In a case that was defended by Ethan Ostroff and the team at Troutman Pepper and Smith Debnam, a District Court judge in North Carolina has granted a defendant’s motion to compel arbitration and dismiss a class-action after it was accused of violating the Fair Debt Collection Practices Act and the North Carolina Collection Agency Act by threatening legal action to collect on an unpaid credit card debt.
A copy of the ruling in the case of Warner v. Midland Credit Management et al can be accessed by clicking here.
The plaintiff defaulted on a credit card debt that was sold to one of the defendants in 2017. The defendant sent the plaintiff a pre-legal notification letter saying if a payment or contact was not made, the account would be forwarded to an attorney. Seven months later, the plaintiff received another letter, this time from a law firm, saying that if the account was not disputed, legal action may result. A month later, the plaintiff was sent a letter “Notice of Intent to File Legal Action.”
The plaintiff then filed his lawsuit against the defendants, alleging they violated the FDCPA and NCAA.
Way back in December 2018, the defendants filed a motion fo compel arbitration and dismiss the complaint, which was ruled on last week by Judge Loretta Biggs of the District Court for the Middle District of North Carolina. In responding to the defendant’s motions, the plaintiff argued the defendant did not have the authority to enforce the underlying agreement between the plaintiff and the original creditor, that the right to invoke arbitration was not assigned to the defendant by the original creditor, and that the dispute in question falls outside the scope of the arbitration agreement.
Judge Biggs made relatively short work of all three of the plaintiff’s arguments, going as far as to label them “convoluted and inexplicably contradictory.” The plaintiff attempted to argue that the words “we,” “us,” and “our” had different meanings in the arbitration portion of the underlying agreement than they did in the rest of the document. But, as pointed out by Judge Biggs, the defendant “step[s] into the shoes of the assignor” when the account was transferred. “… to conclude otherwise would render other parts of the Credit Card Agreement surplusage,” she wrote. “It is a fundamental principle of contract law that a contract should be read as a
whole.”
