Defending Debt Collection Suits
(Often, the Best Defense is a Good Offense...)
Prepared by:
Jerry J. Jarzombek
The Law Office of Jerry Jarzombek, PLLC
714 W. Magnolia Avenue
Fort Worth, Texas 76104
817-348-8325
817-348-8328 Facsimile
[email protected]
I.
II.
Objectives of this presentation
A.
To generate enough cash flow in the defense of collection suits to operate
a successful practice.
B.
To better serve your clients by identifying actionable violations of state
and federal debt collection statutes, arising from collection lawsuits.
C.
To overcome the attempts of the debt buyers to separate your client from
their money.
D.
To develop a reputation as an attorney who makes collection attorneys,
debt buyers and creditors obey the law.
E.
To make collection attorneys, debt buyers and creditors obey the law.
The Process – Where to Begin?
A.
How did the client get to you? Or, better yet, how do you get clients to
find you?
1.
Court clerks and Judges (yes, they DO refer people; they have
families ands friends too)
a.
2.
what can you do so that they remember you favorably?
Other lawyers – Bankruptcy, personal injury, family law
a.
some bankruptcy lawyers are your friends; some are not
b.
almost every personal injury lawyer has clients who have
medical bills that may never get paid
1
c.
B.
3.
Websites
4.
Direct mail
5.
Newspaper articles and television interviews (never pass up a
chance at being interviewed)
6.
Legal insurance providers.
Size up the client. Talk to them and LISTEN to what they have to say
about the account made the basis of the suit.
1.
C.
family law lawyers have clients who were often both
supporting a household, and now support two households
Do they have a story?
a.
death/health/job/age?
b.
harassment?
c.
have no clue why they are being sued (identity theft)?
d.
do they (think that they) know more than you?
2.
Are they credible?
3.
Can they pay you something? How much is enough and what is
too much?
a.
It is OK to ask for the money – your doctor does.
b.
You too can structure payment plans…
4.
Is there a possibility of a counterclaim or a separate lawsuit?
5.
What does the client want? Do they want it to ―go away,‖ or are
they looking for a pound of flesh?
How do you charge the defendant in a collection case?
1.
Hourly?
a.
set a limit?
2
b.
2.
3.
D.
E.
Flat fee?
a.
based on your probable result?
b.
based on the average time you spend?
c.
based on just how good you really are?
Pro bono?
Who is the Plaintiff and/or its lawyer?
1.
Do you automatically know there is an offensive claim?
2.
Do you and your clients get treated favorably by a particular
lawyer or that lawyer‘s client? Or does the lawyer need a lesson or
two?
3.
Will you get a non-suit by making a phone call or merely filing an
answer? Or is it Rambo litigation equal to Sherman‘s march to the
sea?
4.
What are your ethical obligations?
5.
Are there cases you need to turn away?
LOOK closely at the pleadings.
1.
III.
the sky‘s the limit?
Is the suit from a creditor or a debt buyer?
a.
Claims against the collection lawyer and/or the debt buyer
will be FDCPA claims, while claims against the creditor
will be governed by state law.
b.
do you have to spend more time on a creditor lawsuit as
compared to a debt-buyer suit?
Causes of action commonly asserted in scavenger suits
A.
Breach of written contract [something they can‘t get]
1.
requirements of a valid contract are: (1) an offer; (2) an acceptance
in strict compliance with the terms of the offer; (3) a meeting of
the minds; (4) each party's consent to the terms; and (5) execution
3
and delivery of the contract with the intent that it be mutual and
binding.
2.
Does the contract have more than one part?
a.
3.
B.
How can the scavenger prove the contract of some prior owner?
a.
Business record affidavits
b.
Subpoenas to the original creditor
c.
Admissions to the consumer
d.
Establishing a contract through the use of the card
Breach of oral contract [never have I ever seen one]
1.
C.
has anyone seen a credit card agreement that allows for oral
modifications? So why do they use it? Probably because Citibank
started it….
Sworn account [still found in pleadings in some states]
1.
A sworn account applies only to transactions between persons, in
which there is a sale upon one side and a purchase upon the other,
whereby title to personal property passes from one to the other, and
the relation of debtor and creditor is thereby created by general
course of dealing--it does not mean transactions between parties
resting upon special contract.
a.
D.
Citibank and BOA both have interest rates described in a
separate document called a ‗card carrier‘ or a ‗folder.‘ This
additional item is part of the card agreement – and the
original creditors don‘t have it – so the scavengers can not
possibly have it!
Credit card transactions are a financing arrangement – they
are not the sale of an item to the consumer by the credit
card company – so sworn account will not apply.
Account stated
1.
A few definitions:
a.
An account stated has been defined as an agreement 1)
between two persons who have had previous transactions,
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2) fixing the amount due in respect of such transactions,
and 3) promising payment
b.
At a minimum, Plaintiff is required to prove 1) that services
were rendered and 2) the prices charged were agreed to by
Defendant or that, in the absence of an agreement, the
prices charged were usual, customary and reasonable.
c.
An account stated has been defined as an agreement
between parties who have had previous transactions that the
account representing those transactions is true and the
balance stated is correct, together with a promise, express
or implied, for the payment of such balance.
2.
The contract AND the statement of account are required.
3.
How can the scavenger prove that the statement was held by the
consumer without objection?
4.
How can the scavenger prove that the consumer received the
statement?
i.
E.
F.
It is insufficient for a plaintiff to claim that a statement was
mailed, but not paid.
Money had [ some states consider this to be conversion, with a shorter
SOL]
1.
A claim for money had and received is an equitable action that
may be maintained to prevent unjust enrichment when the
defendant obtains money, which in equity and good conscience
belongs to the plaintiff. A cause of action for money had and
received is not based on wrongdoing but instead looks only to the
justice of the case and inquires whether the defendant has received
money which rightfully belongs to another. It is essentially an
equitable doctrine applied to prevent unjust enrichment.
2.
But, the scavenger did not provide any money to the consumer –
rather, a windfall is sought. Otherwise, the consumer ought to be
able to make the scavenger whole, by paying them back the
acquisition cost of the purchased account.
Quantum meruit [and this is mutually of contract]
1.
The elements are: (1) valuable services were rendered; (2) to the
party sought to be charged; (3) which services were accepted by
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the party sought to be charged; (4) under such circumstances as
reasonably notified the recipient that the plaintiff, in performing
such services, expected to be paid by the recipient.
2.
G.
But, the scavenger did not provide any services to the consumer –
and how could the scavenger expect to the paid by the consumer at
the time the services were acquired?
Unjust enrichment [like ‗money had‘ can be subject to a shorter SOL]
1.
Unjust enrichment is based on the equitable principle that one who
receives benefits unjustly should make restitution for those
benefits. A party may recover under the theory of unjust
enrichment when another has obtained a benefit by fraud, duress,
or the taking of an undue advantage. To be entitled to restitution
under a theory of unjust enrichment, the plaintiff must show the
party sought to be charged had wrongfully secured a benefit or had
passively received one which would be unconscionable for that
party to retain
H.
Common law debt
I.
Truth In Lending Act: Defendant‘s failure to exercise an option to object
to the billings is irrelevant.
1.
THE TRUTH IN LENDING ACT DOES NOT WAIVE
CONSUMERS‘ RIGHTS
a.
Plaintiff‘s frequently rely on the Fair Credit Billing portion
of the TILA, 15 U.S.C. § 1666. That provision imposes
liability on plaintiff were it not to comply with the statutory
billing error procedures. §1666(e). The Fair Credit Billing
Act does take away consumers‘ rights to claim that they do
not owe what is stated on a periodic bill. It does not
mandate that consumers avail themselves of those dispute
procedures -- unless they want to seek statutory damages
for their violation -- nor does it provide that consumers lose
claims or defenses if they call to complain -- as most do -rather than write. Congress did not take away consumers‘
defenses as a penalty for not invoking the statutory billing
error procedures, undoubtedly because imposing a writing
requirement places a burden, sometimes insurmountable,
on a portion of TILA‘s intended beneficiaries. See, White
and Mansfield, Literacy and Contract, 132 Stanford Law &
Policy Rev. 233 (2002). While the majority of the
population may be able to draft a dispute letter, a
6
significant minority unfortunately does not have that
capability, for lack of either literacy or English language
skills. See, National Institute for Literacy, the State of
Literacy in America: Estimates at the Local, State and
National
Levels
(1998),
available
through
http://www.nifl.gov. Plaintiff‘s efforts to import the
optional consumer protection of the Fair Credit Billing Act
as a sword against the consumer turns that consumer
protection statute upside down and inside out.
2.
THE FRB AGREES THAT RESORT TO BILLING ERROR
PROCEDURES IS OPTIONAL
a.
The Federal Reserve Board‘s position appears in its
Official Staff Commentary, which is dispositive unless
demonstrably irrational.
Ford Motor Credit Co v.
Milhollin, 444 U.S. 555 (1980); Mourning v. Family
Publications Service, 411 U.S. 356 (1973). As does
defendant, the FRB interprets 15 U.S.C. § §1643
(unauthorized use) and 1666 (billing errors) as alternative,
non-exclusive options:
12(c) Right of cardholder to assert claims or defenses
against card issuer.
1. Relationship to § 226.13. The § 226.12(c) credit card
"holder in due course" provision deals with the consumer's
right to assert against the card issuer a claim or defense
concerning property or services purchased with a credit
card, if the merchant has been unwilling to resolve the
dispute. Even though certain merchandise disputes, such as
nondelivery of goods, may also constitute "billing errors"
under § 226.13, that section operates independently of §
226.12(c). The cardholder whose asserted billing error
involves undelivered goods may institute the error
resolution procedures of § 226.13; but whether or not the
cardholder has done so, the cardholder may assert claims or
defenses under § 226.12(c). Conversely, the consumer may
pay a disputed balance and thus have no further right to
assert claims and defenses, but still may assert a billing
error if notice of that billing error is given in the proper
time and manner. An assertion that a particular transaction
resulted from unauthorized use of the card could also be
both a "defense" and a billing error.
2.
Claims and defenses assertible.
7
Section 226.12(c)
merely preserves the consumer's right to assert against the
card issuer any claims or defenses that can be asserted
against the merchant. It does not determine what claims or
defenses are valid as to the merchant; this determination
must be made under state or other applicable law.
Official Staff Commentary on Regulation Z, §226.12(c).
b.
Moreover, the statute itself provides that the consumer may
re-assert the same error, but provides that the card issuer
does not have to again comply with the investigation
provisions. 15 U.S.C. § 1666(a), final clause.
c.
Citibank has lost the argument that failure to take
advantage of the statutory remedies waives the consumer‘s
claims and defenses. Citibank (South Dakota) v. Mincks,
135 S.W.2d 545 (Mo. App. Ct. 2004). ―Nothing in the
statute affirmatively imposes any penalty on the consumer
for failing to take advantage of the benefits of this statute
[TILA]. The only penalty which can even be inferred is the
loss of the abatement rights contained therein.‖ Id. at 559.
―If we were to accept Citibank‘s argument, it would mean
that a consumer who failed to utilize this billing error
statute – through ignorance, inadvertence, or purposeful
action – would completely forfeit his right to contest the
debt owed in a collection lawsuit.‖ Id.
d.
And it doesn‘t work in Connecticut either. In People’s
Bank v. Scarpetti, 21 Conn. L. Rptr. 357, 1998 WL 61925
(Conn. Super. 1998), Judge Skolnick ruled, ―The court
finds that § 1666 does not require a defendant to allege that
he provided, or to provide, written notice of theft or loss of
a credit card in order to assert unauthorized use by others as
a special defense. Rather, § 1666(a) provides the required
procedure a creditor is to follow when and if an obligor
voluntarily provides timely written notice of an error on a
credit statement.‖ Defendant also respectfully refers the
Court to Crestar Bank v. Cheevers, 744 A.2d 1043, 1047
(D.C. 2000) (15 U.S.C. § 1666 does not mandate the
consumer to utilize the statutory dispute procedures);
Jacobs v, Marine Midland Bank, N.A., 475 N.Y.S.2d 1003,
1005 N.Y. Super. 1984) (legislative history shows purpose
to protect the consumer against unfair or inaccurate
practices between credit card issuers and retail merchants).
8
3.
BILLING ERROR PROCEDURES ARE QUITE LIMITED IN
APPLICATION
a.
Plaintiff‘s position that failure to comply with the Billing
Error Act waives any claims or defenses is also unsound
because the Act applies only to certain limited aspects of
the periodic statement. 15 U.S.C. § 1666(b); Reg. Z, 12
C.F.R. §226.13(a). Reg Z §226.13(a) limits the optional
billing error dispute procedures only to:
Extension of credit not made to the consumer
Extension of credit not made in the amount reflected by the
statement
Unauthorized extension of credit even if consumer received
benefit
Extension of credit for property not accepted by the
consumer
Extension of credit not properly identified
Extension of credit for property or services not delivered
(wrong quantity or different from agreed upon)
Failure to include a payment or credit
Computational error in the credit related portion of the
statement
Additional clarification request, if accompanied by a
dispute
Failure to send to last known address
b.
The Billing Error Act does not apply, for instance, to
disputes over the quality of accepted merchandise. Official
Staff Commentary §226.13(a)(3)-1. The list of available
disputes under the Fair Credit Billing Act does not include
contractual disputes between the card issuer and the card
holder: usury or the proper amount of interest; whether late
charges or over limit fees are contractually authorized and
constitute liquidated damages or an unlawful penalty;
unauthorized use; unsolicited issuance (15 U.S.C. §
§1642); statutory disclosure violations that can be used as
recoupment, 15 U.S.C. § 1640; or theft of identity.
c.
Plaintiff‘s position that the TILA deprives the consumer of
defenses is not only contrary to the statute it relies on and
the dispositive interpretation of the FRB, but constitutes
another effort to evade the normal burden of proof on a
contract claim.
9
d.
The Fifth Circuit clearly states that the purpose of the Fair
Credit Billing Act is ―protecting consumers from the
harassment of creditors.‖ Koerner v. American Express
Co., 615 F.2d 191, 196 (5th Cir. 1980). In a discussion of
credit card fraud and its relationship to failing to dispute
fraudulent charges, the United States District of Columbia
Circuit Court of Appeals states:
Regulation Z likewise reflects the remedial purpose
of § 1643. Filling in the gap between TILA and the
Fair Credit Billing Act, the Federal Reserve Board
explains in Regulation Z that a cardholder need not
contest charges under § 1666 in order to pursue
remedies under § 1643. See Crestar Bank, 744 A.2d
at 1048. Specifically, the Board's official staff
interpretation of 12 C.F.R. § 226.12(b)(3) states that
"[t]he liability protections afforded to cardholders in
§ 226.12 [under § 1643] do not depend upon the
cardholder's following the error resolution
procedures in § 226.13 [under § 1666]." Although §
1666 and § 226.13 apply only to "consumer credit"
and not to corporate credit, see §§ 1666(a), 1602(h),
they
nevertheless
support
the
general
proposition that a cardholder's failure to report
fraudulent charges does not create apparent
authority for such charges. Congress instructed
the Federal Reserve Board to promulgate
regulations to carry out the purposes of TILA, see
15 U.S.C. § 1604(a), and the Supreme Court has
held that courts owe deference to the Board's
regulations and its interpretation of its regulations
under TILA. See Anderson Bros. Ford v. Valencia,
452 U.S. 205, 219, 101 S.Ct. 2266, 2274, 68
L.Ed.2d 783 (1981) (citing Ford Motor Credit Co.
v. Milhollin, 444 U.S. 555, 556, 100 S.Ct. 790, 792,
63 L.Ed.2d 22 (1980)). Because the Board's
interpretation is consistent with § 1643 and § 1666,
deference to Regulation Z is due. See Anderson,
452 U.S. at 219, 101 S.Ct. at 2274; Milhollin, 444
U.S. at 565, 100 S.Ct. at 796. Indeed, in Crestar
Bank, 744 A.2d at 1048, the District of Columbia
Court of Appeals deferred to Regulation Z and
rejected an interpretation that "reads into §
1643 a presumption that if the cardholder fails to
notify the [card issuer] that the disputed charges
10
are not his, they will be deemed to have been
authorized by the cardholder."
d.
IV.
Venue Violations: Where does the consumer live? [1692i violations]
A.
Is the suit filed in the county where the consumer resides?
B.
Is the suit filed where the consumer signed the agreement made the basis
of the lawsuit?
C.
V.
VI.
The above-cited authority dealt with fraudulent charges, but
the result is the same – there is no liability placed on a
consumer for allegedly failing to notify a card issuer, and
an alleged failure to notify does not means that the
cardholder authorized the charges.
1.
That is NOT necessarily the same as the consumer‘s residence.
2.
Is it worthy of a 1692i claim?
What about courts of lesser jurisdiction (such as justice courts that are
divided into precincts?)
1.
Do you transfer venue? Not if the wrong venue is favorable…
2.
Does a motion to transfer venue get you a non-suit (or dismissal)
with prejudice?
Does the debt belong to the named Defendant? [1692e violations]
1.
Is the named defendant only an authorized user?
2.
Is this identity theft?
How old is the account? [1692e violations]
A.
Ask about the last payment. While most people remember the events in
their lives that caused them to have financial difficulty, some are poor
historians. If you have a poor historian, have them get a credit report.
1.
Look for an affidavit attached to the pleadings. Collection lawyers
attach affidavits to get a default judgment without making a
physical appearance to the courthouse. [In Tarrant County, Texas,
judges estimate that 85% to 95% of collection cases are concluded
with a default judgment; one Dallas County, Texas, one judge
opined the number was 95% and not a bit less].
11
a.
VII.
Sometimes the affidavit proves that the account is timebarred. A true gift.
What about notices under 15 U.S.C. § 1692g and responses to validation
requests? [1692g(a) and (b) violations]
A.
B.
Did the lawyer send a notice prior to suit?
1.
In the case of a debt buyer, some collection lawyers rely on their
client to send the g notice.
2.
Is the g notice included in the pleadings? Is it defective?
Are you at a hearing with an appearance lawyer (rent-a-lawyer or lawyer
du jour?
1.
2.
3.
Heintz v. Jenkins says ―The Act must be read to apply to lawyers
engaged in consumer debt-collection litigation for two rather
strong reasons. First, a lawyer who regularly tries to obtain
payment of consumer debts through legal proceedings meets the
Act's definition of "debt collector": one who "regularly collects or
attempts to collect, directly or indirectly, [consumer] debts owed . .
. another," 15 U.S.C. § 1692a(6). Second, although an earlier
version of that definition expressly excluded "any attorney-at-law
collecting a debt as an attorney on behalf of and in the name of a
client," Congress repealed this exemption in 1986 without creating
a narrower, litigation-related, exemption to fill the void.
Where‘s the rent-a-lawyer‘s g notice?
a.
Ask if he does this all the time (or you may know that
already)
b.
Is the appearance lawyer buddies with the judge?
Have the appearance lawyer formally appear in the case.
a.
B.
Ask them questions to prove they know nothing about the
case, giving them an opportunity to dazzle the judge with
their … brilliance.
What about validation?
1.
If the g notice is in the pleadings, ask for validation. If an answer
is required prior to the expiration of the validation period, you may
have an overshadowing violation.
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2.
3.
a.
But what about 1692g(d)?
communication.
b.
Should the client call the lawyer before hiring you if there
was no pre-suit notice?
Ask if the consumer requested validation or disputed the account.
Many consumers send a validation request or a dispute notice they
found on the internet somewhere. Hopefully, they kept a copy, and
sent the request by certified mail. Was the suit filed without
response to the validation request?
a.
Look at the credit report to see if the account is being
reported as disputed. There could be an e8 violation.
b.
Look at the credit report to see if the account is being
reported as a joint account when it is the sole responsibility
of the other spouse. Another chance for an e8 violation.
Demand a validation notice from the rent-a-lawyer.
a.
VIII.
Pleadings are not an initial
Watch them send a defective validation notice, such as one
addressed to your client, c/o you as the lawyer, with the
salutation of the notice addressed to your client….
Telephone calls prior to suit. [1692 d, e & f violations]
A.
Is the client savvy enough for this? Or do they just want it to go away?
B.
Calls from the creditor.
1.
This is not fertile ground for an FDCPA suit, BUT can form the
basis of a counterclaim based on state law.
a.
C.
Example: Providian habitually called clients in Texas,
threatening wage garnishment and liens on their
homesteads in an effort to wrench $$ from the consumer.
Calls from the collection attorney.
1.
Are the calls from a lawyer?
a.
Example: Some states (such as Texas) require a bond for a
non-lawyer to communicate with a consumer regarding the
13
collection of a consumer debt; other states have a licensing
requirement.
D.
Calls from the debt buyer.
1.
E.
Assess your client!
1.
F.
Do they have a recording? What kind of witness will they make?
Are they up for being deposed?
Foti violations.
1.
IX.
Be ready for the ―we‘re not a collector – we own it‖ argument.
Messages left on the answering machine without any disclosure.
Examine the pleadings. [1692e violations]
A.
Legal Misrepresentations.
1.
2.
Does the pleading seek recovery on an improper theory?
a.
Example: Case law in Texas holds that credit card cases
are NOT subject to a suit on a sworn account under Tex. R.
Civ. P. 185. In spite of this, collection lawyers continue to
make allegations regarding a suit on a sworn account.
b.
How many times have you seen an attempt by a debt buyer
to recover under the ―account stated‖ theory?
c.
Who made this ―oral contract?‖
What? A legal misrepresentation is subject to the BFE defense?
a.
B.
Factual Misrepresentations.
1.
Does the pleading allege something that is false?
a.
X.
Maybe a motion for summary judgment on the impossible
claims? Sanctions?
Example: Does the debt buyer claim that there was a
contract between it and the consumer? Or that the debt
buyer supplied goods or services?
Examine Attachments to Pleadings. Look at footers!! [1692e violations]
14
A.
Affidavits again.
1.
B.
a.
Example: Affidavits notarized by Sondra Rosenfeld,
employed by NCO, frequently contain allegations that the
affiant is employed by the Plaintiff (when in reality, the
affiant is employed by NCO).
b.
Does the affiant, who represents a debt buyer (and fifth
owner of the debt) claim to have personal knowledge that
the original creditor issued a credit card to the consumer?
c.
Is the affidavit signed by a TrakAmerica employee?
1.
Note, in many jurisdictions a business record
affidavit must disclose the employer of the affiant,
and none of the TrakAmerica affidavits I have seen
make this disclosure.
2.
Update – allegedly, Sara Rubin is no longer
employed at TrakAmerica
―Agreements.‖
1.
C.
Does the affidavit contain false statements?
Is there a ―real‖ credit card agreement attached?
a.
Example: A suit to collect a credit card debt should not
contain a blank copy of a retail sales installment contract
for a vehicle purchase.
b.
Example: Does the suit identify Bank One as the original
creditor, only to have a NextCard agreement attached as a
copy of the agreement?
c.
Example: Does CACH want to collect a Providian
MasterCard, but attached a Providian Visa agreement?
Demand letters.
1.
Is the collection lawyer silly enough to attach his demand letter?
a.
Example: the letter makes an immediate demand for
payment of $150 in attorney‘s fees, although the lawyer
says he has not yet looked at the case.
15
D.
Offers to Settle Without Litigation
1.
XI.
Example: Wolpoff & Abramson offers to have the defendant call
them to settle, which could result in missing the deadline to
answer, and the entry of a default judgment. Probably false,
deceptive and misleading.
Read subsequent pleadings carefully.
A.
The collector‘s MSJ
1.
B.
Example: Some mills are so busy, that they include a copy of
every asset purchase made by their scavenger client. Some will
pre-date your client‘s default; others will prove that the scavenger
bought the debt from an entity other than the one sworn to by the
scavenger in their affidavit; still others prove that the debt was
time-barred.
Business Records Affidavits
1.
FRE 803(6): (6) Records of regularly conducted activity. — A
memorandum, report, record, or data compilation, in any form, of
acts, events, conditions, opinions, or diagnoses, made at or near the
time by, or from information transmitted by, a person with
knowledge, if kept in the course of a regularly conducted business
activity, and if it was the regular practice of that business activity
to make the memorandum, report, record or data compilation, all
as shown by the testimony of the custodian or other qualified
witness, or by certification that complies with Rule 902(11), Rule
902(12), or a statute permitting certification, unless the source of
information or the method or circumstances of preparation indicate
lack of trustworthiness. The term "business" as used in this
paragraph includes business, institution, association, profession,
occupation, and calling of every kind, whether or not conducted for
profit.
a.
How can the scavenger testify that the records were made
by a person with knowledge? They didn‘t make them, nor
did anyone in their employ.
b.
The rule does not require a witness laying the predicate for
introduction of a business record to be the creator of the
document or even an employee of the company keeping the
subject record. What the rule does require, however, is
that the person testifying demonstrate that he or others
16
in his company "knew of the events recorded on the
third party documents. The purpose in requiring that the
"qualified witness" know of the events in the records is to
ensure the accuracy of the records
2.
Challenge computer generated records
a.
What about the ―records‖ transmitted with that bulk
purchase that are contained in a database somewhere? In
the case of a paper record, the inquiry is into the procedures
under which the file is maintained, including custody,
access, and procedures for assuring that the records in the
files are not tampered with. The foundation is well
understood and usually is easily established. See EDWARD
J. IMWINKELRIED, EVIDENTIARY FOUNDATIONS §
4.03[1] (5th ed. 2002) ("IMWINKELRIED"); 5
WEINSTEIN § 900.07[1][b][i]. This ever-expanding
complexity of the cyberworld has prompted the authors of
the current version of the Manual for Complex Litigation to
note that a judge should "consider the accuracy and
reliability of computerized evidence" and that a "proponent
of computerized evidence has the burden of laying a proper
foundation by establishing its accuracy." MANUAL FOR
COMPLEX LITIGATION (FOURTH) § 11.446 (2004),
citing with approval, Gregory P. Joseph, A Simplified
Approach to Computer-Generated Evidence and
Animations, 43 N.Y.L. SCH. L. REV. 875 (1999-2000).
b.
Professor Imwinkelried perceives electronic records as a
form of scientific evidence and discerns an eleven-step
foundation for computer records:
1. The business uses a computer.
2. The computer is reliable.
3. The business has developed a procedure for inserting
data into the computer.
4. The procedure has built-in safeguards to ensure accuracy
and identify errors.
5. The business keeps the computer in a good state of
repair.
6. The witness had the computer readout certain data.
7. The witness used the proper procedures to obtain the
readout.
8. The computer was in working order at the time the
witness obtained the readout.
9. The witness recognizes the exhibit as the readout.
10. The witness explains how he or she recognizes the
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readout.
11. If the readout contains strange symbols or terms, the
witness explains the meaning of the symbols or terms for
the trier of fact.
IMWINKELRIED § 4.03[2].
3.
XII.
Is the affidavit internally consistent?
a.
if principal and interest
mathematically correct?
b.
are their markings on the documents that indicate
unreliability?
is
the
total
i.
the name of the collection firm and the file number
on a 5 year old statement
ii.
is there a conflict with the affidavit attached to the
original pleading filed in the case?
iii.
is there a conflict with the pleadings?
4.
Example: Some mills can not add – the principal and interest add
to a sum different that what is sworn to in the affidavit; many have
handwritten notes by the collection firm (such as their internal file
number or the name of the firm) – hardly possible on a statement
mailed to a client 5 years before – and an indicia of a lack of
trustworthiness. Some of the same ‗connect the dots‘ issues as
stated above.
5.
Does the affidavit claim to be made by a person with knowledge,
at or near the time of the occurrence – yet the affiant is an agent of
the debt buyer, with credit card statements branded with ―this is a
facsimile – not an original?‖ Knowledge of the creation of the
records is required in most jurisdictions.
6.
Does the affiant claim that they or an employee of the debt-buyer
made the records or transmitted information to be included in the
records?
Motion to Dismiss / Plea to the Jurisdiction
A.
are given,
Can they prove they own the claim?
1.
Securitization?
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2.
Assignments?
a.
XIII.
Unifund has provided documents that show they are NOT
the owner of the account, but the assignment was for
collection purposes only, with title and ownership in
someone else (often a Palisades entity).
Send Discovery
A.
Contracts?
B.
Conditions precedent?
D.
Documents viewed by affiant?
E.
Documents proving assignment?
1.
Especially with debt buyers, the chain of title from the original
creditor through all the subsequent owners, to the latest scavenger.
2.
Securitization issues.
F.
Who directs collection efforts?
G.
Anything else that you can think of….
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