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Alnabulsi v. Midland Funding, LLC

United States District Court, D. Connecticut

March 23, 2017

ZOHAIR ALNABULSI, Plaintiff
v.
MIDLAND FUNDING, LLC, Defendant.

          RULING ON MOTION TO DISMISS

          Michael P. Shea, U.S.D.J.

         Plaintiff Zohair Alnabulsi (“Alnabulsi”) filed a single-count first amended complaint (“FAC”) against Defendant Midland Funding, LLC (“Midland”), alleging a violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110 (Count One). Midland moves to dismiss for lack of subject matter jurisdiction, arguing that the FAC fails to meet the amount in controversy requirement for diversity cases under 28 U.S.C. § 1332. For the reasons stated below, the Court DENIES Midland's motion to dismiss. (ECF No. 33.)

         I. BACKGROUND

         The following factual allegations are taken from the FAC and are accepted as true for the purpose of deciding Midland's motion to dismiss.

         A. Factual Background

         Alnabulsi is a resident of Guilford, Connecticut. (FAC, ECF No. 32 at ¶ 1.) In 2008, Alnabulsi underwent a “failed back surgery and was diagnosed with Complex Regional Pain Syndrome (“CRPS”).” (Id. at ¶ 29.) Alnabulsi lost his job as a result of his disability (id.), and this apparently led him to incur substantial credit card debt.

         Midland is a Delaware limited liability corporation the sole member of which is Midland Portfolio Services, Inc., a Delaware corporation. (ECF No. 32 at ¶ 2, 4.)[1]

On November 23, 2011, Midland sued Alnabulsi for credit card debt it had purchased from Chase Bank. (Id. at ¶ 30.) On March 27, 2012, Midland secured a default judgment against Alnabulsi for $5, 836.63. (Id. at ¶ 31.) On April 3, 2012, Midland placed a judgment lien on 2 Covey Crossing in Guilford, Connecticut. (Id. at ¶ 32.) It is not clear whether Midland performed a title search on the property at 2 Covey Crossing. (Id. at ¶ 33.) Alnabulsi did not own 2 Covey Crossing at the time of the judgement lien. (Id. at ¶ 32.) The owner of 2 Covey Crossing learned of the lien in March 2013, after being unable to close on a mortgage refinancing agreement until the judgment was satisfied. The lien halted the refinancing process. (Id. at ¶ 34-35.) A Midland employee failed to resolve the issue in a phone call with the owner. (Id. at ¶ 36.) “The delay in closing ended up costing an extra 25 basis point[s], 0.25% on the entire amount of the loan, [and] additional attorney fees to deal with the lien problem.” (Id. at ¶ 37.)

         After being notified of the presence of the lien, Alnabulsi was blamed for the delay in the closing, the higher rate on the mortgage, and the additional costs imposed on the owner of 2 Covey Crossing. (Id. at ¶ 38.) As a result, Alnabulsi had increased episodes of migraine headaches and sleep disturbances, and became depressed. (Id.) Alnabulsi borrowed $7, 500 from a friend to give to the owner of 2 Covey Crossing to put in escrow. (Id. at ¶ 39.) He had to drive from Guilford, Connecticut to Bloomingdale, New Jersey to get the money. (Id.) Alnabulsi was charged a $500 “upfront fee” and an “additional 2% a month in interest” by his friend, which caused Alnabulsi more stress due to other financial obligations. (Id.)

         The owner of 2 Covey Crossing had no relationship with Midland. (Id. at ¶ 42.) Alnabulsi alleges that Midland engaged in “unfair, deceptive conduct to collect a debt, ” and “caused the Plaintiff to come up with money he does not have, to make sure the refinancing process will continue.” (Id. at ¶ 41.) It further caused “fights and hardship in addition to monetary losses” and “embarrassment [and] humiliation in front of the attorney, and the bank officers involved in the closing process.” (Id. at ¶ 43.)[2] As a result of the stress, Alnabulsi was prescribed Duloxetine, Alprazolam, and Bupropion for his major depression, anxiety, and pain. (Id. at ¶ 4.) Additionally, Alnabulsi suffered increased episodes of migraines and insomnia. (Id.)

         Alnabulsi alleges that Midland generates “a significant portion of their revenue by filing lawsuits and collecting on judgments against individual consumers.” (Id. at ¶ 13.) Midland filed 245, 000 collection lawsuits in 2009. (Id. at ¶ 20.) The majority of the collection lawsuits resulted in default judgment in favor of Midland due to lack of defendant appearance or response. (Id.) Midland Credit Management (“MCM”) is a subsidiary of Encore Group, Inc., which is also the parent company of Midland. (Id. at ¶ 3.) At least three MCM employees “admitted under oath in different sworn testimony that they signed false statements that were filed in courts around the country to obtain judgments against individual citizens in favor of Midland.” (Id. at ¶ 21.) The MCM employees testified that they would sign 300 to 400 computer generated affidavits each day without reading them, having any knowledge of the information contained in them, or checking the accuracy of the information to which they were swearing to. (Id. at ¶ 22.) MCM employees testified that Midland used “robo-signed affidavits attesting to the authenticity of documents attached to the affidavit that purported to substantiate the debt.” (Id. at ¶ 26.) These practices allowed Midland to obtain a judgment against Alnabulsi, based on “incomplete information supported by what could be false or fraudulent affidavits.” (Id. at ¶ 28.)

         B. Procedural History

         Alnabulsi filed his original complaint on February 20, 2015. (ECF No. 1.) On September 28, 2015, Midland filed a motion to dismiss Count Two because the one-year statute of limitations under the Fair Debt Collection Practices Act (FDCPA) had expired. (ECF No. 11.) On January 27, 2016, the Court dismissed Count Two as untimely. (Order, ECF No. 22.) The Court gave Alnabulsi an opportunity to “submit a signed statement setting forth the citizenship of each of Midland's members” showing that there was diversity jurisdiction to proceed on Count One. (Id.) On February 11, 2016, Alnabulsi filed a “Statement in Support of Diversity Jurisdiction, ” responding to the Court's order and Midland's amount in controversy argument. (ECF No. 26.) On May 4, 2016, the Court gave Alnabulsi an opportunity to file an amended complaint “alleging facts demonstrating (1) the citizenship of each of Midland's members, and (2) the amount he claims in emotional damages as a result of Midland's alleged violation of CUTPA.” (Order, ECF No. 31.) Subsequently, Alnabulsi filed his First Amended Complaint (FAC) on May 17, 2016. (ECF No. 32.)

         On February 9, 2016, Midland filed a motion for leave to file a memorandum regarding the Court's jurisdiction, in which it argued that even if the parties in this case are diverse, the amount in controversy does not exceed $75, 000. (ECF Nos. 23, 24, 25.) On May 31, 2016, Midland filed a motion to dismiss Alnabulsi's FAC under Rule 12(b)(1) of the Federal Rules of Civil Procedure. (ECF No. 33.) On January 19, 2017, the Court ordered Midland to file a “Notice to Pro Se Litigant.” (ECF No. 37.) Midland filed a “Notice to Self-Represented Litigant Concerning Motion ...


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