Mednik v. Specialized Loan Servicing

• Decision Date: 23 February 2021
• Docket Number: 20-CV-427 (MKB)
• Parties: VERONIKA MEDNIK, Plaintiff, v. SPECIALIZED LOAN SERVICING, LLC, Defendant.
• Court: U.S. District Court — Eastern District of New York

VERONIKA MEDNIK, Plaintiff, v. SPECIALIZED LOAN SERVICING, LLC, Defendant.

20-CV-427 (MKB)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

February 23, 2021

MEMORANDUM & ORDER

MARGO K. BRODIE, United States District Judge:

Plaintiff Veronika Mednik commenced the above-captioned action against Defendant Specialized Loan Servicing LLC ("SLS"), among others,¹ on January 26, 2020, alleging that SLS violated section 1681s-2(b) of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (the "FCRA") by failing to investigate and correct disputed information relating to Plaintiff's mortgage loan in reports to the credit bureaus. (Compl. ¶¶ 45-50, Docket Entry No. 1.) SLS moves to dismiss the claim against it for lack of personal jurisdiction, improper venue, and failure to state a claim pursuant to Rules 12(b)(2), (b)(3), and (b)(6) of the Federal Rules of Civil Procedure, respectively, and Plaintiff opposes the motion.²

For the reasons set forth below, the Court grants SLS's motion and dismisses the Complaint for lack of personal jurisdiction but grants Plaintiff sixty days to file an amended complaint.

I. Background

Plaintiff is a New York resident and "consumer" as defined by the FCRA.³ (Compl. ¶ 11.) Defendant SLS is a mortgage loan servicing company and "furnisher" as defined by the FCRA. (Id. ¶ 15.) SLS has its principal place of business in Colorado and is registered to do business in New York.⁴ (Id.)

In 2006, Plaintiff obtained a mortgage loan and used it to purchase a property in Pennsylvania. (Decl. of Veronika Mednik ("Pl.'s Aff.") ¶¶ 2-3, annexed to Pl.'s Opp'n as Ex. 1, Docket Entry 44-1.) In 2016, Plaintiff defaulted on the loan and Nationstar Mortgage LLC ("Nationstar") commenced a mortgage foreclosure action against her in Pennsylvania. (Foreclosure Complaint, attached to Decl. of Alan F. Kaufman ("Kaufman Decl.") as Ex. A, Docket Entry No. 40-2, at 4.) In October of 2017, the court in the Pennsylvania action entered a Judgment in Mortgage Foreclosure in favor of Nationstar and against Plaintiff. (J. in Mortgage Foreclosure, annexed to Kaufman Decl. as Ex. B, Docket Entry No. 40-2, at 75.) SLS was later assigned Nationstar's rights to service the loan and began servicing the loan on December 18,2017. (Notice of Servicing Transfer, annexed to Kaufman Decl. as Ex. C, Docket Entry 40-2, at 78.) In March of 2018, Nationstar substituted SLS "as the real party/[p]laintiff in interest in [the foreclosure] action and the holder of the Note and Mortgage," making SLS the judgment creditor. (Praecipe to Mark the J. to the Use of SLS, annexed to Kaufman Decl. as Ex. D, Docket Entry No. 40-2, at 91.) In September of 2018, the property was sold at foreclosure sale. (Proposed Schedule of Distribution, annexed to Kaufman Decl. as Ex. E, Docket Entry 40-2, at 94.)

As the loan servicer, SLS was responsible for collecting payments from Plaintiff, (Notice of Servicing Transfer 78),⁵ and furnishing information regarding the loan to the national credit bureaus, including TransUnion, LLC, (see Compl. ¶ 26). The loan account was eventually closed, leaving a balance of $0. (Id. ¶ 5.) However, SLS continued to report that payments on the account were "120 days past due." (Id. ¶ 27.) This reporting conveyed to prospective lenders that Plaintiff was currently delinquent on her payments, and it adversely affected her creditworthiness. (Id. ¶ 28.)

On October 27, 2019, Plaintiff sent a letter to TransUnion disputing the accuracy of the reporting of the SLS account and TransUnion notified SLS about the dispute. (Id. ¶¶ 28-29.) Although the FCRA requires furnishers to mark disputed accounts as such, investigate the dispute, and remove any misleading information within thirty to forty-five days of receiving notice of a dispute, (id. ¶¶ 6, 19), SLS failed to complete these tasks, (id. ¶¶ 29-30). Due toSLS's failure to complete these tasks, Plaintiff lost credit opportunities, suffered harm to her credit reputation and credit score, and suffered emotional distress. (Id. ¶ 49.)

II. Discussion

a. Standard of review

On a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, "[a] plaintiff bears the burden of demonstrating personal jurisdiction over a person or entity against whom it seeks to bring suit." Troma Ent., Inc. v. Centennial Pictures Inc., 729 F.3d 215, 217 (2d Cir. 2013) (quoting Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 34 (2d Cir. 2010)). The showing a plaintiff must make to meet that burden is governed by a "sliding scale," which "varies depending on the procedural posture of the litigation." Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir. 2013) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)). If a defendant challenges personal jurisdiction by filing a Rule 12(b)(2) motion, "the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant." JCorps Int'l, Inc. v. Charles & Lynn Schusterman Family Found., 828 F. App'x 740, 742 (2d Cir. 2020) (quoting DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001)); see also Holmes v. Apple, 797 F. App'x 557, 559 (2d Cir. 2019) ("A plaintiff has the burden of establishing personal jurisdiction over an entity against which it seeks to bring suit, and to survive a motion to dismiss for lack of such jurisdiction, 'a plaintiff must make a prima facie showing that jurisdiction exists.'" (quoting Penguin Grp. (USA) Inc., 609 F.3d at 34-35)); Eades v. Kennedy, PC Law Offs., 799 F.3d 161, 167-68 (2d Cir. 2015) (same). Prior to discovery, a plaintiff need only plead "an averment of facts that, if credited by the ultimate trier of fact, would suffice to establish jurisdiction over the defendant." Holmes, 797 F. App'x at 559(quoting Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010)); see also Dix v. Peters, 802 F. App'x 25, 27 (2d Cir. 2020) ("Where the district court grants a Rule 12(b)(2) motion without an evidentiary hearing, we credit the plaintiff's averment of jurisdictional facts as true." (citing Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996)); Chirag v. MT Marida Marguerite Schiffahrts, 604 F. App'x 16, 19 (2d Cir. 2015) ("A prima facie case requires non-conclusory fact-specific allegations or evidence showing that activity that constitutes the basis of jurisdiction has taken place." (citing Jazini v. Nissan Motor Co., 148 F.3d 181, 185 (2d Cir. 1998))). After discovery, the plaintiff's "prima facie showing must be factually supported." Dorchester Fin. Sec., Inc., 722 F.3d at 85 (quoting Ball, 902 F.2d at 197). "Conclusory allegations based only on information and belief are not sufficient" to provide such factual support. McGlone v. Thermotex, Inc., 740 F. Supp. 2d 381, 383 (E.D.N.Y. 2010) (citing Jazini, 148 F.3d at 183-84).

The court must "construe the pleadings and any supporting materials in the light most favorable to the plaintiffs." Licci ex rel. Licci v. Lebanese Can. Bank, SAL (Licci IV), 732 F.3d 161, 167 (2d Cir. 2013) (citing Chloé, 616 F.3d at 163); see also Grundstein v. Eide, 598 F. App'x 45, 46 (2d Cir. 2015) (citing DiStefano, 286 F.3d at 84). However, the court need not "accept as true a legal conclusion couched as a factual allegation." O'Neill v. Asat Tr. Reg. (In re Terrorist Attacks on Sept. 11, 2001), 714 F.3d 659, 673 (2d Cir. 2013) (quoting Jazini, 148 F.3d at 185).

b. Plaintiff has not made a prima facie showing that the Court has personal jurisdiction over Defendant

Defendant argues that the Court must dismiss the action for lack of personal jurisdiction because there is no basis for the Court to find general or specific jurisdiction over SLS other than the fact that Plaintiff resides in New York, which is insufficient. (Def.'s Mem. 8-11.) Inaddition, Defendant argues that the Court should deny Plaintiff's request for jurisdictional discovery because she has failed to state a prima facie case for jurisdiction over SLS, any purported discovery is already in her possession, and none of the relevant facts are in dispute. (Def.'s Reply 6.)

Plaintiff argues that the Court has specific jurisdiction over SLS under sections 302(a)(1) and (a)(3) of New York's long-arm statute and that the exercise of personal jurisdiction comports with due process.⁶ (Pl.'s Opp'n 8-11.) In addition, Plaintiff argues that "if the Court is not inclined to exercise personal jurisdiction, it should permit limited jurisdictional discovery into SLS's New York contacts to avoid undue prejudice." (Id. at 11-13.) Finally, Plaintiff requests leave to amend "[i]f . . . the Court finds the Complaint lacking in any way." (Id. at 13-14.)

"There are two types of personal jurisdiction: specific and general." Sonera Holding B.V. v. Çukurova Holding A.Ş., 750 F.3d 221, 225 (2d Cir. 2014). General jurisdiction permits a court to exercise personal jurisdiction over a defendant regardless of whether the underlying claim has a connection to the forum. Id. ("A court with general jurisdiction over a corporation may adjudicate all claims against that corporation — even those entirely unrelated to the defendant's contacts with the state.") Specific jurisdiction requires a connection between the forum exercising jurisdiction over the defendant and the underlying controversy that gave rise to the claim. Waldman v. Palestine Liberation Org., 835 F.3d 317, 331 (2d Cir. 2016) ("Specific jurisdiction . . . depends on an affiliation between the forum and the underlying controversy, principally, activity or an occurrence that takes place in the forum state and is therefore subject to the State's regulation." (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S.915, 919 (2011))). Under New York law, courts exercise specific jurisdiction pursuant to N.Y. C.P.L.R. § 302 and general jurisdiction pursuant to N.Y. C.P.L.R. § 301.

Section 302(a) permits ...