Argued May 22, 2013
Approved for Publication September 2, 2014.
On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Hudson County, Docket No. DC-4244-12 (A-6078-11), and Monmouth County, Docket No. DC-4774-12 (A-6370-11).
Philip D. Stern argued the cause for appellant (both appeals) ( Philip D. Stern & Associates, LLC, attorneys; Mr. Stern, on the briefs).
Lawrence J. McDermott, Jr., argued the cause for respondent (both appeals) ( Pressler and Pressler, L.L.P., attorneys; Mr. McDermott and Steven A. Lang, on the briefs).
John Ukegbu argued the cause for amicus curiae Northeast New Jersey Legal Services, Inc. (A-6078-11) ( Northeast New Jersey Legal Services, attorneys; Mr. Ukegbu, on the brief).
Before Judges GRALL, SIMONELLI and ACCURSO. The opinion of the court was delivered bye ACCURSO, J.A.D.
[437 N.J.Super. 303] OPINION
[437 N.J.Super. 304]
In these two appeals, calendared back-to-back and consolidated here, we consider the proofs necessary for plaintiffs to prevail on summary judgment in an action to collect an assigned debt on a closed and charged-off credit card account. Plaintiffs are debt buyers. Debt buyers purchase charged-off credit card debts from the card issuers or other debt buyers and attempt to collect the debts, that is, the amount due the card issuer when it charged-off the account, or re-sell them to other debt buyers. Plaintiffs obtained summary judgments against defendants on charged-off credit card debts which plaintiffs claim to have purchased from sellers who, ultimately, albeit indirectly, derived their ownership from the banks that issued the credit cards to defendants. Defendants contend that the summary judgments were improper because plaintiffs did
not submit sufficient proof of their ownership of the debts and did not offer admissible evidence of the amounts allegedly owed.
Plaintiffs suing on assigned, charged-off credit card debts must prove two things: ownership of the defendant's charged-off debt and the amount due the card issuer when it charged off the account. In considering whether plaintiffs established prima facie proof of their claims, we hold that: lack of notice to the debtor of the sale of the debt does not affect the validity of the assignment; the assignment need not specifically reference defendant's name or account number and instead may refer to an electronic data file containing that information; a plaintiff need not procure an affidavit from each transferor in its chain of assignments and may instead establish prima facie proof of ownership on the basis of business records documenting its ownership; and that an electronic copy of the periodic billing statement for the last billing cycle is prima facie proof of the amount due on the account at charge off. [437 N.J.Super. 305] Applying those standards to the facts presented on the motions, we affirm one judgment and reverse the other.
The Summary Judgment Motions
Plaintiff New Century Financial Services, Inc. (New Century) sued defendant Ahlam Oughla alleging that it was the owner of Oughla's Credit One Bank, N.A., account on which $723.82 was due at charge off. Oughla, representing herself, answered stating " [p]laintiff provided no documentation to support the charges alleged in the complaint, therefore defendant denies all allegations." Although each side propounded limited interrogatories as allowed in actions cognizable but not pending in the Small Claims Section, R. 6:4-3(f), neither party provided responsive answers.
New Century moved for summary judgment. In its statement of material facts, New Century stated that its predecessor in interest, Credit One, extended credit to Oughla on a specific account; that as set forth in its supporting certification, New Century had purchased that account; that the " Electronically Transmitted Information from Seller," showed that Oughla opened the account on October 25, 2007; made her last payment on March 2, 2008; and that Credit One charged off the account on October 5, 2008 with a balance due of $723.82, which constituted the principal balance New Century demanded. New Century also sought interest of $1.58 calculated at the rate specified in Rule 4:42-11(a)(ii), not at the rate charged by Credit One when the account was active.
New Century attached what it claimed to be the bill of sale and assignment by which it acquired Oughla's debt as well as documents relating to several prior transfers of the account. Specifically, New Century attached four executed assignment documents memorializing the sale and assignment of certain charged-off credit card account receivables, purportedly described on computer files transferred therewith: from MHC Receivables, L.L.C. (MHC Receivables) to Sherman Originator, L.L.C. (Sherman [437 N.J.Super. 306] Originator); from Sherman Originator to LVNV Funding, L.L.C. (LVNV Funding); from LVNV Funding to Sherman Acquisition, L.L.C. (Sherman Acquisition); and from Sherman Acquisition to New Century. Only one of the assignments referenced a portfolio number and none referenced Oughla's account, or indeed, any individual account.
New Century also attached an electronic copy of the final periodic account statement for " VISA Account [XXXX]" from Credit One to Oughla with the same address she noted on her answer, advising
that the account was closed and scheduled to be charged off with a balance of $723.82.
Oughla filed a response to the motion and consented to disposition on the papers. She did not dispute any of the particular facts New Century asserted, but contended that there was no admissible evidence of the formation of a contract between her and Credit One, or of the breach of any such contract, and no reference to her name or account number in any of the assignments. On that evidence, the judge granted New Century summary judgment in the sum of $725.40 plus costs without a statement of reasons.
Oughla retained counsel who filed a motion for reconsideration. Counsel argued that New Century did not establish its ownership of the debt or provide a proper foundation for the final periodic account statement.
New Century responded with additional proofs of its ownership of the debt. Its " business development manager," Marko Galic, certified that he participated in the transaction in which New Century purchased Oughla's debt and thus had personal knowledge of the records New Century obtained in that sale, including the assignments, a copy of the electronically-transmitted spreadsheet New Century acquired, redacted to show only the information relating to Oughla's account, and the final periodic statement Credit One issued to Oughla.
In addition, New Century provided evidence of the transfers that preceded its acquisition, the first being from Credit One to [437 N.J.Super. 307] MHC Receivables. John Mazzoli submitted an affidavit stating that he is an authorized representative for MHC Receivables, having personal knowledge of " the method and manner" by which MHC " originates, services, owns and manages VISA and MasterCard accounts." Mazzoli explained that MHC Receivables " purchases and holds VISA and MasterCard accounts" originated by Credit One, which Credit One thereafter continues to service on behalf of MHC Receivables, the legal owner. According to Mazzoli, " [t]he Agreements that transfer the accounts between Credit One and MHC are self-executing, allow for the accounts to be transferred immediately after origination, and comply with all state and federal regulations," and that " [c]ardholders receive appropriate notice of these events in accordance with all state and federal laws." Mazzoli averred that " [t]he transfer between MHC and any subsequent buyer [is] evidenced by a Purchase and Sale Agreement and corresponding Bill of Sale." 
The judge denied the motion for reconsideration and reaffirmed the entry of summary judgment. She was satisfied that New Century had established a prima facie case that it was the owner of the account and that Oughla was in default in the sum of $723.82 plus interest of $1.58, for a total due of $725.40. The judge found that Oughla's only defense to the motion was that she " was not satisfied" with New Century's proofs, which the judge concluded was not sufficient to defeat summary judgment.
Azeem H. Zaidi
Plaintiff MSW Capital, L.L.C. (MSW Capital) sued defendant Azeem H. Zaidi
alleging that it was the owner of Zaidi's [437 N.J.Super. 308] " CHASE-WAMU" account, on which $12,487.36 was due at charge off. Zaidi, representing himself, filed an answer leaving plaintiff to its proofs.
MSW Capital served Zaidi with interrogatories seeking the factual basis for any defense Zaidi claimed, to which Zaidi declined to provide responsive answers. MSW Capital also served Zaidi with requests for admissions asking whether he admitted applying for credit privileges with CHASE-WAMU; whether he made purchases or received cash advances using the account; and whether he received monthly statements. Zaidi responded without admitting or denying any of the requested admissions.
MSW Capital moved for summary judgment. In its statement of material facts, MSW Capital stated that its predecessor in interest, CHASE-WAMU, extended credit to Zaidi, and that as set forth in the certification submitted in support of the motion, MSW Capital was the current owner of that account on which $12,487.36 was due at charge-off. MSW Capital attached copies of eighteen monthly billing statements for Zaidi's CHASE-WAMU account from August 2009 through January 2011, each addressed to Zaidi at the address indicated on Zaidi's answer.
MSW Capital supported the motion with a certification of its managing director, Lawrence A. Whipple, Jr., who claimed both personal knowledge of MSW Capital's " books and business" and authority to make the certification on its behalf. Whipple certified that MSW Capital " is the owner by purchase of [Zaidi's] defaulted CHASE-WAMU Account" on which there is due the sum of $12,487.36.
[437 N.J.Super. 309] Zaidi, through counsel, opposed MSW Capital's motion and cross-moved for summary judgment. He denied MSW Capital's claims based on its " failure to provide proof that it owns the alleged account and . . . that I am indebted to [MSW Capital] in any amount." Zaidi certified that prior to his receipt of the complaint he had never heard of MSW Capital and never received notice " that an account between 'CHASE-WAMU' and me had been transferred, sold or assigned."
MSW Capital responded with a supplemental certification from Whipple, as well as new certifications from its attorneys. Whipple explained, as he had not in his original certification, that his job responsibilities required that he be familiar with MSW Capital's " records and the manner in which those records are recorded and maintained," and that he personally participated in MSW Capital's acquisition of Zaidi's charged-off " CHASE-WAMU account number [XXXX]." According to Whipple, MSW Capital acquired Zaidi's charged-off CHASE-WAMU account on July 18, 2011 by bill of sale and assignment from Main Street Acquisition Corp., (Main Street) a true copy of which he attached. The bill of sale and assignment recites that:
For value received and subject to the terms and conditions of the [Purchase and Sale Agreement, dated as of April 15, 2011], the Seller [Main Street] hereby
transfers, sells, assigns, conveys, grants, bargains, sets over and delivers to the Purchaser [MSW Capital, L.L.C.], and to the Purchaser's successors and assigns, all of the Seller's rights, title and interest in and to the Purchased Accounts and any claims arising out of the Purchased Accounts described in the Agreement and contained in the Sale File provided to the Purchaser on July 18, 2011.
This Assignment is executed without recourse and without representations or warranties including, without limitation, warranties as to collectability, except as otherwise provided in the Agreement.
Whipple certified that Main Street also provided MSW Capital with a copy of the assignment by which Main Street acquired Zaidi's charged-off account from Chase, a true copy of which he attached.
[437 N.J.Super. 310] Whipple attested to the electronic information Main Street provided MSW Capital regarding Zaidi's charged-off CHASE-WAMU account, including the account number, that the account was opened on August 16, 2004, that the last payment on the account had been made on June 7, 2010 in the amount of $300.00, that Chase Bank charged off the account on January 31, 2011, that the balance due at charge-off was $12,487.36, Zaidi's address in Morganville, New Jersey, as well as Zaidi's date of birth and social security number which Whipple did not list but represented would be made available to the court at its request. Finally, Whipple identified, and attached as true copies, the eighteen periodic statements he obtained from Main Street for Zaidi's charged-off account, each of which stated " This Statement is a Facsimile -- Not an original."
MSW Capital's counsel, Steven A. Lang, submitted a certification countering Zaidi's sworn statement that he had never heard of MSW Capital before being served with the complaint. Lang attached a copy of a demand letter his office had sent to Zaidi before the complaint was filed, informing him that his CHASE-WAMU account had been purchased by MSW Capital and placed with the firm for collection. Lang also explained that in September 2008, the Federal Deposit Insurance Corporation (FDIC) seized Washington Mutual Bank (WAMU), thereafter placing the bank into receivership and eventually selling " substantially all" of its assets to JPMorgan Chase & Co., the parent of Chase Bank USA, N.A., the firm's credit card issuing bank in accordance with JPMorgan Chase & Co.'s public filings with the Securities and Exchange Commission. Lang attached copies of those filings to his certification.
The trial judge reviewed all of the evidence submitted by MSW Capital and the objections to that evidence from Zaidi, and determined that the billing statements satisfied the requirements of Rule 6:6-3(a), and LVNV Funding, L.L.C. v. Colvell, 421 N.J.Super. 1, 22 A.3d 125 (App.Div. 2011), and that Whipple's certification constituted sufficient proof to establish that Zaidi's [437 N.J.Super. 311] charged-off credit card had been transferred to MSW Capital. The judge noted that Zaidi had not offered anything to dispute his responsibility for the account, the accuracy of the amount due at charge-off, or his receipt of the billing statements. Finding no material fact in dispute and that MSW Capital had proved its claim, the judge entered summary judgment for MSW Capital in the amount of $12,487.36 plus costs.
Both defendants filed timely notices of appeal. This court subsequently granted the motion of Northeast New Jersey Legal Services, Inc. to appear as amicus curiae and to argue in support of Oughla's appeal.
Brief Overview of the Debt Buying Industry
Because defendants and amicus rely on reports of the Federal Trade Commission (FTC), a federal agency responsible for enforcing the Fair Debt Collection Practices Act, 15 U.S.C.A. § 1692, issued after the FTC assessed the effect of debt buying on the collection of consumer debt and its effect on consumers, we begin with a brief background of the debt buying industry.
The FTC undertook its studies in response to the rapid increase in debt buying over the last two decades. Although acknowledging that debt buying reduces the losses creditors incur in providing credit, thereby helping to keep the price of credit low and ensuring its wide availability, the FTC was concerned that the re-selling of debts could lead to debt buyers having insufficient or inaccurate information about the debts they are trying to collect, resulting in debt buyers attempting to collect from the wrong debtor or more than the debtor owes. Federal Trade Commission, Debt Buying Report, supra, at 11, 29-30, Federal Trade Commission, Repairing a Broken System : Protecting Consumers in Debt Collection Litigation and Arbitration i-ii (2010) available at http://ftc.gov/os/2010/07/debtcollectionreport.pdf, [hereinafter " Debt Collection Report" ]; Federal Trade Commission, Collecting Consumer Debts: The Challenges of Change, A Workshop Report 1 (2009) availab ...