Baltazar v. Houslanger & Assocs., PLLC
| Decision Date | 16 August 2018 |
| Docket Number | 16-4982 (JMA) (AKT) |
| Parties | ALEX BALTAZAR, on behalf of himself and all others similarly situated, Plaintiff, v. HOUSLANGER & ASSOCIATES, PLLC, TODD E. HOUSLANGER and VIRGO CAPITAL Defendants. |
| Court | U.S. District Court — Eastern District of New York |
REPORT AND RECOMMENDATION
I. PRELIMINARY STATEMENT
Plaintiff Alex Baltazar ("Plaintiff" or "Baltazar") brings the instant putative action on behalf of himself and all others similarly situated against Defendants Houslanger & Associates, PLLC, Todd E. Houslanger, Esq., and Virgo Capital (collectively, "Defendants") alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. See generally Second Amended Complaint ("SAC") [DE 31]. Presently before the Court, on referral from Judge Azrack, is Defendants' motion to dismiss the SAC for failure to state a claim. See DE 37. For the reasons set forth below, the Court respectfully recommends to Judge Azrack that Defendants' motion to dismiss be GRANTED, in part, and DENIED, in part.
II. BACKGROUND
The following facts are taken from the SAC. All facts alleged by Plaintiff are assumed to be true for purposes of deciding a motion to dismiss and are construed in a light most favorable to Plaintiff as the non-moving party. See, e.g., LaFaro v. N.Y. Cardiothoracic Grp., 570 F.3d 471, 475 (2d Cir. 2009); Matthews v. City of N.Y., 889 F. Supp. 2d 418, 425 (E.D.N.Y. 2012).
Plaintiff filed the SAC against Houslanger & Associates, PLLC ("H&A"), Todd. E. Houslanger and Virgo Capital, LLC ("Virgo Capital") on May 18, 2017. See generally SAC. According to the SAC, on March 2, 2007, Mel. S. Harris & Associates LLC commenced a lawsuit on behalf of LR Credit 11, LLC against Plaintiff in the Civil Court of the City of New York, Richmond County, under Index No. CV-004809-07/RI (the "State Action"). Id. ¶ 25. The debt which Mel. S. Harris & Associates sought to recover in the State Action was based on Plaintiff's entering into a Retail Charge Account Agreement with Providian Financial Corp. Id. ¶ 39. Plaintiff incurred charges by using the credit card account but failed to pay those charges. Id. "[Plaintiff] remembers using the aforementioned Charge Account to purchase an airline ticket to travel to attend his Grandmother's funeral and to purchase from Macy's clothes for his everyday personal use." Id. ¶ 41.
According to the SAC, Plaintiff had no knowledge of the State Action since he was not served or "was served at a location and in a manner which could not have resulted in [Plaintiff] obtaining any knowledge of the State Action." Id. ¶ 26. Mel S. Harris & Associates LLC obtained a default judgment against Plaintiff on or about May 23, 2007 ("the Judgment"). Id. ¶ 27. On or about December 12, 2011, LR Credit 11, LLC sold, transferred or assigned the Judgment to Virgo Capital. Id. ¶ 28. Virgo Capital retained Defendant H&A as legal counsel to enforce the Judgment. Id. ¶ 29.
In an attempt to locate Plaintiff's assets, H&A served a Restraining Notice on Bank of America on or about April 21, 2015 pursuant to New York Civil Practice Law and Rules ("CPLR") § 5222. Id. ¶ 31. The Restraining Notice was served on the Bank of America branchlocated at 5701 Horatio St., Utica, New York 13502. Id. ¶ 32. At that time, Plaintiff resided at 555 Old Post Road, Apt. A12, Edison, NJ 08817. Id. ¶ 34. Plaintiff first learned of the State Action on or about April 30, 2015 when he discovered that his Bank of America account had been frozen as a result of the Restraining Notice. Id. ¶ 36.
The allegations set forth in the remainder of the SAC are divided into eight causes of action and are asserted on behalf of Plaintiff as well as putative class members. In the first cause of action, Plaintiff alleges that he never received any notification from LR Credit 11, LLC that the Judgment against him had been sold, transferred or assigned to Virgo Capital — a requirement under New York law. Id. ¶ 56. Since such notice was lacking, neither Virgo Capital nor H&A had the ability to produce proof of the notice at the time the Restraining Notice was served on Bank of America. Id. ¶ 57. As such, the SAC asserts H&A had no legal right to serve the Restraining Notice. Id. ¶ 58. Based on these allegations, Plaintiff maintains that H&A, Virgo Capital and Todd E. Houslanger violated 15 U.S.C. §§ 1692e, 1692e(5) and 1692f. Id. ¶ 60. With regard to Virgo Capital, Plaintiff alleges at the conclusion of each cause of action, with the exception of the the eighth, that "Virgo is vicariously liable for the actions of H&A via Virgo's participation in the control and/or supervision of the actions of H&A, via H&A being an agent of Virgo, and/or via the attorney/client relationship between H&A and Virgo." Id. ¶¶ 59, 66, 77, 84, 93, 109, 115.
In the second cause of action, Plaintiff asserts that H&A had no legal right to serve a Restraining Notice on Bank of America in Utica since Plaintiff's accounts were maintained by Bank of America and/or Plaintiff at a Bank of America branch in New Jersey. Id. ¶ 63. Based on that contention, Plaintiff alleges that Defendants H&A and Todd E. Houslanger violated 15 U.S.C. §§ 1692e, 1692e(2)(A), 1692e(5), 1692f and 1692f(1). Id. ¶ 67.
In Plaintiff's third cause of action, he alleges that the Restraining Notice constitutes a "communication" under 15 U.S.C. § 1692a(2), which, however, failed to satisfy the requirements of written notice under § 1692(g). Id. ¶¶ 72, 74. In the fourth cause of action, Plaintiff sets forth the requirements for service of a Restraining Notice under CPLR § 5222. Id. ¶ 82. Plaintiff then turns to 15 U.S.C. § 1692i(a)(2), arguing that Defendants violated this provision because the Restraining Notice was a legal action against Plaintiff in a judicial district in which he did not reside. Id. ¶ 83. Plaintiff avers in his fifth cause of action that a New York court has no specific jurisdiction over Bank of America in regard to an account maintained by the bank at one of its branches in New Jersey. Id. ¶ 90. As such, Plaintiff asserts that Defendants had no legal right to serve the Restraining Notice on Bank of America. Id. ¶ 92. In view of these allegations, Plaintiff claims that H&A, Virgo Capital and Todd E. Houslanger violated 15 U.S.C. §§ 1692e, 1692e(2)(A), 1692e(5), 1692f , and 1692f(1). Id. ¶ 94.
In connection with the sixth cause of action, Plaintiff asserts that Defendants failed to conduct a "meaningful attorney review before [they] began to attempt [ ] to enforce the Judgment." Id. ¶ 104. Plaintiff references in some detail the facts and law arising from the Southern District of New York case, Sykes v. Mel S. Harris & Associates, LLC, 757 F. Supp. 2d 413 (S.D.N.Y. 2010). Id. In Sykes, the plaintiffs alleged that "Mel S. Harris & Associates LLC, LR Credit 11, LLC and its corporate parent, their process server, and others engaged in a widespread pattern and practice of not actually attempting to serve consumers with a Summons and Complaint in an action such as the State Action." Id. ¶ 99. Among other things, Sykes involved allegations that the defendants filed falsified affidavits of service and obtained default judgments based on those affidavits. Sykes, 575 F. Supp. 2d at 418. The SAC goes on to state the following:
SAC ¶¶ 101-03. Sykes culminated in a Class Action Settlement in 2015. Id. ¶ 100. Plaintiff asserts that notwithstanding the Sykes decision, Defendants failed to conduct a "meaningful attorney review" prior to attempting to collect on the judgment. Id. ¶ 107. Had Defendants conducted a meaningful attorney review, the Complaint alleges, "H&A may have discovered that the Judgment was invalid or that there was no legal right to enforce the Judgment due to the aforementioned notice of assignment requirements." Id. ¶ 108. On these grounds and because the Defendants did not possess (1) a copy of the Judgment, (2) the application for default judgment, (3) the affidavit of service and/or (4) the Complaint, id. ¶ 106, Plaintiff maintains that Defendants violated 15 U.S.C. §§ 1692e, 1692e(3), 1692e(9) and 1692e(10). Id. ¶ 110.
The Seventh Cause of Action also arises from Plaintiff's contention that Defendants were aware of the Sykes case which should have raised questions about the validity of the Judgment. Id. ¶ 112. Because the Defendants nonetheless continued to pursue the Judgment, Plaintiff claims Defendants violated 15 U.S.C. §§ 1692f, 1692f(1), 1692e, 1692e(3) and 1692e(5). Id. ¶¶ 113, 116
In the Eighth and final Cause of Action, Plaintiff alleges that Defendants' conduct constitutes a violation of New York General Business Law § 349 which prohibits "[d]eceptiveacts or practices in the conduct of any business, trade or commerce or in the furnishing of any service." Id. ¶ 118. Specifically, the SAC asserts that Defendants falsely conveyed to Plaintiff that they had the legal right to enforce the Judgment and to restrain Plaintiff's bank account. Id. ¶ 119.
This action was commenced on April 20, 2016 in the Supreme Court of the State of New York, County of Suffolk. See generally Summons with Notice annexed as Exhibit A to Notice of Removal [DE 1]. The case was filed against Mel S. Harris, David Waldman, Scott E. Wortman, LR Credit 11, LLC, Leucadia National Corporation, as well as H&A, Todd E. Houslanger and Virgo Capital. Id. On September 7, 2016, the action was removed...
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