A District Court judge in New Jersey has denied a defendant’s motion to dismiss and to compel arbitration after it was accused of violating the Fair Debt Collection Practices Act by making offers in a collection letter that falsely implied they would expire, when in fact they would not.
A copy of the ruling in the case of Shanthi Hejamadi and Ricardo Varela v. Midland Funding, LLC and Midland Credit Management, Inc., can be accessed by clicking here.
The plaintiffs received a collection letter from the defendant in regard to an unpaid debt. The collection letter included the following statements:
“LET US HELP YOU! If the account goes to an attorney, our flexible options may no longer be available to you. There is still an opportunity to make arrangements with us.”
The plaintiffs allege that the defendants continue to offer the payment options, even after the account was placed with an attorney and that the “flexible options” would never not be available.
Hejamadi was sued by the defendant for an unpaid debt. She answered the lawsuit and filed a class-action counterclaim against the defendant. The defendant dismissed its suit against Hejamadi.
Even though it included an arbitration statement in the operative agreements, and even though the plaintiffs do not dispute that the agreement exists, they argue that the defendants “failed to submit the purchase agreement transferring the Accounts from the Citibank to defendants so as to show to what extent the purchase agreement transferred arbitration rights to defendants.”
Because the plaintiffs did not attach a copy of the agreements to their complaint, Judge Katherine Hayden of the District Court for the District of New Jersey ruled that discovery was needed to answer the question of arbitrability. At that time, Judge Hayden said, the defendant can renew their motion to compel arbitration.
