Ford v. Midland Funding LLC et al
ORDER DENYING WITHOUT PREJUDICE 25 , 26 Defendants' Motions to Compel Arbitration, and Setting Summary Trial under 9 U.S.C. Section 4. Signed by District Judge Terrence G. Berg. (AChu)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
FRANCES FORD, individually
and on behalf of other persons similarly situated,
Case No. 16-12612
Hon. Terrence G. Berg
MIDLAND FUNDING, LLC.;
MANAGEMENT, INC.; ENCORE
CAPITAL GROUP INC.; & LAW
OFFICE OF MICHAEL R.
STILLMAN, PC d/b/a/ THE
STILLMAN LAW OFFICE
ORDER DENYING WITHOUT PREJUDICE DEFENDANTS’
MOTIONS TO COMPEL ARBITRATION, DKTS. 25, 26,
AND SETTING SUMMARY TRIAL UNDER 9 U.S.C. § 4.
Plaintiff—an individual and a member of a putative class—
brings a claim under the Fair Debt Collection Practices Act
(FDCPA), 15 U.S.C. § 1692, against Defendants (debt collectors)
and their law firm.1 Plaintiff contends that Defendants sued her
in state court to collect a credit card debt, but that their lawsuit
Defendant Midland Credit Management is the servicer for Midland Funding, Dkt. 26, Ex. 1 at Pg ID 182.Midland Funding and Midland Credit Management are wholly owned subsidiaries of Defendant Encore Capital. Dkt. 29
at Pg ID 233. Defendant Stillman Law Office, on behalf of Midland funding,
filed the state court action that is the basis for Plaintiff’s lawsuit. Dkt. 35 at
Pg ID 138-39.
was time-barred by the statute of limitations and thus illegal under the FDCPA. Defendants’ motions ask this Court, over Plaintiff’s objection, to dismiss this case and compel Plaintiff to arbitrate her claims on an individual, non-class basis.
For reasons explained in detail below, the question whether Defendants may compel arbitration is premature. Before deciding
whether Defendants may compel arbitration, it is necessary to determine whether Plaintiff and Defendants actually entered into an
arbitration agreement. The Federal Arbitration Act contains a
summary trial procedure to make such a determination where the
existence of a contract to arbitrate is in issue. The existence of
such an agreement is at issue here, so the Court will deny Defendants’ motions to compel arbitration without prejudice and set
this case for summary trial.
Background and Procedural History
The record in this case shows that Plaintiff’s credit card ac-
count was owned by several entities before Midland allegedly purchased it. In 2003, Plaintiff opened a credit card with Fleet Bank
(“Fleet”), which merged into Bank of America (“BOA”) in 2005.
Dkt. 30, Ex. A at Pg ID 392. In October 2006, BOA merged into
FIA Card Services. (“FIACS”). Id. All FIACS credit card accounts
are subject to a Credit Card Agreement. FIACS’s 2006 agreement
contained an arbitration clause and a “delegation provision,”
which reserved the threshold question of whether a dispute was
arbitrable for an arbitrator instead of the court. That delegation
provision provides in relevant part:
“Any claim or dispute by either you or us against the
other …shall, upon election by either you or us, be resolved by binding arbitration. The arbitrator shall resolve any Claims, including the applicability of this Arbitration and Litigation Section or the validity of the
Dkt. 26, Ex. 1 at Pg ID 195, ¶ 48. According to Defendants, Plaintiff last used her card on December 8, 2006 and FIACS charged-off
her account for non-payment later that month. Dkts. 26, Ex. 2 at
Pg ID 191; 30, Ex. 2 at Pg ID 393.
Then, in September 2008, Midland allegedly purchased Plaintiff’s charged-off account from FIACS. Dkt. 26, Ex. 1 at Pg ID 183.
On December 26, 2015—more than seven years after purchasing
Plaintiff’s debt—Midland filed a collection lawsuit against Plaintiff in Michigan state court by and through Defendant Stillman
Law Office. Plaintiff asserted that the statute of limitations had
run on her debt as an affirmative defense. Dkt. 35, Ex. 7 at Pg ID
4. In April, 2016, at Stillman’s request, the court entered a stipulated dismissal of Midland’s case with prejudice. Id. at Pg ID 8.2
At the oral argument on April 3, 2017 counsel for Midland stated that it was
his “understanding” that Midland’s state court case against Plaintiff was
dismissed “without prejudice.” Dkt. 35, Ex. 9 at Pd ID 783. This statement
was incorrect, as the case was dismissed with prejudice.
The record is unclear whether Midland’s case was dismissed with
prejudice because Plaintiff’s debt was in fact time-barred. However, Michigan’s statute of limitations for debt collection is six years,
M.C.L. § 600.5807(8), and Midland sued Plaintiff on December 15,
2015, Dkt. 35, Ex. 6 at Pg ID 749, more than nine years after
Plaintiff’s last account activity on December 8, 2006.
The record before the Court also shows that on September 3,
2015—approximately four months before Midland brought suit
against Plaintiff in Michigan state court over a nine-year-old
debt—Midland entered into a consent order with the United
States Consumer Financial Protection Bureau (CFPB) that enjoined the company from among other things: (1) attempting to
collect time-barred debt; (2) procuring and submitting misleading
affidavits in debt collection litigation; and (3) attempting to collect
debt based on potentially inaccurate data. Dkt. 36, Ex. C at Pg ID
358-64; 2015-CFPB-0022. In addition, as Plaintiff points out and
Defendants do not contest, in August 2016, the American Arbitration Association (AAA)—a leading national provider of alternative
dispute resolution services—indicated that it would no longer administer claims involving Midland because the company failed to
comply with numerous AAA policies. Dkt. 29, Ex. D.
Plaintiff alleges, individually and on behalf of a putative class,
that Defendants attempted to collect time-barred debt in violation
of: (1) the FDCPA, 15 U.S.C. §§ 1692(f)-(e); (2) the 2015 CFPB consent order; and (3) the Michigan Regulation of Collection Practices
Act. M.C.L. § 445.252.
Defendants contend that the arbitration clause and delegation
provision in the FIACS 2006 credit card agreement govern Plaintiff’s account and therefore, because Defendants so elect, this
Court must compel Plaintiff to arbitrate (1) her claims (on an individual, non-class basis) and (2) all threshold questions of arbitrability, including the question of whether an arbitration agreement exists between the parties. Plaintiff contends that there are
issues of fact regarding whether Midland owns her account and, if
it does, whether FIACS ever sent her the 2006 agreement. Thus,
Plaintiff argues, notwithstanding the 2006 agreement’s delegation
provision, this case must proceed summarily to trial on the issue
of whether the 2006 agreement is contractually binding on the
parties. See 9 U.S.C. § 4.3
Standard of Review
The Federal Arbitration Act (FAA) “embodies the national poli-
cy favoring arbitration and places arbitration agreements on equal
Section 4 of the Federal Arbitration Act provides: “If the making of the arbitration agreement or the failure, neglect of refusal to perform the same be
in issue, the court shall proceed summarily to trial thereof. If no jury trial be
demanded by the party alleged to be in default . . . the court shall hear and
determine such issue.”
footing with all other contracts.” Buckeye Check Cashing, Inc. v.
Cardena, 546 U.S. 440, 443 (2006) (citing 9 U.S.C. § 2). Despite
this liberal federal policy favoring arbitration agreements, arbitration is a “matter of contract and a party cannot be required to
submit to arbitration any dispute which he has not agreed so to
submit.” AT & T Techs. v. Commc’ns Workers of Am., 475 U.S. 643
In most cases, before compelling an unwilling party to arbitrate, “the court must engage in a limited review to determine
whether the dispute is arbitrable; meaning that a valid agreement
to arbitrate exists between the parties and that the specific dispute falls within the substantive scope of that agreement.” Richmond Health Facilities v. Nichols, 811 F.3d 192, 195 (6th Cir
2016) (quoting Javitch v. First Union Sec., Inc., 315 F.3d 619, 624
(6th Cir. 2003)). And, “because arbitration agreements are fundamentally contracts,” courts apply the “applicable state law of contract formation” in performing this limited review. Tillman v. Macy’s, Inc., 735 F.3d 453, 456 (6th Cir. 2013) (quoting Seawright v.
Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 972 (6th Cir 2007)).
Sometimes, however, an arbitration clause contains a delegation provision that allows parties to “arbitrate ‘gateway’ questions
of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.”
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68-69 (2010).
Before a court can enforce a delegation provision, however, it must
find that the parties “clearly and unmistakably” manifested their
intent to delegate threshold questions of arbitrability to an arbitrator. Id. at n. 1.
Where a party admits it assented to a contract containing an
arbitration clause and delegation provision, gateway questions
concerning the arbitration clause’s enforceability (for example,
whether the contract it is within is unconscionable), validity, or
scope, are for an arbitrator to decide. See, e.g., Danley v. Encore
Capital Group, Inc., 680 F. App’x. 394 (6th Cir. 2017) (where
Plaintiff signed a contract with an arbitration clause and delegation provision, question of arbitration clause’s validity under the
Uniform Commercial Code (UCC) was for the arbitrator). But
what if—as here—a party resisting arbitration contends that she
never assented to a contract containing an arbitration clause and
delegation provision? Is the gateway question of whether an arbitration agreement between the parties exists—as opposed to questions about its validity, enforceability, or scope—also for the arbitrator to decide? Neither the Sixth Circuit nor the Supreme Court
have explicitly answered this question, though close reading of
each court’s precedent suggests that, in most cases, their answer
would be no.
In Granite Rock Co. v. Int’l Bhd. Of Teamsters, 561 U.S. 287
(2010), the majority stated in dictum that before a court can determine that parties agreed to arbitrate a dispute, it must find
that their agreement “was validly formed and (absent a provision
clearly and validly committing such issues to the arbitrator [that
is, a delegation provision]) is legally enforceable and best construed to encompass the dispute.” Id. at 303. As Professor Karen
Halverson points out, in that sentence the “placement of the parenthetical” suggests that the opinion “draws a distinction between
the issue of contract formation and issues of contract enforceability and interpretation” and implies “that only the latter two issues
can be delegated to [an] arbitrator.” Karen Halverson Cross, Letting the Arbitrator Decide Unconscionability Challenges, 26 Ohio
St. J. on Disp. Resol. 1, 59-60 (2011).
The Sixth Circuit, and at least one other Circuit, seem to agree
with Professor Cross’s interpretation of Granite Rock. In Danley,
for example, the circuit court noted that it was typically “within
the district court’s province” to decide the threshold question of
contract formation. 680 F. App’x. at 397-98 (quoting Granite Rock,
561 U.S. at 296); see also Kubala v. Supreme Prod. Servs., Inc.,
830 F.3d 199, 202 (5th Cir. 2016) (noting that even where a party
seeking arbitration “points to a purported delegation clause,” the
court always performs a contract formation analysis).
Another court has pointed out in a well-reasoned opinion treating this issue that under the Supreme Court’s decision in Rent-ACenter, a court must find “clear and unmistakable evidence” that
the parties intended to arbitrate the question of arbitrability before enforcing a delegation provision. Further, the text of a delegation provision itself is “only a valid indicator of the parties’ intent if they agreed to be bound by its terms.” Allstate Ins. Co. v.
Roll Bros., Inc., 171 F. Supp. 3d 417, 424 (E.D. Pa. 2016). This
reasoning makes sense because a delegation provision is only
vested with legal force if the parties agreed to it. Therefore, a
court must first conclude that an agreement exists before considering whether to enforce a delegation provision and compel the
parties to arbitrate questions of an arbitration clause’s validity,
enforceability, or scope.
If it is clear that a contract containing an arbitration clause
and delegation provision exists, a court must then decide whether
to grant or reject a motion to compel arbitration as a matter of
law. However, the Federal Arbitration Act provides that “[i]f the
making of the arbitration agreement . . . be in issue, the court
shall proceed summarily to the trial thereof.” 9 U.S.C. § 4. Neither
the Supreme Court nor the Sixth Circuit has announced a standard for determining when a motion to compel arbitration should
proceed to trial under 9 U.S.C. § 4. Several other circuits, howev9
er, liken the standard to one for summary judgment under Rule
56(a) of the Federal Rules of Civil Procedure. See Bazemore v. Jefferson Capital Sys., LLC, 827 F.3d 1325, 1333 (11th Cir. 2016); accord Howard v. Ferrellgas Partners, L.P., 748 F.3d 975, 984 (10th
Cir. 2014); Neb. Mach. Co. v. Cargotec Solutions, LLC., 762 F.3d
737, 743 (8th Cir. 2014); SBRMCOA LLC v. Bayside Resort, Inc.,
707 F.3d 267, 271 (3d Cir. 2013).
The Court will therefore apply this summary-judgment-like
standard and “conclude as a matter of law that the parties did or
did not enter into a contract containing an arbitration clause and
delegation provision only if ‘there is no genuine dispute as to any
material fact’ concerning the agreement’s formation.” Bazemore,
827 F.3d at 1333 (quoting Fed. R. Civ. P. 56(a)); accord Jackson v.
VHS Detroit Receiving Hosp., Inc., 814 F.3d 769, 775 (6th Cir.
2016) (“[A] dispute of material fact is genuine so long as the evidence is such that a reasonable jury could return a verdict for the
non-moving party”) (quoting Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986)).
Defendants contend that the arbitration clause and delegation
provision in the 2006 FIACS card member agreement governs this
dispute.4 Defendants further argue that because they have elected
to arbitrate this dispute the court must now compel Plaintiff to
arbitrate all her claims as well as the issue of whether she formed
a contract to arbitrate in the first place.
Plaintiff responds that issues of fact remain about whether
Midland purchased Plaintiff’s account from FIACS and, even if it
did, whether FIACS ever sent her the 2006 agreement. Therefore,
Plaintiff argues, this case must proceed summarily to trial on the
question of contract formation.
In support of their argument that the parties intended to arbitrate even the question of contract formation, Defendants point
only to the text of a delegation provision that Plaintiff claims she
never assented to. Accordingly, the Court rejects Defendant’s argument and will consider the question of whether the parties
agreed to the 2006 agreement, and how that question should be
1. Applicable Law
The Court applies Michigan law to decide contract disputes
such as whether an arbitration agreement between the parties exTo reiterate, the arbitration clause and delegation provision provides: “Any
claim or dispute by either you or us against the other …shall, upon election
by either you or us, be resolved by binding arbitration. The arbitrator shall
resolve any Claims, including the applicability of this Arbitration and Litigation Section or the validity of the Entire Agreement….” Dkt. 26, Ex. 1 at Pg
ID 195, ¶ 48.
ists. See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 91-92 (1938).
In Michigan, the proponent of a contract must prove its existence
by a preponderance of the evidence. Bank of America, N.A. v. First
American Title Ins. Co., 499 Mich. 74, 100 (Mich. 2016). “A valid
contract requires five elements: (1) parties competent to contract,
(2) a proper subject matter, (3) legal consideration, (4) mutuality
of agreement, and (5) mutuality of obligation.” Id. at 101. The
general rule is that a contract, including an arbitration agreement, is freely assignable. Detroit, T & I.R. Co. v. W.U. Tel. Co,
200 Mich. 2, 5-6 (1918). But to enforce an assigned agreement, an
assignee must first establish that the agreement was in fact assigned to it. Weston v. Dowty, 163 Mich. App. 238, 242-43 (1987).
Mutuality of agreement requires a “meeting of the minds,”
which is “a figure of speech for mutual assent.” Hall v. Small, 267
Mich. App. 330, 333 (2005) (quoting Kamalnath v. Mercy Mem.
Hosp. Corp., 194 Mich. App. 543, 548 (1992)). A party may assent
to any contract, including a card member agreement, through
conduct (for example, by using a credit card). See, e.g., Unifund
CCR Partners v. Riley, 2010 WL 571829, at *2-3 (Mich. Ct. App.
Feb. 18, 2010). It is axiomatic, however, that a party cannot assent to an agreement—even through conduct—if the agreement
was never sent or otherwise communicated to her. See M.C.L. §
445.862 (“A retail charge agreement shall be considered signed
and accepted by the buyer if after a request for a retail charge account… the [account] is used by the buyer […] A copy of the
agreement shall be delivered or mailed to the buyer before the
date the first payment is due under the agreement”).
Finally, Rule 803(6) of the Federal Rules of Evidence “permits
records of regularly conducted business activity into evidence….”
United States v. Collins, 799 F.3d 554, 582 (6th Cir. 2015). This
exception to the rule against hearsay is “based on the indicia of reliability that attach to a record created…by an employer in the ordinary …course of their business.” Cobbins v. Tenn. Dep’t of
Transp., 566 F.3d 582, 588 (6th Cir. 2009). Business records may
be admitted if a custodian or other qualified witness (who is familiar with the record keeping system) testifies or certifies that the
records were: “(1) ‘created in the course of a regularly conducted
business activity’, (2) ‘kept in the regular course of that business’,
(3) ‘resulted from a regular practice of that business,’ and (4) ‘were
created by a person with knowledge of the transaction or from information transmitted by a person with knowledge.’” Collins, 799
F.3d at 582-83 (quoting Yoder & Frey Auctioneers, Inc. v. EquipmentFacts, LLC, 774 F.3d 1065, 1071-72 (6th Cir. 2014); see also
Fed. R. Evid. 803(6)).
If a custodian or other qualified witness lays a sufficient foundation, “the proper approach is to admit the evidence and permit
the jury to determine the weight to be given to the records.” United States v. Hathaway, 798 F.2d 902, 908 (6th Cir. 1986). Unless,
that is, there exists “specific and credible evidence of untrustworthiness.” Id.; see also Fed. R. Evid. 803(6)(E) (business records excludable if “the source of information or circumstances of preparation indicate a lack of trustworthiness”). Under Rule 406, “evidence of…an organization’s routine practice may be admitted to
prove that on a particular occasion the…organization acted in accordance with the…routine practice.” Fed. R. Evid. 406. And, under Rule 803(8), a record of a public office that sets out factual
findings from a legally authorized investigation are excepted from
the rule against hearsay. Fed. R. Evid. 803(8)(a)(iii).
Defendants maintain that the FIACS 2006 card member
agreement is contractually binding on Midland and Plaintiff. Defendants must therefore prove by a preponderance of the evidence
that the contract exists. Plaintiff argues that Defendants have not
met this burden, as there are issues of fact regarding whether
Midland purchased Plaintiff’s account from FIACS and, even if it
did, whether FIACS ever sent her the 2006 agreement. As proof of
these two events, Defendants submit various business records and
corresponding affidavits from Michael Burger, Director of Operations for Midland Credit Management (“MCM”), Dkt. 26, Ex.1, and
Nichole Piper, Senior Vice President of Bank of America. Dkt. 30,
In their declarations, Mr. Burger and Ms. Piper recite Rule
803(6)’s requirements for authenticating business records—they
attest that they are familiar with Midland’s and FIACS’s record
keeping practices respectively and that their declarations are
made either from personal knowledge of the matters set forth
therein, or on information and belief. Dkt 26, Ex. 1. at 182-83;
Dkt. 30, Ex. A at Pg ID 392. They also both declare that the following are true and correct business records maintained by MCM,
or its predecessors or assigns, in the course of regularly conducted
business activity: (1) the Bill of Sale between Midland and FIACS,
Dkt. 26, Ex. 1 at Pg ID 187, (2) MCM’s excel file linking Plaintiff’s
account to the Bill of Sale, Id. at 189, (3) the 2006 FIACS card
member agreement, Id. at 193-96, and (4) Plaintiff’s account
statement indicating that her BOA account was active as of December 2006. Id. at 191.
Additionally, Mr. Burger declares that 2006 agreement “governed to [Plaintiff’s FIACS account] [sic] at the time [it] was sold
to Midland funding.” Dkt. 26, Ex. 1 at Pg ID 184. And, Ms. Piper
declares that Plaintiff’s “account file notes indicate that the 2006
Credit Card Agreement was sent to [Plaintiff] in connection with
[BOA’s] merger with FIACS,” and that there “is no evidence in the
notes for [Plaintiff’s] account that the [agreement] was returned
as undeliverable.” Dkt. 30, Ex. A at Pg ID 393.
Declarations like Mr. Burger’s and Ms. Piper’s are often accepted as sufficient to lay a foundation for a Court to admit the corresponding business records under Rule 803(6). Moreover—absent
evidence to the contrary—a reasonable jury would probably conclude that it is more likely than not that Midland owned Plaintiff’s
account and, based on Ms. Piper’s declaration, that FIACS sent
Plaintiff the 2006 agreement.
But there is some evidence before the court casting doubt on
Midland’s credibility concerning its debt collection litigation practices. Some of those practices have included procuring and submitting misleading or false business records. As discussed, the American Arbitration Association (AAA) will no longer administer
claims involving Midland. Much more significantly, the 2015
CFPB Consent Order that Midland stipulated to found that that
the company, among other things:
(1) “Routinely requested and used affidavits from
sellers that contain false or misleading statements regarding the seller’s review of unattached records…According to an Encore Senior manager responsible for negotiating debt purchase agreements, the
ability to request affidavits from sellers that purport to
be based on a review of documentation is negotiated by
Encore “as a safeguard, should documentation not exist, so we have some form of evidence from the seller;”
(2) “Routinely submitted business records affidavits in
which affiants swear that attached documentation relates to individual Consumer’s accounts. However, in
many instances, the attached documentation, which
sometimes include[s] generic credit card agreements
created years after the Consumer purportedly defaulted on the agreement, does not in fact relate to the account;” and
(3) “In numerous instances, from at least 2009 to
2011… submitted affidavits in which affiants misrepresented that they had personal knowledge of facts
contained in affidavits.
Dkt. 36, Ex. C at Pg ID 860-63.
And, for its part, Bank of America stipulated to a consent order
with the Office of the Comptroller of the Currency (OCC), in which
the OCC found, among other things, that in connection with its
sworn document and collections litigation processes, the bank
“filed or caused to be filed in courts affidavits executed by its employees …making assertions in which the affiant represented that
the assertions in the affidavit were made based on personal
knowledge or based on a review by the affiant of the relevant
books and records, when, in many cases, they were not based on
such personal knowledge or review of the relevant books and records.” 2015-OCC-046 at 4, https://www.occ.gov/static/enforcementactions/ea2015-046.pdf.
In addition to the doubts raised by the AAA letters and CFPB
and OCC consent orders, careful examination of the business rec17
ords and affidavits that Defendants have submitted in this case
raise a number of similar red flags. First, Ms. Piper declares that
Plaintiff’s “account notes indicate” that the FIACS 2006 agreement was sent to Plaintiff. Ms. Piper does not state that the 2006
agreement was sent to Plaintiff. See Bazemore 827 F.3d at 1331
(declarant’s statement that card member agreement “would have
been sent” not competent evidence to prove that it was sent).
Moreover, Defendants do not provide the “account notes” showing
the sending of the agreement that Ms. Piper alleges she reviewed.
Nor does Ms. Piper provide an address to which FIACS supposedly
sent the 2006 agreement.
Second, in Defendants’ state court case against Plaintiff, they
submitted a generic 1999 Bank of America card member agreement as the contract governing Plaintiff’s account. Dkt. 35, Ex. 6
at Pg ID 758-66. That 1999 card member agreement was an entirely different agreement from the generic 2006 agreement that
Defendants now claim controls.
Third, as the Court noted at oral argument, the exemplar 2006
agreement that Defendants provided is not very legible. Dkt. 34 at
Pg ID 525. The Court requested that Defendants submit a more
readable version, but they did not produce a different copy. Rather, in their supplemental briefing, Defendants appear to have
submitted a digitally enlarged, but still difficult to read, version of
the delegation provision from the 2006 agreement. Dkt. 37 at Pg
Fourth, in Mr. Burger’s declaration, he refers to Plaintiff’s account as “opened on May 16, 2003” and “ending in 0828.” Dkt. 26,
Ex. 1 at Pg ID 183. Whereas Ms. Piper refers to the account Plaintiff opened on May 16, 2003 as ending in “4764.” Dkt. 30, Ex. A at
Fifth, in their motion to compel arbitration, Defendant Stillman
Law Office attached a Bill of Sale, that they claimed applied to
Plaintiff’s account, between Bank of America and Cavalry SPV I,
LLC—that is, a company other than Midland. In their reply brief,
Defendant Stillman Law Office stated that including this document was “purely erroneous.” Dkt. 31 at Pg ID 500.
Thus, before the Court are: (1) records from two federal agencies that, pursuant to legally authorized investigations, set out
findings that Midland and Bank of America have routinely submitted misleading or false documents and affidavits in debt collection litigation, and (2) indicia of untrustworthiness in the documents and affidavits that Midland and Bank of America have
submitted in this case. The Court cannot be certain at this point
whether, in light of these issues, there would be a sufficient foundation to permit the admission of the business records Defendants
seek to rely upon. If such records were excluded, a reasonable ju19
ry could certainly conclude that the evidence did not establish that
Midland owned Plaintiff’s account or that FIACS ever sent her the
For now, however, the Court has made no determination concerning the admissibility of the business records Defendants have
submitted. Indeed for the purposes of this Order the Court will
assume that these records will be admitted under Rule 803(6), together with the CFPB and OCC consent orders under Rules 406
and 803(8)(a)(iii). Fed. R. Evid. 803(6), (8); 406. To resolve this motion, the question is whether there is a genuine issue of material
fact regarding Midland’s ownership of Plaintiff’s account and
whether FIACS sent Plaintiff the 2006 agreement. The answer to
both of these questions is yes.
On the record before the Court, a reasonable jury could determine that Defendants’ business records, declarations, or witness
testimony, are entitled to little or no weight. Based on that determination a reasonable jury could then conclude there is no evidentiary basis for finding that Midland owns Plaintiff’s account.
Moreover, even if a jury concluded that Midland does own Plaintiff’s account, they could still find that Midland had not proven by
a preponderance of the evidence that it sent Plaintiff the 2006
agreement. The jury might give more weight to the CFPB consent
order indicating that Midland has supplied affidavits from debt
sellers (like Bank of America) in lieu of documentary evidence; or
to the OCC consent order indicating that Bank of America affiants
have asserted they have reviewed records that they have not; particularly when the only evidence that FIACS sent Plaintiff the
2006 agreement is Ms. Piper’s uncorroborated and somewhat
equivocal statement that Plaintiff’s “account notes”—which Defendants have not provided—indicate that FIACS sent that
For these reasons, the Court finds that there are genuine issues of material fact as to: (1) whether Midland purchased Plaintiff’s account from FIACS, and (2) whether FIACS ever sent Plaintiff the 2006 agreement. There is consequently a genuine issue of
material fact as to whether an arbitration agreement exists.
Because the Federal Arbitration Act provides for a summary
trial procedure in cases where there is a genuine issue of a material fact as to whether an arbitration agreement exists, this case
must proceed summarily to trial on the issue of contract formation. See 9 U.S.C. § 4.
The Court will therefore DENY
WITHOUT PREJUDICE Defendants’ motions to compel arbitration (Dkts. 25 and 26) until the summary proceeding has determined whether or not an arbitration agreement existed. Defend21
ants may renew their motions if the summary trial results in a
finding that an arbitration agreement existed.
Dated: September 8,
s/Terrence G. Berg
TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE
Certificate of Service
I hereby certify that this Order was electronically filed, and
the parties and/or counsel of record were served on September 8,
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