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You Must Read This NY Judge’s Order… It’ll Leave You Laughing! – Midland Funding LLC v. Tagliafferro

You Must Read This NY Judge’s Order… It’ll Leave You Laughing! – Midland Funding LLC v. Tagliafferro


Decided on September 27, 2011

Civil Court of the City of New York,
Richmond County

.

 Midland Funding LLC, dba IN NEW YORK, AS MIDLAND FUNDING OF DELAWARE LLC Claimant,

against

Jessica Tagliafferro, Defendant.

15781/11

Philip S. Straniere, J.

“Who are you? Who, who, who, who?”[FN1]

“But it ain’t me , babe. No, no, no, it ain’t me babe. It ain’t me you’re lookin’ for babe.”[FN2]

“I am he as you are me and we are all together.”[FN3]

 

Plaintiff, Midland Funding LLC DBA in New York as Midland Funding of Delaware LLC, commenced this action against the defendant, Jessica Tagliaferro, alleging that the defendant defaulted on the terms of a consumer credit agreement. As set forth below, it is obvious that the plaintiff has taken these classic rock lyrics to heart and created a situation which may be a deceptive business practice.

The court has been informed by the clerk of the court that the plaintiff has filed the summons and complaint in this matter containing the following information:

Midland Funding LLC DBA in New York as Midland Funding of Delaware LLC

Attorneys for the Plaintiff

100 Church Street, 8th Floor

New York, NY 10007

(866)626-5053

No attorney’s name is specifically designated on the summons and complaint. CPLR §321(a) prohibits self-representation by a corporation and requires a corporation to appear by an [*2]attorney. This requirement extends to limited liability companies as they are legal entities distinct from their members [Michael Reilly Design Inc. v. Houraney 40 AD3d 592 (2007)]. No where in the pleadings is the name of an attorney disclosed.

In addition, CPLR §2101(d) provides:

Indorsement by attorney. Each paper served or filed shall be indorsed with the name, address and telephone number of the attorney for the party serving or filing the paper, or if the party does not appear by attorney, with the name, address and telephone number of the party.

The pleadings lack the name of an attorney and are defective.

The Rules of the Chief Administrator of the Courts have expanded this statute to require that all papers and pleadings be signed. 22 NYCRR §130-1.1-1 provides:

Signing of Papers.

(a) Signature. Every pleading, written motion, and other paper, served on another party or filed or submitted to the court shall be signed by an attorney,…with the name of the attorney…clearly printed or typed directly below the signature. Absent good cause shown, the court shall strike any unsigned paper if the omission of the signature is not corrected promptly after being called to the attention of the attorney….

The signing of the pleading becomes a certification by counsel as to the accuracy of the information contained in the document [22 NYCRR §130-1.1-a(b)]. Plaintiff’s summons and complaint lacks a signature and therefore is not a certification as required by the rule. The fact that the complaint has been verified, does not correct this defect.

The complaint is verified by a “Scott Morris, Esq.” He states in the verification that he is the attorney for the plaintiff but does not set forth beneath his signature any address or other information set forth in the above rule by which the court, or a defendant, might communicate with him. The attorney registration records lists only one attorney with that name in New York, but he is practicing law at a different address in New York City and is doing so as a member of law firm. Other consumer credit debt collector’s list their “in-house” legal counsel or department as the attorney of record, but always have the name of an attorney designated on the pleadings. This procedure is not being utilized by the plaintiff. Plaintiff is not even seeking to avail itself of the device literary utilized by Agatha Christie in “And Then There Were None” of using the pseudonym “U.N. Owen” for an “unknown” person, in that story, the host of the weekend party.

The summons and complaint lists the plaintiff’s residence as 8875 Aero Drive, Suite 200, San Diego, California and the complaint alleges that the plaintiff is a “foreign entity.” These facts would permit the complaint to be verified by an attorney as was done here [CPLR§3020(d)(3)]. Interestingly a search of the Department of State, Division of Corporations records lists seven entities registered in New York containing the name “Midland Funding” including both Midland Funding LLC and Midland Funding of Delaware LLC, the two entities [*3]mentioned in this summons and complaint. The Division of Corporations records shows both of these entities as an “Active,” “Foreign Limited Liability Company” formed in “Delaware.” Both names were filed with the Department of State on the same date, January 22, 2008. The website maintained by the California Secretary of State discloses only “Midland Funding LLC” as an active entity. Its address is the one recited in the pleadings for the plaintiff.

Examination with of the pleadings reveals another more substantial problem beyond the failure to disclose the name of counsel. The plaintiff is designated as “Midland Funding LLC DBA in New York as Midland Funding of Delaware LLC.” DBA is generally thought to be an abbreviation for “doing business as,” a term which means that an individual or entity-such as a corporation or limited liability company-is conducting or transacting business in New York under an “assumed name.” This should not be confused with the jurisdictional concept of “doing business” in a particular state so as to be present for the commencement of litigation.

New York law [General Business Law Article 9-b] requires that a person or entity doing business under an assumed name comply with the requirements of GBL §130. The statute requires a limited liability company to file with the secretary of state a certificate setting forth the name under which business is to be carried on, conducted or transacted as well as its legal name [GBL§ 130(1) (b)]. The statute also provides; “the real name’ of a limited liability company shall mean its name as set forth in the articles of organization and any generally accepted, understood or recognizable abbreviation of such names” [GBL §130(1-a)(b)]. This being the case, because both Midland Funding LLC and Midland Funding of Delaware LLC are registered as foreign limited liability companies with the Department of State, both are “real names” under the statute. Therefore, one entity cannot be a “DBA” for the other entity. The idea is that there is only one legal person [GBL§130(1-a)(a)] whether the name being used is either the name of the legally registered entity or individual, or the one under which business is being conducted. There is no evidence that the proper certificate of doing business under an assumed name has been filed by the plaintiff.

For instance, should Clark Kent abandon his altruism and decide to supplement his meager reporter’s income by marketing his alter ego, he would go from “Clark Kent aka Superman” to “Clark Kent dba Superman.” Other proper “doing business as” designations would be “Scrooge McDuck Enterprises, Inc. dba The Duckburg National Bank.” Or even “Rick Blaine dba Rick’s Café Americain.” This issue could get complicated as in the case of the performer “Prince” when he decided to be called “The Artist Formerly Known As Prince.” Was this a change of name or was he now really “Prince dba The Artist Formerly Known As Prince?” (This apparently is an issue for a higher court to resolve). Also an interesting situation was created by Halley Mills playing the twins Susan Evers and Sharon McKendrick in “The Parent Trap” and Patty Duke portraying both Patty Lane and her identical cousin Cathy Lane in “The Patty Duke Show.” Can a person “do business as” more than one other person?

In this litigation, a designation such as either Midland Funding LLC dba “Midland Funding of New York” or Midland Funding of Delaware LLC dba “Midland Funding of New [*4]York” would be a proper. The current attempt to have one registered LLC be designated as another LLC is not permitted. Each entity named in the caption is capable of doing business as or under an assumed name, but cannot do business under each others name.

Perhaps the situation has been complicated because plaintiff alleges that “Plaintiff is a debt collector licensed by the NYC Department of Consumer Affairs, License #1312658.” A search of the Department of Consumer Affairs records shows that license number belongs to Midland Funding of Delaware LLC and not Midland Funding LLC. Which means only Midland Funding of Delaware may attempt to collect this debt in New York City.

In fact, this practice may be a “deceptive” act or practice under General Business Law §349 in that it is impossible for the defendant to know which entity is the correct plaintiff. The complaint alleges that this consumer credit debt was taken by assignment from the original creditor. It is impossible for either the defendant or the court to determine which of the two Midland LLC’s named in the complaint is the proper one. The complaint does not plead which entity actually purchased the defendant’s alleged debt nor which entity is trying to collect it. Plaintiff may be subject to damages and punitive damages under that statute if a deceptive practice is established. The court at this juncture will not conclude any bad faith on the part of the plaintiff and will give the plaintiff the opportunity to correct the pleadings.

In an attempt to resolve these issues and determine the name of counsel, the court recorded the entire summons and complaint and then played it backwards. All to no avail.

The commencement of litigation to collect consumer debt is neither “brain surgery” nor “rocket science.” But it does require some attention to the rules of civil procedure, which based on this court’s experience, apparently is not part of the equation for a significant number of members of the debt collection fraternity. When you buy furniture from IKEA to be assembled, it is generally a good idea to read and follow directions lest the furniture unexpectedly collapse under its own weight. You should not mistake an Allen wrench for a walking stick provided by Obamacare for Thumbelina, it, like the CPLR, is there to help you successfully complete the project.

Based on the foregoing, the clerk is directed to stay placing this matter on a trial or motion calendar or entering a default judgment until plaintiff files an amended summons and complaint designating counsel with the proper contact information and correcting the plaintiff’s “doing business as” status.

The foregoing constitutes the decision and order of the court.

Dated: September 27, 2011

Staten Island, NYHON. PHILIP S. STRANIERE

Judge, Civil Court

Footnotes

Footnote 1: “Who Are You?” by Peter Townshend

Footnote 2: “It Ain’t Me, Babe” by Bob Dylan

Footnote 3: “I Am the Walrus” by John Lennon & Paul McCartney

FYI They Recently Settled:

“Robo-Affidavit” Class Action Settles for $5.2 Million | MIDLAND FUNDING v. BRENT

[ipaper docId=67003214 access_key=key-26her2o4sh7y4birtr6z height=600 width=600 /]

image credit: deadline

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“Robo-Affidavit” Class Action Settles for $5.2 Million | MIDLAND FUNDING v. BRENT

“Robo-Affidavit” Class Action Settles for $5.2 Million | MIDLAND FUNDING v. BRENT


From the Memorandum Order from Ohio District Court…

MIDLAND v. BRENT [pdf]

According to that relationship, JBR requested an affidavit to support the Brent debt using the Midland “You’ve Got Claims” computer system, which is a system that allows attorneys like JBR to log on and request certain supporting documentation be generated.

Whether through the “You’ve Got Claims” system or otherwise, Midland receives and fulfills about 200 to 400 requests for affidavits per day. Ivan Jimenez, one of Midland’s ten “specialists” in the department that supports law firms, personally signs between 200 and 400 of such affidavits per day. (Ivan Jimenez Dep., Doc. 35, Ex. E at 15). He finds the stack on a printer, signs them, and sends them by internal mail to the notary. (Id. at 16-17 (“Q: Where do your affidavits come from? A: As far as what I deal with, they just come from the printer as far as where we get them”)). Mr. Jimenez has the ability to check the accuracy of the information on the affidavit via the computer system and he does, but the percentage of those that are checked for accuracy is “very few and far between.” (Id. at 24).

Then, after receipt of the signed affidavit from Midland, JBR attached it to the complaint filed in Sandusky, Ohio Municipal Court. When the affidavit is compared to the deposition of the affiant, Ivan Jimenez, it is apparent that the affidavit itself contains many falsehoods.

In paragraph 1, the affidavit reads “.I make the statements herein based upon my personal knowledge.” It is apparent from the Jimenez deposition that Mr. Jimenez actually had no personal knowledge of Ms. Brent or her account. For instance, while Mr. Jimenez is assigned to support and work with ten law firms, JBR is not one of them, leading to the logical conclusion that he would not have personal knowledge of any matter they were handling. (Jimenez Dep., Doc. 35, Ex. E at 7-8; Id. at 16). It appears to be an entirely random act that he signed this affidavit: he was the signer based entirely on when it came off the printer rather than based on his personal knowledge of Ms. Brent or her account. (Id. at 16-17). Mr. Jimenez never had any contact with Ms. Brent at all, leading to a logical conclusion that he could not have had the “personal knowledge” claimed in paragraph 1. See Id. at 25-26 (“Q: Did you ever have any contact with Ms. Brent, any business contacts at all? A: I did not personally.”).

In paragraph two of the affidavit, the affiant states:. I have personal knowledge of all relevant financial information concerning Midland Credit Management Inc.’s account number 8524186453, which includes the following information: that the defendant did fail to make payments on the account and that demand has been made for defendant to make payment of the balance owing on the account described above more than thirty (30) days prior to making this affidavit; that the attorneys representing the plaintiff Midland Funding LLC were retained on Midland Funding LLC (sic) behalf by me or persons reporting to me for the purpose of collecting the delinquent debt owed on the defendant’s account number set out above; and that there was due and owing to Midland Funding LLC the sum of $4,516.57. (Jimenez Aff. ¶ 2). As is evident in the discussion supra regarding paragraph one of the affidavit, Mr. Jimenez has no personal knowledge about the Brent account. He was not familiar with this account, did not know the last time a payment was made and did not know the outstanding balance. The paragraph also represents that the law firm, JBR, was hired by Mr. Jimenez or one of his employees. However, the following exchange during the deposition makes clear this is not true:

Q: So were you aware when you signed this affidavit that it was going to be used as part of a collection action in a lawsuit?

A: I was not.

Q: Are you aware of any other reasons that affidavits are completed, except for the collection actions that are filed in the courts?

A: I wouldn’t know what the firm uses the affidavits for.

Q: So you simply sign them?

A: Yes.

Q: You work for Midland Credit Management; correct?

A: Yes.

Q This affidavit lists at the top as a plaintiff, Midland Funding, LLC. What’s the relationship between Midland Credit Management and Midland Funding LLC?

A: I wouldn’t be the best person to ask that question. I don’t know.

Q: Okay. If you look at paragraph 2, four lines from the bottom of paragraph 2, you’re attesting to the fact, “that the attorneys representing Plaintiff Midland Funding LLC were retained on Midland Funding LLC behalf by me or persons reporting to me for the purpose of collecting the delinquent debt.” Is that what it says? Did I read that correctly?

A: Yes

Q: When did you retain the attorneys representing Midland Funding LLC?

A: I don’t know when the people in my department retained the attorneys.

Q: Did you personally retain the attorneys?

A: I did not.

Q: Which persons in your department did retain the attorneys?

A: I wouldn’t know specifically.

Q: Are these — how many people do you have reporting to you?

A: I have zero.

Q: Do you know the names of any persons in your department or any persons in Midland Credit who actually do have the responsibility of retaining attorneys?

A: I don’t know who in my department would do that.

Q: Would there be someone from another department that would do that?

A: I wouldn’t know. (Jimenez Dep. at 19-21).

Thus, there are two patently false claims within paragraph two: first that Mr. Jimenez had any personal knowledge regarding Ms. Brent’s debt, and second, that Mr. Jimenez was involved with the decision or act of hiring JBR to pursue legal action.

Paragraph three describes how Midland acquired the debt from Citibank, and if it is read alone, it only states a fact that is very likely true. However, when read in conjunction with paragraph one (“I make the statements herein based upon my personal knowledge”), it is apparently false. The issue of the affiant’s knowledge was raised in the deposition:

Q: Well, it says in this affidavit that, in number 3, “That Plaintiff’s predecessor in interest sold and assigned all right, title, and interest in this account to the plaintiff.” So if it was sold to the plaintiff, my assumption is it was purchased by the plaintiff. And the question I have is, did you have any role or were you involved in any way, shape, or form in the purchase of this account?

A: I was not.

Q: Do you know anything about the terms of the purchase of this account?

A: I do not. (Jimenez Dep. at 21-22). Thus, the statement in paragraph three, however true or not, cannot be based on personal knowledge.

Paragraph five is also of concern. It asserts that Ms. Brent is neither a minor nor mentally incapacitated, which are facts that are probably true. However, the affiant bases those conclusions “upon business dealings with the defendant(s),” which is clearly not possible since he had no contact with Ms. Brent. See supra.

If this is not enough, the affidavit is improperly sworn, as evidenced by the deposition:

Q: You mentioned earlier, when I asked you about that, you signed these affidavits and had them notarized. Was the notary present in the room when you were signing all the affidavits, or do you sign them and give them to the notary?

A: I sign them and give them to the notary. (Jimenez Dep. at 15). Minnesota Revised Code requires that “an oath… shall be administered… [t]o affiants[.]” Minn. Stat. Ann. § 358.07 (West 2004).

In finding assertions in the affidavit to be false and misleading, this Court is not concluding that all the information in the affidavit is incorrect. Brent has provided no evidence that the amount of the debt, the fact that it is unpaid, or other vital account information, is false. As discussed infra, the actual account information is probably either correct or likely thought correct in good faith by Midland and MCM (and likely a bona fide error if so).

However, this Court finds that the affidavit as a whole is both false and misleading for the aforementioned reasons and notwithstanding the fact that some of the data in it are correct. It is unclear to this Court why such a patently false affidavit would be the standard form used at a business that specialized in the legal ramifications of debt collection. Midland, MCM, or JBR could easily prepare a form affidavit that achieved the same goals without being misleading by reflecting the truth, plain and simple. Rather than basing the affidavit on false personal knowledge, they could base it on the accuracy of the records kept and the accuracy of the data.

3. Materiality

In a recent opinion, the Sixth Circuit held that “[a] statement cannot mislead unless it is material, so a false but non-material statement is not actionable.” Miller v. Javitch, Block and Rathbone, 561 F.3d 588, 596 (6th Cir. 2009) (quoting Hahn v. Triumph P’ships LLC, 557 F.3d 755, 758 (7th Cir. 2009)). Both Miller and Hahn allow for a statement to be “false in some technical sense” but still not in violation of the FDCPA. Miller, 561 F.3d at 596 (quoting Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 646 (7th Cir.2009)); Hahn, 557 F.3d at 758.

Generally, material facts are ones which, if known, might influence a person’s decision on a matter. See generally Black’s Law Dictionary 998 (8th ed. 2004) (defining material as “[h]aving some logical connection with the consequential facts [or] [o]f such a nature that knowledge of the item would affect a person’s decision-making; significant; essential[.]”). Thus, the Court evaluates statements for materiality by considering whether they make the proposed assertion more or less likely.

In general, a complaint and attached affidavit act as both a message to the court and a message to the debtor.*fn2 While the creditor seeks different action from either audience (payment from the debtor as opposed to judgment from the court), the general assertions are the same: that the debt is valid, that there is a total amount, that it is delinquent, that it is subject to interest, and that it is now due and owing. Therefore, a statement or claim based on an affidavit would be material if it makes one of those listed assertions more or less likely than if that fact were not considered.

It is unsurprising when a consumer/debtor contacted by a collection agency about a seven-year-old debt would question whether it was a valid obligation. Ms. Brent instantly questioned the validity of the debt. Both the complaint and Jimenez affidavit refer to the debt being owed to “CITIBANK USA,” and in her answer, Brent “denies that she originally owed any claim to CITIBANK USA at any time.” (Doc. 2 at ¶ 1; See also Brent Dep., Doc. 35, Ex. F at 26 (wherein Ms. Brent asserts “[t]o my knowledge, I’ve never had a CitiBank USA.”)). Thus, Ms. Brent clearly questions the validity of the debt. To further add confusion to this particular case, investigation reveals that the debt was originally owed to “Associates,” and was acquired by Citibank before it was acquired by Midland years later. Since neither the complaint nor affidavit mention “Associates” in any form, it would be extremely plausible for Ms. Brent to doubt the validity of this debt.

The claims within the Jimenez affidavit that this Court finds to be false are materially related to supporting the proposition of whether the debt is valid. The affidavit states that the affiant personally knows that this debt is valid, that he personally has “business dealings with the defendant(s),” and specifically that he has personal knowledge of this particular account. These statements are material to the issue of whether the debt is valid at all, and if relied on, help to make the proposition that it is more likely valid than it was without the statements.

Considering public policy, it is also worth noting many debt collection cases of these types place courts in the position of evaluating the validity of the plaintiff’s claim without any response from the defendant. Thus, in general terms, courts rely on the assertions in an affidavit to determine, among other things, whether the debt is valid and judgment, usually default judgment, should be granted.

This case, then, is distinguishable from those with immaterial falsehoods. In Miller, the Sixth Circuit determined that the difference between suing “for money loaned” rather than specifying that it was for an unpaid credit card debt did not amount to a violation of the FDCPA. Miller v. Javitch, Block & Rathbone, 561 F. 3d 588 (6th Cir. 2009). Miller admitted “that she ‘pretty much’ understood [the complaint]” when she received it as being an attempt to collect on a credit card that she stopped paying. Id. at 591. She was aware of the credit card and recalled that she stopped paying on it. Id. at 590.

By contrast, in the case at the bar, Brent claims that she was not aware of any obligation owed to Citibank. Upon receiving the Midland complaint and attached Jimenez affidavit, she had to evaluate whether the debt being sued on was a valid one. The contents of the affidavit itself, and in particular the fact that the affiant allegedly had personal knowledge that the debt was valid, would effectively serve to validate the debt to the reader, whether that was Brent or a court.

Therefore, the affidavit was false, deceptive, and misleading in its use in conjunction with an attempt to collect a debt, and Midland and MCM have violated FDCPA § 1692e.

Below is the Settlement Agreement set in place

[ipaper docId=62460947 access_key=key-25d1nrlzklhzplacelcb height=600 width=600 /]

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