Pettaway v. Nat'l Recovery Solutions, LLC

• Decision Date: 09 April 2020
• Docket Number: August Term, 2019,Docket No. 19-1453
• Citation: Pettaway v. Nat'l Recovery Solutions, LLC, 955 F.3d 299 (2nd Cir. 2020)
• Parties: Jean M. PETTAWAY, Individually and on Behalf of All Others Similarly Situated, Plaintiff - Appellant, v. NATIONAL RECOVERY SOLUTIONS, LLC, US Asset Management Inc., Defendants - Appellees, John and Jane Does 1–50, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

955 F.3d 299

Jean M. PETTAWAY, Individually and on Behalf of All Others Similarly Situated, Plaintiff - Appellant,

v.NATIONAL RECOVERY SOLUTIONS, LLC, US Asset Management Inc., Defendants - Appellees,John and Jane Does 1–50, Defendants.

Docket No. 19-1453

August Term, 2019

United States Court of Appeals, Second Circuit.

Argued: January 17, 2020

Decided: April 9, 2020

Philip D. Stern (Andrew T. Thomasson, Francis R. Greene, on the brief), Stern Thomasson LLP, Springfield, NJ, for Plaintiff-Appellant.

Brian D. Gwitt, Andrea K. DiLuglio (on the brief), Woods Oviatt Gilman LLP, Buffalo, NY, for Defendants-Appellees.

Before: Hall, Sullivan, and Bianco, Circuit Judges.

Per Curiam:

Plaintiff-Appellant Jean M. Pettaway appeals from a judgment of the United States District Court for the Southern District of New York (Daniels, J. ) entered on May 20, 2019 granting Defendants-Appellees’ motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and denying Plaintiff-Appellant’s motion for leave to file an amended complaint. Although we agree with Pettaway that her amended complaint was timely filed, and therefore leave to file an amended complaint was not required, we nevertheless conclude that the district court properly dismissed Pettaway’s amended complaint on the merits because it fails to state a plausible claim for relief.

I.

Pettaway co-signed a student loan, which subsequently fell into default and was charged-off. Defendant-Appellee US Asset Management Inc. ("US Asset") purchased the debt and placed it with Defendant-Appellee National Recovery Solutions, LLC ("NRS") for collection. NRS thereafter sent a form collection letter (the "Letter") to Pettaway on behalf of US Asset in an attempt to collect the debt; the Letter stated in pertinent part:

As of the date of this letter, you owe $26,610.58 . Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection.

App. at 18, 33 (emphasis in original). The letter also contained a "time sensitive" offer whereby NRS would accept $21,288.46 as a full settlement of the debt if the payment was received by a certain date. Id.

Pettaway filed a class action complaint against NRS, US Asset, and John and Jane Doe defendants in February 2019, alleging that they "used false, deceptive, and misleading practices, and other illegal practices, in connection with their attempts to collect an alleged debt from Plaintiff and other similarly situated customers," App. at 6, thereby violating the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq . Pettaway’s initial complaint alleged that the Letter is "materially false, deceptive, and misleading," App. at 11, because it suggests that late charges and other charges will cause a customer’s debt to increase even where, as here, such charges are not legally or contractually available.

NRS and US Asset timely filed a motion to dismiss the complaint under Rule 12(b)(6) and moved for attorneys’ fees. In response, and pursuant to Federal Rule of Civil Procedure 15(a)(1)(B), Pettaway filed an amended complaint 21 days after Defendants-Appellees served their motion, adding allegations relating to the Letter’s settlement offer and an allegation that Defendants-Appellees had not charged, and did not intend to charge, interest on the debt. The day after Pettaway filed her amended complaint, the clerk docketed a notice informing the parties that the amended complaint was deficient, and that Pettaway would be required to re-file. Since the 21-day window following a Rule 12 motion during which a plaintiff may file an amended complaint once as a matter of right was then closed, the notice stated that either the opposing party’s consent or the district court’s leave would be required to re-file.

Defendants-Appellees did not consent to a re-filing, so Pettaway filed a letter motion requesting leave to re-file the amended complaint. By order dated May 20, 2019, the district court granted Defendants-Appellees’ motion to dismiss, denied their request for attorneys’ fees and costs, and denied Pettaway’s motion for leave to file the amended complaint. This appeal followed.

II.

On appeal, Pettaway first argues that her amended complaint was timely and properly filed on the 21^st day following service of Defendants-Appellees’ Rule 12 motion. Because the amended complaint followed the district court’s Electronic Case Filing Rules & Instructions, she argues, it was served and filed in compliance with the Southern District of New York’s local rules and was therefore "filed" within the meaning of Federal Rule of Civil Procedure 5 notwithstanding contrary online directions.¹ See S.D.N.Y. Local Civil Rule 5.2 ("A paper served and filed by electronic means in accordance with such instructions [published on the court’s website] is, for purposes of Fed. R. Civ. P. 5, served and filed in compliance with the Local Civil Rules of the Southern [District] of New York."). Pettaway contends that the district court clerk was therefore incorrect to label her amended complaint as deficient and to require either the court’s permission or the opposing party’s consent to re-file and that the district court erred in concluding that the amended complaint was not correctly filed within the 21-day period.

We agree. Federal Rule of Civil Procedure 5(d)(4) prohibits a clerk from refusing "to file a paper solely because it is not in the form prescribed by these rules or by a local rule or practice." Pursuant to this directive, we have held that an error in a notice of appeal would not cause a party to lose his right to appeal, and the notice would be deemed timely filed notwithstanding the court’s rejection of it for noncompliance with its rules on filing. Contino v. United States , 535 F.3d 124, 127 (2d Cir. 2008) (also citing Federal Rule of Civil Procedure 83(a)(2) for the proposition that "[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"). Pettaway’s amended complaint, filed as a matter of right and seemingly in compliance with the express instructions of the district court, should have been accepted by that court.

Pettaway next contends that because her amended complaint was properly and timely filed, it mooted the pending motion to dismiss. It is true that "an amended pleading ordinarily supersedes the original and renders it of no legal effect." In re Crysen/Montenay Energy Co. , 226 F.3d 160, 162 (2d Cir. 2000). This rule does not, however, dictate that a pending motion to dismiss is automatically rendered moot when a complaint is amended. District courts in this Circuit have repeatedly explained that, when faced with an amended complaint, they may either deny a pending motion to dismiss as moot or consider the merits of the motion, analyzing the facts as alleged in the amended pleading. See, e.g. , Conforti v. Sunbelt Rentals, Inc. , 201 F. Supp. 3d 278, 291 (E.D.N.Y. 2016) ("Where a plaintiff seeks to amend his complaint while a motion to dismiss is pending, a court ‘has a variety of ways in which it may deal with the pending motion to dismiss, from denying the motion as moot to considering the merits of the motion in light of the amended complaint.’ " (quoting Hamzik v. Office for People with Developmental Disabilities , 859 F. Supp. 2d 265, 273–74 (N.D.N.Y. 2012) )); see also id. (citing cases from the District of Connecticut and the Eastern District of New York for the same proposition). This is a sound approach that promotes judicial economy by obviating the need for multiple rounds of briefing addressing complaints that are legally insufficient. We now adopt this rule and hold that when a plaintiff properly amends her complaint after a defendant has filed a motion to dismiss that is still pending, the district court has the option of either denying the pending motion as moot or evaluating the motion in light of the facts alleged in the amended complaint.

The district court essentially followed the second approach described above. Although the district court explained that it would "consider Plaintiff’s original complaint in evaluating [the] motion to dismiss and will separately assess the validity of Plaintiff’s application to amend her complaint," App. at 37, it went on to say that Pettaway’s amended complaint did not moot Defendants-Appellees’ pending motion to dismiss because the new allegations did not save her claim. In effect, the district court’s denial of Pettaway’s application to amend her complaint was premised on its view that the amended complaint would not withstand a motion to dismiss. See Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals , 282 F.3d 83, 88 (2d Cir. 2002) ("An amendment to a pleading will be futile if a proposed claim could not withstand a motion to dismiss pursuant to Rule 12(b)(6)."). Even though the district court conducted the bulk of its analysis of the motion to dismiss addressing the allegations in the original complaint, it also considered the motion in light of the allegations in the amended complaint. Because we agree that its methodology was satisfactory, we find no error in the district court’s analysis.

III.

Pettaway contends that the "Amended Complaint alleged facts proving a cause of action." Appellant Br. at 10. We disagree. On independent review, we hold that the district court properly granted Defendants-Appellees’ motion to dismiss. "We review de novo a grant of a motion to dismiss pursuant to Rule 12(b)(6), accepting the complaint’s factual allegations as true and drawing all reasonable inferences in the plaintiff’s favor." Brown Media Corp. v. K&L Gates, LLP , 854 F.3d 150, 156–57 (2d Cir. 2017) (internal quotation marks and citation omitted). "To...