A District Court judge in Connecticut has denied a defendant’s motion to compel arbitration in a Fair Debt Collection Practices Act class-action lawsuit, ruling the defendant — a debt buyer that purchased the account from the original creditor — did not have specific documentation reflecting the assignment of the plaintiff’s account.
The Background: The background from the ruling was a little thin, but it appears as though the plaintiff filed suit because the defendant attempted to collect on a debt after the plaintiff had submitted a cease and desist letter to the defendant.
- The plaintiff stopped making payments on the debt in 2019, according to the defendant, and the account was sold to the defendant in 2020. Included in the sale was the underlying agreement, which contained an arbitration clause.
- The suit was originally filed last March, and in September, the defendant filed its motion to compel arbitration.
- The defendant submitted a declaration from an individual involved in the sale, a bill of sale and an exhibit to the bill of sale that shows the files included in the assignment. This, according to the plaintiff, is not enough to determine whether the defendant had been assigned the right to enforce the arbitration agreement. Judge Victor A. Bolden of the District Court for the District of Connecticut, agreed with the plaintiff.
The Ruling: “… it is not enough to have documentation reflecting an assignment generally over any claim,” Judge Bolden wrote in his ruling. “There also must be specific documentation reflecting an assignment over” the plaintiff’s claims.
- The bill of sale that the defendant submitted states that the creditor sold the accounts subject to the terms and conditions of the Master Purchase and Sale Agreement, but that document was not included in the defendant’s motion, Judge Bolden noted.
- “As a result, the Court cannot determine what ‘terms and conditions’ came with the assignment to [the defendant] — and what rights, significantly here, regarding the arbitration provision, [the defendant] was assigned,” according to the judge.
- The judge’s denial of the motion was without prejudice.
