THOMAS J. McAVOY, Senior District Judge.
Plaintiff Robert Carroll ("Plaintiff") commenced this action pro se asserting claims under the Fair Debt Collection Practices Act ("FDCPA"), the Racketeer Influenced and Corrupt Organizations Act ("RICO"), New York General Business Law § 349 ("GBL § 349"), and New York Judiciary Law § 487. The action also asserts a New York state common-law claim for malicious prosecution. Defendants U.S. Equities Corp. ("U.S. Equities"), Linda Strumpf ("Strumpf"), and Hal Siegal ("Siegal") (collectively "Defendants") move pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) to dismiss the claims against them. Plaintiff opposes the motion. For the reasons that follow, the motion is granted in part and denied in part.
Unless otherwise noted, the following facts are taken from the Complaint, documents attached to the Complaint as exhibits, documents incorporated by reference in the Complaint, and documents in the underlying state-court litigation. Generally, Plaintiff maintains that Defendants, based upon false affidavits of service and merit, obtained a default judgment against him in Kingston City Court for a consumer debt and then, unbeknownst to him, served an information subpoena and restraining notice on a bank where he had deposited over $50,000, thereby seizing money in that account. Plaintiff's efforts to stop execution of the retraining notice and to vacate the default judgment were unsuccessful.
Plaintiff contends that the default judgment against him was acquired using a scheme similar to that used in another case. See Compl. ¶¶ 1-2, 21.
As to Plaintiff's specific situation, he contends that on February 2, 2009, U.S. Equities obtained a "fraudulent" default judgment against him in the Kingston City Court in the amount of $28,681.97 which was a result of the $11,424.67 underlying debt plus interest at 21.99% per annum from March 28, 2002 through January 14, 2009. Compl. Ex. 1, p. 9. Plaintiff maintains that this judgment was fraudulent because: he was never served with a summons and complaint; Defendant Warshall, who worked for SYR at the time, submitted a false affidavit of service; that at the time the action was commenced, Plaintiff did not live within the City of Kingston and therefore the Kingston City Court did not have personal jurisdiction over him; the judgment sought damages in excess of the statutory limit for money damages in the Kingston City Court; the date of the alleged service of the summons and complaint was more than six years after the date the cause of action accrued and thus was beyond the applicable statute of limitations; Defendant Lam submitted an affidavit of merit falsely claiming that he had personal knowledge that Plaintiff owed the debt that was the subject of the lawsuit; and that Plaintiff never received a letter from the creditor, Strumpf, or U.S. Equities notifying him of that his debt was overdue (a "dunning" letter).
Plaintiff contends that he did not learn of the lawsuit or the default judgment until June or July 2017 when he noticed that the balance in his bank account had suddenly decreased. He called his bank and was told that it had been served with an information subpoena and retraining notice effectively freezing his account. He contends that the bank never mailed a copy of the information subpoena to him but, after repeated requests, it emailed a copy to him more than a month later. He asserts that "soon thereafter," his bank "issued a check and sent it to the Nassau County Sheriff's Department." Plaintiff contacted the Nassau County Sheriff's Department civil division and was told that the Sheriff's Department would not release the funds to U.S. Equities "pending an order to show cause." Plaintiff then submitted an application to the Kingston City Court seeking an order requiring U.S. Equities to show cause why the default judgment should not be vacated, and for a temporary restraining order staying the execution of the judgment pending a hearing to determine whether plaintiff had been properly served with a summons and complaint (a "traverse" hearing) and whether his bank account contained exempt veterans benefits. In support of that application, Plaintiff submitted an affidavit in which he attested that he was never served with a summons and complaint and did not learn of the action until he received a letter informing him that an information subpoena and restraining notice had been served on his bank; that he had a good defense to the action because the service of process was not proper, because the court did not have personal jurisdiction over him, and because the statue limitations had already expired at the time the action was commenced; that he did not live at the location where the summons and complaint was allegedly served; that he believed the representations made by the process server in attempting to effectuate service were false; that at the time the action was commenced he was living in another town and therefore the Kingston City Court never had personal jurisdiction over him; and that the funds upon which the restraining notice were executed were exempt from creditor judgment collections under the New York Debtor and Creditor Law. Compl., Ex. 2, pp. 5-7.
On August 14, 2017, the Deputy Chief Clerk of the Kingston City Court sent Plaintiff a letter stating:
Id., p. 2.
This action followed. As indicated above, Plaintiff asserts FDCPA, RICO, GBL § 349, and New York Judiciary Law § 487 claims, and a New York state common-law claim of malicious prosecution. He seeks a judgment "declaring that defendants have committed the violations of law alleged in this action;" actual and/or compensatory damages; treble damages pursuant to RICO and N.Y. Jud. Law § 487; punitive damages; statutory damages pursuant to the FDCPA; and an order awarding costs, disbursements and attorney fees pursuant to FDCPA, RICO and N.Y. GBL § 349.
A motion brought pursuant to Fed. R. Civ. P. 12(b)(1) challenges the subject matter of the Court to address a case or certain claims in the case. A case is to be dismissed for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) "when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). A district court may refer to evidence outside the pleadings in resolving a motion to dismiss for lack of subject matter jurisdiction. Id. "A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Id.
A motion brought pursuant to Fed. R. Civ. P. 12(b)(6) challenges the legal sufficiency of the claims alleged in the matter. On such a motion, the Court must accept "all factual allegations in the complaint as true, and draw[] all reasonable inferences in the plaintiff's favor." Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009) (internal quotation marks omitted). This tenet does not apply to legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Similarly, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements ... are not entitled to the assumption of truth." Id.; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (stating that a court is "not bound to accept as true a legal conclusion couched as a factual allegation").
While Rule 8(a)(2) "does not require detailed factual allegations, ... it demands more than an unadorned, the-defendant-harmed-me-accusation." Iqbal, 556 U.S. at 678 (citation and internal quotation marks omitted). A complaint which "tenders `naked assertion[s]' devoid of `further factual enhancement'" does not suffice. Id. (citation omitted). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Id. (quoting Twombly, 550 U.S. at 570). A claim will only have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "Where a complaint pleads facts that are `merely consistent with' a defendant's liability, it `stops short of the line between possibility and plausibility of `entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557). When, as here, the Plaintiff proceeds pro se, the Court must "`construe [the Complaint] broadly, and interpret [it] to raise the strongest arguments that [it] suggests.'" Weixel v. Bd. of Educ. of N.Y., 287 F.3d 138, 146 (2d Cir. 2002) (quoting Cruz v. Gomez, 202 F.3d 593, 597 (2d Cir. 2000)).
Defendants argue that the Court lacks subject matter jurisdiction over this matter under the Rooker-Feldman doctrine. The Court disagrees.
"Rooker-Feldman bars the federal courts from exercising jurisdiction over claims `brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.'" Sykes v. Mel S. Harris & Assocs. LLC, 780 F.3d 70, 94 (2d Cir. 2015) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L. Ed.2d 454 (2005)). To satisfy the requirements of Rooker-Feldman, a defendant must satisfy the following four requirements:
Id. (quoting Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77, 85 (2d Cir. 2005)). Defendants' Rooker-Feldman argument fails on the second and third requirements.
"The causation requirement is only satisfied if `the third party's actions are produced by a state court judgment and not simply ratified, acquiesced in, or left unpunished by it.'" Id. (quoting Hoblock, 422 F.3d at 88). "Rooker-Feldman does not prevent [a] plaintiff from raising federal claims based on the same facts as a prior state court case as long as the plaintiff complains of an injury independent of an adverse decision." Ceraldi v. Strumpf, No. 3:17-CV-1628 (WWE), 2018 WL 1587467, at *2 (D. Conn. Apr. 2, 2018). Plaintiff asserts claims alleging injuries independent of the state-court judgment. The "claims sounding under the FDCPA, RICO, and state law speak not to the propriety of the state court judgment[], but to the fraudulent course of conduct that defendants pursued in obtaining [the] judgment[]." Sykes, 780 F.3d at 94-95.
Moreover, "Plaintiff is not asking the federal courts to overturn the underlying state-court judgment. Rather, he is alleging that the Defendants' conduct in their attempts to collect on that judgment violated [federal statutes and state law] and, as a result, that he is entitled to money damages." McCrobie v. Palisade Acquisition XVI, LLC, 664 Fed. Appx 81, 83 (2d Cir. 2016). "Although [the claims in this action] may deny a legal conclusion of the [Kingston City Court]— namely, that Defendants are legally entitled to recover on the . . . debt, . . . [t]his action, in which Plaintiff primarily seeks money damages, would continue even if the state-court judgment were vacated." Mascoll v. Strumpf, No. 05-CV-667 (SLT), 2006 WL 2795175, at *8 (E.D.N.Y. Sept. 26, 2006).
For these reasons, the Rooker-Feldman doctrine does not bar this action. Defendants' motion in this regard is denied.
Defendants also argue that Plaintiff's claims are barred by the doctrines of res judicata and collateral estoppel. For the reasons that follow, this aspect of Defendants' motion is denied with leave to renew.
Federal courts are required to give a prior state court decision the same preclusive effect under either res judicata or collateral estoppel that courts of that state would give to that decision. Kremer v. Chemical Constr. Corp., 456 U.S. 461, 466 (1982). State law determines whether a prior state-court proceeding has any preclusive effect in a subsequent action pending in federal court. See Fayer v. Middlebury, 258 F.3d 117, 124 (2d Cir. 2001).
Under the doctrine of res judicata, a "final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." EDP Med. Computer Sys., Inc. v. United States, 480 F.3d 621, 624 (2d Cir. 2007) (internal quotations omitted). "Under New York's transactional approach to [res judicata], once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy." Giannone v. York Tape & Label, Inc., 548 F.3d 191, 194 (2d Cir. 2008) (quoting In re Derek Josey, 880 N.E.2d 18 (NY 2007)). Res judicata does not require that a claim actually had been litigated to be precluded, but it does require that the party against whom it is applied had a full and fair opportunity to litigate the claim. See EDP Med. Computer Sys., 480 F.3d at 626; Matter of Hunter, 4 N.Y.3d 260, 269 (NY 2005).
Plaintiff contends, inter alia, that he did not have a full and fair opportunity to litigate in the Kingston City Court. This argument is supported by the present record. While "it has long been the law that default judgments can support res judicata as surely as judgments on the merits," EDP Med. Computer Sys., 480 F.3d at 626; see Lazides v. P & G Enterprises, 58 A.D.3d 607, 871 N.Y.S.2d 357 (2009) ("It is well settled that default judgments can have res judicata effect."), Plaintiff contends he was denied any opportunity to litigate the debt collection claim because of the fraudulent scheme perpetrated by Defendants. Looking only at the default judgment determination, and presuming the truth of Plaintiff's allegations of a fraudulent scheme that prevented him from learning of the state court action until years after the default judgment was issued, Plaintiff presents a sufficient argument to deny application of res judicata. See Aghaeepour v. N. Leasing Sys., Inc., 378 F.Supp.3d 254, 265-66 (S.D.N.Y. 2019).
"Collateral estoppel, or issue preclusion, is a doctrine related to, but distinct from, res judicata." Quadrozzi Concrete Corp. v. City of New York, 2004 WL 2222164, at *5 (S.D.N.Y. Sept. 30, 2004) (citing Flaherty v. Lang, 199 F.3d 607, 613 (2d Cir. 1999)). It is an affirmative defense, see, Austin v. Fischer, 453 Fed. Appx. 80, 82 (2d Cir. 2011), and cannot be granted on a Rule 12(b)(6) motion unless it is clear from the face of the pleading that the claim is barred as a matter of law. Cayuga Indian Nation of New York v. Seneca Cty., New York, 260 F.Supp.3d 290, 302 (W.D.N.Y. 2017) (citations omitted). Under New York law, collateral estoppel "precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same." Burgos v. Hopkins, 14 F.3d 787, 792 (2d Cir. 1994) (citing Ryan v. New York Tel. Co., 62 N.Y.2d 494 (1984)). The doctrine applies if "(1) the issue in question was actually and necessarily decided in a prior proceeding, and (2) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the first proceeding." McKithen v. Brown, 481 F.3d 89, 105 (2d Cir. 2007), cert. denied 552 U.S. 1179 (2008) (quotation omitted).
Although Plaintiff's affidavit in support of his application to vacate the default judgment placed before the Kingston City Court issues pertinent to the claims in this case, see Compl. Ex. 2, pp. 5-7,
Defendants argue that Plaintiff's FDCPA claims should be dismissed. For the reasons that follow, this aspect of Defendants' motion is granted in part and denied in part.
Plaintiff appears to have modeled his FDCPA cause of action on one used in a case involving multiple plaintiffs, judgments, and enforcement actions. See Compl. ¶ 46.
The Court turns first to the allegation that the default judgment was obtained by fraud. Plaintiff contends that this judgment was obtained by fraud because he was never served with the summons or complaint yet Warshall submitted a false affidavit of service; that the Kingston City Court did not have personal jurisdiction over him because he did not live within the City of Kingston; the action sought monetary damages in excess of the statutory limit in the Kingston City Court; the claim was barred by the applicable statute of limitations; Defendant Lam submitted an affidavit of merit falsely claiming that he had personal knowledge that Plaintiff owed the debt that was the subject of the lawsuit; and that Plaintiff never received a dunning letter. The Court addresses these theories below.
It is recognized that the practice of obtaining a default judgment by filing false affidavits of service, colloquially referred to as "sewer service," presents an actionable claim under the FDCPA. See Guzman v. Mel S. Harris & Assocs., LLC, No. 16 CIV. 3499 (GBD), 2018 WL 1665252, at *9 (S.D.N.Y. Mar. 22, 2018) ("`[S]ewer service practice, followed by obtaining a default judgment, falls squarely within the actions prohibited' by section 1692e [of the FDCPA.] Such practices may also violate section 1692f.") (quoting Polanco v. NCO Portfolio Mgmt., Inc., 132 F.Supp.3d 567, 576 (S.D.N.Y. 2015), and citing Sykes v. Mel Harris & Assocs., LLC, 757 F.Supp.2d 413, 424 (S.D.N.Y. 2010) (finding "the filing of a debt collection action ... supported by affidavits that contained false or deceptive representations about the status and character of the debt" may violate 1692e, and "could also be deemed `unfair or unconscionable' in violation of 15 U.S.C. § 1692f") and Scott v. Greenberg, No. 15-Civ.-5527 (MKB), 2017 WL 1214441, at *11 (E.D.N.Y. Mar. 31, 2017) ("[S]ewer service allegations [are] sufficient to allege an FDCPA claim under sections 1692d, 1692e, and 1692f.")). Plaintiff's claim that the default judgment was obtained by the use of a false affidavit of service states a plausible FDCPA claim. Whether Plaintiff's FDCPA claim on this theory is barred by collateral estoppel will have to await a determination whether Plaintiff's post-judgment application in the Kingston City Court constituted a full and fair opportunity to litigate in that court.
Plaintiff's claims that the Kingston City Court did not have personal jurisdiction over him, that the action sought monetary damages in excess of the statutory limit, and that the claim was barred by the applicable statute of limitations appear to part of Plaintiff's claim that the default judgment was obtained by the use of a false affidavit of merit. To the extent Plaintiff maintains that these are the reasons the affidavit of merit was false,
Plaintiff has not argued that Defendants' failure to send him a dunning letter presents a plausible FDCPA claim. See Pl. Mem. L., at 10. Absent such argument, any such claim is dismissed.
As to Plaintiff's claim that Defendants violated the FDCPA by making false and deceptive representations to the Kingston City Court and the Nassau County Sheriff's Department, it is unclear to what representations Plaintiff refers. If it is to the alleged false representations in the affidavits of service and merit presented to the Kingston City Court, then, for the reasons discussed above, Defendants' motion addressed to these FDCPA claims is denied. However, the Complaint fails to contain allegations of false representations to the Nassau County Sheriff's Department. While Plaintiff alleges that "[t]he default judgment was never filed with the Ulster County Clerk's office, which would have been necessary before the Nassau County Sheriff's Department could execute the judgment against plaintiff's bank account," Compl. ¶ 37, he does not allege that Defendants falsely represented to the Nassau County Sheriff's Department that the default judgment had been filed with the Ulster County Clerk's Office. Therefore any FDCPA claim based on representations made to the Nassau County Sheriff's Department is dismissed.
Regarding Plaintiff's claim that the Defendants violated the FDCPA because they failed to provide him actual notice of "the assignment," Defendants contend: "Plaintiff is apparently referring to CPLR § 5019(c) which requires a person who acquires rights to a judgment to file a copy of the assignment of the judgment with the clerk of the court. This is inapplicable since Equities is the original plaintiff in the state action." Def. Mem. L., at 13. Plaintiff did not respond to the aspect of the Defendants' motion and therefore is deemed to have abandoned any claim in this regard. See Thurmand v. Univ. of Connecticut, No. 3:18-CV-1140 (JCH), 2019 WL 369279, at *3 (D. Conn. Jan. 30, 2019) ("Courts in this Circuit have presumed that plaintiffs have abandoned their claims when they do not oppose a motion to dismiss them.") (collecting cases); Russell v. N.Y. Univ., No. 1:15-cv-2185, 2017 U.S. Dist. LEXIS 111209, at *99 (S.D.N.Y. July 17, 2017) (failure to address defendant's arguments for dismissal of claims deems those claims abandoned); De Sole v. Knoedler Gallery, LLC, 137 F.Supp.3d 387, 410 (S.D.N.Y. Sept. 30, 2015) (dismissing claim as abandoned when the plaintiff failed to respond to the arguments on a motion to dismiss). Thus, any FDCPA claim premised on the allegation that Defendants failed to notify Plaintiff of the assignment of the Kingston City Court judgment is dismissed. To the extent Plaintiff is contending that Defendants violated the FDCPA because they failed to provide him with notice that the debt incurred with MBNA America Bank, N.A., was assigned to U.S. Equities, see Compl., Ex. 1, p. 6, the claim is without merit. New York law requires that the assignor provide the debtor with a notice of assignment, not the assignee. Strobel v. RJM Acquisitions LLC, No. 13-CV-2467 (JS/AKT), 2014 WL 507510, at *4 (E.D.N.Y. Feb. 6, 2014) (citation omitted). "[T]here is no valid cause of action under the FDCPA for any purported failure by Defendant[s] to provide the notice of assignment to Plaintiff, at least in this context." Id. (citation omitted). Accordingly, Defendants' motion in this regard is granted and any FDCPA claim premised on lack of notice of assignment of the underlying debt is dismissed.
Turning to Plaintiff's contention that Defendants violated the FDCPA because they collected or attempted to collect on the judgment without conducting a meaningful attorney review of whether the judgment was entered based on false affidavits of merit or false affidavits of service, this is simply a recasting of the claims addressed above. For the reasons addressed to Plaintiff's FDCPA claims based on the affidavits of service and merit, Defendants' motion is denied. To the extent Plaintiff asserts an FDCPA claim on the theory of lack of meaningful attorney involvement under 15 U.S.C. §1692e(3), the claim is dismissed as abandoned and for lack of merit. See Pl. Mem. L., Dkt. 18-1, p. 10 ("[T]he FDCPA's `meaningful involvement' requirement means that if an attorney debt collector sends a letter, on the attorney's letterhead, the attorney must actually be involved in the collection process. . . . In the case at bar, the Plaintiff never received a Dunning letter, and since Strumpf
Plaintiff argues in his memorandum of law that the money seized from his bank account were exempt funds yet Defendants failed to comply with New York CPLR 5222-a which would have provided him an opportunity to file an exemption claim. However, he does not specifically allege in the Complaint that Defendants' omission in this regard amounted to a FDCPA violation. See Compl., ¶ 42-46. Nevertheless, he asserts in the section of the Complaint addressed to whether he is entitled to equitable tolling of the statutes of limitations on the claims in this action:
Compl. ¶¶ 96-97.
Reading the Complaint broadly, and interpreting it to raise the strongest argument it suggests, Plaintiff appears to allege that Defendants violated the FDCPA by failing to provide him with restraining notice as required by New York law, thereby preventing him from interposing a claim that the funds in his bank account were exempt. This presents a plausible FDCPA claim. See Moukengeschaie v. Eltman, Eltman & Cooper, P.C., No. 14-CV-7539 (MKB), 2016 WL 1274541, at *11 (E.D.N.Y. Mar. 31, 2016) ("Section 1962e(10) is a `catch-all' provision that prohibits the use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer."); see, e.g., Arias v. Gutman, Mintz, Baker & Sonnenfeldt LLP, 875 F.3d 128, 139 (2d Cir. 2017) ("GMBS argues that Arias cannot recover under the FDCPA because [New York's Exempt Income Protection Act] provides for sanctions when a judgment creditor files an objection in bad faith. See, e.g. N.Y. C.P.L.R. § 5222-a(c)(4), (g). But abusive debt collection practices may violate both the FDCPA and State law. The FDCPA's express purpose includes `promot[ing] consistent State action to protect consumers against debt collection abuses.' 15 U.S.C. § 1692(e). The legislative history confirms this purpose . .. . We therefore reject the argument that the remedial scope of the FDCPA is limited by State law.").
In the exercise of discretion and affording Plaintiff the special solicitude extended to pro se litigants, Plaintiff is granted leave to file an amended complaint to reassert the dismissed FDCPA claims. See Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000) ("[A] district court should not dismiss a pro se complaint without granting leave to amend at least once when a liberal reading of the complaint gives any indication that a valid claim might be stated.") (interior quotation marks and citation omitted).
Defendants argue that Plaintiff's RICO claims must be dismissed because, inter alia, his alleged RICO predicate acts are routine litigation activities that cannot properly form the basis of a RICO claim. The Court agrees.
Plaintiff maintains that Defendants engaged in a racketeering enterprise and conspiracy, in violation of 18 U.S.C. § 1962(c) & (d). See Compl., ¶ 53. Those sections of law state:
18 U.S.C. § 1962(c) & (d). "`Racketeering activity' is in turn defined to include a litany of so-called predicate acts, including `any act which is indictable' under the mail and wire fraud statutes." In re U.S. Foodservice, Inc. Pricing Litigation, 729 F.3d 108, 117 n. 5 (2d Cir. 2013) (citing 18 U.S.C. § 1961(1)(B)); Snyder v. U.S. Equities Corp., No. 12-CV-6092 (CJS), 2014 WL 317189, at *6 (W.D.N.Y. Jan. 28, 2014) (same). "To satisfy the `pattern of racketeering activity' requirement, the statute requires `at least two acts of racketeering activity ... the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity.'" U.S. v. Cain, 671 F.3d 271, 284 (2d Cir. 2012) (citing 18 U.S.C. § 1961(5)); Snyder, 2014 WL 317189, at *6 (same).
Plaintiff alleges that Defendants engaged in acts of mail fraud and wire fraud. See Compl., ¶¶ 56-60. More specifically, the Complaint states, in pertinent part:
Compl. ¶¶ 56-60.
In Snyder v. U.S. Equities Corp., Judge Siragusa dismissed strikingly similar RICO claims on the grounds that the complaint failed to allege actionable predicate acts of racketeering, Snyder, 2014 WL 317189, at *7-9, observing that "[t]here are . . . a significant number of decisions, in this Circuit and in other Circuits, which hold, in the context of Civil RICO claims based on fraudulent litigation, that a defendant's use of mail and wire to conduct allegedly fraudulent `litigation activities' is insufficient to establish predicate acts of racketeering." Id., at *7 (collecting cases).
Curtis & Assocs., P.C. v. Law Offices of David M. Bushman, Esq., 758 F.Supp.2d 153, 175 (E.D.N.Y. 2010), aff'd sub nom. Curtis v. Law Offices of David M. Bushman, Esq., 443 F. App'x 582 (2d Cir. 2011). The Second Circuit concluded in Eisen:
Eisen, 974 F.2d at 254.
Judge Siragusa found that Eisen was inapplicable because "Plaintiff's claim arises from the fact of the bogus lawsuit against her, and from Defendants' alleged use of perjured documents to obtain a default judgment against her. The alleged racketeering activity is the fraudulent lawsuit. The fact that Plaintiff has. . . alleged that Defendants acted in identical fashion toward many other persons, does not, in the Court's view, permit the denial of Defendants' motion." Snyder, 2014 WL 317189, at *8 (citations omitted). The Court agrees with this analysis, and applies it here. Although Plaintiff alleges a course of conduct by Defendants to engage in mail fraud activities, these all pertain to litigation activities. They do not include fraudulent conduct beyond mere litigation activities, as in Eisen. See Curtis & Assocs., P.C., 758 F. Supp. 2d at 176 ("[T]he predicate acts in Eisen amounted to far more than mere `litigation activities,' and instead involved an extensive and broader scheme to defraud defendants in the personal injury lawsuits commenced by the Eisen Firm."). Moreover, although Plaintiff alleges that the Defendants engaged in a broad course of conduct, the only conduct by which Plaintiff was seemingly injured was the litigation activity pertaining to the Kingston City Court case against him. Therefore, the Court finds that Eisen is distinguishable. The Court also agrees with Judge Siragusa's reason to distinguish Sykes v. Mel Harris and Associates, LLC, 757 F.Supp.2d 413 (S.D.N.Y. 2010). See Snyder, 2014 WL 317189, at *9 ("There is no indication . . . that the particular issue being discussed here was raised in Sykes. In that regard, the Sykes decision contains no discussion as to whether the defendants' fraudulent litigation activities qualified as predicate acts under RICO, in light of the line of cases represented by [Daddona v. Gaudio, 156 F.Supp.2d 153 (D. Conn. 2000)] and the other cases cited above, nor does the decision mention Eisen. Therefore, while the Sykes decision reaches the result that Plaintiff wants, it does not explain how or why this Court could reach the same result, in light of established authority.").
Because the overwhelming weight of authority bars a civil RICO claim based on the use of the mail or wire to conduct allegedly fraudulent litigation activities as predicate racketeering acts, Defendants' motion to dismiss Plaintiff's RICO claims is granted. See Avraham v. Lakeshore Yacht & Country Club, Inc., No. 5:15-CV-1297, 2016 WL 6585589, at *12 (N.D.N.Y. Nov. 7, 2016) ("[A] defendant's `use of mail and wire to conduct allegedly fraudulent `litigation activities' is insufficient to establish predicate acts of racketeering.'") (quoting Snyder, 2014 WL 317189, at *7); Saluzzo v. Greenbaum, No. 110-CV-649 (GLS\RFT), 2011 WL 13234286, at *3 (N.D.N.Y. Feb. 4, 2011) ("[W]hile mail and wire fraud do constitute predicate acts under RICO, . . . allegations of mail or wire fraud are nonetheless insufficient to plead the necessary predicate act where the focus of those allegations is the defendant's litigation activities in pending litigation.") (citation omitted); Estate of Izzo v. Vanguard Funding, LLC, No. 15-CV-7084 (ADS/GRB), 2017 WL 1194464, at *11 (E.D.N.Y. Mar. 30, 2017) ("[E]ven assuming that Urban Financial's August 29, 2011 mailing satisfies the elements of mail fraud—a proposition that is questionable on the current record—the RICO claim fails because the service and filing of litigation documents in the Foreclosure Action cannot plausibly support a cognizable claim."); Snyder, 2014 WL 317189, at *7 (and cases cited thereat); Republic of Kazakhstan v. Stati, 380 F.Supp.3d 55, 61 (D.D.C. 2019) ("Courts do not allow allegedly fraudulent `litigation activities,' such as filing fraudulent documents or engaging in baseless litigation to serve as predicate acts for RICO ... where such acts constitute `the only allegedly fraudulent conduct.'") (quoting Feld Entm't, Inc. v. Am. Soc'y for the Prevention of Cruelty to Animals, 873 F.Supp.2d 288, 318-19 (D.D.C. 2012), in turn quoting Daddona, 156 F. Supp.2d at 162); Quick v. EduCap, Inc., 318 F.Supp.3d 121, 141-42 (D.D.C. 2018) ("As Plaintiffs' RICO claim is premised entirely on mailings done for the purpose of litigation activity, they have failed to state a claim."); E. Sav. Bank, FSB v. Papageorge, 31 F.Supp.3d 1, 13 (D.D.C. 2014) ("Abusive or sham litigation does not constitute a RICO predicate act.") (collecting cases), aff'd, 629 F. App'x 1 (D.C. Cir. 2015); see also Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512, 525 (5th Cir. 2016) ("[P]rosecuting litigation activities as federal crimes would undermine the policies of access and finality that animate our legal system. Moreover, allowing such charges would arguably turn many state-law actions for malicious prosecutions into federal RICO actions.") (quoting United States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir. 2002)); Auburn Med. Ctr., Inc. v. Andrus, 9 F.Supp.2d 1291, 1298 (M.D. Ala. 1998) ("Numerous other courts have found that the actions underlying claims for malicious prosecution, or analogous actions in the litigation context, will not support a RICO action."). Although it appears unlikely from the allegations in the Complaint that Plaintiff could plead viable RICO claims, see Cuoco, 222 F.3d at 112 (leave to amend a complaint should be denied if any amendment would be futile), the Court will exercise its discretion and grant Plaintiff leave to file an amended complaint reasserting RICO claims.
Defendants move to dismiss Plaintiff's GBL § 349 claim. The motion in this regard is denied.
GBL § 349 prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service." GBL § 349(a). To assert a claim under GBL § 349, "a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice." Nick's Garage, Inc. v. Progressive Casualty Ins. Co., 875 F.3d 107, 124 (2d Cir. 2017); see Stutman v. Chemical Bank, 95 N.Y.2d 24, 29 (NY 2000) (same). The "consumer oriented" prong is satisfied by showing that the acts forming the basis of the complaint are not private disputes but instead could have a broad impact on "consumers at large." Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 25 (NY 1995). "Private contract disputes, unique to the parties,' however, do not `fall within the ambit of the statute." Oswego, 85 N.Y.2d at 25. Thus, acts within the statute must "potentially affect similarly situated consumers." Id., at 27. However, some courts have held that in the context of debt collection cases, the "consumer oriented" prong can be "satisfied where the conduct forming the basis of the complaint was a `normal part of defendants' business, in which case the practice could have a broad impact on consumers at large." Winslow v. Forster & Garbus, LLP, No. CV 15-2996 (AYS), 2017 WL 6375744, at *9 (E.D.N.Y. Dec. 13, 2017), appeal withdrawn, No. 18-116, 2018 WL 1840195 (2d Cir. Apr. 6, 2018) (internal quotation marks and citation omitted).
Plaintiff's GBL § 349 allegations are little more than an unadorned, the-defendant-harmed-me-accusation found to be insufficient insufficient in Iqbal. See Compl., ¶¶ 68-70.
Defendants move to dismiss Plaintiff's New York Judiciary Law § 487 claim because, they contend, he fails to allege a chronic or extreme pattern of deceit and wrongdoing to sustain such a claim. The motion on this basis is denied.
N.Y. Judiciary Law § 487.
"Section 487 thus permits a civil action to be maintained by any party who is injured by an attorney's intentional deceit or collusion in New York on a court or on any party to litigation, and it provides for treble damages." Amalfitano v. Rosenberg, 533 F.3d 117, 123 (2d Cir.), certified question accepted, 11 N.Y.3d 728, 894 N.E.2d 643 (NY 2008), and certified question answered, 12 N.Y.3d 8, 903 N.E.2d 265 (NY 2009) (citation omitted). "The act of deceit need not occur during a physical appearance in court; the statute applies to any oral or written statement related to a proceeding and communicated to a court or party with the intent to deceive." Id. (citations omitted).
Id. (interior quotation marks and citations omitted).
Plaintiff asserts that "by filing deceptive and misleading affirmations in obtaining a default judgment against Robert Carroll, Defendant LINDA STRUMPF engaged in deceit or collusion, or consented to deceit and collusion, with the intention to deceive courts and opposing parties." Compl. ¶ 74. Plaintiff further alleges that "Defendant Strumpf, acting in concert with the other Defendants, repeatedly and persistently prepared, signed, submitted and filed false and fraudulent affidavits, affirmations and pleadings in this and thousands of other actions with courts and county clerks throughout New York State." Id. ¶ 75. It is also asserted that Strumpf, "at all times relevant, knew the aforementioned acts were false, and/or acted in reckless disregard for their truth or falsity. Strumpf submitted and file[d] the aforementioned documents with the intent of deceiving the court and county clerks in order to fraudulently obtain default judgments against debtor/defendants." Id. 76. These allegations are sufficient to state a plausible Section 487 claim based on a chronic or extreme pattern of deceit and wrongdoing. In reaching this conclusion, the Court offers no opinion as to whether a chronic or extreme pattern of deceit and wrongdoing is required, whether Plaintiff has standing to rely on Strumpf's allegedly deceitful acts in other actions, whether the Section 487 claim can be brought in this court, see Melnitzky v. Owen, 19 A.D.3d 201, 796 N.Y.S.2d 612, 612-13 (NY App. Div. 2005) (New York law requires a Section 487 claim against an attorney be brought in the action in which the fraud occurred), and whether res judicata or collateral estoppel bars the claim. See, e.g., Heriveaux v. Lopez-Reyes, No. 18-1433-CV, 2019 WL 2611058, at *1 (2d Cir. June 26, 2019) ("[W]e agree with the District Court that this [Section 487] claim is barred by res judicata.") (citing Robert v. Stephanie R. Cooper, P.C., 114 A.D.3d 456, 979 N.Y.S.2d 585, 586 (NY App. Div. 2014)).
Defendants argue that Plaintiff's New York state common-law claim of malicious prosecution must be dismissed because the state court action did not terminate in his favor. The Court agrees.
To prevail on a malicious prosecution claim under New York law, the plaintiff must show: "(1) the defendant initiated a prosecution against [the] plaintiff, (2) without probable cause to believe the proceeding can succeed, (3) the proceeding was begun with malice, and (4) the matter terminated in [the] plaintiff's favor." Rentas v. Ruffin, 816 F.3d 214, 220 (2d Cir. 2016) (alterations and internal quotation marks omitted). The Kingston City Court action clearly did not terminate in Plaintiff's favor. He contends, however, that he has drafted a New York State Supreme Court complaint challenging the judgment which "will be served upon the Defendants, once it is complete, if necessary." Pl. Mem. L., at 3. He asserts that the Kingston City Court action "will ultimately fail" because it was commenced without personal jurisdiction over him, because it sought judgment in excess of the statutory limits of the Kingston City Court, because the statute of limitations on the claim had expired, and because the default was based on a fraudulent affidavit of service. Id., at 17. The argument is insufficient to challenge the finality of the matter in the Kingston City Court.
A judgment is presumptively valid until reversed or set aside. See All Terrain Properties, Inc. v. Hoy, 265 A.D.2d 87, 91 (NY App. Div. 2000) ("A party against whom a default judgment is entered without obtaining jurisdiction over his person may appear and contest its validity or ignore the judgment and assert its invalidity whenever enforcement is attempted. The judgment, however, is presumptively valid until reversed or set aside.").
Defendant's motion to dismiss the Complaint [Dkt. No. 15] is
The motion is granted in that:
—Any FDCPA claim based on the absence of a dunning letter is dismissed with leave to amend;
—Any FDCPA claim based on false representations to the Nassau County Sheriff's Department is dismissed with leave to amend;
—Any FDCPA claim based upon the failure to provide Plaintiff notice of the assignment of the underlying debt or the judgment in the Kingston City Court is dismissed with leave to amend;
—Plaintiff's RICO claims are dismissed with leave to amend; and
—Plaintiffs New York state common-law claim of malicious prosecution is dismissed without prejudice to renewal if a court vacates the Kingston City Court judgment.
The motion is denied in all other respects.
Plaintiff is given
Compl., ¶¶ 1-2, 21.
Aghaeepour, 378 F. Supp. 3d at 265-66.
Compl. ¶ 46.
The Court also notes that Plaintiff has not directly asserted that he did not owe the debt that was the subject of the default judgment. Nevertheless, even if this is the case it does not necessarily defeat a FDCPA claim. See Sykes v. Mel Harris & Assocs., LLC, 285 F.R.D. 279, 292 (S.D.N.Y. 2012), aff'd sub nom. Sykes v. Mel S. Harris & Assocs. LLC, 780 F.3d 70 (2d Cir. 2015) ("Liability under the FDCPA can be established irrespective of whether the presumed debtor owes the debt in question.") (citing Fedotov v. Peter T. Roach & Assocs., P.C., 354 F.Supp.2d 471, 477 (S.D.N.Y. 2005) ("[T]he [FDCPA] protects consumers from `unscrupulous debt collectors, regardless of whether a valid debt actually exists.'") (quoting Baker v. G.C. Servs. Corp., 677 F.2d 775, 777 (9th Cir.1982)).
Compl., ¶¶ 68-70.