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Midland Funding LLC v. Colvin

Court of Appeals of Ohio, Third District, Hancock

December 30, 2019

MIDLAND FUNDING LLC, PLAINTIFF-APPELLEE,
v.
CASSANDRA COLVIN, DEFENDANT-APPELLANT.

          Appeal from Hancock County Common Pleas Court Trial Court No. 2013-CV-459

         Judgment Reversed and Cause Remanded

          Ronald I. Frederick and Gregory S. Reichenbach for Appellant

          H. Toby Schisler for Appellees, Midland Funding LLC, Midland Credit Management, Inc., and Encore Capital Group, Inc.

          OPINION

          PRESTON, J.

         {¶1} Defendant/counterclaim-plaintiff/third-party-plaintiff-appellant. Cassandra Colvin ("Colvin"), appeals the June 12, 2018 judgment of the Hancock County Court of Common Pleas denying her motion for class certification. For the reasons that follow, we reverse.

         {¶2} On April 22, 2013, plaintiff/counterclaim-defendant-appellee, Midland Funding LLC ("Midland"), filed a complaint against Colvin in the Hardin County Municipal Court. (Doc. No. 8). Midland alleged that Colvin had defaulted on a Chase Bank credit-card account, that it had purchased Colvin's delinquent account from Chase Bank, and that, despite Midland's informal efforts to collect the amount owing, Colvin failed to pay the balance due. (Id.). Midland requested judgment against Colvin in the amount of $950.60 along with other related relief. (Id.).

         {¶3} On June 5, 2013, Colvin filed a motion to dismiss Midland's complaint. (Id.). In her motion, Colvin alleged that she "lives in Hancock County, Ohio, and has never lived in Hardin County, Ohio." (Id.). In addition, she noted that Midland "made no allegation that there was any contract signed in Hardin County, or any other connection to Hardin County." (Id.). Colvin thus argued that the Hardin County Municipal Court did not have subject-matter jurisdiction over Midland's action because Midland's action did not have a territorial connection to the court. (Id.). On June 14, 2013, Midland filed a memorandum in opposition to Colvin's motion to dismiss. (Id.).

         {¶4} On June 27, 2013, the Hardin County Municipal Court issued its ruling on Colvin's motion to dismiss. (Id.). The court found that Colvin "at all times relevant lived in Hancock County, Ohio" and that "there does not appear to be any nexus to the territory over which [the Hardin County Municipal Court] has jurisdiction." (Id.). However, the court did not dismiss Midland's action outright. (Id.). Instead, the court transferred Midland's action to the Findlay Municipal Court at Midland's cost. (Id.).

         {¶5} On September 3, 2013, after the case had been transferred to the Findlay Municipal Court, Colvin filed a combined answer to Midland's complaint, counterclaim against Midland, and third-party complaint adding third-party-defendants-appellees, Midland Credit Management, Inc. ("Midland Credit") and Encore Capital Group, Inc. ("Encore"), as third-party defendants.[1] (Id.). In her counterclaim and third-party complaint, Colvin alleged that the Midland parties violated the federal Fair Debt Collection Practices Act ("FDCPA") when Midland filed suit against her in the Hardin County Municipal Court because she did not reside within the territorial jurisdiction of the Hardin County Municipal Court at the time Midland filed its complaint and she did not sign the contract underlying her alleged debt to Chase Bank within the territorial jurisdiction of the Hardin County Municipal Court.[2] (Id.). See 15 U.S.C. 1692i(a). Colvin further maintained that the Midland parties "regularly file[] collection actions against Ohio residents in counties where the defendant does not live and did not sign a contract, including * * * instances where [the Midland parties] used the city or village of defendants' postal address without determining the physical location of the address," in violation of the FDCPA. (Doc. No. 8). Accordingly, Colvin asserted claims on behalf of a class of plaintiffs who were injured by the Midland parties' alleged violations of the FDCPA. (Id.). Colvin referred to this class of plaintiffs as the "FDCPA Class."[3](Id.). Colvin requested a declaration that the Midland parties violated the FDCPA when they brought suit against class members in improper venues, actual and statutory damages as provided for by 15 U.S.C. 1692k(a)(1)-(2), and costs of the action and reasonable attorney's fees as provided for by 15 U.S.C. 1692k(a)(3). (Id.).

         {¶6} The same day that Colvin filed her answer, counterclaim, and third-party complaint, Colvin filed a motion to transfer the case to the Hancock County Court of Common Pleas. (Doc. No. 8). On September 5, 2013, the Findlay Municipal Court granted Colvin's motion to transfer, and the case was subsequently transferred to the Hancock County Court of Common Pleas. (Id.).

         {¶7} On November 7, 2013, the Midland parties filed their joint answer to Colvin's counterclaim and third-party complaint. (Doc. No. 20). On December 5, 2013, the Midland parties filed their amended joint answer to Colvin's counterclaim and third-party complaint. (Doc. No. 23).

         {¶8} In March 2015, Colvin moved to consolidate her case with case number 2015-CV-94, Caitlin Gilbert v. Midland Funding LLC ("Gilbert "). See Gilbert v. Midland Funding, L.L.C., 3d Dist. Hancock No. 5-19-11, 2019-Ohio-5295, ¶ 5. On May 21, 2015, the trial court ordered that Colvin's case be consolidated with Gilbert for purposes of discovery. Id

         {¶9} On November 30, 2015, Colvin moved for leave to file an amended counterclaim/third-party complaint. (Doc. No. 68). On December 28, 2015, the Midland parties filed a memorandum in opposition to Colvin's motion for leave to file an amended counterclaim/third-party complaint. (Doc. No. 71). On January 15, 2016, the trial court granted Colvin's motion. (Doc. No. 73). On February 22, 2016, Colvin filed her amended counterclaim/third-party complaint. (Doc. No. 78). On March 4, 2016, the Midland parties filed their answer to Colvin's amended counterclaim/third-party complaint. (Doc. No. 79).

         {¶10} On June 1, 2017, Colvin filed a motion for class certification. (Doc. No. 106). Colvin sought to certify one class defined as:

a. All persons who have been sued in Ohio Courts by [the Midland parties] from April 22, 2012 until the time this class is certified;
b. where the address on the face of the complaint and/or the address at which the Defendant was served are not within the geographical limits of the court where the suit was filed; or
c. where [the Midland parties] filed suit in a court where the contract was not signed; and
d. the debt alleged by [the Midland parties] was incurred for personal, family or household use.[4]

(Id.). On June 22, 2017, the Midland parties filed their memorandum in opposition to Colvin's motion for class certification.[5] (Doc. No. 107). On July 14, 2017, Colvin filed a reply in support of her motion for class certification. (Doc. No. 108). On July 20, 2017, the Midland parties filed a reply memorandum in support of their motion to strike Colvin's class claims. (Doc. No. 109).

         {¶11} On June 12, 2018, the trial court denied Colvin's motion for class certification. (Doc. No. 115). The trial court first concluded that the proposed class definition is unambiguous, that the proposed class is sufficiently numerous, and that Colvin is a member of the proposed class. (Id.). However, the trial court held that class certification is inappropriate because there are not questions of law or fact common to the class, Colvin's claims and defenses are not typical of the claims and defenses of the proposed class, and Colvin cannot fairly and adequately protect the interests of the proposed class. (Id.). See Civ.R. 23(A)(2)-(4). Because the trial court concluded that Colvin and the proposed class fail to satisfy Civ.R. 23(A)'s commonality, typicality, and adequacy-of-representation requirements, it did not conduct an analysis to determine whether the proposed class satisfies the requirements of Civ.R. 23(B)(3). (Id.).

         {¶12} On July 11, 2018, Colvin filed a notice of appeal. (Doc. No. 116). She raises two assignments of error for our review.

         Assignment of Error No. I

         The Trial Court abused its discretion in denying Ms. Colvin's motion for class certification based on the incorrect premise that her claims were not common or typical of the purported class and that she was not an adequate representative, because she has differing damages.

         {¶13} In her first assignment of error, Colvin argues that the trial court abused its discretion by denying her motion for class certification. Colvin contends that the entire basis of the trial court's conclusion that Civ.R. 23(A)'s commonality, typicality, and adequacy-of-representation requirements are not satisfied was the trial court's belief that, because she is seeking only statutory damages under the FDCPA, she cannot represent class members with claims for both actual damages and statutory damages. (Appellant's Brief at 6). She argues that the trial court was mistaken and that "Civ.R. 23 permits class certification despite differing damages among class members and, in the FDCPA setting, permits a class member claiming only statutory damages to represent members claiming both statutory and actual damages." (Id.). Thus, Colvin maintains that the trial court should have found the commonality, typicality, and adequacy-of-representation requirements satisfied with respect to the entire proposed class.

         {¶14} "Civ.R. 23 sets forth the requirements for maintaining a class action." Stammco, L.L.C. v. United Tel. Co. of Ohio, 125 Ohio St.3d 91, 2010-Ohio-1042, ¶ 6 ("Stammco I "). The Supreme Court of Ohio has identified seven requirements that a litigant must satisfy in order to maintain a class action under Civ.R. 23:

"(1) an identifiable class must exist and the definition of the class must be unambiguous; (2) the named representatives must be members of the class; (3) the class must be so numerous that joinder of all members is impracticable; (4) there must be questions of law or fact common to the class; (5) the claims or defenses of the representative parties must be typical of the claims or defenses of the class; (6) the representative parties must fairly and adequately protect the interests of the class; and (7) one of the three Civ.R. 23(B) requirements must be met."

Id., quoting Hamilton v. Ohio Sav. Bank, 82 Ohio St.3d 67, 71 (1998), citing Civ.R. 23(A) and (B) and Warner v. Waste Mgt, Inc., 36 Ohio St.3d 91 (1988). The party moving for class certification must prove each of these seven requirements by a preponderance of the evidence. Gordon v. Erie Islands Resort & Marina, 6th Dist. Ottawa No. OT-15-035, 2016-Ohio-7107, ¶ 26, citing Cullen v. State Farm Mut. Auto. Ins. Co., 137 Ohio St.3d 373, 2013-Ohio-4733, ¶ 15; MidFirst Bank v. Biller, 3d Dist. Seneca No. 13-10-13, 2010-Ohio-6067, ¶ 18, citing Robinson v. Johnston Coca-Cola Bottling Group, Inc., 153 Ohio App.3d 764, 2003-Ohio-4417, ¶ 2 (1st Dist.) and State ex rel. Ogan v. Teater, 54 Ohio St.2d 235, 247 (1978). "'The failure to meet any one of these prerequisites will defeat a request for class certification * * *.'" Stammco, LLC v. United Tel. Co. of Ohio, 136 Ohio St.3d 231, 2013-Ohio-3019, ¶ 24 ("Stammco II "), quoting Schmidt v. Avco Corp., 15 Ohio St.3d 310, 313 (1984).

         {¶15} "'A trial judge has broad discretion in determining whether a class action may be maintained and that determination will not be disturbed absent a showing of an abuse of discretion.'" Id. at ¶ 25, quoting Marks v. C.P. Chem. Co., Inc., 31 Ohio St.3d 200, 201 (1987). "[T]he appropriateness of applying the abuse-of-discretion standard in reviewing class action determinations is grounded not in credibility assessment, but in the trial court's special expertise and familiarity with case-management problems and its inherent power to manage its own docket." Hamilton at 70. "'Abuse of discretion has been defined as more than an error of law or judgment; it implies an attitude on the part of the trial court that is unreasonable, arbitrary, or unconscionable.'" Stammco II at ¶ 25, quoting Marks at 201, citing Ojalvo v. Bd of Trustees of Ohio State Univ., 12 Ohio St.3d 230, 232 (1984). "'A finding of abuse of discretion, particularly if the trial court has refused to certify, should be made cautiously.'" Id., quoting Marks at 201.

         {¶16} However, the trial court's discretion, while expansive, "'is not unlimited, and indeed is bounded by and must be exercised within the framework of Civ.R. 23. The trial court is required to carefully apply the class action requirements and conduct a rigorous analysis into whether the prerequisites of Civ.R. 23 have been satisfied.'" State ex rel Davis v. Pub. Emps. Retirement Bd, 111 Ohio St.3d 118, 2006-Ohio-5339, ¶ 20, quoting Hamilton at 70.

         {¶17} In this action, Colvin maintains that the Midland parties' litigation activities against putative class members violated the FDCPA. "Congress enacted the FDCPA * * * to eliminate abusive debt collection practices, to ensure that debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers." Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 577, 130 S.Ct. 1605 (2010), citing 15 U.S.C. 1692(e). "Forum abuse," "an unfair practice in which debt collectors seek to obtain default judgments by filing suit in courts so distant or inconvenient that consumers cannot make an appearance," was one such debt collection practice that concerned Congress. Taylor v. First Resolution Invest. Corp., 148 Ohio ...


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