In an environment where successfully obtaining judgment against debtors who have defaulted on their obligations requires a sworn affidavit attesting to the amount and nature of the debt, the language that the affidavit contains can be critical. The U.S. District Court for the Eastern District of Tennessee recently broadened language the 6th Circuit found acceptable for a debt buyer to use in testifying about account records created by the original creditor.
In Sells v. LVNV Funding, LLC, the plaintiff, Carl T. Sells brought an action against LVNV Funding (“LVNV”) under the Federal Debt Collection Practices Act alleging violation of several provisions of the Act. Sells argued that the debt buyer, who merely purchased the account after default, did not have actual personal knowledge of the account creation and terms and therefore the affidavit filed with the collection case was false and misleading.
The debt at issue in the original action was a credit card debt that Sells incurred and then defaulted on. It was assigned to LVNV who ultimately brought suit in November of 2010, with a copy of an affidavit attached. The affidavit stated a principal amount due of $6,321.47 and asked for pre and post judgment interest, as well as reasonable attorneys’ fees. With respect to the amount of the debt the affidavit stated: “on the Date of Assignment [5/28/2009], all ownership rights were assigned to, transferred to, and became vested in Plaintiff [LVNV], including the right to collect the purchased balance owing of $6,321.47 plus any additional accrued interest.
The District Court likened this case to the recent opinion by the 6th Circuit in Clark v. Main Street Acquisition Corp 2014 WL 274469 (6th Cir. January 17, 2014) regarding the use of an affidavit were the debt buyer claims personal knowledge of the debt. In, Clark, the 6th Circuit stated that claims of personal knowledge refer to business records, which include the original lender’s records.
The language LVNV used included,
– “I have personal knowledge regarding Plaintiff’s creation and maintenance of its normal business books and records, including computer records of its account receivables.”
– “In the ordinary courts of business, Plaintiff regularly acquires revolving credit accounts, installment accounts, service accounts and/or other credit lines. The records provided to Plaintiff have been represented to include information provided by the original creditor or it successor in interest.”
– “Based upon the business records maintained on account XXXXXX (hereinafter “Account”) which are a compilation of the information provided upon acquisition and information obtained since acquisition…”
Quoting from the Clark decision, the District Court stated, “Such an affidavit is not ‘inaccurate or misleading’ and even if it was ‘the representation was still not material’ because ‘the least sophisticated consumer understands that lenders and debt collectors will by necessity have to rely on business records they may not personally have created, especially in an age of automated, computerized transactions.’” (citing 2014 WL 274469 at *4).
The full text of the Sells opinion can be found here.
The full text of the Clark opinion can be found here
Special thanks to Meredith Hughes for her contributions to this article. Meredith is a Litigation Clerk with Slovin & Associates Co., L.P.A. and student at the University of Cincinnati College of Law.
