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Evans v. Midland Funding, LLC

United States District Court, W.D. Kentucky, Louisville Division

April 10, 2017

KIMBERLY EVANS PLAINTIFF
v.
MIDLAND FUNDING, LLC DEFENDANT

          OPINION AND ORDER

          GREG N. STIVERS, JUDGE

         This matter is before the Court on Defendant's Motion to Dismiss and Compel Arbitration (DN 22). Plaintiff has not responded to the motion, and the motion is ripe for adjudication. For the reasons outlined below, the motion is GRANTED.

         I. SUMMARY OF FACTS AND CLAIMS

         In December 2011, Plaintiff Kimberly Evans (“Evans”) opened a credit card account with Credit One Bank, N.A. (“Credit One”) with an account number ending in 2964. (Compl. ¶ 6, DN 1; Collins Aff. Ex. 3, at 1, DN 22-1). Evans allegedly used the credit card “exclusively for personal, family, and household purposes . . . .” (Compl. ¶ 7).

         It was Credit One's regular practice to hold and service its accounts but to immediately sell the receivable portion of accounts (i.e., the payments from accountholders) to a wholly-owned entity called MHC Receivables, LLC (“MHC”). (Scott Aff. ¶¶ 2-3, DN 22-2). After Evans opened her account, MHC immediately sold the receivable portion of her account to another wholly-owned entity called FNBM, LLC (“FNBM”). (Scott Aff. ¶ 4).

         On April 22, 2014, Credit One charged-off Evans' account after she defaulted. (Collins Aff. ¶ 15, DN 22-1; Collins Aff. Ex. 3, at 1). At the time of the charge-off, the account was subject to the “Credit One Visa/MasterCard Cardholder Agreement, Disclosure Statement, and Arbitration Agreement” (“Agreement”). (Collins Aff. ¶ 10; Collins Aff. Ex. 4, DN 22-1 [hereinafter Agreement]).

         On April 30, 2014, Credit One sold Evans' account to MHC, but FNBM still retained the receivable portion of the account. (Scott Aff. ¶ 5, DN 22-2). On May 14, 2014, MHC and FNBM sold their interests in Evans' account to Sherman Originator III LLC (“Sherman”), resulting in Sherman owning all rights to the account. (Scott Aff. ¶ 5; Collins Aff. ¶ 3). On May 21, 2014, Sherman sold a broad portfolio of accounts to Defendant Midland Funding, LLC (“Midland”), which included all rights to Evans' account. (Collins Aff. ¶¶ 3, 6, 9; Collins Aff. Ex. 3, at 1; Mazzoli Aff. ¶¶ 4, 6, DN 22-3).

         On March 20, 2015, Midland filed a collection action against Evans in Spencer District Court seeking to recover funds due relating to her Credit One account. (Compl. ¶ 6). Subsequently, on June 8, 2015, Midland obtained a default judgment against Evans, and on July 1, 2015, Midland filed a judgment lien against her. (Compl. ¶¶ 8-9, 11-12; Compl. Exs. A-B, DN 1-2 to 1-3). Through its counsel, Midland also attempted both wage and non-wage garnishments to collect on the judgment. (Compl. ¶¶ 14-21; Compl. Exs. C-F, DN 1-4 to 1-7).

         On June 29, 2016, Evans filed this action alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692o, state law, and a state court rule. (Compl. ¶ 1). In particular, Evans has alleged that counsel for Midland violated the FDCPA because the judgment lien and the garnishments included court costs to which Midland was not entitled. (Compl. ¶¶ 12, 16-23). Evans also has asserted that the judgment lien recording fee and costs associated with filing the garnishments were not awarded in the judgment, and Midlands' efforts to collect such fees and costs violated the FDCPA. (Compl. ¶¶ 24-35). Finally, Evans has asserted various class claims against Midland. (Compl. ¶¶ 36-52). After filing its answer, Midland moved to compel arbitration and stay or dismiss this case. (Def.'s Mot. Dismiss & Compel Arbitration, DN 22).

         II. JURISDICTION

         This Court has subject-matter jurisdiction over Evans' FDCPA claim based upon federal question jurisdiction. See 28 U.S.C. § 1331. In addition, the Court has supplemental jurisdiction over her state-law claims. See 28 U.S.C. § 1367(a).

         III. STANDARD OF REVIEW

         In ruling on a motion to compel arbitration, courts apply the summary judgment standard in Fed.R.Civ.P. 56(c). See Arnold v. Rent-a-Center, Inc., No. 11-18-JBC, 2011 WL 1810145, at *2 (E.D. Ky. May 12, 2011) (“This court will treat the motion to compel arbitration as one for summary judgment . . . .”); Weddle Enters., Inc. v. Treviicos-Soletanche, J.V., No. 1:14CV-00061-JHM, 2014 WL 5242904, at *2 (W.D. Ky. Oct. 15, 2014) (“A motion to dismiss based on the existence of a valid arbitration agreement is not evaluated under the usual Fed.R.Civ.P. 12(b)(6) standard. Instead, courts apply the standard applicable to motions for summary judgment.” (citations omitted)). “In order to show that the validity of the agreement is in issue, the party opposing arbitration must show a genuine issue of ...


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