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Munoz v. Pipestone Financial

September 26, 2006


The opinion of the court was delivered by: Joan N. Ericksen United States District Judge


Munoz brought this action against Defendants Pipestone Financial, LLC (Pipestone), and Messerli & Kramer, P.A. (Messerli), (collectively Defendants), asserting claims under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692o (2000). The case is before the Court on Munoz's motion for class certification and Defendants' motion for summary judgment. For the reasons set forth below, the Court denies both motions.


In 1995, Munoz opened a credit card account with First USA Bank, N.A., now known as Bank One, Delaware, N.A. (Bank One). The Cardmember Agreement governing the account established an interest rate of 11.99 percent per year*fn1 on outstanding purchase balances. The Cardmember Agreement also provided for the payment by Munoz of reasonable attorneys' fees in the event that Bank One referred the account in default to an attorney who is not a "regularly salaried employee" of Bank One. Moreover, the Cardmember Agreement provided: "[Bank One] may at any time assign [the] Account, any sums due on [the] Account, this Agreement or [Bank One's] rights or obligations under this Agreement. The person(s) to whom [Bank One] makes any such assignment shall be entitled to all of [Bank One's] rights under this Agreement, to the extent assigned."

Munoz used the account for approximately seven years. He ultimately defaulted and the account was closed in September 2002. In the summer of 2003, rights in and to a portfolio of debt, including Munoz's debt with Bank One, were assigned to Unifund CCR Partners (Unifund) (Bank One-Unifund Assignment). As evidence of the sale of Munoz's account, Defendants have produced two bills of sale from the summer of 2003. The first bill of sale, dated June 19, 2003, memorializes the assignment of 61,272 credit card accounts pursuant to the terms and cond itions of a "Credit Card Account Purchase Agreement" dated June 19, 2003. The second bill of sale, dated August 19, 2003, memorializes the assignment of 17,437 credit card accounts pursuant to the terms and conditions of a "Credit Card Account Flow Purchase Agreement" dated July 23, 2003. Both bills of sale provide for the assignment of "all rights, title and interest of Seller in and to those certain receivables, judgments or evidences of debt described in Exhibit 1" to Unifund.*fn2

Unifund, in turn, sold "all of its good and marketable title . . . in and to" certain accounts, including Munoz's account, to Pipestone on December 29, 2003 (Unifund-Pipestone Assignment). Pipestone, a purchaser of defaulted debt portfolios, then retained Messerli to collect Munoz's debt. Messerli sent a demand letter in the amount of $8,660.26 to Munoz on January 5, 2004. On April 7, 2004, Messerli filed suit on behalf of Pipestone in Minnesota District Court for the First Judicial District. In the state complaint, Pipestone sought the principal sum; attorneys' fees in the amount of $2,105.35, which represented 28% of the principal; and accrued interest totaling $1,341.20.*fn3

Munoz filed this action on September 17, 2004. Munoz's three-count complaint alleges that Defendants violated the FDCPA by (1) attempting to collect an impermissible amount of interest, (2) misrepresenting the attorneys' fees that may lawfully be received, and (3) sending a letter in an envelope through which personal and confidential information was visible.

On September 12, 2005, the Court denied Defendants' initial motion for summary judgment, explaining that the term "receiveables," as used in the Bank One-Unifund Assignment bills of sale, refers to an amount owed and does not include interest not yet accrued or future attorneys' fees. Accordingly, the Court reasoned that Defendants failed to demonstrate, as a matter of law, that Unifund (or subsequently Pipestone) received the rights to collect interest and attorneys' fees.

At the time of the ruling on the initial motion for summary judgment, the only evidence in the record to reflect the Bank One-Unifund Assignment were the two bills of sale between Bank One and Unifund. On December 14, 2005, however, Defendants produced an affidavit from Unifund's director of acquisitions, Henry Thoman, in connection with Munoz's motion for class certification. Appended as an exhibit to Thoman's affidavit is a document he declares to be the purchase agreement underlying the Bank One-Unifund Assignment. This Bank One-Unifund Credit Card Flow Purchase Agreement (Bank One-Unifund Purchase Agreement) is dated July 25, 2003, and provides for the assignment of "all of Seller's rights, title and interest in and to the Charged-off Accounts identified in the file delivered by Seller to [Unifund] on the applicable Cut-Off Date." No such file of Charged-off Accounts has been made part of the record, but Thoman attests that Munoz's account was sold from Bank One to Unifund via the Bank One-Unifund Purchase Agreement.


Munoz seeks certification of a class consisting of every consumer whose consumer-credit account was acquired by Pipestone, Messerli, or any third party pursuant to a sale of "receivables," "accounts," or "account receivables," and from whom Defendants have since September 17, 2003, collected or attempted to collect interest or attorneys' fees based on the terms of the contract between the consumer and the credit issuer. Munoz is not seeking class certification of his claims relating to Defendants' use of the window envelopes in the third count of his complaint.

Defendants contend that Munoz's claims relating to Defendants' collection of interest or attorneys' fees fail as a matter of law based on evidence produced after the Court's ruling on the initial motion for summary judgment. Defendants therefore seek summary judgment on these claims, thus rendering the motion to certify a class moot. Defendants are not seeking summary judgment on Munoz's claims regarding Defendants' use of the window envelopes. The Court turns first to Defendants' motion.

A. Defendants' Motion for Summary Judgment

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party "bears the initial responsibility of informing the district court of the basis for its motion," and must identify "those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party satisfies its burden, Rule 56(e) requires the nonmoving party to respond by submitting evidentiary materials that designate "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In ...

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