by the Consumer Financial Services Group
Recent decisions in New Jersey and Maine demonstrate the
growing burden courts are placing on creditors and debt buyers in credit card
In LVNV Funding, LLC v. Colvell, the New Jersey
Superior Court ruled that, to win on a summary judgment motion, a party suing
on a credit card account must provide the same proof that is required for a
default judgment. In its decision issued on July 12, 2011, the court found that
New Jersey court rules do not allow entry of summary judgment for that party
without proof of the previous balance, all transactions and credits, the
periodic rates, the balance on which the finance charge was computed, any other
charges, the cycle closing date, and the new balance (all from the periodic
statement for the last billing cycle).
The court reversed the trial court's grant of summary
judgment for the collection agency that had purchased the account at issue
because the agency's computer-generated report submitted in support of its
motion had no transaction information, had no billing cycle information, and showed
the periodic and annual percentage rates as zero.
Asserting the need for "strict adherence" to court rules,
the Maine Supreme Court also cited insufficient evidence as the basis for its
decision in Cach, LLC v. Kulas vacating the district court's
grant of summary judgment for the buyer of a credit card account.
The Cach, LLC, decision, issued on June 23, 2011,
held that the affidavit of a bank officer who stated that the bank had sold the
account to the debt buyer was insufficient to establish the buyer's account
ownership for purposes of summary judgment. According to the court, to
establish ownership, copies of the bank's "computerized and hard copy books and
records" on which the affiant's statement was based had to be attached to the
affidavit. It also held that the amount owed on the account was not established
for purposes of summary judgment by the "Debtor's File Balance Report" prepared
by the debt buyer's attorney. Although the report showed the account balance as
of a specific date and the amount of per diem interest, the court held it could
not be considered for purposes of summary judgment because it was not
accompanied by an affidavit supporting its authenticity or establishing that it
was prepared by a person with personal knowledge of the credit card account.
For information about the hurdles for credit card
collection actions in other states, see our prior legal alert on Delaware's new pleading and
documentation requirements for credit card collection actions, which took
effect on July 1, 2011, and our prior legal alert with reference to a recent Pennsylvania
case addressing what evidence is admissible in such actions. In light of the
efforts by federal and state regulators and plaintiffs' lawyers to challenge
foreclosures based on allegations that documentation was inadequate to
establish ownership of the underlying mortgage loans, it is not surprising that
credit cards and other types of loans are now receiving similar attention.
Credit card issuers, other lenders, and debt buyers should review their
procedures and supporting documents for collection actions to ensure that they
conform completely with state laws. Ballard Spahr's Consumer Financial Services
Group has substantial experience in doing these types of reviews.
The Group is nationally recognized for its guidance in
structuring and documenting new consumer financial services products, its
experience with the full range of federal and state consumer credit laws
throughout the country, and its skill in litigation defense and avoidance
(including pioneering work in pre-dispute arbitration programs). In addition to
regularly counseling clients engaged in consumer debt collection on compliance
with the Fair Debt Collection Practices Act and state debt collection laws,
Ballard Spahr lawyers have extensive experience in defending all manner of debt
collection lawsuits. For more information, please contact group Chair Alan S.
Kaplinsky, 215.864.8544 or email@example.com; Vice Chair Jeremy T.
Rosenblum, 215.864.8505 or firstname.lastname@example.org; John L. Culhane, Jr.,
215.864.8535 or email@example.com; Mercedes K. Tunstall, 202.661.2221 or
firstname.lastname@example.org; Barbara S. Mishkin, 215.864.8528 or
email@example.com; or Mark J. Furletti, 215.864.8138 or
Copyright © 2011 by Ballard Spahr LLP
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