In the prior post, the problems facing debt buyers seeking to collect delinquent credit card accounts were generally described. Today’s post looks at a specific case illustrating these issues.
The outcome was a disaster for the debt buyer, and is a road map for debtor’s attorneys seeking to prevent collection of a delinquent account.
The case is entitled Unifund CCR, Assignee of Palisades Collections vs. Vo and was decided February 17, 2009 by Philadelphia Court of Common Pleas Judge Idee C. Fox. As is often typical, bad facts form bad law, at least from the creditor’s point of view.
The debt buyer’s lawsuit initially claimed $14,237.78, plus interest, costs and attorneys fees. On four occasions, debtor’s attorney filed objections to the Complaint and each time the debt buyer amended its lawsuit. Shockingly, the second and third complaints reduced the claim to $6,17.62 in damages, plus interest, costs and attorneys fees. The fourth version reduced the amount even further to $5,702.36!!!!
The decision suggests that in July, 2001, Jenny Vo signed a written application for an AT&T Universal Card (although the actual application was never provided to the Court). Plaintiff claimed that in May, 2006, Citibank sold delinquent accounts to Unifund Portfolio A, which on the same day assigned accounts to “Cliffs Portfolio Acquisition I”. The creditor further referenced a July, 2005 assignment agreement between “Cliffs Portfolio Acquisition I ” and “Palisades Collection, LLC” as assignors, and “Unifund CCR Partners” as assignees.
As they say in baseball, “Its hard to tell the players without a scorecard”.
Pennsylvania is a fact pleading state, meaning that the Plaintiff is required to provide enough specific facts to allow Defendant to respond with specific denials to each allegation. Fact pleading differs from notice pleading, which is the rule in Federal Courts, and which allows more general statements to form the basis of a lawsuit.
Although the creditor sought to show the chain of title of the debt from Citibank to the itself, unfortunately all of the documents produced were generic, referring to “accounts” but not specifically to Ms. Vo’s account.
At this point in the story, you might suspect that the bad ending for the creditor was that the case was dismissed, since the ownership of the account was in doubt. And you would be right, but only half right.
The creditor’s nightmare got worse.
Judge Fox next set a standard requiring the creditor to identify each individual transaction which form the basis of the total amount claimed. The creditor can not merely summarize the total balance owed on the account, either when it was last billed by the original creditor or when it was purchased by the debt buyer.
Not only does the creditor have to identify all unpaid purchases, but it also must state all changes made the basic agreement which relate to any outstanding charges which the creditor seeks to collect. For example, each change in interest rate must be specifically noted.
Judge Fox adopted the reasoning of Worldwide Asset Purchasing LLC vs. Stern, a widely cited Court of Common Pleas decision by Judge Wettick of Allegheny County. Similar results are reported in Center and Lancaster counties.
What does this all mean?
Its tough enough to collect judgments in Pennsylvania, which greatly protects its citizens with the absence of wage garnishment and which shelters assets of individual debtors who are married through tenancy by the entireties.
Now, purchasers of defaulted credit card accounts have more hoops to jump through as courts require more information than is ordinary included in portfolio acquisitions.
Next: Philadelphia Municipal Court Adopts New Rules Regulating Credit Card portfolio collections.
Lee M. Herman, Esquire, is an attorney with offices in Pennsylvania and New Jersey. For thirty years, he has prosecuted and defended creditor lawsuits in state and federal courts. He can be reached at (610) 891-6500 or by email at lherman@lmhlaw.com . His website is lmhlaw.com
