Madden v. Midland Funding, LLC

In 2005, Saliha Madden, a resident of New York, opened a Bank of America (BOA) credit card. BOA was a national bank. In 2006, BOA’s credit card program was consolidated into FIA Card Services, N.A. (FIA), another national bank. With the transfer to FIA, the terms and conditions of Madden’s account were amended by a document titled “Change In Terms,” which contained a Delaware choice-of-law clause. Madden owed approximately $5,000 on her credit account, and in 2008, FIA wrote off the account as a loss and sold Madden’s debt to Midland Funding, LLC (Midland Funding) (defendant). Midland Funding’s consumer debt accounts were serviced by Midland Credit Management, Inc. (Midland Credit) (defendant). Neither Midland Funding nor Midland Credit was a national bank. In 2010, Midland Credit sent Madden a letter to collect payment on her debt, and an interest rate of 27 percent per year applied. Madden filed suit in district court against Midland Credit and Midland Funding, alleging that they had violated the Fair Debt Collection Practices Act (FDCPA) by charging a usurious rate of interest that was higher than the maximum rate of 25 percent permitted by New York law. The district court found in favor of Midland Credit and Midland Funding, finding that state-law usury claims and FDCPA claims predicated on state-law violations against a national bank’s assignees like Midland Credit and Midland Funding are preempted by the National Bank Act (NBA). Madden appealed.