On March 1, 2019, the parties in Madden v. Midland Funding, LLC, filed a settlement agreement with the Southern District Court for New York to potentially end long-running litigation over alleged violations of state usury limitations.
Full Answer
Who sold Madden's debt to Midland Funding?
FIA then sold Madden's debt to Defendant–Appellee Midland Funding, LLC (“Midland Funding”), a debt purchaser. Midland Credit Management, Inc. (“Midland Credit”), the other defendant in this case, is an affiliate of Midland Funding that services Midland Funding's consumer debt accounts. Neither defendant is a national bank.
Is there a class action against Midland Funding?
Thomas Arthur Leghorn (Joseph L. Francoeur, on the brief), Wilson Elser Moskowitz Edelman & Dicker LLP, New York, NY, for Midland Funding, LLC and Midland Credit Management, Inc. This putative class action alleges violations of the Fair Debt Collection Practices Act (“FDCPA”) and New York's usury law.
What was the interest rate that Midland Credit applied to Madden?
In November 2010, Midland Credit sent Madden a letter seeking to collect payment on her debt and stating that an interest rate of 27% per year applied.
What is the lawsuit against Madden Madden?
Madden also contends that by attempting to collect interest at a rate higher than allowed by New York law, the defendants falsely represented the amount to which they were legally entitled in violation of the FDCPA, 15 U.S.C. §§ 1692e (2) (A), (5), (10), 1692f (1).
What is the Madden v. Midland case?
Midland Funding that the federal preemption provision of the National Bank Act, 12 U.S.C. § 85, could not be invoked by a non-national bank assignee. Consequently, even though the debt in that case was procured from a national bank, the interest rate the non-bank assignee could charge was subject to state usury law scrutiny.
Did Madden deal with distressed debt?
Finally, it is worth not ing that Madden dealt with distressed, indeed defaulted, debt. In that context, the Court felt comfortable refusing to let the purchaser step into the bank’s shoes for the purposes of federal preemption based on speculation that there would not be a major market impact on the power and business of the national banks. In the minds of the appellate judges in Madden, the debt value was already marked down and a possible decrease in the stated interest rate was not likely to have a material impact, if any, on the value of defaulted debt.
Why did Madden's claims fail?
However, the court stated that if, at trial, the defendants were able to prove that Madden had received the Cardholder Agreement and Change In Terms, and that FIA had assigned her debt to Midland Funding, her claims would fail as a matter of law because the NBA would preempt any state-law usury claim against the defendants.
Who sold Madden's debt?
Madden owed approximately $5,000 on her credit card account and in 2008, FIA “charged-off” her account (i.e., wrote off her debt as uncollectable). FIA then sold Madden's debt to Defendant–Appellee Midland Funding, LLC (“Midland Funding”), a debt purchaser. Midland Credit Management, Inc. (“Midland Credit”), the other defendant in this case, is an affiliate of Midland Funding that services Midland Funding's consumer debt accounts. Neither defendant is a national bank. Upon Midland Funding's acquisition of Madden's debt, neither FIA nor BoA possessed any further interest in the account.
Why did the District Court vacate the FDCPA claim?
Because the District Court's analysis of the FDCPA claim was based on an erroneous NBA preemption finding and a premature assumption that Delaware law applies, we vacate the District Court's judgment as to this claim.
What is the ruling on Madden's motion for class certification?
In ruling on Madden's motion for class certification, the District Court held that because “assignees are entitled to the protection of the NBA if the originating bank was entitled to the protection of the NBA ․ the class action device in my view is not appropriate here.” App'x at 120. The District Court concluded that the proposed class failed to satisfy Rule 23 (a)'s commonality and typicality requirements because “ [t]he claims of each member of the class will turn on whether the class member agreed to Delaware interest rates” and “whether the class member's debt was validly assigned to the Defendants,” id. at 127–28, both of which were disputed with respect to Madden. Similarly, the court held that the requirements of Rule 23 (b) (2) (relief sought appropriate to class as a whole) and (b) (3) (common questions of law or fact predominate) were not satisfied “because there is no showing that the circumstances of each proposed class member are like those of Plaintiff, and because the resolution will turn on individual determinations as to cardholder agreements and assignments of debt.” Id. at 128. On May 30, 2014, the parties entered into a “Stipulation for Entry of Judgment for Defendants for Purpose of Appeal.” Id. at 135. The parties stipulated that FIA had assigned Madden's account to the defendants and that Madden had received the Cardholder Agreement and Change In Terms. This stipulation disposed of the two genuine disputes of material fact identified by the District Court, and provided that “a final, appealable judgment in favor of Defendants is appropriate.” Id. at 138. The District Court “so ordered” the Stipulation for Entry of Judgment.
What did Madden sue for?
A year later, Madden filed suit against the defendants—on behalf of herself and a putative class —alleging that they had engaged in abusive and unfair debt collection practices in violation of the FDCPA, 15 U.S.C. §§ 1692e, 1692f, and had charged a usurious rate of interest in violation of New York law, N.Y. Gen. Bus. Law § 349; N.Y. Gen. Oblig. Law § 5–501; N.Y. Penal Law § 190.40 (proscribing interest from being charged at a rate exceeding 25% per year).
When did the District Court deny the Madden motion?
On September 30, 2013, the District Court denied the defendants' motion for summary judgment and Madden's motion for class certification. In ruling on the motion for summary judgment, the District Court concluded that genuine issues of material fact remained as to whether Madden had received the Cardholder Agreement and Change In Terms, ...
Who opened a credit card account in 2005?
In 2005, Saliha Madden, a resident of New York, opened a Bank of America (“BoA”) credit card account. BoA is a national bank. 1 The account was governed by a document she received from BoA titled “Cardholder Agreement.” The following year, BoA's credit card program was consolidated into another national bank, FIA Card Services, N.A. (“FIA”). Contemporaneously with the transfer to FIA, the account's terms and conditions were amended upon receipt by Madden of a document titled “Change In Terms,” which contained a Delaware choice-of-law clause.