McCrobie v. Palisades Acquisition Xvi, LLC

• Decision Date: 14 February 2019
• Docket Number: 15-CV-18
• Citation: 359 F.Supp.3d 239
• Parties: Christopher MCCROBIE, Plaintiff, v. PALISADES ACQUISITION XVI, LLC, Houslanger & Associates, PLLC, and Todd Houslanger, Defendants.
• Court: U.S. District Court — Western District of New York

359 F.Supp.3d 239

Christopher MCCROBIE, Plaintiff,

v.PALISADES ACQUISITION XVI, LLC, Houslanger & Associates, PLLC, and Todd Houslanger, Defendants.

15-CV-18

United States District Court, W.D. New York.

Signed February 14, 2019

Filed February 15, 2019

Brian L. Bromberg, Bromberg Law Office, P.C., New York, NY, Jonathan R. Miller, Salem Community Law Office, Winston-Salem, NC, Kenneth R. Hiller, Seth Andrews, Timothy Hiller, Law Offices of Kenneth Hiller, Amherst, NY, for Plaintiff.

Hilary F. Korman, Scott Evan Wortman, Blank Rome LLP, New York, NY, Glenn M. Fjermedal, Davidson Fink LLP, Rochester, NY, for Defendants.

DECISION AND ORDER

LAWRENCE J. VILARDO, UNITED STATES DISTRICT JUDGE

On January 6, 2015, the plaintiff, Christopher McCrobie, filed this action seeking damages against defendants Palisades Acquisition XVI, LLC ("Palisades"), and Houslanger & Associates, PLLC ("Houslanger & Associates"). Docket item 1. McCrobie alleges that the defendants violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692a, et seq., by trying to collect a debt that was not theirs to collect. Id. Before this Court is McCrobie's motion for leave to amend his complaint and the defendants' motion to dismiss.

PROCEDURAL BACKGROUND

On May 19, 2015, McCrobie filed his first amended complaint ("FAC") adding Todd Houslanger, the attorney for Palisades and Houslanger & Associates, as a defendant. Docket Item 7. McCrobie also added a cause of action: violation of New York General Business Law ("GBL") § 349. Id. Finally, he added several factual allegations pertaining to events that occurred after the date of the original pleading. Id.

On July 28, 2015, the defendants moved to dismiss the amended complaint for failure to state a plausible claim of relief under the FDCPA or GBL and for lack of subject matter jurisdiction. Docket Item 17. McCrobie responded by filing a motion for leave to file a second amended complaint. Docket Item 19. He sought to add Palisades' corporate parent, Asta Funding, Inc., as an additional defendant. Id. He also sought to add claims for declaratory and injunctive relief and punitive damages. Id.

On March 25, 2016, United States District Judge John T. Curtin dismissed the complaint for lack of subject matter jurisdiction under the Rooker-Feldman doctrine. Docket Item 41. McCrobie appealed, and the United States Court of Appeals for the Second Circuit reversed Judge Curtin's decision. Docket Item 47. The Second Circuit remanded the case to this Court¹ to address the other arguments raised in the motions that had been pending before Judge Curtin. Id.

After the Second Circuit's remand, this Court held a status conference on January 30, 2017, and permitted the parties to file supplemental briefing. Docket Item 52. On March 22, 2017, the defendants filed supplemental briefs in support of their motion to dismiss McCrobie's FAC and in opposition to McCrobie's motion for leave to file a second amended complaint. Docket Items 55 and 56. On April 24, 2017, McCrobie responded, Docket item 63, and on May 8, 2017, the defendants replied, Docket Items 66 and 67.

MOTION FOR LEAVE TO AMEND

As a preliminary matter, the Court considers McCrobie's motion for leave to amend his complaint, Docket Item 19. Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend should be freely given "when justice so requires." The defendants oppose McCrobie's request to amend his complaint a second time. Among other reasons, the defendants contend that the second amended complaint fails to comply with Local Rule 15(b), Docket Item 55 at 11-12, which provides that

[u]nless the movant is proceeding pro se , the amendment(s) or supplements(s) to the original pleading shall be identified in the proposed pleading through the use of a word processing ‘redline’ function or other similar markings that are visible in both electronic and paper format.

A "local rule imposing a requirement of form must not be enforced in a way that causes a party to lose any right because of a nonwillful failure to comply."

Fed. R. Civ. P. 83(a)(2). In this case, the plaintiff's counsel specifically acknowledged "that the local rules generally require a ‘redlined’ copy of a proposed amended complaint to be submitted along with a motion to amend a complaint." Docket Item 19-2 at 2. Nevertheless, he decided that "in light of the significant additions, subtractions, and revisions, a ‘redlined’ copy would not be practicable." Id.

Contrary to the assertion by plaintiff's counsel that "a ‘redlined’ copy of a proposed amended complaint" is only "generally require[d]," id. , the language in Local Rule 15(b) is mandatory. What is more, this Court can find no authority for an attorney's unilaterally deciding that the rule need not be followed because it is not "practicable." In fact, at least one court in this district has strictly held plaintiffs who are represented by counsel to the requirements of Local Rule 15(b) when requesting leave to file complex amendments to their complaints. Doe by and through Doe v. E. Irondequoit Cent. Sch. Dist. , 2018 WL 2100605, at *5-*6 (May 7, 2018) (denying leave to amend because failure to comply with Local Rule 15(b)"required the Court to visually compare" the complaints "paragraph by paragraph, to identify the differences").

All that being said, this Court recognizes that "[n]arrow pleading rules should not be applied to foil an honest plaintiff's efforts to gain redress." Middle Atl. Utils. Co. v. S.M.W. Dev. Corp. , 392 F.2d 380, 384 (2d Cir. 1968). Therefore, this Court denies McCrobie's request to amend his FAC for failure to comply with Local Rule 15(b) without prejudice to his filing another request to amend that complies with that rule.

MOTION TO DISMISS

Having denied McCrobie's motion for leave to amend his complaint, this Court considers the defendants' motion to dismiss McCrobie's FAC.

I. FACTUAL BACKGROUND

When considering a motion to dismiss, this Court accepts "the factual allegations in the complaint as true and draw[s] all reasonable inferences in the plaintiff['s] favor." Mantikas v. Kellogg Co. , 910 F.3d 633, 636 (2d Cir. 2018). The FAC tells the following story.

In 2007, Centurion Capital Corporation obtained a default judgment against McCrobie, Docket Item 7 at 1, 6, relating to credit card debt that McCrobie owed to Providian Financial. Id. at 5-6. McCrobie says that his debt to Providian Financial was "allegedly assigned" to Centurion Capital Corporation and that he did not know about the lawsuit or default judgment. Id. at 5-6.

In 2014, defendant Houslanger & Associates—and, in particular, defendant Todd Houslanger, an attorney with the firm—represented defendant Palisades. Id. at 1. On behalf of Palisades, Houslanger forwarded an income execution to McCrobie's employer designed to garnish McCrobie's wages so as to enforce Centurion Capital Corporation's judgment against McCrobie. Id. at 1, 6-7. Centurion Capital Corporation never notified McCrobie about the alleged assignment of the judgment to Palisades, nor did it file the assignment in the City Court of Buffalo, the court where the default judgment was entered. Id. at 6-7. Such a filing may have given McCrobie constructive notice of the assignment, but that never happened. Id.

In March 2015, McCrobie contacted Houslanger & Associates and asked for a copy of the chain of title that gave Palisades the right to enforce the default judgment obtained against McCrobie by Centurion Capital Corporation. Id. at 7.

Houslanger and Associates sent McCrobie several documents, but none of them referred to the default judgment against him or gave Palisades any right to enforce that judgment. Id. at 7-8. McCrobie therefore claims that the defendants had no right to try to enforce the judgment and, in doing so, violated the FDCPA. Id. at 13.

II. FDCPA STATUTORY CONTEXT

"Responding to reports of abusive practices by third-party collectors of consumer debts, Congress enacted the FDPCA ‘to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.’ " Sheriff v. Gillie , ––– U.S. ––––, 136 S.Ct. 1594, 1598, 194 L.Ed.2d 625 (2016) (quoting 15 U.S.C. § 1692(e) ). "Among other proscriptions, the FDCPA prohibits debt collectors from employing ‘false, deceptive, or misleading’ practices.’ " Id. (quoting § 1692e). " ‘Without limiting’ this general ban, § 1692e enumerates [sixteen] categories of conduct that qualify as false or misleading." Id.

McCrobie claims that four of those categories are pertinent to the defendants' conduct:

• first, "[t]he false representation of—(A) the character, amount, or legal status of any debt; or (B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt," 15 U.S.C. § 1692e(2) ;

• second, "[t]he threat to take any action that cannot legally be taken or that is not intended to be taken," § 1692e(5) ;

• third, "[t]he use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval," § 1692e(9) ;

• fourth, "[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer," § 1692e(10).

In addition, "[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." § 1692f. "[T]he term[,] ‘unfair or unconscionable means’ ... refers to practices that are ‘shockingly unjust or unfair, or affronting the sense of justice, decency, or reasonableness.’ " Arias v. Gutman, Mintz, Baker & Sonnenfeldt LLP , 875 F.3d 128, 135 (2d Cir. 20...