IN THE COURT OF COMMON PLEAS FOR THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY
MIDLAND FUNDING, LLC, assignee of ) Asset Acceptance, LLC, assignee of ) Citibank, N.A (The Home Depot), ) ) Plaintiff, ) ) v. ) C.A. No. CPU4-14-001135 ) IRWIN HANBY, ) ) Defendant. ) )
Submitted: January 27, 2015 Decided: February 23, 2015
Mr. Seth Yeager, Esquire Mr. Douglas Shachtman, Esquire Lyons, Doughty, and Veldhuis, P.A. The Shachtman Law Firm 15 Ashley Place, Suite 2B 1200 Pennsylvania Ave., Suite 302 Wilmington, DE 19804 Wilmington, DE 19806 Attorney for Plaintiff Attorney for Defendant
DECISION AFTER TRIAL This is an action for breach of contract brought by Plaintiff Midland Funding, LLC,
(“Plaintiff”) as assignee of Asset Acceptance, LLC (“Asset Acceptance”), as assignee of
Citibank, N.A. (“Citibank”), against Defendant Irwin Hanby (“Defendant”). Plaintiff
brought suit against Defendant for allegedly defaulting on the credit card agreement. Trial
was held on January 27, 2015. After Plaintiff’s case-in-chief, Defendant moved for a
directed verdict, arguing that Plaintiff failed to establish that it is the proper party to bring
this action against Defendant. The Court reserved decision on the motion. This is the
Court’s final decision after trial.
FACTS
In its Complaint, Plaintiff Midland Funding, alleged that Citibank issued a credit card
to Defendant on behalf of The Home Depot, and that Defendant subsequently defaulted on
the account, owing a balance of $9,549.80. Defendant denied the substantive allegations of
Plaintiff’s Complaint, and raised a number of affirmative defenses in his Answer. Defendant
also counterclaimed against Plaintiff, alleging that Plaintiff trespassed on Defendant’s
property to effect service of process.
At trial, Plaintiff’s first witness was Mycah Struck (“Struck”), an employee of Midland
Credit Management (“MCM”). MCM services accounts and maintains records for Plaintiff.
Struck testified that he has been employed with MCM for over three years, and currently
serves as a senior legal specialist. Struck testified as follows:
First, Struck testified regarding the background information about Plaintiff’s
corporate structure. The Encore Capital Group (“Encore”) is the parent corporation for
MCM, which owns 100% of the shares of Plaintiff, therefore making Plaintiff an indirect
2 subsidiary of Encore. Encore purchases debt portfolio accounts from various financial
institutions. MCM manages and electronically maintains the accounts. Plaintiff is assigned
the portfolios and collects on the debt. Struck, in his capacity as a senior legal specialist for
MCM, reviews and verifies all legal and business documents associated with the assigned
debt accounts to ensure that Plaintiff has the correct information.
In these proceedings, Citibank, the original creditor, issued a credit card to Defendant
on behalf of The Home Depot. Struck testified that on May 29, 2013, Citibank sold
Defendant’s credit card account to Asset Acceptance, which subsequently sold a number of
portfolios to Plaintiff. Plaintiff then entered into evidence three exhibits that related to the
original transaction between Citibank and Asset Acceptance.
First, Plaintiff entered Plaintiff’s Exhibit 1, which was a Bill of Sale and Assignment
by Citibank to Asset Acceptance, dated May 29, 2013 (the “May 2013 Bill of Sale”). The
May 2013 Bill of Sale was a single document, and stated the following: “[Citibank] does
hereby transfer, sell, assign, convey, grant, bargain, set over and delivery to [Asset
Acceptance], and to [Asset Acceptance’s] successors and assigns, the Accounts described in
Exhibit 1 and the final electronic file.”1 Plaintiff’s Exhibit 1 does not identify any specific
accounts involved in the transaction.
Next, Plaintiff submitted Plaintiff’s Exhibit 2 into evidence, which was an Affidavit
signed on October 28, 2013 that identified Defendant’s account as one that Asset
Acceptance purchased on May 29, 2013 (the “October Affidavit”).2 The October Affidavit
1 Plaintiff’s Exhibit 1. 2 Plaintiff’s Exhibit 2.
3 specifically identified Defendant’s account by referencing the account number’s last four
digits, and by identifying Defendant as the account holder.3
Plaintiff then entered Plaintiff’s Exhibit 3 into evidence, which was an Affidavit of
Sale of Account by Original Creditor, signed on June 13, 2013 (the “June Affidavit”).4 The
June Affidavit stated that Citibank “sold a pool of charged-off accounts” to Asset
Acceptance and that “[a]s part of the sale of the [a]ccounts, certain electronic records were
transferred on individual accounts to the debt buyer.”5 Attached to the June Affidavit was a
document titled “Schedule A,” which was completely redacted.
Struck provided conflicting testimony as to how MCM received these documents.
At some points during his testimony, Struck stated that Encore purchased Asset Acceptance,
however he also stated, a number of times, that MCM purchased Asset Acceptance. When
identifying the October 2013 Affidavit, Struck stated, “How we differentiate between
ownership [of the debt portfolios] is confusing. Asset Acceptance no longer exists, so MCM
is the third buyer on paper but in reality it’s the second [buyer].”
Struck later testified that Encore purchased Asset Acceptance, and explained,
“Encore purchased the company of Asset Acceptance, LLC, as a whole, however when it
comes to processing their accounts and suing on their accounts, the Encore Capital Group
cannot do that because the Encore Capital Group is not licensed as a debt buyer.” When
3 Id.
4Plaintiff’s Exhibit 3. The Court allowed Plaintiff to submit this exhibit subject to Defendant’s hearsay objection, and ruled that this exhibit is not dispositive as to the issue of liability.
5 Id.
4 asked by counsel to clarify his response, Struck merely described the corporate structure
governing the entities.
Plaintiff then submitted Plaintiff’s Exhibit 4 into evidence, which were a bundle of
original Billing Statements (the “Billing Statements”) from The Home Depot, issued by
Citibank and associated with Defendant’s credit card account. Although the Billing
Statements included Defendant’s account number, neither Defendant’s name nor
Defendant’s address appeared anywhere on any of the documents.
Plaintiff called Defendant as its second witness. Defendant testified that he obtained
a Home Depot credit card during the year of 2009 or 2010, in order to purchase materials
needed to renovate his home. Defendant further stated that he received monthly billing
statements, and made payments on the account. When presented with the Billing
Statements, Defendant acknowledged that the latest statement showed a balance of
$9,549.80, but claimed that he did not know if that was the actual amount that he owed.
At the end of Plaintiff’s case-in-chief, Defendant moved for judgment as a matter of
law, or a directed verdict. Defendant argued that Plaintiff did not establish how, if at all, it
came to own the subject account. Defendant questioned the integrity of the evidence
proffered by Plaintiff, arguing that the testimony was confusing as to the corporate
relationship between Encore, Asset Acceptance, MCM, and Plaintiff. In response, Plaintiff
argued that the Court should consider all evidence under the totality of the circumstances,
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IN THE COURT OF COMMON PLEAS FOR THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY
MIDLAND FUNDING, LLC, assignee of ) Asset Acceptance, LLC, assignee of ) Citibank, N.A (The Home Depot), ) ) Plaintiff, ) ) v. ) C.A. No. CPU4-14-001135 ) IRWIN HANBY, ) ) Defendant. ) )
Submitted: January 27, 2015 Decided: February 23, 2015
Mr. Seth Yeager, Esquire Mr. Douglas Shachtman, Esquire Lyons, Doughty, and Veldhuis, P.A. The Shachtman Law Firm 15 Ashley Place, Suite 2B 1200 Pennsylvania Ave., Suite 302 Wilmington, DE 19804 Wilmington, DE 19806 Attorney for Plaintiff Attorney for Defendant
DECISION AFTER TRIAL This is an action for breach of contract brought by Plaintiff Midland Funding, LLC,
(“Plaintiff”) as assignee of Asset Acceptance, LLC (“Asset Acceptance”), as assignee of
Citibank, N.A. (“Citibank”), against Defendant Irwin Hanby (“Defendant”). Plaintiff
brought suit against Defendant for allegedly defaulting on the credit card agreement. Trial
was held on January 27, 2015. After Plaintiff’s case-in-chief, Defendant moved for a
directed verdict, arguing that Plaintiff failed to establish that it is the proper party to bring
this action against Defendant. The Court reserved decision on the motion. This is the
Court’s final decision after trial.
FACTS
In its Complaint, Plaintiff Midland Funding, alleged that Citibank issued a credit card
to Defendant on behalf of The Home Depot, and that Defendant subsequently defaulted on
the account, owing a balance of $9,549.80. Defendant denied the substantive allegations of
Plaintiff’s Complaint, and raised a number of affirmative defenses in his Answer. Defendant
also counterclaimed against Plaintiff, alleging that Plaintiff trespassed on Defendant’s
property to effect service of process.
At trial, Plaintiff’s first witness was Mycah Struck (“Struck”), an employee of Midland
Credit Management (“MCM”). MCM services accounts and maintains records for Plaintiff.
Struck testified that he has been employed with MCM for over three years, and currently
serves as a senior legal specialist. Struck testified as follows:
First, Struck testified regarding the background information about Plaintiff’s
corporate structure. The Encore Capital Group (“Encore”) is the parent corporation for
MCM, which owns 100% of the shares of Plaintiff, therefore making Plaintiff an indirect
2 subsidiary of Encore. Encore purchases debt portfolio accounts from various financial
institutions. MCM manages and electronically maintains the accounts. Plaintiff is assigned
the portfolios and collects on the debt. Struck, in his capacity as a senior legal specialist for
MCM, reviews and verifies all legal and business documents associated with the assigned
debt accounts to ensure that Plaintiff has the correct information.
In these proceedings, Citibank, the original creditor, issued a credit card to Defendant
on behalf of The Home Depot. Struck testified that on May 29, 2013, Citibank sold
Defendant’s credit card account to Asset Acceptance, which subsequently sold a number of
portfolios to Plaintiff. Plaintiff then entered into evidence three exhibits that related to the
original transaction between Citibank and Asset Acceptance.
First, Plaintiff entered Plaintiff’s Exhibit 1, which was a Bill of Sale and Assignment
by Citibank to Asset Acceptance, dated May 29, 2013 (the “May 2013 Bill of Sale”). The
May 2013 Bill of Sale was a single document, and stated the following: “[Citibank] does
hereby transfer, sell, assign, convey, grant, bargain, set over and delivery to [Asset
Acceptance], and to [Asset Acceptance’s] successors and assigns, the Accounts described in
Exhibit 1 and the final electronic file.”1 Plaintiff’s Exhibit 1 does not identify any specific
accounts involved in the transaction.
Next, Plaintiff submitted Plaintiff’s Exhibit 2 into evidence, which was an Affidavit
signed on October 28, 2013 that identified Defendant’s account as one that Asset
Acceptance purchased on May 29, 2013 (the “October Affidavit”).2 The October Affidavit
1 Plaintiff’s Exhibit 1. 2 Plaintiff’s Exhibit 2.
3 specifically identified Defendant’s account by referencing the account number’s last four
digits, and by identifying Defendant as the account holder.3
Plaintiff then entered Plaintiff’s Exhibit 3 into evidence, which was an Affidavit of
Sale of Account by Original Creditor, signed on June 13, 2013 (the “June Affidavit”).4 The
June Affidavit stated that Citibank “sold a pool of charged-off accounts” to Asset
Acceptance and that “[a]s part of the sale of the [a]ccounts, certain electronic records were
transferred on individual accounts to the debt buyer.”5 Attached to the June Affidavit was a
document titled “Schedule A,” which was completely redacted.
Struck provided conflicting testimony as to how MCM received these documents.
At some points during his testimony, Struck stated that Encore purchased Asset Acceptance,
however he also stated, a number of times, that MCM purchased Asset Acceptance. When
identifying the October 2013 Affidavit, Struck stated, “How we differentiate between
ownership [of the debt portfolios] is confusing. Asset Acceptance no longer exists, so MCM
is the third buyer on paper but in reality it’s the second [buyer].”
Struck later testified that Encore purchased Asset Acceptance, and explained,
“Encore purchased the company of Asset Acceptance, LLC, as a whole, however when it
comes to processing their accounts and suing on their accounts, the Encore Capital Group
cannot do that because the Encore Capital Group is not licensed as a debt buyer.” When
3 Id.
4Plaintiff’s Exhibit 3. The Court allowed Plaintiff to submit this exhibit subject to Defendant’s hearsay objection, and ruled that this exhibit is not dispositive as to the issue of liability.
5 Id.
4 asked by counsel to clarify his response, Struck merely described the corporate structure
governing the entities.
Plaintiff then submitted Plaintiff’s Exhibit 4 into evidence, which were a bundle of
original Billing Statements (the “Billing Statements”) from The Home Depot, issued by
Citibank and associated with Defendant’s credit card account. Although the Billing
Statements included Defendant’s account number, neither Defendant’s name nor
Defendant’s address appeared anywhere on any of the documents.
Plaintiff called Defendant as its second witness. Defendant testified that he obtained
a Home Depot credit card during the year of 2009 or 2010, in order to purchase materials
needed to renovate his home. Defendant further stated that he received monthly billing
statements, and made payments on the account. When presented with the Billing
Statements, Defendant acknowledged that the latest statement showed a balance of
$9,549.80, but claimed that he did not know if that was the actual amount that he owed.
At the end of Plaintiff’s case-in-chief, Defendant moved for judgment as a matter of
law, or a directed verdict. Defendant argued that Plaintiff did not establish how, if at all, it
came to own the subject account. Defendant questioned the integrity of the evidence
proffered by Plaintiff, arguing that the testimony was confusing as to the corporate
relationship between Encore, Asset Acceptance, MCM, and Plaintiff. In response, Plaintiff
argued that the Court should consider all evidence under the totality of the circumstances,
and find that it did establish the connection between Plaintiff and the subject account. The
Court reserved decision on the motion, and trial continued.
5 Defendant then presented its case-in-chief on its counterclaim, and testified to the
following: Defendant resides in Wilmington, Delaware, and owns three acres of land. His
house sits 300-350 feet from the main road. In October 2013, Defendant installed a camera
after experiencing problems with people trespassing onto his property.6 Approximately
three or four months later, Defendant hung multiple “No Trespassing” signs on his
property, placing three on or around his house, and three on his detached garage. The No
Trespassing signs were red, black and white in color, and measured to 14 x 16 inches.
Defendant testified that on three separate occasions, the process server who effected
service for this matter drove onto his property without his permission.7 Defendant learned
of the first incident after reviewing the film from his camera, which showed that the process
server stopped and parked his car in front of one of the No Trespassing signs, and waved at
the camera. Defendant testified that this man drove onto the property a second time, came
down and circled the driveway before leaving. Finally, the process server drove onto
Defendant’s property a third time, and Defendant spoke with him. The process server
remained in his car, asked for Defendant’s name, and handed Defendant papers. Defendant
took down the car’s license plate number, but did not ask the process server to leave his
property. At the conclusion of this testimony, Defendant rested.
6 Defendant did not indicate on which building, his home or his garage, he affixed the camera.
7Although Defendant was unaware that the person driving onto his property was a process server, he stated that he learned that he was a process server during the litigation of this matter. 6 In response to Defendant’s counterclaim, Plaintiff called Giacimo Bonvetti
(“Bonvetti”), the special process server who effected service in this matter, as its witness.
Bonvetti testified that he is employed as a special process server, licensed through O’Rourke
Investigative Associates, and is tasked with, inter alias, serving legal documents. Bonvetti
testified that he attempted to serve Defendant at his home on three separate occasions, and
explained that he never ventured into Defendant’s backyard, nor did he go into Defendant’s
house. Bonvetti saw two No Trespassing signs on Defendant’s house, but stated that there
were no signs along the driveway. When he made service, Defendant approached Bonvetti’s
vehicle, read the papers, and wrote down Bonvetti’s license plate number. This concluded
Plaintiff’s rebuttal.
DISCUSSION
The first issue before the Court is whether Plaintiff failed to establish that it is the
proper party to bring this action against Defendant, thus entitling Defendant to judgment as
a matter of law. Court of Common Pleas Civil Rule 50 governs Motions for Directed Verdict,
and provides that:
A party who moves for a directed verdict at the close of the evidence offered by an opponent may offer evidence in the event that the motion is not granted, without having reserved the right so to do and to the same extent as if the motion had not been made. A motion for a directed verdict shall state the specific grounds therefor.
When considering a defendant’s motion for directed verdict, the Court must view the
evidence in a light most favorable to the plaintiff as the nonmovant.8 To find in favor of the
8 Rumble v. Longo, 147 A.2d 511, 513 (Del. Super. 1958).
7 moving defendant, the Court should be convinced that there is no substantial evidence to
support a verdict for the plaintiff.9
It is undisputed that Citibank issued Defendant a credit card on behalf of The Home
Depot; that Defendant incurred charges on that credit card, and; that a balance remains on
the account. However, this matter involves a number of assignments, and in a consumer
debt action, a plaintiff with an assignment of debt has the burden to prove the assignment in
order to establish that it is the proper party to bring the action.10 The Court of Common
Pleas Administrative Directive No. 2011-1 (the “Directive”)11 establishes pleading
requirements for complaints in consumer debt collection actions, and requires creditors to
setforth in the Complaint the debt’s full chain of title. This pleading requirement
emphasizes the importance of an assignee-creditor’s burden of proving that it is the proper
party to collect on the delinquent account.12
In this matter, the Court is unable to resolve the discrepancies within the testimony
presented by Plaintiff. Plaintiff clearly established that Citibank originally owned
Defendant’s credit card account, and that Asset Acceptance purchased the account in May
2013, however Plaintiff failed to establish the current owner of the subject account. While
it is clear that MCM received the May 2013 Bill of Sale, the October Affidavit, and the June
9 McCarthy v. Mayor of Wilmington, 100 A2d 739, 740 (Del. Super. 1953).
Citimortgage, Inc v. Bishop, 2013 WL 1143670 (Del. Super. Mar. 4, 2013); Delaware Trust Co.v. Everitt, 140 10See
A.2d 778, 782 (Del. Ch. 1958); Dahlink Financial Corp. v. Bochniak, 2012 WL 1415815 (Del. Com. Pl. Mar. 13, 2012).
11Although amended to Admin. Dir. No. 2012-2, however the substance of the Directive remained unchanged.
12 Dahlink Financial Corp. v. Bochniak, 2012 WL 1415845 at *5 (Mar. 13, 2012). 8 Affidavit as part of a bundle of information within an electronic transfer, it is unclear as to
which entity provided MCM with this information, and which entity currently owns the
subject account.
During his testimony, Struck stated that Encore purchased Asset Acceptance
however; he also stated that MCM purchased Asset Acceptance. Upon the Court’s inquiry,
Plaintiff’s counsel specifically asked Struck how Plaintiff came to own the subject account.
Struck was nonresponsive, and restated that Encore purchased Asset Acceptance, and
explained that because Encore is not licensed as a debt buyer, it cannot collect on delinquent
accounts. When counsel asked Struck to clarify his response, and again asked how Plaintiff
came to own the account, Struck re-explained the corporate structure governing the entities.
The documents which plaintiff relies consist of a bill of sale dated May 29, 2013 from
Citibank to Asset Acceptance LLC. This document lists no accounts or amounts (Pltf. Exh.
#1). The second document plaintiff relies upon to establish the right to the debt is the
“Affidavit of Sale of Agreement by Original Creditor” dated June 13, 2013 between Citibank
and Asset Acceptance LLC. This document refers to the May 29, 2013 document regarding
the sale of a pool of charge off accounts by Citibank to Asset Acceptance LLC. The
document refers to purchased accounts, but the account schedule “A” page is blank (Pltf.
Exh. #3).
A third affidavit dated October 28, 2013 provides that Citibank on May 29, 2013,
sold account 4032 in the name of Irwin T. Hanby to Asset Acceptance with a balance due of
$9,549.80. (Pltf. Exh. #2). Plaintiff’s final exhibit consists of a series of billing statements
from Home Depot to defendant Irwin T. Hanby. (Pltf. Exh. #4).
9 The claim is brought by Midland Funding LLC, assignee of Asset Acceptance, LLC,
assignee of Citibank. However, there is no document introduced to establish that there was
a sale or assignment to the entity which brings the claim.
I find the documents and testimony insufficient to establish the chain of title in this
case. Struck was inconsistent in his testimony, and I find his inability to directly answer
counsel’s pointed question regarding how Plaintiff came to own the subject account to be of
concern. From the evidence presented by Plaintiff, it is unclear as to whether Encore or
MCM subsequently purchased the account from Asset Acceptance. Even if Plaintiff had
established that Encore purchased the subject account from Asset Acceptance, Plaintiff
failed to present any evidence that Encore specifically assigned the subject account to
Plaintiff. Plaintiff has failed to meet its burden in establishing that it is the proper party to
bring this action and collect on this debt. Therefore, Defendant’s Motion for Directed
Verdict is granted.
Turning to defendant’s claim for trespass, it is well settled in Delaware that parties
have a right to question the sufficiency of service of process.13 In the matter at hand,
Defendant claims that that the service of process was insufficient because Bonvetti, the
special process server, illegally trespassed upon Defendant’s property to attempt service. In
order to prevail on a claim for trespass to land, Defendant must prove: (1) that he has lawful
possession of the property in question; (2) that the defendant entered onto his property
without consent or privilege, and; (3) that he is entitled to damages.14
13 Alston v. Dipasquale, 2001 WL 34083824 at *1 (Del. Super. Oct. 19, 2001).
14 O’Bier v. JBS Const., LLC, 2012 WL 1495330 at *2 (Del. Super. April 20, 2012). 10 Defendant argues that the presence of six large, conspicuous “No Trespassing” signs
on his property created an additional protective measure that prevented Bonvetti from
entering onto his property. I find that this argument has no merit; the Court appointed
Bonvetti to serve processes on behalf of the Court pursuant to Court of Common Pleas Civil
Rule 4(d).15 As an appointed process server, Mr. Bonvetti was privileged to enter onto
Defendant’s property for purposes of discharging the duties for which the Court appointed
him. Therefore, I find that Bonvetti was not unlawfully trespassing onto Defendant’s
property, and the service of process in this matter was properly perfected.
CONCLUSION
For the foregoing reasons, Defendant’s Motion for Directed Verdict is granted for
Plaintiff’s failure to establish the subject account’s chain of title.
On Defendant’s counterclaim for insufficient service, the Court finds in favor of
Plaintiff because service was properly effected.
SO ORDERED
______________________________________ The Honorable Alex J. Smalls. Chief Judge Midland Funding-OP Feb 2015
Specifically, the Court renewed Mr. Bonvetti’s Application for Designation as a Special Process Server on 15
December 26, 2013, and approved his Application for the entire calendar year of 2014. 11