Vassalle et al v. Midland Funding LLC et al

Filing 203

SPECIAL MASTER ORDER 198 granting deft's Motion for Approval of Proposed Modifications to Affidavit Language. Midland shall revise the affidavits as ordered and submit a copy of the same to the Special Master for his review. Special Master Richard B. McQuade. Issued 10/2/12. (B,CJ)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
WESTERN DIVISION

MARTHA VASSALLE, et al.,
Plaintiff,

Case No. 3:11 CV 96

-vsO R D E R
MIDLAND FUNDING LLC, et al.,
Defendant.
BRIEF BACKGROUND
The background surrounding this litigation is contained in the Special Master’s Findings of
April 25, 2012 (Doc. No. 186) and are incorporated by reference. Following a hearing before the
Special Master on May 21, 2012, Defendants provided the undersigned a CD containing updated
templates regarding the affidavit language by letter dated June 1, 2012. Copies of the same were
provided to Class Counsel. In the July 5, 2012 Order, the Special Master directed Defendants to
revise the affidavits to comply with the personal knowledge requirements of Midland’s business
records. (Doc. No. 190).
This matter is before the Special Master on Defendants’ motion for approval of
modifications to affidavit language. Also before the undersigned are responses by Plaintiffs and
by Objectors Clawson, Guest and Rivera as well as replies by Plaintiffs and Midland. For the
reasons stated the Court adopts the language set forth below.
DISCUSSION
1.

Proposed Language #1: MCM’s records indicate that MCM or its
agents made demand for payment of the balance herein prior to
making this affidavit and defendant(s) failed to make full payment
of the amount owed on the account.

or
MCM’s records indicate that MCM or its agents made demand for
payment of the balance herein prior to making this affidavit and
defendant(s) failed to make full payment of the amount owed on the
account; and the attorneys representing plaintiff were retained for
the purpose of collecting the delinquent debt owed on the account
set out above.
or
MCM’s records indicate that MCM or its agents made demand for
payment of the balance herein more than 30 days prior to making
this affidavit and defendant(s) failed to make full payment of the
amount owed on the account; and the attorneys representing plaintiff
were retained for the purpose of collecting the delinquent debt owed
on the account set out above.
Having considered Class Counsel’s suggested modifications and Defendant’s responses
thereto, the Court finds the following proposals to be acceptable:
Approved Language #1: MCM’s records state that MCM or
its agents made demand for payment of the balance herein prior to
making this affidavit and defendant(s) failed to make full payment
of the amount owed on the account.
or
MCM’s records state that MCM or its agents made demand
for payment of the balance herein prior to making this affidavit and
defendant(s) failed to make full payment of the amount owed on the
account; and the attorneys representing plaintiff were retained for
the purpose of collecting the delinquent debt owed on the account
set out above.
or
MCM’s record state that MCM or its agents made demand
for payment of the balance herein more than 30 days prior to making
this affidavit and defendant(s) failed to make full payment of the
amount owed on the account; and the attorneys representing plaintiff
were retained for the purpose of collecting the delinquent debt owed
on the account set out above.
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2.

There being no being no objections to the proposed language contained in proposal

number 2, the following is approved:
Approved Language #2: MCM’s records state that MCM sent a
letter to defendant(s) on behalf of plaintiff, and that defendant(s)
have not contacted MCM to dispute or object to the amounts stated
in such correspondence as due and owing.
3.

Proposed Language #3: MCM’s records indicate that there is no
record of any legitimate dispute by defendant(s) or a substantiated
claim that any credit card associated with this account has been
reported lost or stolen.
Class Counsel’s concern center around the subjectivity of the term “legitimate.” The

undersigned agrees and specifies the following language be implemented:
Approved Language #3: Midland’s records state that there is no
record of an active dispute or of a prior unresolved dispute, or a
substantiated claim that any credit card associated with this account
has been reported lost or stolen.
4.

Upon consent of the parties and approval by the Special Master, the following language

shall be adopted as to paragraph 4:
Approved Language #4: MCM records show that the defendant(s)
owed $_____ as of [date].

5.

Upon consent of the parties and approval by the Special Master, the following language

shall be adopted as to paragraph 5:
Approved Language #5: MCM’s records show that the defendant(s)
owed a balance of $_____.
6.
7.

Proposed Language #6: Withdrawn per Defendants.
Proposed Language #7: The account shows that the defendant(s) owed a
balance of $_____ as of [date]. MCM’s records further show that interest is
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due from [date] accrued at the rate set forth in the cardholder
agreement/original contract and/or as required by law, and Plaintiff may
seek to recover such interest to the extent allowed by the Court according to
proof
Upon consent of the parties and approval by the Special Master, the following language
shall be adopted as to paragraph 7 depending on the jurisdiction:
Approved Language #7: The account shows that the defendant(s)
owed a balance of $_____ as of [date]. MCM’s records further
show that interest is due from [date] accrued at the rate set forth in
the cardholder agreement/original contract and/or as allowed by law,
and Plaintiff may seek to recover such interest to the extent allowed
by the Court according to proof.
8.

Proposed Language #8: MCM’s records show that the defendant(s) owed a
balance of $_____. Such balance may continue to accrue interest at the rate
set forth in the cardholder agreement/original contract and/or as required by
law, to the extent allowed by the Court according to proof, until judgment is
entered herein, after which interest on the unpaid balance shall accrue as
required by law and as set forth within the terms of the judgment.
Upon consent of the parties and approval by the Special Master, the following language

shall be adopted as to paragraph 8 depending on the jurisdiction:
Approved Language #8: MCM’s records show that the defendant(s)
owed a balance of $______. Such balance may continue to accrue
interest at the rate set forth in the cardholder agreement/original
contract and/or as allowed by law, to the extent allowed by the
Court according to proof, until judgment is entered herein, after
which interest on the unpaid balance shall accrue as required by law
and as set forth within the terms of the judgment.
9.

Regarding the language proposed in #9, the objectors take issue with the introduction of

third party records and compliance with hearsay rule. As noted in the Special Master’s Findings
of April 25, 2012, Fed. R. Evid. 803(6) allows for statements based upon business records created
by and integrated into the current owner’s records where the affiant: (1) describes the nature of the
business; (2) indicates their familiarity with the business’s record-keeping system; (3) describes
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the business practice of preparing and maintaining its contemporaneous records; and (4) identifies
the exhibit as a record maintained in the records of the business. (Doc. No. 186 at p. 6.) See
generally, WEINSTEIN’S FEDERAL EVIDENCE §803.08[2] (2d 1997).
At the May 21, 2012 hearing, Patrick Minford, Midland’s senior manager of business
development process, testified that apart from the assurances Midland receives from the seller,
Midland itself conducts a “robust due diligence process” during which they “continually validate
the data.” (Doc. No. 189 at p. 18.) In performing its own due diligence, Midland compares it with
the data provided by the putative seller in order to place a value on the portfolio. (Id. at p. 21.)
Minford further testified that at the final closing, Midland runs the final data file through a
valuation model to ensure that the file “conform[s] to the due diligence file that [Midland] bid on,
that the data is complete. . .” (Id. at p. 24.) Only when that process is complete does Midland pay
the seller for the portfolio and the file is loaded onto Midland’s system.
Additionally, testimony from one of Midland’s legal senior legal specialist, Ashley
Hoffman confirmed her familiarity with Midland’s record keeping systems and detailed the
process necessary to prepare and confirm the information for inclusion in an affidavit. This
testimony was sufficient to establish the necessary foundational requirements of third party
business records under Fed. R. Evid. 803(6). Likewise, other courts have deemed such evidence
as sufficient to meet the business records exception. See Brawner v. Allstate Indem. Co., 591 F.3d
984, 987 (8th Cir. 2010) (citing United States v. Adefehinti, 510 F.3d 319, 325-26 (D.C.Cir. 2007);
Air Land Forwarders, Inc. v. United States, 172 F.3d 1338, 1342-44 (Fed. Cir. 1999)). See also
United States v. Weinstock, 153 F.3d 272, 276 (6th Cir. 1998) (allowing for admission of physician
practice profile prepared by insurer in government prosecution).

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Having considered the concerns of the objectors, the Special Master finds the proposed
language to be acceptable and approves the same.
Proposed and Approved Language #9: Plaintiff acquired defendant’s
account as part of a portfolio of accounts that was sold by plaintiff’s
predecessor to plaintiff on or about [date]. A true and correct copy
of the Bill of Sale pertaining to the transfer of defendant’s account is
attached hereto as Exhibit A and incorporated herein by this
reference. Plaintiff received [original creditor’s] data and records
that pertained to defendant’s account. Plaintiff adopted and
incorporated said data and records into the records kept on behalf of
plaintiff. The accuracy of such records are relied upon by plaintiff
and/or its servicer in purchasing and collecting this account. These
records are trustworthy and relied upon because the original creditor
was required to keep careful records of the account at issue in this
case as required by law and/or suffer business loss.
CONCLUSION
Accordingly, Defendants’ motion for approval of proposed modifications to affidavit
language (Doc. No. 198) is granted as modified herein. Midland shall revise the affidavits as
ordered and submit a copy of the same to the Special Master for his review.

IT IS SO ORDERED.

s/ Richard B. McQuade
Richard B. McQuade
Special Master

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