Nichols v. Niagara Credit Recovery, Inc.

• Decision Date: 07 May 2013
• Docket Number: 5:12-cv-1068
• Court: U.S. District Court — Northern District of New York
• Parties: JAMES NICHOLS and KATHERINE NICHOLS, Plaintiffs, v. NIAGARA CREDIT RECOVERY, INC., CREDIT RECOVERY GROUP, INC., CAWLEY & BERGMANN, LLP, CAVALRY PORTFOLIO SERVICES, LLC, AND JCS GLOBAL ASSETS, LLC, Defendants.

JAMES NICHOLS and KATHERINE NICHOLS, Plaintiffs,

v. NIAGARA CREDIT RECOVERY, INC., CREDIT RECOVERY GROUP, INC., CAWLEY & BERGMANN, LLP,CAVALRY PORTFOLIO SERVICES, LLC, AND JCS GLOBAL ASSETS, LLC, Defendants.

5:12-cv-1068

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

Dated: May 7, 2013

(MAD/TWD)

APPEARANCES:

WEISBERG & MEYERS, LLC

Attorneys for Plaintiff

MAURICE & NEEDLEMAN, P.C.

Attorneys for Defendant Cavalry Portfolio

Services, LLC and Cawley and Bergman, LLP

OFFICE OF CHARLES F. PITARRESI

Attorneys for Defendant Niagara Credit

Recovery, Inc.

OF COUNSEL:

DENNIS KURZ, ESQ.

THOMAS R. DOMINCZYK, ESQ.

CHARLES F. PITARRESI, ESQ.

Mae A. D'Agostino, U.S. District Judge:

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiffs James and Katherine Nichols filed this action on July 3, 2012, against Defendants Niagara Credit Recovery, Inc. ("NCR"), Credit Recovery Group, Inc. ("CRG"),Cawley & Bergmann, LLP ("Cawley"), Cavalry Portfolio Services, LLC ("CPS"), and JCS Global Assets, LLC ("JCS"), alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227. See Dkt. No. 1. Currently before the Court are the following motions: (1) Defendant Cawley's motion to dismiss for failure to state a claim; (2) Defendant CPS's motion to dismiss for failure to state a claim; (3) Plaintiffs' motion to dismiss Defendant NCR's counterclaim; and (4) Plaintiffs' motion for default judgment against Defendant JCS.

II. BACKGROUND

Plaintiffs are residents of Syracuse, New York. See Dkt. No. 1 at ¶ 4. Plaintiff Katherine Nichols entered into a contract for payment with HSBC. See Dkt. No. 5 at 2. Plaintiffs failed to make all payments due under the terms of the contract and defaulted. See id. The remaining balance on the contract was $3,812.00, plus interest at the rate of 18.9% per annum from May 19, 2009 until paid. See id.

HSBC turned the debt over to JCS for collection, who then retained the services of CPS. See Dkt. No. 9 at 2. Plaintiffs allege that Cawley is the agent in fact of CPS and JCS, and that Cawley assumed responsibility for collecting the debt around September 21, 2010. See Dkt. No. 1 at ¶ 21. In September 2010, Plaintiffs' attorney, Weisberg & Meyers ("Weisberg") sent a letter to Cawley providing notice of its representation of Plaintiffs, and revoking any express permission for Defendants to contact Plaintiffs directly. See id.

On September 21, 2010, Plaintiff Katherine Nichols entered into an agreement with Cawley to settle her account in the amount of $1,000.00, to be paid by Plaintiff on or before September 24, 2010. See id. at ¶ 22. Plaintiff paid the agreed-upon settlement amount to JCS on September 23, 2010. See id. at ¶ 22. After the settlement was consummated, Plaintiff alleges thatJCS violated the terms of the agreement by selling the debt to CRG. See id. at ¶ 24. Defendant NCR then purchased Plaintiffs' contract for payment from CRG and is the sole owner of all right, title and interest in the contract. See id. at ¶ 25.

On January 18, 2012, an NCR employee left a voicemail message at the residential telephone number of Katherine Nichols' father-in-law, William Nichols. See id. at ¶ 26. In the message, NCR's employee stated the following:

This message is for Katherine Nichols. Ms. Nichols, my name's Victoria Joy. I'm contacting you from the pre-legal division at NCR. I'm contacting you in regards to case number XXXXXX-8395. Your file was placed with me for the purpose of legal review and processing. I am currently showing a default status slated for Onondaga County. However, I am in the position to extend to you an out of court option, um, which I would like to discuss with you or your legal representative. The number I can be reached at is 716-236-0011 extension 503.

See id. Plaintiffs allege that in the message, NCR failed to state that the call was made for the purpose of confirming or correcting location information about Plaintiffs. See id. at ¶ 27.

On January 24, 2012, a similar message was left by NCR employee Victoria Joy on both Katherine and James Nichols' cell phones. See id. at ¶¶ 29-33. In these messages, the NCR employee failed to disclose that the communication was from a debt collector, which Plaintiff's contend amounts to NCR's failure to meaningfully disclose its identity. See id. at ¶ 31. Victoria Joy left messages on Plaintiffs' cell phones again on January 26, January 27, and March 7. See id. at ¶¶ 36-44. On March 8, 2012, NCR sent a letter to Plaintiffs, demanding payment for the account. See id. at ¶ 45. Plaintiffs contend that the repeated phone calls from NCR were made without their prior express consent and were made using an automatic telephone dialing system. See id. at ¶ 47.

Plaintiffs allege that CRG is liable for the actions of NCR, the debt collector it hired to collect the debt from Plaintiffs on its behalf. See id. at ¶ 55. Plaintiffs allege that NCR and CRG violated the following provisions of the FDCPA, 15 U.S.C. § 1692 and the TCPA, 47 U.S.C. § 227(b)(1)(A)(iii):

(1) 15 U.S.C. § 1692b(1) by contacting a third party and failing to state that the call was made for the purpose of confirming or correcting location information about Plaintiffs and by providing the identity of Plaintiffs to a third party without such information being expressly requested, in connection with an attempt to collect a debt from Plaintiffs. See id. at ¶¶ 50-52.

(2) 15 U.S.C. § 1692c(b) et seq., by communicating with a third party in a manner other than that prescribed in the statute and without having received the prior consent of Plaintiffs or the express permission of a court of competent jurisdiction, and without the communication being necessary to effect a post-judgment remedy. See id. at ¶ 57.

(3) 15 U.S.C. § 1692d(6) by placing telephone calls without meaningfully disclosing the caller's identity. See id. at ¶¶ 62, 65.

(4) 15 U.S.C. § 1692e(2)(A) by falsely representing the character, amount, or legal status of Plaintiffs' alleged debt. See id. at ¶ 67.

(5) 15 U.S.C. § 1692e(5) by threatening to take an action against Plaintiffs that cannot be legally taken or that was not actually intended to be taken, which included but was not limited to: threatening to file a lawsuit against Plaintiffs on an alleged debt that was previously settled in full. See id. at ¶¶ 78, 80.

(6) 15 U.S.C. § 1692e(10) by using false representations and deceptive practices in connection with collection of an alleged debt from Plaintiffs. See id. at ¶¶ 83, 85.

(7) 15 U.S.C. § 1692e(11) by failing to notify Plaintiffs during each collection contact that the communication was from a debt collector. See id. at ¶¶ 93, 95.

(8) 15 U.S.C. § 1692f by using unfair or unconscionable means against Plaintiff in connection with an attempt to collect a debt. See id. at ¶¶ 98, 100.

(9) 47 U.S.C. § 227(b)(1)(A)(iii) by placing non-emergency calls to Plaintiffs' cellular telephones, without the prior express consent of Plaintiffs, using an automatic telephone dialing system. See id. at ¶¶ 108, 110.

Plaintiffs allege that Cawley, CPS, and JCS violated the following provisions of the FDCPA:

(1) 15 U.S.C. § 1692e(2)(A) by falsely representing the character, amount, or legal status of Plaintiff's alleged debt. See id. at ¶¶ 72, 74, 76.

(2) 15 U.S.C. § 1692e(10) by using false representations and deceptive practices in connection with collection of an alleged debt from Plaintiffs, by misrepresenting that Ms. Nichols owed an alleged debt, when in fact, the debt had previously been settled in full. See id. at ¶¶ 87, 89, 91.

(3) 15 U.S.C. § 1692f by using unfair or unconscionable means against Plaintiffs in connection with an attempt to collect a debt by proceeding with collection activities against Ms. Nichols, when the debt had previously been settled in full. See id. at ¶¶ 102, 104, 106.

Currently before the Court are Defendants CPS and Cawley's motions to dismiss for failure to state a claim, Plaintiffs' motion to dismiss NCR's counterclaim for breach of contract on the underlying debt, and Plaintiffs' motion for default judgment against JCS.

III. DISCUSSION

A. Cawley and CPS' motions to dismiss for failure to state a claim

On September 25, 2012, Defendant Cawley filed a motion to dismiss pursuant to Rule 12(b)(6), arguing that Plaintiffs' claims are barred by the one year statute of limitations contained in the FDCPA. See Dkt. No. 6-1 at 3. On November 26, 2012, Defendant CPS also filed amotion to dismiss pursuant to Rule 12(b)(6), raising issues identical to those in Defendant Cawley's motion to dismiss. See Dkt. No. 15-1.

1. Standard of review

A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the party's claim for relief. See Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir. 2007) (citation omitted). In considering the legal sufficiency, a court must accept as true all well-pleaded facts in the pleading and draw all reasonable inferences in the pleader's favor. See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (citation omitted). This presumption of truth, however, does not extend to legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). Although a court's review of a motion to dismiss is generally limited to the facts presented in the pleading, the court may consider documents that are "integral" to that pleading, even if they are neither physically attached to, nor incorporated by reference into, the pleading. See Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir. 2006) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002)).

To survive a motion to dismiss, a party need only plead "a short and plain statement of the claim," see Fed. R. Civ. P. 8(a)(2), with sufficient factual "heft to 'sho[w] that the pleader is entitled to relief[,]'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (...