LaneBlane

Attacking a JDB’s Standing | Need to Respond to Interrogatories, RPD, RA

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Because I had a deadline looming, I had my attorney respond to a complaint filed by a JDB’s attorney.  I’m going to take things over from here to keep my legal fees to a minimum.

I have the Plaintiff’s first set of Interrogatories, Request for Production of Documents, and Request for Admissions.  I also received a copy of the purchase agreement and bill of sale in response to “Lack of Standing” as my affirmative defense.

I read an older string of messages on this site that went into detail about documents that prove the purchase or transfer of ownership from an original creditor to a JDB.  Looking at what I was provided, I’m convinced the documents don’t comply with the business record exemption in the rules of evidence on hearsay.  Nothing is notarized.  There are no affidavits.

Here’s what I received:

My loan agreements were between [Acme Lending] and me.  The JDB claims they purchased the loan from [ABC Lending].  In order to show transfer of ownership from [Acme Lending] to [ABC Lending], they provided a copy of an agreement titled Non-Recourse Receivables Purchase Agreement.  The agreement says all receivables existing would be sold and assigned by seller to buyer.

When we get into the document they claim transfers ownership from [ABC Lending] to the JDB, they only provided a short, half-page document titled Bill of Sale and Assignment.  This is signed by the General Counsel of [ABC Lending].  This document assigns all of rights, title, and interest in and to “certain charged-off accounts” listed on an attached schedule.  The only attachment is one line of text that includes the name of the JDB, an account number, my business name, and my name.

As I mentioned, neither document/agreement is notarized.  There are no affidavits.

Here are my starting questions:

  • Should I assume the JDB has additional documentation concerning ownership of the account that has not been furnished to me?
     
  •  Because the Plaintiff has not provided sufficient evidence that their client owns the account in question, do I have the ability to challenge their standing (in the form of a motion or other action) before I have to respond to their interrogatories and provide them with information and documents?   I believe they should have to prove ownership of the account before they're entitled to any discovery.

 

 

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56 minutes ago, LaneBlane said:

Should I assume the JDB has additional documentation concerning ownership of the account that has not been furnished to me?

Possibly but MN is a extremely creditor friendly state and the chances that the court rules that what they have so far is not enough are slim to none.

57 minutes ago, LaneBlane said:

Because the Plaintiff has not provided sufficient evidence that their client owns the account in question, do I have the ability to challenge their standing (in the form of a motion or other action) before I have to respond to their interrogatories and provide them with information and documents?   I believe they should have to prove ownership of the account before they're entitled to any discovery.

No.  They filed suit and the rules of civil procedure allow for discovery.  They only have to prove satisfactory ownership of the account to the court at trial IF the court demands it.  They do not have to prove anything to you prior to trial unless you do proper discovery.  The other issue you have is if you do not respond the RCP typically state that your answers are deemed admitted automatically.  The last thing you want is that.

You challenge their proof of ownership at trial.  You need case law to back it up and effectively argue it to the court.  

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Thank you for your input, Clydesmom.

Here are the Interrogatories, Request for Production of Documents, and Request for Admissions I received.  I'm not sure how to answer several of them.

 

I'VE DELETED THE REMAINDER OF THIS POST, AS IT WAS NO LONGER RELEVANT.

 

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Is the suit filed in federal or Minnesota court?  If MN, which one?

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The suit is probably a pocket docket case so it is probably not filed in any court as of yet but in Minnesota, you can be sued by simply having the summons served on you without filing in court. The OP did the right thing by getting an answer to the plaintiff and so far has avoided a default judgement.
 

First thing to do is look at the loan agreement they sent. What you are looking for is an arbitration clause. If there is one and it says that the bank will pay the bill, I would immediately sent a motion to compel arbitration to the plaintiff attorney along with a filled out JAMS application. If this is a small amount, they will probably stop right there. If you continue down the discovery path and try this later, they might say that you waived arb so make sure to do this first.


If no arbitration clause, then you will need to do some google searches in regards to MN civil procedures and what is required to prove a debt case. They sent you some paperwork but is it enough to prove their case? If not, they you send them discovery requesting all the records they need to prove their case as well as your own rogs. The purpose at this point is to make them realize you ware going to cost them a ton of money to maybe or maybe not get a judgement and they might walk away hoping  to get an easier catch.

Another thing to do is look on the MN court website and try to find cases that were filed where the plaintiff either lost or was dismissed by the plaintiff. That will be very hard; although now that the MN rules of civil procedure required a case to be filed in court 1 year after service or the case is dismissed with prejudice, it might be easier; because most cases are dismissed prior to reaching the courthouse. You can go to the courthouse is nearby and look over those cases. I would try the name of the attorney you used to file your answer and see if they have any cases that were dismissed after filing.
 

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 Minnesota follows adoptive business records doctrine.  They don't need any affidavit if they have a witness at trial.

 If there is an arbitration clause in your original contract, I would get this case into arbitration,  like now. As it is you already stand a chance of the court finding you engaged in significant litigation and thereby waived your right to arbitration.

Otherwise, I agree with Clydesmom that it's almost certain you'll end up with a judgment against you. 

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3 hours ago, WhoCares1000 said:

The purpose at this point is to make them realize you ware going to cost them a ton of money

I guarantee there is a capped fee agreement and the plaintiff will spend no more than $1,500 in legal fees. 

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The expenses come in the form of court fees which are outrageous in Minnesota, especially since the plaintiff forced themselves out of small claims court by using pocket docket which they do so that they do not have to pay anything unless they know they can collect. I am sure the lawyers fees do not cover the court fees in the capped fee agreement (and if it does, that would be more of a reason for an attorney to give up and tell their client that the case is lost, especially since it will be only once or twice out of 100 times that they have to do that).

As for business records, it might be true that an affidavit is not needed but I think I read somewhere that in Minnesota, the courts require that account stated cases show an accounting all the way back to 0, not just 1 or 2 statements. I would have to go digging through Google for that (which I told the OP to do).

I would still suggest that if arbitration is in the contract, simply sent the plaintiff attorney a motion to compel arb and the filled in JAMS application. That will probably stop them too (because the plaintiff will have to gamble $300+ just to be told to go to arb).

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18 minutes ago, WhoCares1000 said:

The expenses come in the form of court fees which are outrageous in Minnesota

Ah, good point. I hadn't realized they were that high. 

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10 hours ago, WhoCares1000 said:

The suit is probably a pocket docket case so it is probably not filed in any court as of yet but in Minnesota, you can be sued by simply having the summons served on you without filing in court. The OP did the right thing by getting an answer to the plaintiff and so far has avoided a default judgement.
 

First thing to do is look at the loan agreement they sent. What you are looking for is an arbitration clause. If there is one and it says that the bank will pay the bill, I would immediately sent a motion to compel arbitration to the plaintiff attorney along with a filled out JAMS application. If this is a small amount, they will probably stop right there. If you continue down the discovery path and try this later, they might say that you waived arb so make sure to do this first.

 

The suit was filed in court about 20-days after I was served with the summons.

The loan agreement includes an arbitration clause that states the prevailing party is responsible for the payment of all arbitration and attorneys' fees.

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6 hours ago, Harry Seaward said:

 Minnesota follows adoptive business records doctrine.  They don't need any affidavit if they have a witness at trial.

 If there is an arbitration clause in your original contract, I would get this case into arbitration,  like now. As it is you already stand a chance of the court finding you engaged in significant litigation and thereby waived your right to arbitration.

Otherwise, I agree with Clydesmom that it's almost certain you'll end up with a judgment against you. 

It's my understanding that the odds of a sufficient witness to testify as to the ownership of the account is very unlikely.  The purchase agreement between the original creditor and the second owner of the account isn't notarized.  The bill of sale between that company and the JDB is signed by one person and is not notarized.  There's also the question of my account being part of a group of accounts that was sold.

There is an arbitration clause in the original contract.  It states the prevailing party pays for all arbitration and attorneys' fees.  The contract also lets them bring suit in small claims.

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6 hours ago, WhoCares1000 said:

The expenses come in the form of court fees which are outrageous in Minnesota, especially since the plaintiff forced themselves out of small claims court by using pocket docket which they do so that they do not have to pay anything unless they know they can collect. I am sure the lawyers fees do not cover the court fees in the capped fee agreement (and if it does, that would be more of a reason for an attorney to give up and tell their client that the case is lost, especially since it will be only once or twice out of 100 times that they have to do that).

As for business records, it might be true that an affidavit is not needed but I think I read somewhere that in Minnesota, the courts require that account stated cases show an accounting all the way back to 0, not just 1 or 2 statements. I would have to go digging through Google for that (which I told the OP to do).

I would still suggest that if arbitration is in the contract, simply sent the plaintiff attorney a motion to compel arb and the filled in JAMS application. That will probably stop them too (because the plaintiff will have to gamble $300+ just to be told to go to arb).

My original contract states any matters need to be adjudicated in arbitration or small claims.   I heard someone in Minnesota has the ability to bypass small claims in favor of civil court if they desire.  I don't know if this would be allowed when the contract specifically says small claims.

I should point out that the plaintiff has provided me with a copy of my original agreement and a statement of payments.  I don't know if these are entirely accurate.

Arbitration is in the contract.  The problem is that the prevailing party is responsible for paying the arbitration and attorneys' costs. 

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Here is another piece of information I should add.

There are several loan agreements involved in this case.  The JDB claims they purchased them from the creditor and sent me a copy of each agreement and a copy of a payment history.  They are saying I breached the agreements (collectively) and owe $xxxx.

Many of the agreements have been paid off.  It appears neither the JDB nor their attorney has taken the time to go through the agreements and payment history in their possession so they can state how much is owed on each specific agreement.   They've listed all the agreements and the total amount they claim I owe.

Wouldn't a plaintiff have to specifically state $xxxx is owed on the agreement dated xxxx, $xxxx is owed on the agreement dated xxxx, etc?

 

As I mentioned previously, my original contract includes a arbitration clause and a small claims clause.  There are two things that made me think twice about making a motion to compel arbitration.  First, the contract says the prevailing party is responsible for paying the arbitration and attorneys' fees.  Second, it's my understanding that the plaintiff has the ability to move a case out of small claims and into civil court.   My contract specifically says "small claims" which may block them from doing this.

Does anyone know what kind of business records doctrine arbitration services usually follow?   I'm curious if their requirement levels are relaxed when it comes to the transfer of ownership documents a JDB provides.

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42 minutes ago, LaneBlane said:

  The purchase agreement between the original creditor and the second owner of the account isn't notarized.  The bill of sale between that company and the JDB is signed by one person and is not notarized. 

Those documents are not required to be notarized.

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7 hours ago, Harry Seaward said:

 Minnesota follows adoptive business records doctrine.  They don't need any affidavit if they have a witness at trial.

 If there is an arbitration clause in your original contract, I would get this case into arbitration,  like now. As it is you already stand a chance of the court finding you engaged in significant litigation and thereby waived your right to arbitration.

Otherwise, I agree with Clydesmom that it's almost certain you'll end up with a judgment against you. 

They could provide an affidavit with a motion for summary judgment.  

  I agree that the OP should look into arbitration.

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1 hour ago, LaneBlane said:

It's my understanding that the odds of a sufficient witness to testify as to the ownership of the account is very unlikely.  The purchase agreement between the original creditor and the second owner of the account isn't notarized.  The bill of sale between that company and the JDB is signed by one person and is not notarized.  There's also the question of my account being part of a group of accounts that was sold.

There is an arbitration clause in the original contract.  It states the prevailing party pays for all arbitration and attorneys' fees.  The contract also lets them bring suit in small claims.

These things may have come into play once upon a time but, unless there is a claim of fraud or ID theft, courts are by and large using common sense as the general rule when a plaintiff walks in with a stack of records showing the defendant's name and address. 

Of course you're free to roll the dice in court.  If arbitration is off the table, you may have no choice but I sure wouldn't keep it in court if there was an option for arbitration. 

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I agree.  Arbitration appears to be the best option.

I had expressed some concern about the Plaintiff filing in small claims and having it moved to a higher court.  After reading a section of my agreement a few times, it specifically says this is not allowed.  If a matter cannot be resolved in small claims, it must go to binding arbitration.

My response to the complaint was filed less than 20 days ago, so I can file a motion for leave to file an amended answer.  After I found a few examples, I put the following together:

 

DEFENDANT [NAME] MOTION FOR LEAVE TO AMEND
THEIR ANSWER, AFFIRMATIVE DEFENSES, AND MEMORANDUM IN SUPPORT

            Defendant, [name], hereby moves the Court for leave to amend their answer. In support of this motion, Defendant states:

            1.   The Court should grant Defendant’s motion pursuant to Rule 15 of the Federal Rules of Civil Procedure and in the interests of justice.

            2.    Defendant’s proposed amendment to affirmative defenses includes the addition of the following affirmative defense.

 

AFFIRMATIVE DEFENSE

This court lacks jurisdiction due to the presence of a mandatory, binding arbitration clause and a small claims court clause in the ________ loan agreement.

 

 WHEREFORE, Defendant requests that the Court grant Defendant’s motion for leave to file an Amended Answer and Affirmative Defenses, attached hereto as Exhibit A.

 

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7 hours ago, LaneBlane said:

The suit was filed in court about 20-days after I was served with the summons.

The loan agreement includes an arbitration clause that states the prevailing party is responsible for the payment of all arbitration and attorneys' fees.

They really filed on court and there is a case number? That is highly unusual.

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7 hours ago, LaneBlane said:

My original contract states any matters need to be adjudicated in arbitration or small claims.   I heard someone in Minnesota has the ability to bypass small claims in favor of civil court if they desire.  I don't know if this would be allowed when the contract specifically says small claims.

I should point out that the plaintiff has provided me with a copy of my original agreement and a statement of payments.  I don't know if these are entirely accurate.

Arbitration is in the contract.  The problem is that the prevailing party is responsible for paying the arbitration and attorneys' costs. 

They cannot serve you and then file in small claims court in Minnesota. Small claims is one place where pocket docket is not allowed. If they are doing discovery in the manner which they are doing, this is not in small claims court but regular civil court so at this point, you can move for private arbitration and possibly get it because the contracts mean that they can use small claims court in lieu of the arbitration clause but in this case, the plaintiff did not avail themselves to small claims court and so their only other choice is private arbitration.

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The first question I now have is can you give us a rough amount of what is owed. You can estimate and do a little fudge factor so the other side cannot connect it to you. There is a limit in small claims court of Minnesota of $7500 and any amount over that must go through civil court (or the plaintiff has the option of reducing their claim to fit into the limit for small claims, called conciliation court in Minnesota.

In general, small claims court has streamlined procedures that allow cases to go faster than civil court. I generally say that small claims court is like Judge Judy without the attitude from the judge. Because of that, Minnesota required that for small claims court, you file with the court first and then perform service rather than use pocket docket. There is also no formal discovery in small claims court. They present their case, you present your case, and the judge rules. If you don't like the ruling (or the other side does not like it), you can file for a trial de novo at the civil court level which is higher.

As for the arb clause in the contract, the fact that they can use small claims or arb is an either or decision. They get to decide which route they wanted to go and they did not choose small claims (or could not because of the limit). That leaves them arb as their only option. They also cannot go backwards from civil court to small claims now that they decided to go that path. This means that you can compel arb but only if you do it quickly before you get too far into the civil court process. Since they sent you formal discovery, that suggests that this is not in small claims court.

Finally, as I said before, it is highly unusual that they served you the summons and then filed in court. That is not how the process usually goes. What usually happens is that you get served the summons, you file your answer, and then discovery starts and you work with the plaintiff until you get to the point where the court has to be involved. The plaintiff then can decide to drop the suit or proceed to court. The rules were changed a couple of years ago to force the plaintiff to make that decision by stating that if a case was not filed within 1 year of service, then the case is dismissed with prejudice. They still have the 1 year to decide however. Because the fees for civil court are so high, most JDBs simply wait to see if they get a default and then decide if the cases where answers were filed are worth it to prosecute. They might have filed however (say a new lawyer not yet associated with the unique process in Minnesota and worried about the 1 year clock). I would suggest calling the courthouse and making sure you have a case number. If there is no case number, there is no case in the court.

In either case, I would make up a motion to compel arb and get that to the plaintiff attorney and the court if there is a case filed (if not, then the plaintiff attorney is fine).

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3 hours ago, WhoCares1000 said:

They really filed on court and there is a case number? That is highly unusual.

When I first met with my attorney, he called the court house to see if anything had been filed.  At that time, nothing had been.  After he prepared my response to the complaint, he called the court again while I was in his office and was told the Plaintiff had filed.  Looking at Plaintiff's First Set of Interrogatories and Request for Production of Documents, there is a case number.

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3 hours ago, WhoCares1000 said:

They cannot serve you and then file in small claims court in Minnesota. Small claims is one place where pocket docket is not allowed. If they are doing discovery in the manner which they are doing, this is not in small claims court but regular civil court so at this point, you can move for private arbitration and possibly get it because the contracts mean that they can use small claims court in lieu of the arbitration clause but in this case, the plaintiff did not avail themselves to small claims court and so their only other choice is private arbitration.

They filed in civil court.   They served me with a Complaint and I responded through an attorney because I was up against a deadline and didn't want to push it.

My response to the complaint didn't include the arbitration and small claims clauses as a defense because my attorney advised me they still had the ability to file in small claims and move it up to civil.  My attorney apparently didn't read the contract closely enough.  The contract says a party cannot transfer out of small claims to another court.    Also, any small claims appeal needs to go to binding arbitration.

Is it true that the Plaintiff cannot file in small claims once they've filed a case in civil court?   Could they file a new case in small claims, or has that door been closed?

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3 hours ago, WhoCares1000 said:

The first question I now have is can you give us a rough amount of what is owed. You can estimate and do a little fudge factor so the other side cannot connect it to you. There is a limit in small claims court of Minnesota of $7500 and any amount over that must go through civil court (or the plaintiff has the option of reducing their claim to fit into the limit for small claims, called conciliation court in Minnesota.

They claim I owe between $6000-7000.

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3 hours ago, WhoCares1000 said:

As for the arb clause in the contract, the fact that they can use small claims or arb is an either or decision. They get to decide which route they wanted to go and they did not choose small claims (or could not because of the limit). That leaves them arb as their only option. They also cannot go backwards from civil court to small claims now that they decided to go that path. This means that you can compel arb but only if you do it quickly before you get too far into the civil court process. Since they sent you formal discovery, that suggests that this is not in small claims court.

I just need clarification on this.   Are you saying that because the Plaintiff filed in civil court, they've lost their ability to file in small claims?    I can understand how a civil case can't be transferred down to small claims.  What would keep them from filing a new case in small claims?

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3 hours ago, WhoCares1000 said:

Finally, as I said before, it is highly unusual that they served you the summons and then filed in court. That is not how the process usually goes. What usually happens is that you get served the summons, you file your answer, and then discovery starts and you work with the plaintiff until you get to the point where the court has to be involved. The plaintiff then can decide to drop the suit or proceed to court. The rules were changed a couple of years ago to force the plaintiff to make that decision by stating that if a case was not filed within 1 year of service, then the case is dismissed with prejudice. They still have the 1 year to decide however. Because the fees for civil court are so high, most JDBs simply wait to see if they get a default and then decide if the cases where answers were filed are worth it to prosecute. They might have filed however (say a new lawyer not yet associated with the unique process in Minnesota and worried about the 1 year clock). I would suggest calling the courthouse and making sure you have a case number. If there is no case number, there is no case in the court.

In either case, I would make up a motion to compel arb and get that to the plaintiff attorney and the court if there is a case filed (if not, then the plaintiff attorney is fine).

At the time I initially sat down with my attorney, nothing had been filed with the court.  When I met with my attorney again to review my response, he called the court and found out the complaint had been filed.  The first set of interrogatories I received has a case number on it.  (They worked fast!)

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