Madorskaya v. Frontline Asset Strategies, LLC
| Decision Date | 31 August 2021 |
| Docket Number | 19-CV-895 (PKC) (RER) |
| Parties | OLGA MADORSKAYA, individually and on behalf of all others similarly situated, Plaintiff, v. FRONTLINE ASSET STRATEGIES, LLC, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
Plaintiff Olga Madorskaya brings this putative class action against Defendant Frontline Asset Strategies, LLC, claiming various violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. Currently pending before the Court are Defendant's motions to compel individual arbitration and for summary judgment based on a release of claims to which Plaintiff stipulated prior to the commencement of this action. Also pending is Plaintiff's motion to strike Defendant's reply in support of its summary judgment motion because the reply proffers new evidence. For the reasons below, all of the motions are denied.
Some time prior to February 14, 2018, Citibank, N.A. (“Citibank”) issued Plaintiff a personal credit card, with an account number ending in 8173. (See Defendant's Local Rule 56.1 Statement[1] (“Def.'s 56.1”), Dkt. 38-2, ¶ 5; see also Amended Complaint (“Am. Compl.”), Dkt 12, ¶ 14.) At that time, Plaintiff and Citibank entered into a Card Agreement (the “Agreement”), which contains an arbitration clause (the “Arbitration Clause”). (See Agreement, Dkt. 28-1, at ECF[2] 3, 11-12.)
The Arbitration Clause provides that “[y]ou or we may arbitrate any claim, dispute or controversy between you and us arising out of or related to your Account, a previous related Account or our relationship (called ‘Claims').” (Id. at ECF 11 (bolding in original).) The Agreement explicitly defines “we, us, and our” as “Citibank, N.A., ” and “you and your” as “[t]he cardmember who opened the Account, ” i.e., Plaintiff. (Id. at ECF 4 (bolding in original).)
The Arbitration Clause goes on to describe the covered claims:
Except as stated below, [3] all Claims are subject to arbitration, no matter what legal theory they're based on or what remedy (damages, or injunctive or declaratory relief) they seek, including Claims based on contract, tort (including intentional tort), fraud, agency, your or our negligence, statutory or regulatory provisions, or any other sources of law; Claims made as counterclaims, cross-claims, third-party claims, interpleaders or otherwise; Claims made regarding past, present, or future conduct; and Claims made independently or with other claims. This also includes Claims made by or against anyone connected with us or you or claiming through us or you, or by someone making a claim through us or you, such as a co-applicant, authorized user, employee, agent, representative or an affiliated/parent/subsidiary company.
(Id. at 11.) In addition, the Arbitration Clause states that “Claims brought as part of a class action, private attorney general or other representative action can be arbitrated only on an individual basis, ” and that “[i]f arbitration is chosen by any party, neither you nor we may pursue a Claim as part of a class action or other representative action.” (Id.)
The Arbitration Clause also discloses details on “[h]ow arbitration works.” (Id.) One of the provisions under this section states: (Id.)
The Arbitration Clause provides that it “is governed by the Federal Arbitration Act (FAA), and shall be interpreted in the broadest way the law will allow.” (Id.) Additionally, the Clause makes clear that it “shall survive changes in this Agreement and termination of the Account or the relationship between you and us, including the bankruptcy of any party and any sale of your Account, or amounts owed on your Account, to another person or entity.” (Id. at ECF 12.) Elsewhere in the Agreement it states that “[w]e may assign any or all of our rights and obligations under this Agreement to a third party, ” and that “Federal law and the law of South Dakota govern the terms and enforcement of this Agreement.” (Id.)
At some point before February 14, 2018, after Plaintiff amassed debt on her Citibank credit card and failed to make regular payments, Citibank charged off the debt and sold it to JH Portfolio Debt Equities, LLC (“JH Portfolio”). (Def.'s 56.1, Dkt. 38-2, ¶¶ 5-6.) JH Portfolio, in turn, placed the debt with Defendant Frontline Asset Strategies, LLC for collection. (Id. ¶ 7; see also Plaintiff's Local Rule 56.1 Statement (“Pl.'s 56.1”), Dkt. 42-1, ¶ 14.) Defendant is a debt collector that “uses the mail to collect defaulted consumer debts owed or due or alleged to be owed or due to others.” (Def.'s 56.1, Dkt. 38-2, ¶¶ 3-4.)
On February 14, 2018, Defendant sent Plaintiff a collection letter “on behalf of JH Portfolio.” (Id. ¶ 8.) The collection letter states in part:
(Collection Letter, Dkt. 12-1, at 1.) After sending Plaintiff the February 14, 2018 collection letter, Defendant returned the account to JH Portfolio on May 3, 2018. (Pl.'s 56.1, Dkt. 42-1, ¶ 15; see also Deposition of Christina Palmer (“Palmer Dep.”), Dkt. 42-4, at 25:9-26:9.)
On August 28, 2018, an entity called JHPDE Finance 1, LLC (“JHPDE Finance 1”) sued Plaintiff in Kings County Civil Court regarding the debt on her Citibank credit card ending in 8173. (Pl.'s 56.1, Dkt. 42-1, ¶ 17.) On November 7, 2018, Plaintiff entered a Settlement Stipulation with JHPDE Finance 1 to settle the debt. (See generally Settlement Stipulation (“Stip.”), Dkt. 38-7.) The Settlement Stipulation includes a clause (the “Release”) that states:
Defendant [i.e., Plaintiff Madorskaya], his/her heirs, successors, legal representatives and assigns hereby release, acquit and forever discharge plaintiff [i.e., JHPDE Finance 1] and all of its affiliates, parents, and/or subsidiaries, representative managing partners, officers, directors, shareholders, employees, agents, assigns, successors, attorneys, and all others associated hereto, from any and all claims, liabilities, demands, suits, and causes of action, whether vested or contingent, accrued or unaccrued, whether or not such claims were or could have been raised herein, or as a result of any activities related to the debt and/or plaintiff's account.
(Id. ¶ 6.) According to Plaintiff's deposition testimony in this case, Plaintiff understood that she was agreeing to the Release at the time she signed the Settlement Stipulation. (See Def.'s 56.1, Dkt. 38-2, ¶ 10; see also Deposition of Olga Madorskaya (“Madorskaya Dep.”), Dkt. 42-3, at 21:10-19.)
The relationship between JH Portfolio and JHPDE Finance 1 is not entirely clear. According to the New York Department of State, Division of Corporations, JH Portfolio is a California limited liability company, while JHPDE Finance 1 is a Delaware limited liability company. (See Dkts. 42-6, 42-7.) A declaration from Defendant's Vice President of Strategy and Compliance, which was submitted with Defendant's reply brief in support of its motion for summary judgment, states that JH Portfolio and JHPDE Finance 1 “are affiliated buying entities under JH Capital Group, LLC.” (Supplemental Declaration of Christina Palmer (“Supp. Palmer Decl.”), Dkt. 43-2, ¶ 2.)
Plaintiff commenced this putative class action on February 14, 2019. (Dkt. 1.) On May 3, 2019, Defendant served a motion to dismiss pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). (Dkt. 11.) In response to the motion, Plaintiff amended her complaint as of right under Rule 15(a)(1)(B) on May 24, 2019, in an attempt to address pleading deficiencies raised in Defendant's motion. (See Dkt. 12; 5/28/2019 Docket Order.) Defendant renewed its motion to dismiss on June 11, 2019. (Dkt. 13.) Defendant's motion was fully briefed on July 22, 2019.[4](See Dkts. 16-17.)
By Memorandum and Order dated January 27, 2020, the Court granted dismissal of Plaintiff's FDCPA claim based on the collection letter's statement about the total amount of debt owed, but denied dismissal of Plaintiff's other FDCPA claims based on the collection letter's disclosure regarding the accrual of interest. Madorskaya v. Frontline Asset Strategies, LLC, 2020 WL 423408, at *5-7 (E.D.N.Y. Jan. 27, 2020). Although Defendant also argued in its motion to dismiss that the Release in the Settlement Stipulation barred Plaintiff's FDCPA claims, the Court found it inappropriate to construe the Release on a motion to dismiss, particularly because there remained “a material disputed issue of fact regarding the relationship, if any, between the entities JHPDE Finance 1, LLC, and JH Portfolio Debt Equities, LLC.” See Id. at *8. The Court accordingly declined to grant Defendant's motion to dismiss on the basis that the Release barred Plaintiff's claims. Id. at *9.
Following the Court's decision on the motion to dismiss, Defendant answered the Complaint on February 10, 2020. (Dkt. 21.) Although Defendant raised 17 affirmative defenses in its Answer, it did not make any reference to arbitration. (See Id. at 7-9.)...
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