## Facts

- Midland Funding, LLC, a debt buyer and debt collector, purchased charged-off consumer debts in bulk and pursued collection, often through state-court lawsuits.
- Eric Samuels alleged Midland frequently lacked sufficient account-level information and admissible evidence to prove ownership, amount, or validity of individual debts it sued upon.
- Samuels alleged Midland’s strategy was to file high volumes of collection suits without adequate documentation to obtain default judgments or settlements from consumers who did not appear or defend.
- Midland sued Samuels in Alabama state court alleging he owed a consumer debt Midland claimed to have purchased; Samuels denied owing Midland.
- At the state-court trial, Samuels appeared with counsel; Midland’s lawyer appeared but presented no witnesses and no documents, and judgment was entered for Samuels.
- Samuels sued Midland in federal court alleging FDCPA violations based on Midland’s litigation-based collection practices and asserted Alabama tort claims including invasion of privacy, malicious prosecution, abuse of process, and negligent hiring/supervision.

## Issues

1. Whether allegations that a debt collector filed a collection lawsuit without the intent or ability to prove the debt, primarily to coerce payment or obtain defaults, state a plausible claim under the FDCPA.
2. Whether those same allegations plausibly state Alabama-law tort claims such as malicious prosecution, abuse of process, invasion of privacy, and negligent hiring/supervision.
3. Whether the FDCPA claim was barred because it should have been asserted as a compulsory counterclaim in the prior state-court debt-collection action.

## Decision

- The court denied Midland’s Rule 12(c) motion for judgment on the pleadings.
- The court held the complaint plausibly alleged FDCPA violations based on filing suit as a collection device while lacking intent or ability to prove the asserted debt.
- The court held the complaint plausibly alleged state-law tort claims and that factual disputes about Midland’s purposes and proof could not be resolved on the pleadings.
- The court held the FDCPA claim was not barred as a compulsory counterclaim in the earlier state action.

## Legal Principles

- At the Rule 12(c) stage, the court accepts well-pleaded factual allegations as true and tests only whether the complaint states plausible claims for relief.
- A debt collector’s use of litigation may fall within the FDCPA where the suit is alleged to involve false or misleading representations about the debt’s character, amount, or legal status, or to constitute unfair or unconscionable collection means.
- Allegations that a collector systematically files suits without admissible proof, expecting to win through defaults or pressured settlements, can plausibly support FDCPA claims beyond a mere allegation that the collector lost a contested case.
- State-law claims such as malicious prosecution and abuse of process may be plausibly stated where litigation is alleged to be pursued without a proper basis and for an improper purpose; whether the conduct is tortious is commonly fact-dependent.
- An FDCPA claim based on a collector’s methods and internal litigation practices is not automatically a compulsory counterclaim in the underlying debt action, particularly where the consumer may not reasonably know the facts supporting the FDCPA theory during the debt suit and where the claims do not share the same operative focus.

## Conclusion

The court allowed the case to proceed, holding that allegations of a debt buyer’s mass filing of collection suits without intent or ability to prove the debts could violate the FDCPA and support related Alabama tort claims, and that the FDCPA claim was not forfeited by failure to assert it in the earlier state-court collection action.


Samuels v. Midland Funding, LLC, 921 F. Supp. 2d 1321 (S.D. Ala. 2013)