Consumer Law: Credit Card Debt-State Court Default Judgment-Preclusive Effect

Plaintiff appealed the district court’s dismissal of her complaint under the Fair Debt Collection Practices Act, alleging that defendant had attempted to collect a credit card debt it did not own. Plaintiff owed a balance on a department store credit card; defendant purchased the account and sued in state court to collect the balance. When plaintiff failed to appear in the state court action, defendant obtained default judgment, which required it to demonstrate to the state court how it acquired the debt. Plaintiff then filed the present FDCPA action, which the district court dismissed, ruling that the state court default judgment had preclusive effect.

Where defendant’s ownership of the debt was an essential element to the entry of default judgment in the state court action and had to be found as fact by the state court, the district court correctly determined that the default judgment had preclusive effect to bar plaintiff’s claim that defendant did not own the debt.

Judgment is affirmed.

Delgado v. Midland Credit Management, Inc. (MLW No. 82900/Case No. 24-1786 – 7 pages) (U.S. Court of Appeals, 8th Circuit, Stras, J.) Appealed from U.S. District Court, District of Minnesota, Tostrud, J. (Darren Brayer Schwiebert, Minneapolis, MN for appellant; John Michael Buhta, Rochester, MN on the brief) (Patrick Daniel Newman, Minneapolis, MN for appellee)