Musah v. Houslanger & Assocs., PLLC

• Decision Date: 26 August 2013
• Docket Number: No. 12 Civ. 3207.,12 Civ. 3207.
• Citation: 962 F.Supp.2d 636
• Court: U.S. District Court — Southern District of New York
• Parties: Zakari MUSAH, Plaintiff, v. HOUSLANGER & ASSOCIATES, PLLC, Defendant.

962 F.Supp.2d 636

Zakari MUSAH, Plaintiff,

v.HOUSLANGER & ASSOCIATES, PLLC, Defendant.

No. 12 Civ. 3207.

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

Aug. 26, 2013.

Schlanger & Schlanger, LLP By Elizabeth Ann Shollenberger, Pleasantville, NY, for Plaintiff.

Kaufman, Borgeest & Ryan, LLP By Jonathan B. Bruno, New York, NY, for Defendant.

OPINION

SWEET, District Judge.

Defendant Houslanger & Associates, PLLC (“Houslanger” or “Defendant”), has moved, pursuant to Fed.R.Civ.P. 12(b)(6) (“12(b)(6)”), to dismiss the amended complaint (“AC”) of plaintiff Zakari Musah (“Musah” or “Plaintiff”) for failure to state a claim. Based upon the conclusions set forth below, the Defendant's motion is granted in part and denied in part.

Prior Proceedings

On April 24, 2012, Musah filed a complaint against Houslanger asserting causes of action under (1) the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”); and (2) N.Y. Judiciary Law § 487 (“Section 487”).

The complaint alleged that Musah received an information subpoena and restraining notice (“Information Subpoena”) in May 2011 stating that a restraint had been placed upon his bank account in an attempt to collect on a 1997 judgment (“Judgment”) entered in Bronx County Civil Court against Musah and in favor of a party called FCC National Bank (“FCC”). Compl. ¶ 11. The Information Subpoena, which was signed by Houslanger, stated on its face that “the current judgment creditor/assignee is Palisades Collections, LLC.” Id. at ¶ 11–12.

The complaint asserted that Houslanger's attempt to collect the Judgment on behalf of its client, Palisades Collections LLC (“Palisades”), constituted numerous violations of the FDCPA because Palisades had not in fact been assigned the rights to the Judgment. Specifically, Musah alleged that Houslanger: (i) falsely represented that it had the right to restrain Musah's account on behalf of Palisade, in violation of 15 U.S.C. § 1692e; (ii) falsely represented that the debt had been assigned to Palisades, in violation of 15 U.S.C. § 1692e(2)(A); (iii) sent out a debt collection communication without conducting a meaningful review of the court file, in violation of 15 U.S.C. § 1692e(3); (iv) took action that cannot legally be taken by restraining Musah's account to collect on behalf of an entity that did not have the rights to the debt, in violation of 15 U.S.C. § 1692e(5); (v) used a false representation to obtain information by serving Musah's bank with the Information Subpoena to gather information about Musah, in violation of 15 U.S.C. § 1692e(10); (vi) engaged in unfair and unconscionable practice by taking steps to restrain Musah's bank account without assuring that Palisades had a right to the funds in question, in violation of 15 U.S.C. § 1692f; (vii) attempted to collect an unauthorized debt (since the assignment was not effective), in violation of 15 U.S.C. § 1692f(1); and (viii) took nonjudicial action to effect dispossession absent a present right to the dispossessed property by causing Musah's bank account to be restrained, in violation of 15 U.S.C. § 1692f(6). See Compl. ¶¶ 31–39.

In addition, Musah alleged that Houslanger's attempt to collect the Judgment constituted a violation of N.Y. Judiciary Law § 487 (“ § 487”), which “prohibits an attorney or counselor from ... engaging in any deceit or collusion, or consenting to any deceit or collusion, with intent to deceive the court or any party....” Musah I, 2012 WL 5835293, at *4.

Houslanger moved to dismiss the complaint, and in an opinion filed on November 16, 2012, the Court granted Houslanger's motion to dismiss. Musah v. Houslanger, No. 12 Civ. 3207(RWS), 2012 WL 5835293 (S.D.N.Y. Nov. 16, 2012) (“ Musah I ”). In dismissing the complaint, the Court held, inter alia, that Musah's claims failed because they rested on the erroneous premise that N.Y. C.P.L.R. § 5019(c) (“§ 5019(c)”) required that an assignment of a judgment be filed with the court before it can be enforced by the assignee; in fact, § 5019(c) “does not require that an assignment be filed with the court in order for the assignee to be entitled to enforce [a] judgment” issued against a judgment debtor. Musah I, 2012 WL 5835293, at *2–3.

Musah subsequently filed the AC, which again asserted claims under the FDCPA and § 487. The AC alleged that Houslanger's attempts to collect the judgment from Musah violated these statutes because: (1) the assignment had never been filed with the court, and therefore could not be enforced by the assignee pursuant to § 5019(c); and (2) Musah had never received notice of the assignment, which is a prerequisite to an assignee's ability to enforce a judgment. AC ¶¶ 44–50, 60–67. The AC also alleged that Houslanger violated the FDCPA's “meaningful review” requirement, 15 U.S.C. § 1692e(3) (“ § 1692e(3)”), by sending out the Information Subpoena without conducting the requisite review of the case file. Id. at 50–57.

Houslanger moved to dismiss the AC. The motion was argued and marked fully submitted on March 21, 2013.

The Applicable Standard

On a motion to dismiss pursuant to Rule 12(b)(6), all factual allegations in the complaint are accepted as true, and all inferences are drawn in favor of the pleader. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir.1993). The issue “is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir.1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 235–36, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Plaintiffs must allege sufficient facts to “nudge[ ] their claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. Though the court must accept the factual allegations of a complaint as true, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).

Plaintiff Has Stated a Claim for Violations of the FDCPA

Plaintiff's FDCPA claims are (with the exception of the claim under § 1692e(3), which is addressed below) premised upon the contention that Houslanger's client, Palisades, did not have the right to collect the Judgment from Plaintiff because (1) the assignment was not filed with the court pursuant to § 5019(c), and (2) Plaintiff was not notified of the assignment.

This Court has already rejected the former, holding that § 5019(c) “does not require that an assignment be filed with the court in order for the assignee to be entitled to enforce [a] judgment” issued against a judgment debtor. Musah I, 2012 WL 5835293, at *2–3. The latter, however, provides a suitable basis for Plaintiff's FDCPA claims. The New York Court of Appeals has held that “[a] debtor, in order to be charged with a duty to pay a debt to an assignee, must first have actual notice of the assignment.” Tri City Roofers, Inc. v. Northeastern Industrial Park, 61 N.Y.2d 779, 780, 473 N.Y.S.2d 161, 461 N.E.2d 298 (1984). Plaintiff has alleged that “[p]rior to Houslanger's initiation of collection action against [Plaintiff] on behalf of Palisades, [Plaintiff] did not receive notice that the judgment had been assigned to Palisades,” AC ¶ 17, and therefore at the time of Houslanger's collection efforts, “Houslanger was not legally entitled to take any steps to enforce the judgment,” thereby rendering such attempts in violation of the FDCPA. Id. ¶ 48.

Houslanger has contended that Plaintiff's FDCPA claims fail because Houslanger did in fact give notice of the assignment to Plaintiff prior to Houslanger's attempt to enforce the Judgment. See Memorandum of Law in Support of Defendant's Motion to Dismiss the Amended Complaint Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (“Def. Mem.”) at 6. In support of this contention, Houslanger has submitted an affidavit from Todd E. Houslanger, Esq., a member of the Houslanger law firm, attached to which is an exhibit that purports to be a letter dated May 1, 2009 (the “May 2009 Letter”) mailed to Plaintiff that “stated that the original creditor on the matter was FCC National Bank and the current creditor to whom plaintiff's debt is owed is Palisades.” Affidavit of Todd E. Houslanger, Esq. (“Houslanger Aff.”) ¶ 4 & Ex. A.

However, Houslanger has provided no proof that the May 2009 Letter was received by Plaintiff other than asserting that the letter was in fact mailed. SeeHouslanger Aff. ¶ 3. As noted above, the AC has specifically alleged that Plaintiff did not receive any notice from Houslanger regarding the assignment of the judgment to Palisades prior to receiving the Information Subpoena. See AC ¶¶ 17, 35, 38, 49. Accordingly, a factual dispute exists between the parties as to whether or not Plaintiff received notice of the assignment. Such a factual dispute is “inappropriate for resolution on a motion to dismiss, where allegations are taken as true and read in a light most favorable to plaintiffs.” Burns v. Delaware Charter Guarantee & Trust Co., 805 F.Supp.2d 12, 23–24 (S.D.N.Y.2011).¹

Houslanger has contended that the requirement that a judgment debtor be given notice of the assignment of the judgment is satisfied merely by the act of sending notice of the assignment, regardless of whether the judgment debtor actually receives such notice. See Def. Mem. at 6. However, the relevant precedent indicates that the judgment debtor must receivenotice of the assignment in order for this requirement to be satisfied. See Tri City Roofers, 61 N.Y.2d at 780, 473 N.Y.S.2d 161, ...