Scott v. E. Hope Greenberg, Capitol Disc. Corp., 15-CV-05527 (MKB)
| Decision Date | 31 March 2017 |
| Docket Number | 15-CV-05527 (MKB) |
| Parties | DAPHNEY SCOTT, Plaintiff, v. E. HOPE GREENBERG, CAPITOL DISCOUNT CORP. and MYLAH FURNITURE Inc. also known as MAYLAH FURNITURE, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Plaintiff Daphney Scott commenced this action on September 23, 2015, against Defendants E. Hope Greenberg, Capitol Discount Corporation ("Capitol Discount") and Mylah Furniture Inc., also known as Maylah Furniture ("Mylah Furniture"), alleging misleading and abusive business and debt collection practices in violation of the Fair Debt Collection Practices Act (the "FDCPA"), 15 U.S.C. § 1692 et seq., New York Judiciary Law section 487, New York General Business Law section 349, and New York Personal Property Law section 402. (Compl., Docket Entry No. 1.) Plaintiff's allegations arise from a retail installment contract Plaintiff executed with Mylah Furniture that was later assigned to and enforced by Greenberg, an attorney, through a collection proceeding on behalf of Capitol Discount. In an Amended Complaint filed on October 8, 2015, Plaintiff alleges that Greenberg violated the FDCPA and Judiciary Law section 487, that each Defendant violated General Business Law section 349, and that Mylah Furniture and Capitol Discount violated Personal Property Law section 402. (
Defendants move to dismiss the Amended Complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Greenberg Mot. to Dismiss, Docket Entry No. 33; Capitol Discount Mot. to Dismiss, Docket Entry No. 34; Mylah Furniture Mot. to Dismiss, Docket Entry No. 37.) For the reasons discussed below, the Court (1) grants in part and denies in part Greenberg's motion to dismiss Plaintiff's FDCPA claims, (2) denies Greenberg's motion to dismiss Plaintiff's state law claims, and (3) grants Mylah Furniture's and Capitol Discount's motions to dismiss. Plaintiff is granted leave to amend her General Business Law section 349 and Personal Property Law section 402(4) claims against Mylah Furniture and Capitol Discount.
On or around September 25, 2012, Plaintiff visited Mylah Furniture to purchase several items of furniture.1 (Am. Compl. ¶ 12.) A store clerk at Mylah Furniture told Plaintiff that she could not purchase items on lay-a-way but that a furniture purchase could be financed. (Id. ¶ 12.) Plaintiff gave the clerk a few recent paystubs but did not authorize the clerk to check her credit. (Id. ¶ 13.) After a short time, the clerk informed Plaintiff that she had been denied financing from several financing companies. (Id.) Plaintiff identified the furniture items she wished to purchase and planned to return later in the day to purchase the items, but the clerk told Plaintiff that she could sign a document before leaving so that the clerk could continue to search for financing for Plaintiff's purchase. (Id. ¶ 14.) Plaintiff signed the document, which contained "blank portions." (Id. ¶ 15.) Plaintiff asked why the document contained "blank portions," andthe clerk told her that the blanks had no significance and would be filled in after financing was secured for the purchase. (Id. ¶ 16.) The clerk assured Plaintiff that her signature on the document only authorized him to search for financing. (Id. ¶ 16.) Plaintiff told the clerk that she could not afford a high interest rate or high monthly payments and that if he could not find an affordable deal, she did not wish to purchase the furniture on credit. (Id. ¶ 17.) The clerk assured Plaintiff that he would get her a "good deal." (Id.) Before leaving the store, Plaintiff paid a $50 deposit toward the total $3050 cost of the furniture. (Id. ¶ 18.) Several days later, the furniture was delivered to Plaintiff's home. (Id. ¶ 19.)
In or around October of 2012, Plaintiff received a copy of the document she signed at Mylah Furniture with the blank portions completed. (Id. ¶ 20.) The document was titled "Security Agreement - Retail Installment Contract" (the "Contract"). (Id. ¶ 21.) The Contract provided for a 24.9% interest rate and required Plaintiff to make thirty-six monthly payments of $119.18 beginning on October 25, 2012. (Id. ¶¶ 22, 27.) The Contract did not provide that Plaintiff was responsible for paying attorneys' fees in the event that there was an action to enforce the Contract.2 (Id. ¶ 24.) Mylah Furniture was listed as the seller. (Id. ¶ 21.) The Contract included several notices, including that the Contract "may" be assigned to Capitol Discount and that the holder of the Contract is subject to all of the claims and defenses that the debtor could assert against the seller of the goods obtained pursuant to the Contract. (Id. ¶ 27.) After reviewing the Contract, Plaintiff called Mylah Furniture and asked if she could return the furniture because she did not agree with the high interest rate or high monthly payments. (Id.¶ 29.) Plaintiff was told that she was bound by the terms of the Contract regardless of whether she returned the furniture. (Id.) Plaintiff made payments pursuant to the Contract until July of 2013. (Id. ¶ 32.) After Plaintiff ceased making payments, Capitol Discount began to call Plaintiff's cellular and home telephones approximately every other day. (Id.)
On January 7, 2014, Greenberg, representing Capitol Discount, initiated an action against Plaintiff in Civil Court, Kings County to collect the remaining debt owed pursuant to the Contract.3 (Id. ¶ 33.) Plaintiff was never served with the summons and complaint. (Id. ¶ 36.) Plaintiff became aware of the collection action in or around February of 2014, when she received a summons in the mail from Greenberg on behalf of Capitol Discount, indicating that Capitol Discount was seeking a judgment of $2561.65 plus interest from July 5, 2013, as well as the costs associated with bringing the action. (Id. ¶¶ 35, 38.) The summons did not list a date for Plaintiff to appear in court. (Id. ¶ 40.)
Around the time Plaintiff received the summons, Plaintiff called Greenberg using the telephone number listed on the summons to clarify the information included in the summons.4 (Id. ¶ 38.) Plaintiff spoke with a "Mr. Russel," whom Plaintiff understood to be acting on Greenberg's behalf and to have the authority to resolve Plaintiff's debt. (Id. ¶¶ 38-39, 44.) Russel explained that Plaintiff owed an additional $800 in interest and fees that was not indicated on the face of the summons. (Id. ¶¶ 42-43.) Plaintiff and Russel negotiated a settlement inwhich Plaintiff agreed to pay the amount listed on the summons, totaling $2561.65, in monthly payments of between $100 and $150. (Id. ¶ 44.) Russel told Plaintiff that she "did not need to go to court as long as she continued to pay Capitol Discount." (Id. ¶ 41.) Plaintiff began to make payments to Capitol Discount, paying $100 in January and February of 2014, $500 in March of 2014 and $150 in April of 2014. (Id. ¶ 47.) In reliance on Russel's statements, Plaintiff did not appear in court or file an answer in the collection action. (Id. ¶ 46.)
On April 28, 2014, Greenberg obtained a default judgment against Plaintiff in the amount of $3311.88. (Id. ¶ 49.) The default judgment did not account for the $850 in payments Plaintiff made to Capitol Discount between January and April of 2014. (Id. ¶ 50.) According to the affidavit of service submitted by Greenberg in support of the default judgment, the summons and complaint in the collection action were served on February 12, 2014 at 4:41 PM on "Jane Doe," who was described as "40 years old, around 5 [feet and] 6 [inches], 180 [pounds], with black hair and skin." (Id. ¶ 53.) Plaintiff alleges that the description "does not meet the description of [Plaintiff] or anyone who lived with [Plaintiff] at the time of [the] alleged service." (Id. ¶¶ 53-54.)
Plaintiff first learned of the default judgment in February of 2015, when Plaintiff's employer received an income execution. (Id. ¶¶ 48, 56, 58-59.) By letter dated February 23, 2015, Capitol Discount notified Plaintiff that $160 of the amount Plaintiff owed was for "legal costs." (Id. ¶ 57.) Plaintiff continued to make payments to Capitol Discount after learning of the default judgment, including $100 payments in March, April and May of 2015 and a $500 payment in April of 2015. (Id. ¶ 61.)
On June 16, 2015, Plaintiff moved to vacate the default judgment in the collection action. (Id. ¶ 62.) Plaintiff argued that the judgment should be vacated and dismissed because she wasnot properly served with process and the court lacked personal jurisdiction; or alternatively, that the judgment should be vacated and the action restored to the trial calendar because she had a reasonable excuse for not answering the complaint and had meritorious defenses to the collection action. (Id. ¶ 62.) On June 30, 2015, the Civil Court, Kings County granted Plaintiff's request for relief from the default judgment and dismissed the case. (Id. ¶ 64.)
In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must construe the complaint liberally, "accepting all factual allegations in the complaint as true and drawing all reasonable inferences in the plaintiff's favor." Concord Assocs., L.P. v. Entm't Prop. Trust, 817 F.3d 46, 52 (2d Cir. 2016) (quoting Chambers v. Time Warner Inc., 282 F.3d 147, 152 (2d Cir. 2002)); see also Tsirelman v. Daines, 794 F.3d 310, 313 (2d Cir. 2015) (quoting Jaghory v. N.Y. State Dep't of Educ., 131 F.3d 326, 329 (2d Cir. 1997)). A complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is...
To continue reading
Request your trial