Opinion ID: 6336146
Heading Depth: 5
Heading Rank: 1

Heading: Incorporation under the laws of [Michigan].

Text: (2) Consent, to the extent authorized by the consent and subject to the limitations provided in section 745. (3) The carrying on of a continuous and systematic part of its general business within [Michigan]. MCL § 600.711. The state court noted in the underlying proceedings that “[i]t is undisputed that Ingalls is not incorporated in the state of Michigan.”3 R. 36-6, PID 125. Velo/Renner have not challenged this fact in these proceedings. Thus, the only possible avenues for jurisdiction when Velo/Renner filed the Garnishment Request were either that 1) Ingalls would consent—or had already consented—to Michigan’s jurisdiction; or that 2) Ingalls carried on a “continuous and systematic part of its general business within” Michigan under MCL § 600.711. A foreign corporation may consent to personal jurisdiction in Michigan by “agree[ing] in writing that an action on a controversy may be brought in [Michigan],” provided certain conditions are met. Id. § 600.745(2)(a)–(d). Velo/Renner do not claim that Ingalls agreed in writing to litigate in Michigan. Or, a corporation may waive jurisdiction by failing to raise a jurisdictional objection in its first responsive pleading or motion. MCR 2.116(D)(1). Although Ingalls served the completed garnishee disclosures and interrogatories on St. Mary’s in the garnishment proceedings, the Michigan Court Rules explicitly state that such filings do not waive a garnishee’s right to object to jurisdiction. MCR 3.101(L)(4) (“The filing of a disclosure, the filing of answers to 3 It is also undisputed that MCL § 600.711 is the applicable law governing personal jurisdiction over Ingalls and that Ingalls is a “corporation” within the meaning of this section. -10- No. 21-1366, Thompson v. Renner, et al interrogatories, or the personal appearance by or on behalf of the garnishee at a deposition does not waive the garnishee’s right to question the court’s jurisdiction, the validity of the proceeding, or the plaintiff’s right to judgment.”). As to continuous-and-systematic business within the state, Michigan courts look for indicia that a corporation’s “affiliations with the State . . . render them essentially at home in the forum State,” such as when “the particular corporate entity has a physical location, officers, employees, or bank accounts in Michigan.” Glenn v. TPI Petroleum, Inc., 854 N.W.2d 509, 515 (Mich. Ct. App. 2014) (internal citations omitted) (collecting cases). Velo/Renner do not challenge the district court’s factual finding that, at the time of filing the Garnishment Request, they had “no reason to believe that any further investigation or discovery might support” that Ingalls had either consented to Michigan’s jurisdiction or that it had a continuous-and-systematic business relationship with the state. R. 51, PID 234. Instead, Velo/Renner argue that the FDCPA does not require debt collectors to know with absolute certainty at the time of filing that there are jurisdictional grounds for a garnishment request. But the district court never required absolute certainty. Rather, it required a reasonable belief that jurisdiction was supported, or some actions calculated to make that determination. Velo/Renner cite three cases in support of their position that the district court required too much: Van Hoven v. Buckles & Buckles, P.L.C., 947 F.3d 889 (6th Cir. 2020); Harvey v. Great Seneca Fin. Corp., 453 F.3d 324 (6th Cir. 2006); and Lee v. Javitch, Block & Rathbone LLP, 601 F.3d 654, 658 (6th Cir. 2010). Van Hoven involved a debt-collection company that, when filing garnishment requests with a Michigan-state court clerk, made two allegedly “false, deceptive, or misleading representations” under Michigan law: “(1) they sought the costs of each garnishment request under Michigan law, -11- No. 21-1366, Thompson v. Renner, et al and (2) they sought the costs of prior failed garnishments under Michigan law.” 947 F.3d at 893. In concluding that the second statement was an actionable misrepresentation but the first was not, we clarified that there are two requirements for a claimed violation or false representation of state law to constitute a violation of the FDCPA: first, the “claim must turn on a material misstatement,” and second, the representation must be false “at the time the creditor makes it.” Id. at 894. After clarifying that the Act’s definition of “‘false’ material statements . . . does not [] extend[] to every representation about the meaning of state law later disproved,” we gave several examples of what may and may not constitute false representations. “[M]isquoting a case, relying on a statute no longer in existence, [] invoking an overruled decision,” “claim[ing] that a one-year statute of limitations runs for two years,” and “say[ing] today that the Act does not apply to attorneys collecting debts” would all be “false when made, and it does not matter whether the lawyer knows they are false” because “[i]gnorance of the law is not a defense.” Id. at 895. In contrast, it would not be a false representation for a lawyer to “acknowledge[, whether in a debt collection action or a legal brief,] that state law was unclear about whether the creditor could obtain a certain cost” and then to seek the cost after “explain[ing] that its best reading of the law allowed the cost.” Id. Analogizing to Rule 11 of the Federal Rule of Civil Procedure’s authorization of sanctions when attorneys advance “‘legal contentions’ that are not ‘warranted by existing law,’” we ultimately held that a material misrepresentation of state law is only actionable under the FDCPA when it is “objectively baseless” at the time it was made, making the misrepresentation “legally indefensible.” Id. at 895–96 (quoting Fed. R. Civ. P. 11(b)). Applying this analysis to the Van Hoven facts, we held that the debt collectors had not made “objectively baseless” requests for the costs of each new garnishment because the requests were “reasonable [] under,” and “reflected the better reading of,” Michigan law at the time. Id. at 897. However, the requests for the costs of -12- No. 21-1366, Thompson v. Renner, et al prior garnishments were false representations because “[a]t the time of this lawsuit, the [Michigan Court] Rules made clear that creditors were not entitled to recover” those costs. Id. at 899 (internal citation omitted). Harvey involved a debtor who alleged that a debt collector violated the FDCPA by filing “a lawsuit to collect a purported debt without the means of proving the existence of the debt, the amount of the debt, or that [the debt collector] owned the debt.” 453 F.3d at 326. In concluding that Harvey’s complaint had failed to sufficiently allege that the debt collector’s filing was a deceptive practice under the FDCPA, we reasoned that the debt collectors did not implicitly represent by filing the Complaint for Money that they had in hand the means to prove [their] claims. Rule 11 of the Federal Rules of Civil Procedure does not require attorneys to ensure that their client can prove its case before filing. Instead, the Rule mandates only that “the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.” Fed. R. Civ. P. 11(B)(3). [The plaintiff] did not allege in her complaint that Seneca and Javitch failed to undertake a reasonable investigation into whether or not Harvey’s debt existed; rather, she essentially focused on the contention that [the debt collectors] did not presently possess the means of proving that debt. Id. at 333 (emphasis added). Finally, Javitch involved a debtor who alleged that an attorney violated the FDCPA by filing an affidavit for non-wage garnishment of the debtor’s bank account when, after garnishment, “the court later returned the money after [the debtor] proved that the account contained only” funds exempt from garnishment. 601 F.3d at 655. We concluded that the attorney had not violated the FDCPA because the signed affidavit stated only that the attorney had a “reasonable basis to believe” that the bank account contained garnishable wages, and that the attorney’s belief was indeed reasonable under the relevant standard imposed by Ohio law. Id. at 658. The parties disagree on the significance of these cases, as they did before the district court. The district court concluded that Van Hoven governs this case and that Velo/Renner’s -13- No. 21-1366, Thompson v. Renner, et al representation of jurisdiction was “objectively baseless”—and therefore violated the FDCPA— because Velo/Renner “filed the garnishment without ever being able to show that the Court had jurisdiction over the Illinois corporation.” R. 51, PID 233–34 (noting that Velo/Renner had, at the time of the court’s ruling, still failed to proffer a “reason to believe that any further investigation or discovery might support” jurisdiction for their Garnishment Request). On appeal, Velo/Renner respond only partially to the district court’s analysis. In Velo/Renner’s view, Van Hoven/Harvey/Javitch support their position because the issue of jurisdiction—specifically, the issue of consent to jurisdiction—was an “open question” at the time of filing, and their later-rejected assertion of jurisdiction was, at most, a reasonable and debatable mistake of law. Specifically, Velo/Renner argue that the question whether Ingalls might have had ongoing business with Michigan or might consent to jurisdiction in the future was necessarily [a] fact-specific [inquiry that would] require discovery, which is ordinarily not available to a party until after a complaint, or, in this instance, a garnishment, has been filed. . . . At the end of the day, judgment creditors and their counsel should not be required to meet additional filing requirements not found in Michigan law to avoid running afoul of the FDCPA. Appellants’ Br. at 20–21 (internal citations omitted). Thompson responds by reiterating the district court’s conclusion that Velo/Renner’s representation as to jurisdiction violated the FDCPA under Van Hoven because it “was baseless when it was made and [Velo/Renner] had no reason to believe that jurisdiction would later arise.” Appellee’s Br. at 14–15. Thompson similarly argues that Harvey and Javitch are distinguishable. Unlike in Harvey—where the court found no FDCPA violation because the plaintiff did not “allege in her complaint that [the debt collectors] failed to undertake a reasonable investigation into whether or not [the debtor]’s debt existed”—Velo/Renner “filed the garnishment without ever being able to show that the court had jurisdiction and without any basis to believe that any further -14- No. 21-1366, Thompson v. Renner, et al investigation would support jurisdiction in the Michigan court.”4 Id. at 15; Harvey, 453 F.3d at 333. And unlike in Javitch—where we found that the attorney had a “reasonable basis” to believe that there were garnishable funds in the debtor’s account—Velo/Renner “had no reasonable basis to believe that the Michigan court had jurisdiction.” Appellee’s Br. at 16 (citing 601 F.3d at 657). Finally, Thompson argues that Velo/Renner’s actions are analogous to those in Currier, Stratton, and a line of cases holding that debt collectors violate the FDCPA when they file a timebarred lawsuit. Id. at 9–11. As previously discussed, Currier held that filing a judgment lien against a debtor’s home that was invalid under Kentucky law can “fairly be characterized as a threat to take an action that cannot legally be taken.” 762 F.3d at 535–36. Stratton held that a debt collector violated the FDCPA by misrepresenting, in a complaint filed to recover the debt, the amount owed as interest under Kentucky law. 770 F.3d at 451 (noting that the misstatement was a “threat . . . to take an action that cannot legally be taken” because it “falsely represent[ed] both the ‘character’ and ‘amount’ of [the] debt” such that “[a]n unsophisticated consumer would most certainly have been misled”). As to the time-barred cases, the Sixth Circuit has not explicitly held that suing on a time-barred debt violates the FDCPA. However, the Van Hoven court noted in its discussion that doing so would be “objectively baseless, and is unsurprisingly subject to liability in many circuits.” 947 F.3d at 896; see also Harvey, 453 F.3d at 332–33 (approvingly quoting a district court’s explanation that time-barred-debt collection is impermissible under the FDCPA because it “play[s] upon and benefit[s] from the probability of creating a deception. Honest disclosure of the legal unenforceability of the collection action due to the time lapse since the debt was incurred would [] foil[] . . . efforts to collect on the debt. So instead, the [debt 4 Conversely, we suggested in Harvey that there could have been an FDCPA violation if the debt collectors had “filed the complaint without the means of ever being able to obtain sufficient proof of the debt-collection action.” See 453 F.3d at 328. -15- No. 21-1366, Thompson v. Renner, et al collector] implicitly misrepresent[s] the status of the debt, and thereby misle[ads a debtor] as to the viability of legal action to collect.”) (internal citation omitted). Thompson argues that Velo/Renner’s Garnishment Request is analogous to Currier, Stratton, and these time-barred-lawsuit cases because it relied on a deception that the Request was valid when filed, and “in hopes that the garnishee and the consumer [Thompson] would unwittingly acquiesce and honor the garnishment without objection.” Appellee’s Br. at 11. Thompson also correctly points out that this unwitting acquiescence was precisely Velo/Renner’s position in state court, when they failed to argue that they plausibly alleged jurisdiction at the time of filing and instead argued that “Ingalls’ [responses to the Garnishment Request] could constitute consent” to jurisdiction under Michigan law. R. 36-6, PID 124.