Polanco v. NCO Portfolio Mgmt., Inc.

• Decision Date: 23 September 2015
• Docket Number: No. 11–CV–7177 (DAB).,11–CV–7177 (DAB).
• Citation: 132 F.Supp.3d 567
• Parties: Delia POLANCO, Plaintiff, v. NCO PORTFOLIO MANAGEMENT, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

132 F.Supp.3d 567

Delia POLANCO, Plaintiff,

v.NCO PORTFOLIO MANAGEMENT, INC., Defendant.

No. 11–CV–7177 (DAB).

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

Signed Sept. 23, 2015.

Ahmad Keshavarz, Ahmad Keshavarz, Law Offices, Brooklyn, NY, for Plaintiff.

Aaron R. Easley, Sessions, Fishman, & Nathan & Israel LLC, Flemington, NJ, for Defendant.

MEMORANDUM AND ORDER

DEBORAH A. BATTS

, District Judge:

Plaintiff Delia Polanco ("Plaintiff" or "Polanco") brings this action against Defendant NCO Portfolio Management, Inc. ("Defendant NCOP" or "NCOP"). Now before the Court are the Parties' Cross Motions for Summary Judgment.

Plaintiff's Partial Motion for Summary Judgment ("Plaintiff's Motion") seeks summary judgment as to liability, arguing that based on prior decisions in the case, she states claims for FDCPA violations and conversion, and now has put forth facts on the record supporting those claims. Underlying that general argument, Plaintiff seeks summary judgment that: (1) NCOP is a "debt collector" under the FDCPA; and (2) NCOP is directly liable as a party to the collections lawsuit, and vicariously liable for actions taken by MSH in the collections lawsuit.¹

Defendant NCOP seeks summary judgment on three corresponding grounds:² (1) NCOP is not a "debt collector" and therefore not liable under the FDCPA; (2) as principal, NCOP cannot be subjected to a greater degree of liability than its agent, MSH, which has already settled with Plaintiff; and (3) NCOP is not liable for conversion because it was not directly involved in collecting Plaintiff's debt and never had possession of Plaintiff's property.

For the reasons stated below, Plaintiff's Partial Motion for Summary Judgment is GRANTED in part and DENIED in part. Defendant NCOP's Motion for Summary Judgment is DENIED.

I. BACKGROUND

a. Factual Background

Except where otherwise noted, the following facts are undisputed.

Plaintiff Polanco had a debt arising out of a retail charge account. (Plaintiff's Local Rule 56.1 Statement of Material Facts for Summary Judgment ("Pl.'s 56.1 Stmt.") ¶¶ 1–2; Defendant NCO Portfolio Management, Inc.'s Response to Plaintiff's Statement of Material Facts, ("Def.'s Resp. 56.1 Stmt.") ¶ 2.) Defendant NCOP purchased Plaintiff's defaulted debt and placed it with NCO Financial Systems, Inc. ("NCOF") for debt collection on December 13, 2004. (Defendant's Local Rule 56.1 Statement of Material Facts ("Def.'s 56.1 Stmt.") ¶ 1; Plaintiff's Local Rule 56.1 Counter Statement of Material Facts in Response to Defendant NCO Portfolio Management, Inc.'s Motion for Summary Judgment ("Pl.'s Resp. 56.1 Stmt.") ¶ 1.)

The Parties dispute the relationship between NCOP and NCOF.³ Plaintiff cites the testimony of Defendant's deponent, Michael G. Noah, Senior Vice President of NCOF, who agreed with Plaintiff's Counsel's characterization that for this case, "[NCOP] and [NCOF] are essentially the same entity for the purposes of attempting to collect a debt as to [Plaintiff]." (Transcript of Michael G. Noah Deposition ("Noah Tr.") 11:22–12:21, Declaration of Ahmad Keshavarz in Support of Plaintiff's Motion ("Keshavarz Decl."), Ex. D; Pl.'s Resp. 56.1 Stmt. ¶¶ 1, 4, 11–19, C.2.)⁴ On the other hand, Defendant avers that "Plaintiff has continuously ignored the corporate formalities maintained by NCO Portfolio Management, Inc. and its sister company, NCO Financial Systems, Inc." (Def.'s Resp. 56.1 Stmt. ¶¶ 6, 8–12, 14.)⁵ In addition, with respect to NCOF, Mr. Noah testified "It's one of the—that's the main collection agency of NCO, it's really—it has several subsidiaries under it, but it's the main collection arm. The accounts receivable collection." (Noah Tr. 12:8–12.) When asked if there was any difference between NCOP and NCOF, NCOF's former Legal Compliance Manager Scott Dworsak testified, "I think—I—I believe they were both the same overhead, but they were kind of different entities beneath." (Transcript of Scott Dworsak Deposition ("Dworsak Tr.") 12:4–17, Keshavarz Decl., Ex. I.)

It is undisputed that Defendant NCOP purchases defaulted debts and places them for collection with other agencies. (Pl.'s 56.1 Stmt. ¶ 4, 5; Answer to Am. Compl. ¶ 6.) Mr. Noah testified that NCOP "purchased charged off accounts, hundreds of thousands, millions of accounts" and "placed those accounts for collections to various entities." (Pl.'s 56.1 Stmt. ¶ 5 (citing Noah Tr. 13:22–14:1); Def.'s Resp. 56.1 Stmt. ¶ 5.) Plaintiff avers that NCOP has 34,000 employees, approximately 9,000 of which are debt collectors, operates in fifteen countries, has millions of accounts on which it collects debts, and has filed over 35,000 lawsuits in New York courts alone. (Pl.'s 56.1 Stmt. ¶¶ 7–11, 15.) Plaintiff also states that NCOP uses the services of 165 law firms nationally to collect debts "either directly or indirectly," and gives those law firms "operating procedures they have to follow." (Pl.'s 56.1 Stmt. ¶ 11–12; see also Noah Tr. 129:10–17, 172:22–173:6.) Defendant disputes the scale and nature of NCOP's business, including the number of employees it has, accounts it has purchased, and whether it uses a network of collections law firms, stating that the Noah testimony on which Plaintiff relies to establish those facts actually refers to NCOF, rather than NCOP. (Def.'s Resp. 56.1 Stmt. ¶¶ 6–11; Def.'s 56.1 Stmt. ¶ 3)⁶ To support this contention, Defendant cites the testimony of NCOF's Scott Dworsak, arguing that Mr. Dworsak "testified that NCO Financial Systems, Inc., as opposed to the separate entity NCO Portfolio Management, Inc., had ‘millions' of accounts." (Def.'s Resp. 56.1 Stmt. ¶ 6 (citing Dworsak Tr. 5:17, 13:20, 106:7–12).)⁷

The Parties also dispute whether NCOP had any direct contact with Plaintiff. (Def.'s 56.1 Stmt. ¶ 21; Pl.'s Resp. 56.1 ¶ 21.)

On November 9, 2005, NCOF placed Plaintiff's account with a debt collection law firm, Mel S. Harris and Associates, LLC ("MSH"). (Def.'s 56.1 Stmt. ¶ 2; Pl.'s Resp. 56.1 ¶ 2.) On March 20, 2006, NCOP, through its lawyers MSH, obtained a default judgment against Plaintiff in the amount of $2,451.45 ("the default judgment") in a collections lawsuit in Bronx County Civil Court ("the collections lawsuit"). (Def.'s 56.1 Stmt. ¶ 4; Pl.'s Resp. 56.1 ¶ 4; Pl.'s 56.1 Stmt. ¶ 17; Def.'s Resp. 56.1 Stmt. ¶ 17.) Although it is disputed which NCO entity retained MSH to bring the collections lawsuit, the record demonstrates that NCOP was named as plaintiff in that suit and is listed in all court filings as such. (See, generally, Keshavarz Decl., Ex. B.)⁸

On May 30, 2006, New York City Marshal Martin A. Bienstock issued a Notice of Garnishment to Plaintiff seeking to collect on the default judgment. (Keshavarz Decl., Ex. E.) The record indicates that Bienstock collected the majority of the default judgment. (Keshavarz Decl., Ex. E, F.) Mr. Noah testified that Ms. Polanco paid MSH, which kept its commission and forwarded the remainder to NCO. (Noah Tr. 65:17–67:6.)

On October 27, 2010, Plaintiff filed a pro se Order to Show Cause to vacate the default judgment in the Bronx County Civil Court. (Pl.'s 56.1 Stmt. ¶ 26; Def.'s Resp. 56.1 Stmt. ¶ 26; Keshavarz Decl., Ex. B, 21–26) In her Affidavit in support of the Order to Show Cause, Plaintiff claimed, among other defenses, that the default judgment was obtained using a false Affidavit of Service and that she was never served with the complaint in the collections lawsuit. (Pl.'s 56.1 Stmt. ¶¶ 16–21; Keshavarz Decl., Ex. B, 22–24.)⁹ In another Affidavit by Plaintiff made in this matter, Plaintiff again states that she was never served and that the process server served a "phantom neighbor" whom Plaintiff did not know. (Keshavarz Decl., Ex. A. ¶¶ 3–5.) Defendant disputes that Plaintiff was not served and that the Affidavit of Service was false. (Def.'s Resp. 56.1 Stmt. ¶¶ 17–21.) Defendant also states "[t]o the extent service of the Bronx Civil Court summons on plaintiff was improper or the result of ‘sewer service,’ there is no evidence that NCOP was involved with, participated in or was even aware of the method of service MSH used." (Def.'s 56.1 Stmt. ¶ 22.)

Bronx County Civil Court Judge Raul Cruz set proceedings in the matter for November 18, 2010. (Pl.'s 56.1 Stmt. ¶ 27; Keshavarz Decl., Ex. B, 21) On November 18, 2010, Judge Cruz issued a Decision/Order stating:

This motion to vacate the default judgment entered herein against [Polanco] is granted. [Polanco] has shown excusable default and a meritorious defense to this action. Accordingly, the judgment is vacated, and all liens, restraining orders or executions placed upon [Polanco]'s property including bank accounts and wages are hereby vacated.

(Keshavarz Decl., Ex. B, 18.) ("November 2010 Order").

The Parties dispute whether Defendant NCOP was aware of the November 2010 Order. (Pl.'s 56.1 Stmt. ¶¶ 28–33; Def.'s Resp. 56.1 Stmt. ¶ 28–33.)¹⁰ The record raises questions of fact regarding the method by which MSH and NCO (whether NCOP or NCOF) communicated about the November 2010 Order, whether MSH followed standard procedures for doing so, and ultimately whether NCO had knowledge of the Order. (Def.'s Resp. 56.1 Stmt. ¶ 36.)¹¹ Mr. Noah testified that NCO received the November 2010 Order on or around November 16, 2010. (Noah Tr. 125:20–23.)¹²

Defendant asserts that on January 13, 2011, NCOF terminated MSH, and on January 27, 2011, placed Plaintiff's account with Sharinn & Lipshie ("S & L"), another debt collections law firm. (Def.'s 56.1 Stmt. ¶ 7 (citing Noah Tr. 60:8–15).) Plaintiff disputes that her account was placed with S & L, citing testimony from a senior attorney at S & L, Amanda Moreno, that S & L was not the attorney of record in the case in January 2011. (Pl.'s Resp. 56.1 Stmt. ¶ 7, C.4 (citing Transcript of Amanda Moreno Deposition ("Moreno Tr.") 39:21–40:17, Pl.'s Resp. 56.1 Stmt., Ex. B).)

Plaintiff's funds were not returned following the November 2010 Order. On March 2, 2011, Polanco filed a second motion in the Bronx County Civil Court to "vacate,...