Class action: federal court holds “personal knowledge” in debt buyer Midland affidavit “patently false”

When debt buyer Midland (Encore owned) sued Brent in Ohio state court for an OLD Associates (now CitiFinancial) debt, she retained an attorney who removed the case to federal court.  He filed counter claims for violations of the FDCPA as well as Ohio law and went on to file for class certification.

Judge Katz recently granted a permanent injunction against Midland Credit and Midland Funding, prohibiting the use of the “patently false” affidavits claiming “personal knowledge”:

Midland and MCM are enjoined under the OCSPA [Ohio law] from using form affidavits that falsely claim to be based on the affiant’s personal knowledge.

The court also determined that Midland violated the FDCPA by using the false affidavit.

I got some of the court filings and this will be an EXTREMELY important case to watch because false affidavits are used by MANY debt buyers.

From the 8/11/09 ruling regarding the false affidavit:

Whether through the “You’ve Got Claims” system or otherwise, Midland receives and fulfills about 200 to 400 requests for affidavits per day. Ivan Jimenez, one of Midland’s ten specialists” in the department that supports law firms, personally signs between 200 and 400 of such affidavits per day. (Ivan Jimenez Dep., Doc. 35, Ex. E at 15). He finds the stack on a printer, signs them, and sends them by internal mail to the notary. (Id. at 16-17 (“Q: Where do your affidavits come from? A: As far as what I deal with, they just come from the printer as far as where we get them”)). Mr. Jimenez has the ability to check the accuracy of the information on the affidavit via the computer system and he does, but the percentage of those that are checked for accuracy is “very few and far between.” (Id. at 24).

Then, after receipt of the signed affidavit from Midland, JBR attached it to the complaint filed in Sandusky, Ohio Municipal Court. When the affidavit is compared to the deposition of the affiant, Ivan Jimenez, it is apparent that the affidavit itself contains many falsehoods.

In paragraph 1, the affidavit reads “…I make the statements herein based upon my personal knowledge.” It is apparent from the Jimenez deposition that Mr. Jimenez actually had no personal knowledge of Ms. Brent or her account. For instance, while Mr. Jimenez is assigned to support and work with ten law firms, JBR is not one of them, leading to the logical conclusion that he would not have personal knowledge of any matter they were handling. (Jimenez Dep., Doc. 35, Ex. E at 7-8; Id. at 16). It appears to be an entirely random act that he signed this affidavit: he was the signer based entirely on when it came off the printer rather than based on his personal knowledge of Ms. Brent or her account. (Id. at 16-17). Mr. Jimenez never had any contact with Ms. Brent at all, leading to a logical conclusion that he could not have had the “personal knowledge” claimed in paragraph 1. See Id. at 25-26 (“Q: Did you ever have any contact with Ms. Brent, any business contacts at all? A: I did not personally.”).

In paragraph two of the affidavit, the affiant states:

… I have personal knowledge of all relevant financial information concerning Midland Credit Management Inc.’s account number 8524186453, which includes the following information: that the defendant did fail to make payments on the account and that demand has been made for defendant to make payment of the balance owing on the account described above more than thirty (30) days prior to making this affidavit; that the attorneys representing the plaintiff Midland Funding LLC were retained on Midland Funding LLC (sic) behalf by me or persons reporting to me for the purpose of collecting the delinquent debt owed on the defendant’s account number set out above; and that there was due and owing to Midland Funding LLC the sum of $4,516.57.

(Jimenez Aff. ¶ 2). As is evident in the discussion supra regarding paragraph one of the affidavit, Mr. Jimenez has no personal knowledge about the Brent account. He was not familiar with this account, did not know the last time a payment was made and did not know the outstanding balance. The paragraph also represents that the law firm, JBR, was hired by Mr. Jimenez or one of his employees. However, the following exchange during the deposition makes clear this is not true:

Q: So were you aware when you signed this affidavit that it was going to be used as part of a collection action in a lawsuit?
A: I was not.
Q: Are you aware of any other reasons that affidavits are completed, except for the collection actions that are filed in the courts?
A: I wouldn’t know what the firm uses the affidavits for.
Q: So you simply sign them?
A: Yes.
Q: You work for Midland Credit Management; correct?
A: Yes.
Q This affidavit lists at the top as a plaintiff, Midland Funding, LLC. What’s the relationship between Midland Credit Management and Midland Funding LLC?
A: I wouldn’t be the best person to ask that question. I don’t know.
Q Okay. If you look at paragraph 2, four lines from the bottom of paragraph 2, you’re attesting to the fact, “that the attorneys representing Plaintiff Midland Funding LLC were retained on Midland Funding LLC behalf by me or persons reporting to me for the purpose of collecting the delinquent debt.” Is that what it says? Did I read that correctly?
A Yes
Q When did you retain the attorneys representing Midland Funding LLC?
A I don’t know when the people in my department retained the attorneys.
Q Did you personally retain the attorneys?
A I did not.
Q Which persons in your department did retain the attorneys?
A I wouldn’t know specifically.
Q Are these – how many people do you have reporting to you?
A I have zero.
Q Do you know the names of any persons in your department or any persons in Midland Credit who actually do have the responsibility of retaining attorneys?
A I don’t know who in my department would do that.
Q Would there be someone from another department that would do that?
A I wouldn’t know.

(Jimenez Dep. at 19-21). Thus, there are two patently false claims within paragraph two: first that Mr. Jimenez had any personal knowledge regarding Ms. Brent’s debt, and second, that Mr. Jimenez was involved with the decision or act of hiring JBR to pursue legal action.

Paragraph three describes how Midland acquired the debt from Citibank, and if it is read alone, it only states a fact that is very likely true. However, when read in conjunction with paragraph one (“I make the statements herein based upon my personal knowledge”), it is apparently false. The issue of the affiant’s knowledge was raised in the deposition:

Q Well, it says in this affidavit that, in number 3, “That Plaintiff’s predecessor in interest sold and assigned all right, title, and interest in this account to the plaintiff.” So if it was sold to the plaintiff, my assumption is it was purchased by the plaintiff. And the question I have is, did you have any role or were you involved in any way, shape, or form in the purchase of this account?
A I was not.
Q Do you know anything about the terms of the purchase of this account?
A I do not. (Jimenez Dep. at 21-22).

Thus, the statement in paragraph three, however true or not, cannot be based on personal knowledge.

Paragraph five is also of concern. It asserts that Ms. Brent is neither a minor nor mentally incapacitated, which are facts that are probably true. However, the affiant bases those conclusions upon business dealings with the defendant(s),” which is clearly not possible since he had no contact with Ms. Brent. See supra.

If this is not enough, the affidavit is improperly sworn, as evidenced by the deposition:

Q You mentioned earlier, when I asked you about that, you signed these affidavits and had them notarized. Was the notary present in the room when you were signing all the affidavits, or do you sign them and give them to the notary?
A I sign them and give them to the notary.

(Jimenez Dep. at 15). Minnesota Revised Code requires that “an oath . . . shall be administered . . . [t]o affiants[.]” Minn. Stat. Ann. § 358.07 (West 2004).

In finding assertions in the affidavit to be false and misleading, this Court is not concluding that all the information in the affidavit is incorrect. Brent has provided no evidence that the amount of the debt, the fact that it is unpaid, or other vital account information, is false. As discussed infra, the actual account information is probably either correct or likely thought correct in good faith by Midland and MCM (and likely a bona fide error if so).

Here is the entire opinion:


On 9/23/09, the court made some minor corrections and made the injunction prohibiting the use of false affidavits a bit more specific:


The unprotected opinions, the docket to date and several filings from this and other FDCPA and FCRA cases  are available to CreditFactors subscribers.

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