UNITED STATES DISTRICT COURT

IN THE EASTERN DISTRICT OF MICHIGAN -- SOUTHERN DIVISION

GERALD SHIELDS

Plaintiff

 -vs- Case No. 08-14999

Hon. Paul D. Borman

Magistrate Judge: R. Steven Whalen

MERCHANTS & MEDICAL CREDIT CORPORATION, INC.,

Defendant

REPLY BRIEF IN SUPPORT OF

PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Introduction

At issue are Mr. Shields’s allegations that MMCC sought to collect a debt he does not owe,

and that these collection efforts ran afoul of §§ 1692e and 1692f of the FDCPA. In response,

MMCC offers three principal defenses. 1) That MMCC was entitled to rely on its client for

purposes of its collection efforts, and therefore did not violate the act. 2) That the evidence offered

by Mr. Shields is not competent and should be disregarded for purposes of summary judgment; and

3) that any violations of the FDCPA were the product of a bona fide error which precludes entry

summary judgment in Mr. Shields’s favor. Mr. Shields replies to these arguments as follows.

1. MMCC has refused to address or meet the legal and factual allegations that MMCC

misstated Mr. Shields’s rights relating to the removal of the debt from his consumer

reports.

One of Mr. Shields’s central claims arises as a result of MMCC’s misstatements concerning

how Mr. Shields could have the debt removed from his consumer reports. Mr. Shields has provided

his affidavit as to the content of those calls and MMCC has failed to provide any counter affidavit

or other admissible evidence to create an issue of fact. Likewise, it has failed to even address the

legal consequence of these statements. Consequently, there is no genuine issue of material fact as

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1

Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999)(anaylyzing validation under 1692g

only); Clark v. Capital Credit & Collection Servs., 460 F.3d 1162, 1174 (9th Cir.

2006)(expressly rejecting defense of reliance on creditor as a defense to claims under 1692e

while upholding same reliance as sufficient for validation under 1692g); Anderson v. Frederick

J. Hanna & Assocs., 361 F. Supp. 2d 1379, 1383 (N.D. Ga. 2005)(addressing only debt

collector’s violations under 1692g and entering summary judgment in favor of Plaintiff on

same); Rudek v. Frederick J. Hanna & Assocs., P.C., 2009 WL 385804, 2009 U.S. Dist. LEXIS

11573, 5-6 (E.D. Tenn. Feb. 17, 2009)(addressing only claims under § 1692g).

2

The only case cited by MMCC to address the “creditor reliance” defense within the context of

claims outside 1692g is Ducrest v. Alco Collections, 931 F.Supp. 459, 462 (M.D. La. 1996). 

That case arose prior to the 5th Circuit decision in Taylor v. Perrin, Landry, deLaunay & Durand,

103 F.3d 1232, 1238-39 (5th Cir.1997) which took up the defenses available under the FDCPA

and the strict liability nature of the statute. Consequently, and in the face of the recent Circuit

Court consensus, Ducrest appears to be an aberration, which is unlikely to be good law within its

own circuit. See contra Clark v. Capital Credit & Collection Servs., 460 F.3d 1162, 1174 (9th

Cir. 2006); Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 235 (4th Cir. 2007). 

to this claim and the Court should enter summary judgment as to this violation.

2. MMCC’s “creditor reliance” defense is not supported by either legal authority or the

operative facts in this case.

In his motion, Mr. Shields seeks partial summary judgment for his claims under 15 U.S.C.

1692e, 1692e(2), 1692e(5), 1692e(8), 1692e(10, and 1692f(1). MMCC spends the bulk of its

argument addressing this defense and arguing that it has fully complied with its validation

obligations under § 1692g of the FDCPA by relying on its referring creditor. MMCC Brief (Docket

59) at 8-12. This argument fails for two reasons. 

a. The legal authority cited by MMCC does not support its position that it may

rely on its originating creditor in defense of a claim under §§ 1692e or 1692f.

Mr. Shields does not seek summary judgment on his claims under § 1692g; they are not at

issue for purposes of this motion. Each of the cases cited by MMCC deal exclusively with the debt

collector’s duties to validate the debt under 15 U.S.C. § 1692g,1 save one.2 Were that not sufficient

reason to reject MMCC’s ill-conceived defense, the Clark case cited by MMCC directly takes up

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 The documents relied upon by MMCC were not generated by or come from St. John. St.

John/Richardson Deposition (Exhibit A) at 21. St. John is not the same entity as St.

John/CRNA. Id at 22-23. Mr. Shields’s insurance company paid the claim to St. John,

completely satisfying any balance he might have owed. Id at 18. Mr. Shields owes no money to

St. John. at 12. St. John never hired MMCC or any other collector to recover this debt. Id at 18.

and rejects the very position proffered by MMCC, namely that reliance on a creditor constitutes a

valid defense under §§ 1692e and 192f. While this Court may ultimately take account of MMCC’s

degree of culpability in computation of damages, Bentley v. Great Lakes Collection Bureau, 6 F.3d

60, 63 (2d Cir.1993) (“the degree of a [debt collector's] culpability may only be considered in

computing damages”), that culpability bears no relevance to the liability of MMCC. The exclusive

defense to claims the FDCPA arises under the bona fide error provisions of § 1682k(c). Sayyed v.

Wolpoff & Abramson, 485 F.3d 226, 23-4-235 (4th Cir. 2007). As such, this entire line of argument

represents little more than a straw-man argument; MMCC has offered a defense to claims that are

simply not at issue in this motion. The refusal of MMCC to directly address the falsity of the claim

constitutes a tacit admission of the validity of the claims.

b. MMCC has failed to support its claim of reliance with admissible evidence in

support of its position.

MMCC claims that it is may rely on St. John’s Hospital’s records to support its own actions

and statements that Mr. Shields owes the debt at issue. Unfortunately for MMCC, St. John has

denied under oath that Mr. Shields owes the money to it, that it ever hired MMCC to collect the

debt, or that it generated the documents upon which MMCC now relies. In short, St. John disclaims

any association with this debt.3

 In response, MMCC has staked out the absurd position that the

hospital – upon whose documents MMCC claims to have relied – is itself mistaken about whether

Mr. Shields owes the debt. Thus, MMCC asks this Court to disregard the hospital’s sworn testimony

and instead rely on MMCC’s unsworn, hearsay recitation of an email placing the debt (MMCC’s

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MMCC’s analysis of this point is limited to its observation that its own records reveal that St.

John and St. John/CRNA have the same EIN number on a claim form (MMCC’s Exhibit H). 

The record in question, however, does support this conclusion and in fact demonstrates the exact

opposite. By identifying the place of services as different from the service provider, this

document indicates the need for differentiation between the two entities. Similarly, the

document expressly identifies services as having been “provided by employee CRNA”. This

Exhibit F), an email which MMCC itself destroyed long ago. Thus MMCC believes that Mr. Shields

is responsible for this debt, irrespective sworn testimony and admissible evidence. MMCC offers

no authority to support this novel approach to summary judgment. More importantly, the record

evidence does not support this position. MMCC has produced no record evidence establishing that

this debt came from St. John or that Mr. Shields owes it.

In order to rebut this testimony from a properly designated representative of St. John, who

has worked in financial recovery for that hospital for 30 years, and who has managed that group

since 2005, MMCC has reached into the depths of its records to produce two documents: 

1) A blanket agreement that was put in place between St. John and MMCC in

September 2000. (MMCC’s Exhibit A); and

2) A nearly illegible, and incomprehensible computer screen of data processed

information which MMCC claims came from St. John. (MMCC’s Exhibit

F). 

The first document makes no reference to the debt in question and provides only general parameters

for the referral of debts to MMCC. While this document might provide the basis for MMCC’s initial

reliance on a referral, this reliance is not reasonable in the face of a bona fide dispute from the

consumer. See Clark, supra. 

More importantly, the computer records offered by MMCC purport to refer a debt from St.

John/CRNA to MMCC for collection. While MMCC has taken issue with the 30(b)(6) testimony

of St. John on a number of point, it has not – and cannot – refute the central fact establishing

MMCC’s liability, namely that St. John and St. John/CRNA are two separate entities.4

 While

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document, was redacted in large part, but the balance appearing on the bottom reveals that this

document was not associated with Mr. Shields’s treatment. Mr. Shields objects to this document

as irrelevant, unauthenticated, hearsay which was not produced in its entirety.

5

Documents recently produced by MMCC belie this claim. The attached checks from MMCC

demonstrate that when it wants to pay St. John, it does so one way and makes those checks

payable in care of Mr. Richardson, and when it wants to pay CRNA it does son in a different

way. C.f. Exhibit B and C. 

MMCC claims that these entities are one and the same,5 presumptively St. John’s own 30(b)(6)

witness, a 30 year employee is in a position to know such information. To the extent that the coded

account notes are worthy of any weight, neither of these documents actually provides support for

the idea that Mr. Shields owes the money to St. John rather than some other group. As such, these

documents do not give rise to a question of fact on this point. MMCC’s analysis represents nothing

more than speculation and unsupported hypotheses, not record evidence.

In sum, MMCC has failed to come forward with sufficient evidence to present a genuine

issue of material fact as to its misrepresentation of the identity of the creditor of this putative bill for

$85, whether Mr. Shields owes the money, and whether it relied on St. John. In the absence of such

evidence, the court must grant summary judgment in favor of Mr. Shields. 

3. The Court need not resolve the bona fide error defense and MMCC has failed to put

forth sufficient facts to support that defense.

While MMCC claims it is entitled to rely on the bona fide error defense, the Court need not

resolve that issue for purposes of this motion. Rather, Rule 56(d) permits the Court to resolve the

claims at issue and reserve decision on any available affirmative defenses. F.R.Civ.P. 56. To the

extent that the Court wishes to take up those defenses, discovery reveals no actual facts to support

the defense. See attached supplemental interrogatory responses, Exhibit D. And, in point of fact,

MMCC continues to maintain throughout – and to this day – that Mr. Shields owes this money. As

such it has ratified any past violations and has failed to recognize or rectify them. As set forth in

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Mr. Shields’s opening brief, MMCC maintains that it made no errors, and that its procedures were

adequate. As such, MMCC has provided no facts supporting its defense, and its own deposition

testimony demonstrates that it does not possess the facts to support this lawyer-made defense. 

Respectfully Submitted,

By: s/ Ian B. Lyngklip

Ian B. Lyngklip (P47173)

LYNGKLIP & ASSOCIATES

CONSUMER LAW CENTER, PLC

Attorney For Gerald Shields

24500 Northwestern Highway, Ste. 206

Southfield, MI 48075

(248) 208-8864

IanLyngklip@Att.Net

Dated: April 1, 2010

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Certificate of Service

I hereby certify that on April 1, 2010, I served this document on the following parties:

Party Manner Served

Charity Olson

Law Offices of Charity A. Olson

22142 West Nine Mile

Southfield, MI 48033

Electronically via the CM/ECF System

Respectfully Submitted,

By: s/ Ian B. Lyngklip

Ian B. Lyngklip (P47173)

LYNGKLIP & ASSOCIATES

CONSUMER LAW CENTER, PLC

Attorney For Gerald Shields

24500 Northwestern Highway, Ste. 206

Southfield, MI 48075

(248) 208-8864

IanLyngklip@Att.Net

Dated: April 1, 2010

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