Court Opinion

ID: 9914521
Source: CourtListenerOpinion
Date Created: 2024-01-02 15:11:47.243679+00
Date Added: 2024-06-11T13:13:20.076557
License: Public Domain

STATE OF VERMONT

SUPERIOR COURT CIVIL DIVISION
Rutland Unit Docket No. 458-8-15 Rdcv

Midland Funding LLC vs. Cota

ENTRY REGARDING MOTION
Count 1, Collection (458-8-15 Rdcv) FILE
Title: Motion for Reconsideration (Motion 2) APR 12 2016
Filer: Midland Funding, LLC VERMONT Supeaic
Attorney: Sheldon M. Katz RUTLaN * COURT

Filed Date: October 19, 2015
No response filed
The motion is DENIED.

This is an action brought by a party that alleges it purchased a credit card debt and
seeks a judgment to collect on the debt. Defendant was served but did not appear in the case.
Plaintiff filed a Motion for Default Judgment.

On October 7, 2015, this court denied Plaintiff's Motion for Default Judgment with the
following explanation: “There is not a sufficient showing that the original account was sold to
Plaintiff in the sale of accounts on January 9, 2012.” Plaintiffs counsel was given additional
time to file supplemental affidavits.

Plaintiff's counsel filed a Motion for Reconsideration. Plaintiff's counsel argues that
there has been a sufficient showing, and references V.R.C.P. Rule 9.1(g). The court has
reconsidered but still concludes that there has been insufficient proof of Plaintiff's claim for the
following reasons.

V.R.C.P. Rule 9.1(g) sets forth what must be included in a complaint in an action ona
credit card debt: “the complaint must include the following. ..” This rule defines what must be
included in the pleading. As the Reporter’s Notes explain, this alleviates defendants from
having to use the discovery process in order to determine what the basis for the claim is?
Compliance with a rule of pleading does not necessarily equate to proof of a claim. For
example, under V.R.C.P. Rule 9(b), in pleading a fraud claim, “the circumstances constituting

* Drior to the effective date of this rule on September 1, 2015, it was not unusual for defendants to file an answer
such as, “I never heard of Midland Funding LLC. How do | know if | owe money to this plaintiff? | once had a credit
card with Walmart [for example], but | can’t tell if this case is related to that or not, because | had other credit
cards, too, so it could be any of them.”

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fraud...shall be stated with particularity.” Even when stated with particularity, the claim is still
just a claim, and must be proved with facts at trial or on a motion for default or summary
judgment.

V.R.C.P. Rule 55 sets forth the requirements for obtaining judgment on a motion for
default. Under Rule 55(b)(1), “No judgment by default shall be entered against a party who has
not appeared in the action until the filing of an affidavit made on personal knowledge and
setting forth facts as to liability and damages.” Thus an affidavit is required that includes facts
establishing liability and the amount due, and it must be made by a person with personal
knowledge. V.R.C.P. 55(7) adds additional requirements for actions based on a credit card
debt: “the motion for default shall include a copy of...” Several required documents are listed.
However, the documents that must be attached are required in addition to the basic affidavit
requirement. The documents do not take the place of an affidavit by a person with personal
knowledge of facts establishing liability and damages. They simply provide supplementary
documentation. An affidavit is needed to establish the relation between the documents and
the claim and the accuracy of the documents.

The Plaintiff in this case is Midland Funding LLC. The affidavit in support of the Motion
for Default Judgment is from a Jenna Taylor who identifies herself as an employee of an entity
entitled Midland Credit Management, Inc., which she identifies as servicer of the account on
behalf of Midland Funding LLC. She also states that she is authorized to make the affidavit on
behalf of Midland Funding LLC.

Her statement of fact that Plaintiff owns the account is as follows: “Plaintiff is the
current owner of, and/or successor to, the obligation sued upon, and was assigned all the
rights, title and interest to defendant’s CHASE BANK USA, N.A. account XXXXXXXXXXXX8181
(hereinafter “the account”). | have access to and have reviewed the records pertaining to the
account...” She states that the account was sold by Chase to Plaintiff on January 9, 2012, and
references an attached Bill of Sale. Other documents are also attached to the motion (as
required by Rule 55(7)), but are not referenced in the affidavit.

The problem is that her statement is a general one, stating the conclusion that Plaintiff
acquired the account on a certain date, but neither the attached Bill of Sale nor any of the other
documents actually support the fact of assignment of the account that is the subject of this
case. The issue is whether the court accepts her generalized statement as sufficient when the
documents attached (many of which are not even referenced in the affidavit) do not support
the statement. .

The Bill of Sale describes itself as being an exhibit to a contract of sale of accounts, but
the contract is missing. There is nothing in the Bill of Sale that identifies whether or not the
account at issue was included in the sale.

There is a “Closing Statement” that provides no information at all relative to the account
at issue being part of the sale of accounts that took place on January 9, 2012.

There is an “Affidavit of Sale of Account by Original Creditor,” executed by an officer of
JPMorgan Chase Bank, N.A., stating that on January 4, 2012, Chase sold a pool of accounts to

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Midland Funding LLC. It further states that electronic records were transferred to the Buyer.
There is nothing in the affidavit that indicates that the account at issue was included in that
sale. The affidavit only shows that some accounts were sold; it does not show that the
Defendant’s account was included in the sale, nor does it make any statement describing the
authenticity or accuracy or content of the electronic records that were sold. Next in order of
documents, but not referred to in the affidavit, are two credit card statements without
explanation. One is dated May 5, 2011 and shows a payment made on May 5, 2011 anda
balance due of $7,782.15. The other is dated December 19, 2011 and shows a balance due of
$9,412.70.

Finally, there is a piece of paper that purports to be “Data printed by Midland Credit
Management, Inc. from electronic records provided by CHASE BANK USA, N. A. pursuant to the
Bill of Sale / Assignment of Accounts dated 1/9/2012 in connection with the sale of accounts
from CHASE BANK USA, N. A. to Midland Funding LLC.” This piece of paper shows the
Defendant's personal information and some account information. It includes data labelled
“Charge Off Date,” Last Payment Date,” “COBal.” The “COBal” (presumably “charge off
balance”) is shown as $9,412.70, which is the same amount showing as due on the December
19, 2011 statement. There is nothing in any of the affidavits authenticating this document or
even describing or referring to it. The court is apparently expected to infer the accuracy of the
date of the last payment on the account, and to infer that this was the date of default.

The date of default is a key fact for the court to use in determining whether the claim
was filed within the statute of limitations period such that a plaintiff is entitled to relief. See
DaimlerChrysler Services v. Quimette, 2003 VT 47, 4] 6. As noted, this fact is not supported by
affidavit.

Essentially, there is no statement by affidavit from any person with knowledge who
verifies under oath that there is documentation establishing that the particular account that is
the subject of this case was included in the sale of accounts that took place from Chase to
Midland Funding LLC on January 9, 2012. It is established that such a sale took place on that
date, but not that this account was a part of that sale. It is also not established by affidavit on
what date there was a default on the obligation, whether the default was within the statute of
limitations period, the amount due at the time of default, and the amount of interest due from
Defendant after default. There is a collection of documents from which the court is asked to
make a number of inferences, but there is no actual establishment of the pertinent facts.

The court understands that the records are electronic, and is prepared to accept
statements about facts that are in electronic records made in an affidavit by a person who can
reliably establish the accuracy of the content of such records. The court has heard witness
testimony from a person who under similar circumstances was able to identify what was in
electronic records of a similar sale of accounts transaction, and identify that a particular
account was included, and explain the content of the electronic records. However, the
affidavits in this case do not contain such facts. The most that is shown by the affidavits in this
case is a statement from a person who says, ‘I work for a company that is an agent for the
Plaintiff which bought this account,’ and a statement from another person who states, ‘| work
for the seller and we sold some accounts to Midland Funding LLC on January 9, 2012.” Without
either affiant being able to clearly identify that the particular account was specifically included

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in the sale of accounts on that date, there is not sufficient specificity of the chain of assignment
to meet the Plaintiff’s burden under Rule 55(b)}(1) to establish the right to collect on this
particular account. See Unifund CCR Partners v. Daniel Zimmer, 2016 VT 33.

Similarly, while there are account statements, no affidavit identifies them as statements
of the account Plaintiff claims to have bought. The court is left to infer that fact from the
combination of the name on the account statement and printout and the fact that the last four
digits of the account number on the statement are the same last four digits of the account
number on the unexplained printout as well as the fact that they are attached to the motion.

It is important for plaintiffs to be able to prove their entitlement to judgment, even
when a defendant does not appear, in order for the public to have confidence in the integrity of
the justice system. There is too big a risk that the recordkeeping on sale of accounts is not
inherently reliable. See id. at ¥ 5 and 4] 16. This court has had a defendant answer a credit card
debt complaint by stating that the exact same plaintiff had already obtained a judgment on the
exact same credit card account. Whether that was true or not is unknown, as the plaintiff
thereafter dismissed the complaint. Nonetheless, it is the role of the court to make sure that
judgments are not entered against parties, even those who do not appear, without sufficient
proof of the facts supporting both liability and damages. This principle is not unique to credit
card cases; rather, it is the fundamental principal embodied in Rule 55 relating to establishing
liability for a judgment on a motion for default.

In the Motion for Reconsideration, Plaintiff's counsel states, “Plaintiff is at a loss to
understand what is missing from the complaint and exhibits that will provide a more sufficient
showing that Plaintiff acquired Defendant’s account. . .” and seems to raise the question ‘how
else could one prove this kind of claim?’ |am also aware of the position taken by some judges
that for courts to require more than what was offered in this case would make it very difficult if
not next to impossible for credit card debt purchasers to prove their claims in a court of law. However,
it is not difficult to envision the content of an affidavit of a person who has checked all the
records and documents and can identify and describe them, vouch for their accuracy, and
describe what they show. Such an affidavit can set forth the specifics of what was checked and
what the records showed and attach and reference the relevant documents to prove the critical
facts such as those missing in this case: that the account at issue was in the group of accounts
that was sold to the plaintiff in the sale of accounts transaction identified, the date of default,
and the amount due at date of default plus interest thereafter.

Such an affidavit, with reference to attached documents, would sufficiently address
issues of the plaintiff’s entitlement to collect on the account, and is not different than the type
of affidavit required in other kinds of cases in which a plaintiff is suing on a claim originally held
by a third party that has been assigned to the plaintiff. The problem in this case is simply that
the affidavit is not sufficiently specific, and the attachments are neither explained nor
authenticated. A better affidavit would solve these problems. As noted above, the
undersigned has had a witness in court testify to such information in a manner that
satisfactorily supported the claim. If a witness can do it in oral testimony, the same information
can be incorporated into one or more affidavits.
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In addition to proof of liability, there is the issue of proving the amount due. The

affidavit of Jenna Taylor states that “MCM’s records show” that the defendant owed $9412.70
as of May 20, 2015. This is the amount that the credit card statement shows was due on
December 19, 2011 and the amount shown on the printout as “COBal.”. It appears that Plaintiff
is not seeking any additional interest after December 19, 2011. if the December 19, 2011
statement were supported by affidavit, the amount claimed would be sufficiently proved. *

Again, the court is not seeking to impose an impossible task on plaintiffs who have
purchased credit card debt, but simply seeking sufficient information to support a default
judgment in a fair amount as required by Rule 55.

It is very possible that additional evidence would prove the claim. If so, Plaintiff is
welcome to seek an opportunity for a hearing to present testimony. Even if the court were to
grant judgment based on testimony in this case, that does not mean that the documentation
offered in support of the Motion for Default was satisfactory. The basic principle is that
embodied in Rule 55, the civil rule that sets forth the requirements for proving a claim when a
defendant defaults: despite the default, the burden is on the plaintiff to prove its claim with
“an affidavit made on personal knowledge and setting forth facts as to liability and damages.”
All that is needed is an affidavit (a) that is made by a person who has sufficient personal
knowledge of all the relevant facts, and (b) that sets forth the facts with sufficient specificity to
support the particular claim, both as to liability and amount claimed. The information is no
doubt available. it just needs to be verified by the right people with knowledge of the specific
facts in order for the court to be able to rely on it as reliable and accurate for purposes of
default judgment.

Dated at Rutland this 12" day of April, 2016.

“View Yrvts Secathist
Hon. Mary Miles Teachout
Presiding Judge

Notifications:
Sheldon M. Katz (ERN 4784), Attorney for Plaintiff Midland Funding, LLC

? It is noted that in Jenna Taylor’s affidavit, she purports to establish the reliability of “the records pertaining to the
account” and states as follows: “! am familiar with and trained on the manner and method by which MCM
[Midland Credit Management, Inc.] creates and maintains its business records pertaining to this account. The
records are kept in the regular course of business. {t was in the regular course of business for a person with
knowledge of the act or event recorded to make the record or data compilation...the record or compilation is
made at or near the time of the act or event.” However, her statement relates to records of Midland Credit
Management, Inc. The information related to date of default, amount due at default, etc. would have had to have
been the records of Chase, who owned the account when the events occurred. There is no affiant to support the
accuracy of the records made by Chase prior to transfer to Midland Funding LLC, which was prior to the apparent
subsequent transmittal to Midland Credit Management, Inc.

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