Synonyms and semantics can be deadly when in the hands of a federal judge. A defendant is learning that lesson the hard way after a District Court judge in New Jersey denied a defendant’s motion to compel arbitration in a Fair Debt Collection Practices Act case, ruling that the words “accounts” and “receivables” mean different things and purchasing a receivable does not guarantee all of the rights that were assigned to the account.
A copy of the ruling in the case of Rodriguez-Ocasio v. Midland Credit Management can be accessed by clicking here.
The plaintiff received a collection letter from the defendant. The letter did not include a validation statement that informed the recipient of the letter about her opportunity to receive the name and address of the original creditor. The plaintiff filed a class-action suit, alleging the letter violated Section 1692g(a)(5) of the FDCPA. The case has proceeded for nearly five years and through limited discovery until the defendant filed its latest motion to compel arbitration. The defendant argued that agreement governing the accounts mandates that all claims be subject to binding arbitration and that the plaintiffs waived their rights to bring class-action claims.
The plaintiff argued that the purchase agreement between the original creditor and the defendant transferred the rights under the “receivables” and not the “accounts.” The purchase agreement included the following statement: On each Transfer Date, Seller shall sell and Buyer shall buy all right (including the right to legally enforce, file suit, collect, settle or take any similar action with respect to such Receivable), title and interest in and to the Receivables with respect to which Buyer has received a Notification File.
The agreement between the original creditor and the defendant has a section that indicates a “receivable” is a sub-part of an “account” and defines “receivable” as “any credit account receivable that is being sold to Buyer pursuant to the terms of this Agreement, as such receivable exists as of the Cut-Off Date, to the extent such receivable is set forth on the applicable Notification File.”
Arbitration, Judge Esther Salas of the District Court for the District of New Jersey ruled, is a feature of the account, not the “credit account receivable” being sold.
Both the original creditor and the defendant submitted additional affidavits to support their arguments, but those affidavits did not provide enough extraneous evidence to convince Judge Salas to grant the motion to compel arbitration.
