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McMinn v. Midland Credit Management, Inc.

United States District Court, S.D. California

March 2, 2015

LEITHA McMINN, Plaintiff,
MIDLAND CREDIT MANAGEMENT, INC., a Kansas corporation, Defendant.


DANA M. SABRAW, District Judge.

This case comes before the Court on the parties' cross-motions for summary judgment. Both parties seek judgment in their favor on Plaintiff's claim for violation of the Fair Debt Collection Practices Act ("FDCPA"). The parties have filed opposition and reply briefs to each respective motion. For the reasons discussed below, the Court denies Plaintiff's motion and grants Defendant's motion.



At some time prior to 2011, Plaintiff Leitha McMinn obtained a credit card from Chase. (Compl. ¶ 13.) She incurred charges on the card, and later defaulted on the debt. Subsequently, Midland Funding, LLC ("Midland Funding") purchased a debt portfolio from Chase, which included McMinn's unpaid credit card debt.

Prior to the purchase of Plaintiff's debt, Midland Funding entered into a Servicing Agreement with Defendant Midland Credit Management, Inc. Defendant owns 100% of the shares of Midland Portfolio Services, Inc., which owns 100% of Midland Funding. (Decl. of Stelios Harris in Resp. to Pl.'s Supp. Evid. Objections ¶ 4.)[1] Pursuant to the Servicing Agreement, Defendant was responsible for servicing and collecting debt owned by Midland Funding.

Defendant serviced Plaintiff's debt pursuant to the Servicing Agreement. (Notice of Lodgment in Supp. of Def.'s Mot., Ex. C.) Under the Agreement, Defendant is granted broad powers to act on behalf of Midland Funding including "full power and authority... to do or cause to be done any and all things in connection with" the servicing and collection of debt. ( Id., Art. II, § 2.1.) Defendant is obligated to "undertake commercially reasonable efforts to collect" such debt through "legal actions" and "other customary collection activities and practices." ( Id. § 2.3.) Further, Defendant is "deemed to have been assigned rights in and to the Accounts and the debt underlying the Accounts by [Midland Funding] to the extent necessary to enable [Defendant] to pursue collection efforts..., and is authorized to commence, in the name of [Midland Funding] or [Defendant], legal proceedings to collect" such debt. ( Id. )

Pursuant to this contractual relationship, on February 21, 2013, Midland Funding, through Defendant's in-house attorneys, filed a complaint against Plaintiff for account stated in Sonoma County Superior Court. (Decl. of Jay R. Dove in Supp. of Pl.'s Mot. for Summ. J., Ex. D.) While that case was pending, Defendant, through one of its non-attorney group managers, sent Plaintiff a letter on March 21, 2013, and attempted "to resolve the matter voluntarily." (Decl. of Leitha McMinn in Supp. of Pl.'s Mot. for Summ. J. ("McMinn Decl."), Ex. A.) Absent resolution, Defendant informed Plaintiff it intended "to seek a judgment" against her through the foregoing lawsuit. ( Id. ) The lawsuit proceeded until the day of trial, July 25, 2014, at which time it was dismissed without prejudice. (Mem. of P. & A. in Supp. of Pl.'s Mot. at 3 n.3.) After the state court complaint was filed and before it was dismissed, Plaintiff filed the present action against Defendant in this Court. In her Complaint, Plaintiff alleges one claim for violation of the FDCPA. This claim is based on the assertion that Defendant engaged in the unlawful practice of law by filing the state court complaint and mailing the March 21, 2013 letter to Plaintiff.



The parties raise two primary issues in their competing motions for summary judgment. First, Defendant argues Plaintiff lacks standing to pursue her claim. Second, the parties dispute whether Defendant violated the FDCPA.

A. Summary Judgment

Summary judgment is appropriate if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party has the initial burden of demonstrating that summary judgment is proper. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The moving party must identify the pleadings, depositions, affidavits, or other evidence that it "believes demonstrates the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the parties' differing versions of the truth." S.E.C. v. Seaboard Corp., 677 F.2d 1301, 1306 (9th Cir. 1982).

The burden then shifts to the opposing party to show that summary judgment is not appropriate. Celotex, 477 U.S. at 324. The opposing party's evidence is to be believed, and all justifiable inferences are to be drawn in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, to avoid summary judgment, the opposing party cannot rest solely on conclusory allegations. Berg v. Kincheloe, 794 F.2d 457, 459 (9th Cir. 1986). Instead, it must designate specific facts showing there is a genuine issue for trial. Id . See also Butler v. San Diego District Attorney's Office, 370 F.3d 956, 958 (9th Cir. 2004) (stating if defendant produces enough evidence to require plaintiff to go beyond pleadings, plaintiff must counter by producing ...

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