Boyd v. J.E. Robert Co., Inc.
Filing
OPINION, district court orders of 10/02/2012 and 09/27/2013 are affirmed, per curiam JAC, CJS, DAL, FILED.[1305737] [12-4422]
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Boyd v. J.E. Robert Co.
In the
United States Court of Appeals
For the Second Circuit
________
AUGUST TERM 2014
No. 12‐4422‐cv
JOAN GRANT BOYD, SYBIL TAYLOR, RANDA JONES, TONYA
WARTERS, on behalf of themselves and all others similarly
situated,
Plaintiffs‐Appellants,
v.
J.E. ROBERT CO., INC., JER REVENUE SERVICES, LLC, NYCTL 1996‐1
TRUST, NYCTL 1997‐1 TRUST, NYCTL 1997‐2 TRUST, NYCTL 1998‐1
TRUST, NYCTL 1999‐1 TRUST,
Defendants‐Appellees.
________
Appeal from the United States District Court
for the Eastern District of New York.
No. 05‐2455 (KAM) ― Kiyo Matsumoto, Judge.
________
ARGUED: AUGUST 19, 2014
DECIDED: AUGUST 27, 2014
________
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Before: CABRANES, STRAUB and LIVINGSTON, Circuit Judges.
________
Plaintiffs‐Appellants commenced this putative class action
against defendants J.E Robert Co., Inc., JER Revenue Services, LLC,
NYCTL 1996‐1 Trust, NYCTL 1997‐1 Trust, NYCTL 1998‐1 Trust,
and NYCTL 1999‐1 Trust alleging violations of the Fair Debt
Collection Practices Act, 15 U.S.C § 1692, et seq. (“FDCPA”) and New
York statutory and common law. Plaintiffs allege that defendants
obtained unauthorized attorneys’ fees and costs in connection with
actions to foreclose liens on plaintiffs’ properties arising out of
unpaid municipal property taxes and water and sewer charges. The
United States District Court for the Eastern District of New York
(Kiyo A. Matsumoto, Judge) granted summary judgment for
defendants on the FDCPA claims on the basis, inter alia, that the
liens did not involve a “debt” as defined by the FDCPA. The Court
then declined to exercise supplemental jurisdiction over the state
law claims.
We hold that liens for mandatory water and sewer charges
imposed by New York City as an incident to property ownership,
which are treated as akin to property tax liens, are not subject to the
FDCPA because they do not involve a “debt” as that term is defined
in the statute. We also hold that the District Court properly declined
to exercise supplemental jurisdiction over the state law claims.
Accordingly, we AFFIRM the October 2, 2012 and September
27, 2013 orders of the District Court.
________
PAUL STUART GROBMAN (Curtis V. Trinko, Law
Offices of Curtis V. Trinko, LLP, New York, NY,
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on the brief) Law Office of Paul Stuart Grobman,
New York, NY, for Plaintiffs‐Appellants.
JONATHAN DAVID ELLIOT, Zeldes, Needle &
Cooper, P.C., Bridgeport, CT, for Appellees J.E.
Robert Co., Inc. and JER Revenue Services, LLC.
DONNA B. MORRIS (Pamela S. Dolgow, Stephen
Kitzinger, on the brief), on behalf of Zachary W.
Carter, Corporation Counsel of the City of New
York, New York, NY, for Appellees NYCTL Trusts.
________
PER CURIAM:
Plaintiffs‐Appellants Joan Grant Boyd and Randa Jones
commenced this putative class action against J.E Robert Co., Inc. and
JER Revenue Services, LLC (jointly, “JER”), and NYCTL 1996‐1
Trust, NYCTL 1997‐1 Trust, NYCTL 1998‐1 Trust, and NYCTL 1999‐
1 Trust (jointly, the “Trust defendants” and, together with JER,
“defendants”) alleging that defendants violated the Fair Debt
Collection Practices Act, 15 U.S.C § 1692, et seq. (“FDCPA”) and New
York statutory and common law. Plaintiffs allege that defendants
obtained unauthorized attorneys’ fees and costs in connection with
actions to foreclose liens on plaintiffs’ properties arising out of
unpaid municipal property taxes and water and sewer charges. The
District Court granted summary judgment for defendants on the
FDCPA claims on the basis, inter alia, that the liens did not involve a
“debt” as defined by the FDCPA. The Court then declined to
exercise supplemental jurisdiction over the state law claims.
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We hold that liens for mandatory water and sewer charges
imposed by New York City as an incident to property ownership,
which are treated as akin to property tax liens, are not subject to the
FDCPA because they do not involve a “debt” as that term is defined
in the statute. We also hold that the District Court properly declined
to exercise supplemental jurisdiction over the state law claims.
Accordingly, we AFFIRM the September 27, 2013 and October
2, 2012 orders of the District Court.
BACKGROUND
The claims on appeal relate to the foreclosure of liens on two
real properties in the City of New York (the “City”): 480 Quincy
Street, Brooklyn, New York, owned by Joan Grant Boyd (the “Boyd
Property”); and 1459 Carroll Street, Brooklyn, New York, owned by
Randa Jones (the “Jones Property” and, jointly with the Boyd
Property, the “Properties”). Under New York law, the Properties are
subject to property taxes, as well as mandatory water and sewer
charges. See N.Y. Admin. Code § 27‐2024; N.Y. Pub. Auth. L. § 1045‐
j(1). At the Jones Property, the water and sewer charges are based
exclusively on the physical characteristics of the property. At the
Boyd Property, water and sewer charges are also mandatory and
automatic, but they vary with usage, at rates set by law.
In both cases, failure to pay property taxes, water and sewer
charges, and other municipal charges gave rise to liens on the
Properties securing the unpaid charges.1 The City sold lien
certificates evidencing the liens to the Trust defendants, which are
financing vehicles for the City’s collection of the amounts
Although only the owner of the property at the time the charges accrue may be
held personally liable for water and sewer charges, any lien arising out of such charges
follows (or “runs with”) the property until it is redeemed. App’x 163.
1
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underlying the liens. The Trust defendants, in turn, entered into
Servicing Agreements with JER to collect upon the liens. JER
retained outside counsel to pursue foreclosure of the liens against
the Properties on behalf of the Trust defendants.2
Plaintiffs’ FDCPA claims relate to the attorneys’ fees and costs
assessed in connection with the foreclosure actions. The authority
for the attorneys’ fees and costs sought was N.Y. Admin. Code § 11‐
335, which provides, in relevant part: “A plaintiff in an action to
foreclose a tax lien shall recover reasonable attorney’s fees for
maintaining such action.”
In an October 2, 2012 order, the District Court granted
summary judgment for defendants on the basis that the FDCPA did
not govern the foreclosure actions. Specifically, it held that: (1) the
liens in question did not constitute “debt” within the meaning of the
FDCPA; and (2) the FDCPA does not apply to the enforcement of
security interests against property only.3 See Special App’x (“SPA”)
100, 116. In a September 27, 2013 order, the District Court denied
plaintiffs’ motion for reconsideration of its October 2 decision on
summary judgment. Id. at 41.
This timely appeal followed.
Boyd and Jones each entered into Forbearance Agreements with defendants
providing for the payoff of the amounts purportedly due, along with attorneys’ fees and
costs. In both cases, payoff was completed, and the foreclosure actions were
discontinued with no judgment ever issued.
2
Because we resolve this appeal on the first ground―that the liens in question
did not constitute debt―we do not address the District Court’s conclusion that the
FDCPA does not apply to enforcement of security interests against property.
3
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DISCUSSION
We review an order of a district court granting summary
judgment de novo. Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292,
300 (2d Cir. 2003). Summary judgment is appropriate where “the
moving party shows that there are no genuine issues of material fact
and that the moving party is entitled to judgment as a matter of
law.” Id.
In order to maintain an FDCPA action, the allegedly unlawful
behavior must occur in connection with collection of a “debt.” The
FDCPA defines “debt” as “any obligation or alleged obligation of a
consumer to pay money arising out of a transaction in which the
money, property, insurance, or services which are the subject of the
transaction are primarily for personal, family, or household
purposes, whether or not such obligation has been reduced to
judgment.” 15 U.S.C. § 1692a(5) (emphasis supplied).
We have not addressed the question of whether New York
City’s mandatory water and sewer charges involve “debt” within
the meaning of the FDCPA. In Beggs v. Rossi, we held that municipal
taxes levied automatically in connection with ownership of personal
property do not involve a “transaction” as that term is understood
under the FDCPA and, accordingly, are not “debt” for purposes of
the FDCPA. 145 F.3d 511, 512 (2d Cir. 1998). We now conclude that
the New York City water and sewer charges also do not involve
“debt” under the FDCPA. Rather, the relationship between plaintiffs
and the City with respect to such charges is akin to “taxpayer and
taxing authority,” and “does not encompass that type of pro tanto
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exchange which the statutory definition envisages.” Beggs, 145 F.3d
at 512.4
Like property taxes, New York City water and sewer charges
are levied, in some amount, as an incident to property ownership in
New York. In addition, the actions to foreclose the liens in question
were instituted pursuant to New York law governing “tax liens.”
Further, the city ordinance governing foreclosure of water and
sewer liens requires that they be conducted “in the same manner as
a lien for [ ] taxes.” N.Y. Pub. Auth. L. § 1045‐j(5). In light of the
foregoing, the charges at issue are best treated as akin to the
municipal property taxes discussed in Beggs and, accordingly,
outside the scope of the FDCPA.
We also conclude that, after properly granting summary
judgment on the FDCPA claims, the District Court had discretion
not to exercise supplemental jurisdiction over the state law claims.
See Motorola Credit Corp. v. Uzan, 388 F.3d 39, 56 (2d Cir. 2004)
(decision whether to exercise supplemental jurisdiction over state
law claims is reviewed for “abuse of discretion”).
The Third Circuit reached a different conclusion with respect to municipal
water and sewer services in Pennsylvania. See Piper v. Portnoff Law Assoc., Ltd., 396 F.3d
227 (3d Cir. 2005). It concluded that “a homeowner’s consumption of municipal
water/sewer services gave rise to an ‘obligation to pay money which arose out of a
transaction (requesting water and services) . . . .’” Id. at 232‐33 (quoting Pollice v. Natʹl Tax
Funding, L.P., 225 F.3d 379, 400 (3d Cir. 2000), internal quotation marks and alterations
omitted). Even if we were bound by this authority, the character of the water and sewer
charges in Pennsylvania―which was essential to the analysis―differed from the
character of the charges levied on plaintiffs in this case. Specifically, nothing in the record
here suggests that plaintiffs must “request” water and sewer services in order to be
charged by the City. Rather, the charges are levied automatically in connection with the
property ownership. Accordingly, the Third Circuit cases are distinguishable from the
instant case.
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CONCLUSION
To summarize:
(1)
(2)
Liens for mandatory water and sewer charges
imposed by New York City as an incident to
property ownership are not “debt” under the
FDCPA because the relationship between plaintiffs
and the City with respect to such charges is akin to
taxpayer and taxing authority and does not entail
the type of consumer “transaction” anticipated by
the statute.
After dismissing the FDCPA claims, the District
Court properly declined to exercise supplemental
jurisdiction over the remaining state law claims.
Accordingly, we AFFIRM the October 2, 2012 and September
27, 2013 orders of the District Court.
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