GREENE v. MIDLAND CREDIT MANAGEMENT, INC.

Filing 47

OPINION. Signed by Chief Judge Jose L. Linares on 1/3/2019. (gl, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

EILEEN GREENE, on behalf ofherself and ct/i
others similar/v situated.

Civil Action No. 17-1322 (JLL)

Plaintiff,

OPINION

V.

MIDLAND CREDIT MANAGEMENT, INC.,

Defendant.
LINARES. Chief District Judge.

This matter comes before the Court by way of Defendant Midland Credit Management,
Inc.’s Motion for Summary Judgment, pursuant to Federal Rule of Civil Procedure 56 and Local
Civil Rule 56. 1. (ECF No. 2$). Plaintiff Eileen Greene filed opposition, and Defendant replied
thereto. (ECF Nos. 36, 41). Pursuant to an Order issued by this Court, the parties submitted
additional briefing in connection with the relationship between this matter and a recent decision
by the Third Circuit, discussed in more detail herein. (ECF Nos. 42—46). The Court decides this
matter without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set
forth below, the Court grants Defendants Motion for Summary Judgment.
I.

BACKGROUND’

In 2010, Plaintiff had an account with Verizon New Jersey, Inc. (“Verizon”) for (i) basic
telephone services such as local calling (“Basic Services”) and (ii) non-basic telephone services

This background is taken from the parties’ statements of material facts. pursuant to Local Civil Rule 56.1. (ECF No.
30. Defendant’s Statement of Material Facts (“Def.’s SMF”): ECF No. 36-2. Plaintiffs Response to Defendant’s
Statement of Material Facts). To the extent that Plaintiff admits to any material facts as stated by Defendant, the
Court shall cite to “Def’s SMF” and the relevant paragraph number.

such as Caller ID and regional and long distance calling (“Non-Basic Services”). (Def.’s SMF

¶J

1—2). Charges for the Basic and Non-Basic Services were grouped separately. (Def.’s SMF

3). After making a payment toward the August 28, 2010 billing statement balance
2010, Plaintiff failed to make any further payments

on

on

¶

October 14,

her account. (Def.’s SMF ¶ 4). On January

1 8, 2011, Verizon transferred the balance of Non-Basic Services into a separate account (“the NonBasic Services Account”), and continued to bill Plaintiffs original account predominately for the
Basic Services and related outstanding balance (“the Basic Services Account”).2 (Def’s SMF

¶J

5—6).
Defendant is a servicer for Midland Funding LLC, who,

on

March 25, 2012, “purchased a

portfolio of charged-off debts from Verizon that included both” of Plaintiffs accounts. (Def’s
SMF

¶ 7,

10—11). The Basic Services Account had an outstanding balance of $156.04, and the

Non-Basic Services Account had an outstanding balance of $223.22. (Def.’s SMF

¶

9).

On

February 24, 2016, Defendant sent two letters to Plaintiff, one offering to resolve the amount due
on the Basic Services Account and another offering to resolve the amount due on the Non-Basic
Services Account. (Def.’s SMF

¶J

12, 18). The letters were nearly identical, and each offered to

resolve the respective account balance for an amount less than the balance owed. (Def.’s SMF

¶J

13, 19). Specifically, both letters stated the following:

Congratulations!
You have been pre-approved for a
discount program designed to save you money. Act now to
maximize your savings and put this debt behind you
.

.

If these options don’t work for you, call one of our Account
Managers to help you set up a payment plan that does.

2

Plaintiff claims that some of the charges in the Basic Services Account, though admittedly small, were for Non-Basic
Services. (ECF No. 36-2 j 6).

*Jf you pay your full balance. we will report your account as
Paid in Full. If you pay less than your full balance, we will report
your account as Paid in Full for less than the full balance.
We are not obligated to renew this offer. We will report
forgiveness of debt as required by IRS regulations. Reporting is not
required every time a debt is canceled or settled, and might not be
required in your case.
(ECF No. I (“Compi.”) at 17, 19 (formatting omitted)).
On February 24, 2017, Plaintiff filed a putative class-action Complaint with this Court
alleging a single cause of action for violation of the Fair Debt Collection Practices Act, 15 U.S.C.

§

1692, et seq. (“FDCPA”). (Def.’s SMF ¶ 25; Compl. ¶J 61—71). Specifically, Plaintiffs FDCPA

claim related to two separate allegations. First, Plaintiff alleged that Defendant’s action of sending
two letters supposedly for the same debt was a communication under 15 U.S.C.
an improper attempt to collect interest Defendant was not entitled to. (Compl.

§

1692a(2), and

¶J 20—26).

Second,

Plaintiff alleged that the applicable statute of limitations for the two debts had expired prior to the
date that the letters were sent. (Compl.

¶

29). According to Plaintiff, it was misleading for

Defendant to offer to settle the time-barred debts without infonruing Plaintiff that: (i) t]ie debt was
time-ban-ed; (ii) the debt is no longer reportable to a credit agency; and (iii) the statute of
limitations would reset if she chose to pay off the entire outstanding balance. (Compl.

¶ 30—39).

On June 18, 2018, the Hon. Joseph A. Dickson, U.S.M.J., granted Defendant permission to file
this motion for summary judgment and stayed class discovery. (Def’s SMF

¶ 28; see a/so

ECF

No. 27).
II.

LEGAL STANDARD

Summary judgment is appropriate when, drawing all reasonable inferences in the non
movant’s favor, there exists “no genuine dispute as to any material fact” and the movant is entitled

to judgment as a matter of law. See Fed. R. Civ. P. 56(a); see ct/so Anderson v. Liberti’ Lobby,

Inc., 477 U.S. 242, 255 (1986). “[T]he

moving party

must show that the non-moving party has

failed to establish one or more essential elements of its case on which the non-moving party has
the burden of proof at trial.” !vlcCabe v. Ernst & Young, LLP, 494 F.3d 418, 424 (3d Cir.
2007)

(citing

Celotex Corp. v. Catrett, 477 U.S. 317, 322—23 (1986)).

The Court must consider all facts and their reasonable inferences in the light most favorable
to the non-moving party. See Pa. Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995). If a
reasonable juror could

return

a verdict for the non-moving party regarding material disputed

factual issues, summary judgment is not appropriate. See Anderson, 477 U.S. at 249 (“[A]t
the summary judgment stage the judge’s function is not himself to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue for trial.”).
III.

ANALYSIS

The purpose of the FDCPA is “to eliminate abusive debt collection practices by debt
collectors, to insure that those debt collectors who refrain from using abusive debt collection
practices are

not

competitively disadvantaged, and to promote consistent State action to protect

consumers against debt collection abuses.” 15 U.S.C.

§ 1692(e). When Congress passed the

legislation in 1977, it found that “[a]busive debt collection practices contribute to the number of
personal bankniptcies, to marital instability, to the loss of jobs, and to invasions of individual
privacy.” Id.

§ 1692(a). “As remedial legislation, the FDCPA must be broadly construed in order

to give full effect to these purposes.” Caprio v. Healthcare Revenue Recovery Gip.. 709 F.3d 142,
148 (3d Cir. 2013). Accordingly, the Court must “analyze the communication giving rise to the
FDCPA claim ‘from the perspective of the least sophisticated debtor.” Kavmark v. Bank qfAm.,
NA.. 783 F.3d 168, 174 (3d Cir. 2015) (quotingRosenauv. Uni/itncl Corp., 539 F.3d 218, 221 (3d
Cir. 2008)). Furthermore, “[t]he FDCPA is a strict liability statute to the extent it imposes liability

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without proof of an intentional violation.” Allen cx rd. Martin v. LaSatle Ban/c N.A., 629 F.3d
364, 368 (3d Cir. 2011).
To prevail on a claim under the FDCPA, “a plaintiff must prove that (1) she is a consumer,
(2) the defendant is a debt collector, (3) the defendant’s challenged practice involves an attempt to
collect a ‘debt’ as the Act defines it, and (4) the defendant has violated a provision of the FDCPA
in attempting to collect the debt.” Dottglass v. Convergent Otttsourcing, 765 F.3d 299, 303 (3d
Cir. 2014) (citation omitted). At issue here is the fourth prong, i.e., whether Defendant violated a
provision of the FDCPA in attempting to collect the debt.

Specifically, Defendant allegedly

violated the FDCPA in two ways: (i) Defendant sent multiple letters to collect the same debt and
improperly charged interest; and (ii) Defendant misrepresented the legal status of the debt by
failing to disclose that the statute of limitations has passed. (See generally Compl.). There is the
additional issue of whether the Third Circuit’s recent

opinion in

Schultz v. Midland Credit Mgmt.,

Inc., 905 F.3d 159, 160 (3rd Cir. 2018), applies to this case, which the parties were given the
opportunity to brief for this Court, (see ECF Nos. 43—46). The Court addresses each of these issues
in

turn and finds that Defendant is entitled to summary judgment.

A. Defendant Sending Two Letters

As an initial matter, Plaintiff concedes that she uncovered through discovery that the two
debt collection letters were for separate accounts and debts, and therefore voluntarily withdraws
her first argument. (ECF No. 36 at I n.l). Accordingly, the Court shall grant summary judgment
for Defendant on Plaintiffs FDCPA claim to the extent that it pertains to Defendant allegedly
sending two letters for the same account and improperly charging Plaintiff interest fees.

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B. Statute of Limitations

Plaintiff claims that Defendant violated the FDCPA, specifically 15 U.S.C.

§ 1692e, by

sending the two debt collection lettets without informing Plaintiff that the debts were time-barred
and no longer actionable. (Compl.

¶ 29—30). Section 1692e prohibits a debt collector

from

“us[ing] any false, deceptive, ol. misleading representation or means in connection with the
collection of any debt,” 15 U.S.C.

§ 1692e, including: (1) falsely representing “the character,

amount, or legal status of any debt,” Id.
cannot legally be taken,” Id.

§ 1692e(2)(A); (ii) “threat[ening] to take any action that

§ 1692e(5); or (iii) “us[ing] any false representation or deceptive

means to collect or attempt to collect any debt or to obtain information concerning a consumer,”
Id.

§ 1692e(l0). The statute of limitations for the collection of debts under New Jersey law is six

years. N.J.S.A. 2A:14-1; see ctlso Thtertas v. Galaxy Asset Mgmt., 641 f.3d 28, 31 n.2 (3d Cir.
2011) (applying New Jersey’s six year stattite of limitations to an FDCPA case where the debt was
incurred in New Jersey and the case was brought in New Jersey).
Here, Plaintiffs payments for the accounts were due on or around October 25, 2010, and
the letters were sent on February 24, 2016. (Def.’s SMF

¶ 4, 12, 18; see also ECF No. 36 at 15

(conceding same)). Plaintiff seems to concede that, under New Jersey’s statute of limitations, the
debts had not expired at the time the letters were sent. (ECF No. 36 at 1). Instead, Plaintiff argues
that the statute of limitations for at least part of the Non-Basic Services Account is less than New
Jersey’s six year statute of limitations. (Id. at 1—2). Specifically, Plaintiff claims that charges for
long distance calling and federal service fees in the Non-Basic Services Agreement are governed
by a two-year statute of limitations period, pursuant to the Federal Communications Act, 47 U.S.C.

§ 415(a) (“FCA”). (Id. at 4—Il). Plaintiff also claims that the broadband internet services in the

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Non-Basic Services Agreement were provided pursuant to a separate Verizon contract, which was
explicitly governed by Virginia law and Virginia’s five year statute of limitations.
The Court is

not

(id.

at 11—15).

persuaded that the statutes of limitations proposed by Plaintiff apply in

this case. First, as Defendant correctly points out, the two-year stattite of limitations in the FCA
only applies to rates that are tariffed by the Federal Communications Commission, and the
agreements at issue here are not tariffed. (ECF No. 41 at 11—13). As for Plaintiffs second
argument, the Verizon contract states that the sttbstctnth’e law of Virginia applies, (ECF No. 36-1
at Ex. G,

§ 15.4), not its laws of procedure or statute of limitations, which are governed by the

forum state, i.e., New Jersey. See Ghtck v. Unisys Corp., 960 F.2d 1168, 1179 (3d Cir. 1992)
(“choice of law provisions in contracts do not apply to statutes of limitations, unless the reference
is express.”).3 Accordingly, the Court concludes that both service agreements are governed by
New Jersey’s six year statute of limitations. and, because the letters were sent within that six year
statute of limitations period, a reasonable juror could not conclude that the debts were time-barred
or that Defendant violated the FDCPA on this issue.
C. Application of Schttttz

Pursuant to this Court’s Text Order, the parties also briefed the issue of whether or not the
Third Circuit’s recent decision in Schttltz, 905 F.3d at 164, applies to this case. In Schttttz, the
Schultzes received a letter which included the following language: “We will report forgiveness of
debt as required by IRS regulations. Reporting is not required every time a debt is canceled or
settled, and might not be required in your case” (“IRS Language”). 905 f.3d at 161. The Third

Plaintiff argues that Glttck is factually distinguishable because, unlike the contract in that case, the Verizon contract
requires the same state venue and choice of law. (ECF No. 36 at 15). The Court rejects this argument, as it fails to
consider that the Third Circuit in Glttck was discussing a broader legal principle that applies outside the facts of that
case. See Miller v. Btttler, Civ. No. 12-1004, 2014 U.S. Dist. LEXIS 5094, at *9 (D.N.J. Jan. 15, 2014) (stating in
an unrelated case that “[c]hoice-of-law clauses relate to substantive law, and thus do not incorporate a statute of
limitations, which is procedural.”) (citing Kramer v. Ctha-Geigv Coip., 371 N.J. Super. 580, 601 (App. Div. 2004);
Gcttto v. Meiiclian ,4Ied. ,4ssocs., Joe.. Civ. No. 87-5076. 1989 U.S. 01st. LEXIS 1672. at *11 (D.N.J. Feb. 9, 1989)).

7

Circuit determined that said IRS Language could be construed as being misleading, because the
Schultzes’ debt was for less than $600 and therefore would not be reported under IRS regulations.
Id. at 165.
Here, Plaintiff argues that the Schultz decision is directly on

point

with this case, and that

Defendant’s motion for summary judgment should be denied, because: (1) Plaintiffs debts were
for an amount less than $600; and (ii) Defendant’s letters included the IRS Language from Schtdtz.
(ECF No. 44 at 1—2). Plaintiff further contends that she should be given the opportunity to amend
her complaint even though the January 31, 2018 deadline to do so has passed, because amending
the complaint would not require new legal claims but merely the incorporation of “additional
facts.” (Id. at 2—3).
Despite the sufficient opportunity this Court provided to the parties to address the issue,4
Plaintiff has not persuaded the Court that Schultz relates to this case or that granting Plaintiff
permission to amend her complaint is warranted. As Defendant colTectly points out, Plaintiff never
raised or asserted any claims related to the IRS Language during the course of these proceedings.
(See generally Compl.). Instead, Plaintiffs allegations only relate to two claims: (i) Defendant
sending two letters that requested improper interest fees; and (ii) Defendant’s failure to inform
Plaintiff about the statute of limitations. (See Compi.

¶

20—39). Even if the IRS Language

implicated the same provisions of the FDCPA presently before the Court, a claim alleging same
would raise wholly separate facts and arguments connected to the IRS Language as to not relate
back to the original claims. See Smith v. Rabin & Raine of N.J. No. 08-5724, 2009 WL 2143644,
at *2 (D.N.J. Jul. 14, 2009) (“an amendment does not relate back.

.

.

when it asserts a new ground

for relief supported by facts that differ in both time and type from those the original pleading set

‘

In fact, both parties submitted additional briefing not requested by the Court, which was nevertheless taken into
consideration. (See ECF Nos. 45, 46).

$

forth.”) (citations and quotations omitted). Furthermore, a new FDCPA claim related to the IRS
Language would be time-barred, considering that the FDCPA is governed by a one year statctte of
limitations, see 15 U.S.C.

§ 1692k(d), and the letters were sent in February 2016. Accordingly,

the Court concludes that any claim related to the IRS Language is not presently before this Court,
and that the Third Circuit’s decision in Schttlt does not prevent Defendant from being entitled to
summary judgment.
IV.

CONCLUSION

For the aforementioned reasons, the Court hereby grants Defendant’s Motion for Summary
Judgment. and shall enter judgment for Defendant and against Plaintiff. An appropriate Order
follows this Opinion.

Dated: January

2019

Judge, United States District Court

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