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Bonnie Webb and Angela v. Midland Credit Management

May 31, 2012

BONNIE WEBB AND ANGELA FULLER, ON BEHALF OF THEMSELVES AND OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
MIDLAND CREDIT MANAGEMENT, INC., MIDLAND FUNDING LLC, AND ENCORE CAPITAL GROUP, INC.
FORMERLY KNOWN AS MCM CAPITAL GROUP, INC. DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

OPINION AND ORDER

Plaintiffs Bonnie Webb and Angela Fuller filed a putative class action against defendants Midland Credit Management, Inc. ("Midland Credit"), Midland Funding LLC ("Midland Funding") and Encore Capital Group, Inc. ("Encore") (collectively "defendants"), alleging that defendants engaged in deceptive and unfair collection practices under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, by sending plaintiffs pre-legal notifications and discount offers demanding inflated payments to satisfy past-due debts. Defendants have moved to compel arbitration and stay proceedings pending the completion of arbitration as to plaintiff Webb. [Dkts. #34 & #67.]*fn1 Defendants' motion will be denied.*fn2

BACKGROUND

Defendants are in the debt collection business and have been attempting to collect an outstanding credit card debt from Webb. The present dispute centers on whether Midland Funding, as the purported assignee of all right, title and interest in Webb's credit card debt, may enforce the arbitration provision contained in Webb's credit card agreement (the "card agreement"). (See Defs.' Mot. to Compel Ex. 1.)*fn3 According to defendants, Webb incurred a debt on a credit card serviced by Citibank, N.A. ("Citibank"), and subsequently the debt was assigned multiple times to various debt collection entities before coming to rest in the possession of Midland Funding. These assignments, state defendants, were as follows:

(1) From Citibank to Sherman Originator III LLC ("Sherman Originator III");

(2) From Sherman Originator III to Sherman Originator LLC ("Sherman Originator");

(3) From Sherman Originator to LVNV Funding LLC ("LVNV");

(4) From LVNV to Sherman Acquisition, LLC ("Sherman Acquisition"); and

(5) From Sherman Acquisition to Midland Funding. (See Minford Decl. ¶¶ 5--12.)

Defendants argue that Midland Funding, as an assignee, stands in the shoes of Citibank, the original assignor, and may enforce the arbitration provision contained in the card agreement.*fn4

In support of each of the aforementioned assignments, defendants submit the following evidence:

(1) The affidavit of Lana Handy, an employee of Citicorp Credit Services, Inc. ("CCSI"), a subsidiary of Citibank that services credit card accounts for Citibank. (Handy Aff. ¶ 1.)*fn5 Handy states that Citibank's records indicate that Webb's account was sold to Sherman Originator III on or about March 30, 2009, and that Citibank retained no ownership interest in the account. (Id.¶ 8.) Attached to Handy's affidavit is an account summary for Webb's account and the card agreement. Defendants also submit the declaration of Pat Minford, Senior Manager of Business Development Process for Midland Credit, who, based on his personal knowledge and review of the business records of Midland Funding and Midland Credit, states that Citibank South Dakota, N.A. ("Citibank South Dakota")*fn6 assigned its interest in Webb's account to Sherman Originator III. (Minford Decl. ¶¶ 2, 12.)*fn7 In support, Minford relies on a bill of sale executed by the two companies and dated March 30, 2009, which is attached as Exhibit E. (See Minford Decl. Ex. E.) Also attached are billing statements for Webb's account. (Id. Ex. F.)

(2) The declaration of Minford, who states that Sherman Originator acquired Webb's account from Sherman Originator III, relying on an undated "Declaration Account Transfer and Ownership History" executed by the two companies and LVNV and attached as Exhibit D. (Minford Decl. ¶ 11 & Ex. D.)

(3) The declaration of Minford, who states that LVNV acquired Webb's account from Sherman Originator relying on Exhibit D. ...


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