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Walter v. Palisades Collection

January 26, 2010


The opinion of the court was delivered by: Eduardo C. Robreno, J.


Plaintiffs Douglas C. Walter and Kathleen Paone*fn1 (collectively, "Plaintiffs"), bring this action on behalf of themselves and others similarly situated against Defendants Mann Bracken, LLP (as successor in interest to Wolpoff & Abramson, LLP) ("Mann Bracken") and Palisades Collection, LLC ("Palisades," and together with Mann Bracken, "Defendants"). Plaintiffs allege that Defendants violated the Fair Debt Collection Practices Act (the "FDCPA") by indiscriminately and without legal basis adding non-liable spouses to collection lawsuits. Currently before the Court is Plaintiffs' motion for certification of a national class. For the reasons that follow, the Court will deny the motion for class certification on the ground that Plaintiffs' counsel has not satisfied Rule 23(a)(4) of the Federal Rules of Civil Procedure.


A. Facts

Palisades is in the business of purchasing defaulted debt from creditors. Palisades would refer certain of the defaulted debt accounts to Mann Bracken for collection purposes, and specifically to institute collection lawsuits on behalf of Palisades. In referring a case to Mann Bracken, Palisades would forward a collection file which generally included basic account information on the defaulted debt, such as the assigned date from the original creditor, the assigned amount calculated by the original creditor, the last payment recorded by the original creditor, the date of delinquency, the debtor's name, address, phone number, and social security number. (See Joann Bergmann Dep. Tr. 55:21-56:7, June 28, 2007.)

In pursuit of collecting a debt, on December 27, 2005, Mann Bracken filed a lawsuit on behalf of Palisades against Jill Walter ("Mrs. Walter") and Douglas Walter ("Mr. Walter") in the Pennsylvania Court of Common Pleas of Bucks County, Pennsylvania (the "Walter Complaint"), seeking judgment against both Mr. and Mrs. Walter in the amount of $6,467.40, plus costs. (Pls.' Mot. for Class Certification Ex. 3.) At the time, Mrs. Walter maintained a credit card account with Providian National Bank Visa (the "Walter Account"), of which Mr. Walter was an authorized user. (Douglas Walter Dep. Tr. 56:11-59:14, Aug. 8, 2007.) Although Mr. Walter was an authorized user and was issued a credit card with his name on it, he never used the Walter Account credit card for any purchases. (Id. at 57:15-17.) The monthly statements on the Walter Account were in both Mr. Walter and Mrs. Walter's names, and payments on the Walter Account were made from the joint account of Mr. and Mrs. Walter. (Id. at 54:5-57:14.)

The Walter Complaint alleged in relevant part:

4. It is averred that Defendant(s) was/were issued an open end credit card account.

5. At all relevant times material hereto, Defendant(s) have/has used said credit card for the purchase of products, goods, and/or obtaining services.

6. Plaintiff provided Defendant(s) with copies of the Statement of Accounts showing all debits and credits for transactions on the aforementioned credit card account to which there was no bona fide objection by Defendant(s).

(Pls.' Am. Compl. Ex. 3.) While the Walter Complaint was pending, Mr. Walter sought to refinance the mortgage on his residence. (Pls.' Mot. for Class Certification 7.) The mortgage refinancing company required Mr. Walter to satisfy the $6,467.40 debt alleged in the Walter Complaint in order to consummate his mortgage refinancing. (Id.)

On August 5, 2005, Mann Bracken, on behalf of its client Great Seneca, filed a lawsuit against Joseph Paone ("Mr. Paone") and Kathleen Paone ("Mrs. Paone") before a Magisterial District Judge in Montgomery County, Pennsylvania (the "Paone Complaint") requesting a judgment in the amount of $2,044.30, plus attorney's fees and costs. (See Pls.' Am. Compl. Ex. 4.) Mr. Paone was issued a credit card by Household Bank (the "Paone Account"). (See Kathleen Paone Dep. Tr. 31:13-32:19, Aug. 8, 2007.) Mrs. Paone was not an authorized user on the Paone Account, never made any purchases with the Paone Account credit card, did not make any payments on the Paone Account, and was not even aware that the Paone Account existed until her husband disclosed its existence in order to have the debt discharged in bankruptcy. (Id. at 53:3-15.)

The Paone Complaint stated as follows: Plaintiff's assignor issued a revolving credit account to Defendant which was subject to terms and conditions as outlined and agreed upon by Defendant. Which included, but were not limited to, interest, reasonable attorney's fees and all court collection costs in the event of default in payment. Defendant utilized said revolving credit account to obtain extensions of credit which Defendant used for the purchase of products, goods, and/or for obtaining services from Plaintiff assignor and subsequently incurred a delinquent balance due and owing in the amount of $2,044.30.

(Pls.' Am. Compl. Ex. 4.)

In each of these two cases, it was Plaintiffs' respective spouses who actually incurred the credit card debt at issue in each collection action. In response to these collection lawsuits, Plaintiffs commenced the instant class action on the ground that Defendants' attempt to collect a debt from a non-liable spouse constitutes an unfair debt collection practice in violation of the FDCPA.

B. Procedural History

On January 27, 2006, Plaintiffs filed a complaint against multiple defendants,*fn2 including Mann Bracken and Palisades. Plaintiffs subsequently amended this complaint and asserted three causes of action against Defendants: (1) a violation of the FDCPA, 15 U.S.C. § 1692 et seq.; (2) a RICO claim pursuant to 18 U.S.C. § 1961;*fn3 and (3) a violation of the Pennsylvania Unfair and Deceptive Trade Practices statute, 73 Pa. C.S. § 201-1 and 73 Pa. C.S. § 2270.4-5.*fn4 The parties were permitted to conduct fact discovery with respect to class certification for a period of almost three years. On June 24, 2009, Plaintiffs filed the instant motion seeking class certification of a class defined as follows:

All consumers in the United States of America, who, from January 27, 2005, to the present, were or are spouses who were not signatories to and not liable for credit card obligations for which their spouses were legally and contractually liable, and who had been added as co-defendants with their liable spouses in collection law suits filed by or on behalf of the captioned defendants. (Pls.' Proposed Order ¶ 1.)*fn5 On September 14, 2009, the Court held a hearing on the instant motion for class certification.


Plaintiffs argue that class certification is proper because (1) there are at least hundreds of non-liable spouses added as co-defendants; (2) there are common issues of whether the addition of a non-liable spouse constitutes a violation of the FDCPA; (3) Plaintiffs' cases are typical of the class because each was a spouse who was not liable on the respective credit card debt but was included as a co-defendant; (4) the class will be adequately represented because Plaintiffs' interests are aligned with those of the class and Plaintiffs' counsel possesses satisfactory experience and qualifications to litigate on behalf of this class; and (5) common issues predominate thereby making a class action the most efficient method of resolution.*fn6

Defendants respond that class status is inappropriate in this case because Plaintiffs have not produced sufficient evidence that there was a common practice of adding a non-liable spouse as a co-defendant merely based on spousal status. The thrust of Defendants' argument is that because an individualized determination was made before adding any co-defendant spouse to a collection lawsuit, then no common action was taken with respect to the putative class members. Defendants contend that an independent basis was relied upon for adding a co-defendant spouse, such as guarantee, fraud, discharge ...

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