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Case 1:17-cv-00177-RDB Document 99 Filed 09/21/17 Page 1 of 14
Plaintiff, *
v. * Civil Action No.: RDB-17-0177
Defendants. *
* * * * * * * * * * * * *
Plaintiff Charlene Novic ("Plaintiff" or "Ms. Novic") initially brought this action
against Defendants Credit One Bank, N.A. ("Credit One"), Midland Funding, LLC and
Midland Credit Management, LLC (collectively, "Midland"), Trans Union, LLC ("Trans
Union"), Equifax Information Services, LLC, ("Equifax"), and Experian Information
Solutions, Inc. ("Experian")1 alleging violations of the Federal Credit Reporting Act
("FCRA"), 15 U.S.C. ? 1681, et seq. (Am. Compl. ECF No. 23.) Currently pending before this
Court is Defendant Credit One's Motion to Compel Arbitration and Stay the Litigation.
(ECF No. 52.) The parties' submissions have been reviewed, and no hearing is necessary. See
Local Rule 105.6 (D. Md. 2016). For the reasons stated herein, Defendant's Motion to
Compel Arbitration and Stay the Litigation (ECF No. 52) is DENIED.
Ms. Novic opened an account with Credit One in September of 2011. (ECF No. 23
at ? 6.) In August of 2013, unbeknownst to Ms. Novic, the mailing address on her account
1 As indicated infra, the claims against the Defendants TransUnion, Equifax, and Experian have now been
dismissed and Credit One and Midland are the only remaining defendants.
Case 1:17-cv-00177-RDB Document 99 Filed 09/21/17 Page 2 of 14
was switched from her Maryland address to an address in Oregon. (ECF No. 23 at ?? 16-19;
ECF No. 54-1 at 11.) One month later, fraudulent charges began accumulating on Ms.
Novic's account. (Id.) Ms. Novic, not yet realizing the fraud, continued to make monthly
payments only in an amount sufficient to cover her usual spending. (ECF No. 23 at ? 25.)
On March 22, 2014, Ms. Novic received a late notice from Credit One via email that stated
"if you have already made your payment, please ignore this notice." (Id. at ? 26.) Believing
that she had already paid her account, Ms. Novic ignored the notice. (Id.) Eight days later,
Credit One sold Ms. Novic's account. (Id. at ? 27). Over the next month, Ms. Novic's
account was sold from Credit One to MHC Receivables, LLC ("MHC"), from MHC to
Sherman Originator III LLC ("Sherman"), and then from Sherman to Midland. (ECF No.
54-1 at 9.)
In late April of 2014, Midland began contacting Ms. Novic to collect the debt via
letter and telephone calls. (ECF No. 23 at ?? 28-29.) Ms. Novic, not yet aware of the fraud
or that her account had been sold to Midland, initially thought the calls were a scam. (Id. at ?
31.) After the calls continued, Ms. Novic demanded proof that she owed the debt. (Id.) After
speaking with Midland representatives and contacting Credit One, Ms. Novic finally received
an account statement showing the fraudulent address and unauthorized charges. (Id. at ?? 20,
32.) Ms. Novic immediately reported the fraudulent Oregon address and unauthorized
transactions to Midland. (Id. at ? 32.) When she checked her credit reports, Ms. Novic saw
that both Credit One and Midland were reporting the same fraudulent account. (Id. at ?? 34,
39.) Ms. Novic then began to dispute the debt with Equifax, Trans Union, and Experian. (Id.
at ?? 35-39.) When Credit One and Midland continued to report that Ms. Novic owed
Case 1:17-cv-00177-RDB Document 99 Filed 09/21/17 Page 3 of 14
money on the fraudulent account, however, the credit bureaus refused to remove the false
reporting. (Id.)
Despite Ms. Novic's disputes and reports of fraud, in 2016, Midland initiated
collection proceedings against Ms. Novic in the District Court of Maryland for Washington
County. (ECF No. 54-1 at 1-7.) Midland, in order to show that it was the successor-in-
interest to Ms. Novic's account, had documentation and affidavits from Credit One. (Id. at
12-14, 16-17.) To show that Credit One originated Ms. Novic's account, Credit One's Vice
President of Portfolio Services-Operations, Gary Harwood, noted on the bill from MHC to
Sherman that Credit One acknowledged the sale and that the accounts were originated by
Credit One and had previously been assigned to MHC. (Id. at 12.) Mr. Harwood also
provided an affidavit detailing that Ms. Novic's account was "originated by Credit One and
owned by MHC immediately prior to the sale to Sherman" and the sale "represent[s] all
rights to the accounts and receivables previously owned and serviced by Credit One." (Id. at
13-14.) Midland then had a copy of the bills of sale from MHC to Sherman and from
Sherman to Midland. (Id. at 8-25.) In addition, Credit One's Senior Vice President and Chief
Financial Officer provided an affidavit similar to Mr. Harwood's detailing how Credit One
assigns accounts and receivables "represent[ing] all rights to the accounts." (Id. at 16-17.)
Ms. Novic filed a notice of intention to defend on the grounds that someone had
stolen her identity, changed the address on her account, and ran up charges. (ECF No. 54 at
2, ? 2; ECF No. 54-1 at 3.) The state district court, after a trial on the merits on October 3,
2016, entered judgment in favor of Ms. Novic. (ECF No. 23 at ?? 46-52.)

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