Does anyone know the outcome of this Case??

[Rick9972]

This is a case that directly effects alot of us and I have been unable to find how it ended. Does any know???

Maloney v. LVNV Funding LLC

N.D.Tex.,2006.

October 20, 2006

[mcb11902]

I checked Pacer; Heather Maloney filed a motion to dismiss stating she settled her claims with LVNV and no longer wishes to pursue the matter. Court dismissed the action on 8/1/07.

[Lecasbas]

Regardless of the case being dismissed there is a Ruling on a MSJ which can be used for persuasive argument. The link for the whole Decision is listed below:

http://aolsearch.aol.com/aol/redir?src=websearch&requestId=926b8aaee550866d&clickedItemRank=1&userQuery=Maloney+v+LVNV+Funding&clickedItemURN=http%3A%2F%2Fcreditsuit.org%2Fimages%2Fuploads%2FOpinion_LVNV_MSJ.pdf&title=C%3A%5CDocuments+and+Settings%5CUser%5CLocal+Settings%5CTemp%5CnotesFFF692+%3Cb%3E...%3C%2Fb%3E&moduleId=matchingsites.jsp.M&clickedItemPageRanking=1&clickedItemPage=1&clickedItemDescription=WebResults

From a quick reading, it seems that the Court ruled against Maloney on everything except as to whether a Creditor is a Debt Collector when it is collecting it's own debt:

E. Fair Debt Collection Practices Act violation claims against LVNV and Sherman

Failure to give proper notice, reporting false information, and failure to give required disclosures– §§1692g, 1692e(8) and §1692e(11)

LVNV and Sherman argue that they are not liable for any violations under the FDCPA because, (1) they are creditors, not debt collectors (2) they never communicated directly with Maloney, therefore they are not liable for failure to give proper notices and disclosures under §1692e(11) and §1692g and (3) they are not vicariously liable for the acts of Resurgent and any failure to give notices and disclosures it may have made. Maloney argues that LVNV and Sherman are debt collectors, and although they did not communicate directly with Plaintiff, they violated §1692e(8) of the FDCPA by reporting inaccurate credit information.

LVNV and Sherman argue that they are not they are not subject to the FDCPA because they are creditors not debt collectors. Defendants support this argument stating they are not debt collectors because they collect debts for themselves rather than on behalf of another. However, even though they collect debts for themselves, they are still debt collectors within the meaning of §1692a(4) and §1692a(6) of the Act, because the debts were already in default when they were assigned to the companies. 15 U.S.C.A. §1692a(6); See Perry v. Stewart Title Co., 756 F.2d. 1197, 1208 (5th Cir. 1985); Kimber v. Federal Financial Corp., 668 F.Supp. 1480, 1486 (M.D. Ala. 1987). LVNV and FDCPA clearly fall into the assignee exception to the definition of the creditor. See 15 U.S.C. §1692a(4). Therefore, they are debt collectors and are subject to the requirements of the FDCPA. (underlining mine)

However, Defendants correctly argue that debt collectors and creditors are not vicariously liable under the FDCPA for the acts of a third-party independent debt collector. Defendants rely on Scally v. Hilco Receivables, LLC, asserting that they are not liable for the acts of Resurgent. 392 F. Supp. 2d 1036 (N.D. Ill. 2005). That case held, that in light of very specific facts showing the independent relationship between the debt purchaser and the debt collector, the debt purchaser could not be held vicariously liable for the independent contractor ’ s acts. Id. at 1041.

However, the Court declines at this time to decide if Resurgent was in fact an independent debt collector because Plaintiff ’ s claims for failure to give proper notice and disclosure fail for other reasons. LVNV and Sherman argue that since they did not communicate directly with Maloney, they are not required to give proper notice pursuant to §1692g or §1692e(11). Requirements under both of these sections are triggered after a debt collector ’ s initial communication with a debtor. See 15 U.S.C. §1692g and §1692e(11). Maloney admits that neither LVNV nor Sherman ever directly communicated with her (See Appx. pp. 22, 27). Therefore, Plaintiff ’ s claims under 1692(g) and 1692e(11) against LVNV and Sherman are dismissed, and summary judgment is GRANTED on these claims.

So...my question here is, doesn't this also apply to OC's? The Court made an issue of the Bad Debt already being in default before being assigned to the CA's. If the Bad Debt is in default when the OC assigns it to a CA then isn't this the same thing?

[Rick9972]

So...my question here is, doesn't this also apply to OC's? The Court made an issue of the Bad Debt already being in default before being assigned to the CA's. If the Bad Debt is in default when the OC assigns it to a CA then isn't this the same thing?

Well from my opinion there was not really anything new in the ruling he made. Basically from what I have read Maloney over reached and tried to get LVNV and Sherman on FDCPA violations.

The key determination that the judge made was that JDB's are not Debt Collectors until they try to collect the debt directly from the debtor. They never contacted Maloney nor reported nor any other collection activity except to hire Resurgent(CA). Thus they are Creditors. BAsically the judge followed the current law in that a OC cannot be a debt collector, a JDB cannot be a Creditor once they actually try to collect. JDB can be a Creditor, if they take no collection activity. (Note: Reporting to the CR's is considered a Collection Activity.)

The truly interesting part of this case centered on Resurgent. Maloney was challenging Resurgent's right to report the account to the CR's as a Open Installment account 120 days late, instead of as a Collection account.

We all hold the belief that accounts that have been sold, can only be reported as collection accounts. HOwever, I have not found a single case where this belief has been validated, nor can I find support for the belief in the FCRA or FDCPA.

Does anyone have any caselaw that supports this belief?

I had come across this MSJ and hoped that the issue would be addressed. *shrugs* Hopefully someone else has information I cannot find.

[cjtx]

Defendants rely on Scally v. Hilco Receivables, LLC, asserting that they are not liable for the acts of Resurgent. 392 F. Supp. 2d 1036 (N.D. Ill. 2005). That case held, that in light of very specific facts showing the independent relationship between the debt purchaser and the debt collector, the debt purchaser could not be held vicariously liable for the independent contractor ’ s acts. Id. at 1041.

This is one of the things that get me all confused. Resurgent is an affiliate/subsidiary of Sherman/LVNV. The one you deal with for collections. Sometimes they are the ones who report to the CRAs and sometimes they handle DV. So the court erred in considering it an independent debt collector. It's the same LVNV lowlifes operating under a different name!!!!

[flacorps]

This is one of the things that get me all confused. Resurgent is an affiliate/subsidiary of Sherman/LVNV. The one you deal with for collections. Sometimes they are the ones who report to the CRAs and sometimes they handle DV. So the court erred in considering it an independent debt collector. It's the same LVNV lowlifes operating under a different name!!!!

Courts will largely respect the niceties of different corporate entities being utilized, even if there's common ownership ... common management ... and what-have-you. At some point alter ego theory kicks in and the court will pierce the corporate veil. But it's gotta be pretty blatant.

Smart businesspeople will use one corporate entity to fulfill one function and a different one to fulfill another function, especially where fulfilling both functions within a single entity will expose the enterprise as a whole to unacceptable litigation risk, or to potentially conflicting duties to different regulators, or to other inconveniences...

TMMV (their mileage may vary)

[cjtx]

I see what you are saying, but the argument was based on Resurgent being an independent 3rd-party debt collector. How can it be considered independent, if a CR lists LVNV, every phone listing you can find for LVNV has that same number, yet Resurgent answers when you call?

[Lecasbas]

If I hire a lawyer and tell it to take care of things for me while I go to Florida for my winter vacation then I have no specific knowledge of its tactics. If that lawyer violates the law in pursuit of these matters I don't see how I can be held liable for its actions.

It should be no different with a Creditor who turns an account over to a CA. The only way would be able to prove that the Creditor knew what the CA was doing. What are the chances of that?

I do not favor any type of collector. I have spent days of my time fighting them. But...I feel that if one is to succeed in any court action one should be able to prove what the other party can and cannot legally do.

[cjtx]

If I hire a lawyer and tell it to take care of things for me while I go to Florida for my winter vacation then I have no specific knowledge of its tactics. If that lawyer violates the law in pursuit of these matters I don't see how I can be held liable for its actions.

It should be no different with a Creditor who turns an account over to a CA. The only way would be able to prove that the Creditor knew what the CA was doing. What are the chances of that?

I have a case right now where I may have a chance to try this and the OC thinks there is no way I can prove they knew the CA was breaking the law.

They are in for a surprise! I got public records from the state's attorney general listing all the complaints about a certain CA who was working for this OC. In the process of investigating the complaints, AG contacted all the parties involved, including OC and informed it about the illegal practices of CA.

I almost wish we take this to trial... We are talking settlement, though.

[Rick9972]

The truly interesting part of this case centered on Resurgent. Maloney was challenging Resurgent's right to report the account to the CR's as a Open Installment account 120 days late, instead of as a Collection account.

We all hold the belief that accounts that have been sold, can only be reported as collection accounts. HOwever, I have not found a single case where this belief has been validated, nor can I find support for the belief in the FCRA or FDCPA.

Does anyone have any caselaw that supports this belief?

I had come across this MSJ and hoped that the issue would be addressed. *shrugs* Hopefully someone else has information I cannot find.

So does anyone have any information about successful complaints or even unsuccessful complaints on this subject?

[Recovering Attorney]

The Kimber case cited in the opinion supports the theory that a creditor can be liable for the violations of its hired collector. In Kimber, the JDB was held vicariously liable for the bad acts of the lawyers it hired to sue. It works with JDBs, but probably not with OCs merely suing you when you default

[Methuss]

Yeah. The only way to nail the OC is if they are careless and do one of two things.

1 - If the OC uses a false or misleading name that leads the consumer to the belief that a third party debt collector is contacting them when in fact it is their own internal collections personnel, then the OC becomes a debt collector under the law and is subject to all the FDCPA provisions.

2 - If the OC allows or the debt collector uses the OC's name and gives the consumer the impression the OC is doing internal collections when it is a third party debt collector, then the OC looses it's exemption from the law and the FDCPA applies to them.

Both of these instances have happened in the past and there is case law on it. But an OC would have to be incredibly stupid for it to happen these days. OCs don't generally want their name tied to the scummy behaviors of the CAs they hire. (The OCs are well aware of the abuses CAs are known for but use them anyways to extract whatever payment they can get)