State Court Judge Grants Motion to Compel Arbitration in FDCPA Case

In a case that was defended by the team at Gordon & Rees Scully Mansukhani, a state court judge in Wisconsin has granted a defendant’s request to compel arbitration after it was accused of violating the Fair Debt Collection Practices Act and state law in Wisconsin when it did not respond to a hardship application that was submitted by the plaintiff.

A copy of the ruling in the case of Hankins v. PRA Group can be accessed by clicking here.

The case is noteworthy because more plaintiffs are opting to file cases in state court rather than federal court since the threshold to prove a plaintiff has standing to sue is often lower in state court. Obtaining good rulings at the state court level can help companies in the accounts receivable management industry go a long way toward developing case law that helps companies defend themselves.

The plaintiff defaulted on a debt that was sold to the defendant. As part of the sale, the defendant was transferred ownership of the accounts, which included a credit card agreement that the plaintiff did not object to when the account was opened. That agreement included an arbitration clause.

After purchasing the account, the defendant sent the plaintiff a collection letter, informing her of the opportunity to qualify for a permanent hardship. The plaintiff filled out the form and submitted it, but never heard back from the defendant. Instead, the defendant filed suit, seeking to collect on the unpaid debt. The plaintiff filed a counterclaim, alleging the defendant violated the FDCPA by engaging in deceptive practices.

While acknowledging that she had an arbitration clause with the original creditor, the plaintiff argued that the use of words like “we, us, and our” in the agreement was enough to prove that the defendant was not entitled to the same protections when it purchased the account.

“Here, the language of the Purchase Agreement is unambiguous with respect to the parties’ right, title, and interest in the Account,” wrote Judge Pedro Colon of the Circuit Court for the State of Wisconsin. “Once the transfer occurred, Synchrony retained no rights or interest in the Accounts. The language of the Purchase Agreement sells the Account and all of the rights title and interest; and provides that PRA will service the accounts and ‘all actions or omissions by [PRA] with respect to the Accounts,’ subject to the Credit Card Agreement. … In sum, the plain language of the Credit Card Agreement and the Purchase Agreement demonstrates that PRA has a contractual right to enforce the Arbitration Agreement as Synchrony’s assignee.”

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