PLETOS v. MAKOWER ABATTE GUERRA WEGNER VOLLER et al
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SUMMARY JUDGMENT [#9], GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS [#13], DENYING MOTION TO SUPPLEMENT COMPLAINT [#39] AND DISMISSING ACTION. Signed by District Judge Gershwin A. Drain. (TBan)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SANDRA AND MITCHELL PLETOS,
Case No.: 16-cv-13175
Honorable Gershwin A. Drain
MAKOWER ABBATE GUERRA
WEGNER VOLLMER, PLLC, et al.,
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART
MOTION FOR SUMMARY JUDGMENT [#9], GRANTING IN PART AND
DENYING IN PART MOTION TO DISMISS [#13], DENYING MOTION
TO SUPPLEMENT COMPLAINT [#39] AND DISMISSING ACTION
The instant action is the Plaintiffs, Sandra and Mitchell Pletos,’ latest
attempt to avoid payment of their homeowners’ association fees. Dissatisfied with
the state courts resolution of Plaintiffs’ previous lawsuit against their homeowners
association, Plaintiffs filed the instant action claiming that the homeowners
association and its counsel committed various violations of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”), the Michigan
Regulation of Collection Practices Act, MICH. COMP. LAWS § 445.251 et seq.
(“MRCPA”) and the Racketeer Influenced Corrupt Practices Act, 18 U.S.C. § 1961
et seq. (“RICO”) by attempting to collect on the state court judgment. Plaintiffs
also bring state law claims of abuse of process, criminal enterprise and constructive
Presently before the Court is the Defendants, John Finkelmann’s, and his
law firm, Makower Abbate Guerra Wegner Vollmer, PLLC’s (the “Makower
Defendants”) Motion to Dismiss.
Also, before the Court is the Defendants,’
Roger Papa, Giovan Agazzi, Danny Landa, Kati Azia and Mike Desjardines, who
are all Board members of the homeowners association, (the “LWA Defendants”)
Motion for Summary Judgment. These matters are fully briefed and, upon review
of the parties’ submissions, the Court concludes that oral argument will not aid in
the disposition of this matter. Accordingly, the Court will resolve the pending
motions on the submitted briefs. See E.D. Mich. L.R. 7.1(f)(2).
Because Plaintiffs have failed to allege viable federal claims and the Court
declines to exercise supplemental jurisdiction over Plaintiffs’ state law claims, the
Court will grant in part and deny in part the Defendants’ present motions and will
dismiss the instant action.
Plaintiffs are lot owners in Lake in the Woods, a platted subdivision located
in the Township of Shelby, Macomb County, Michigan.
By virtue of Plaintiffs’
lot ownership, they are members of the Lake in the Woods Association, Inc.
(“LWA”), a Michigan nonprofit corporation. The governing documents for the
LWA are the: (1) Articles of Incorporation, (2) the Declaration of Easements,
Covenants, Conditions and Restrictions for Lake in the Woods Subdivision
(“DECCR”) and (3) the Bylaws.
Article IV of the DECCR obligates all lot owners of Lake in the Woods to
pay annual general assessments and special assessments for capital improvements.
Article IV also provides that “[a]ll annual and special assessments, whether general
or related to the Lake Lots, together with interest, costs and reasonable attorneys’
fees, shall from date of assessment be a charge and a continuing lien upon the Lot
against which each such assessment is made.” Pg ID 402.
Plaintiffs failed to pay assessments from 2005 through April of 2012 and the
LWA recorded a lien in the amount of $1,295.53 on Plaintiffs’ property. Pletos v.
Lake in the Woods Homeowners Assoc., No. 319087, 2015 WL 1650803, *1
(Mich. Ct. App. Apr. 14, 2015). In January of 2012, the LWA recorded a second
lien on Plaintiffs’ property in the amount of $6,271.74. Id.
In November of 2012, Plaintiffs sued the LWA in the Macomb County
Circuit Court. Plaintiffs alleged fifteen counts, including violation of the LWA’s
Bylaws and the DECCR, violation of the FDCPA, and slander of title. Id. The
LWA hired the Makower Defendants to pursue a counterclaim against the
Plaintiffs. The counterclaim sought unpaid assessments, interest, late charges, and
The Macomb County Circuit Court granted summary disposition in the
LWA’s favor on both Plaintiffs’ complaint and the LWA’s counterclaim. It held
that the LWA followed the DECCR and the Bylaws, it did not breach its covenants
with Plaintiffs, and that Plaintiffs “failed to prove the delinquent assessments
[were] in error,” and the LWA “had the right to file liens to pursue collection of the
delinquent assessments.” See Mot. Summ. J., Ex. B, Pg ID 798. It further found
no violation of the FDCPA because the LWA was not a “debt collector” under the
After an evidentiary hearing, the court awarded a $20,553.64 judgment
against Plaintiffs, which represented unpaid assessments, late fees, interest, costs,
and attorney fees. The court further held that Plaintiffs were “obligated to pay all
additional legal fees that [the LWA] reasonably incurs in attempting to collect the
aforementioned sums due and owing to [the LWA].”
Plaintiffs appealed these decisions and asked the trial court to set an appeal
bond and to stay the proceedings. The Macomb County Circuit Court granted a
stay conditioned on Plaintiffs posting a $25,000.00 bond within fourteen (14) days
of the court’s order.
The Michigan Court of Appeals affirmed the Macomb County Circuit
Court’s decisions in an unpublished opinion.
Pletos v. Lake in the Woods
Homeowners Assoc., No. 319087, 2015 WL 1650803, *1 (Mich. Ct. App. Apr. 14,
Thereafter, Plaintiffs moved for leave to appeal this decision to the
Michigan Supreme Court, which was denied.
Prior to the denial of leave by the Michigan Supreme Court, the LWA
received a letter from Plaintiff Sandra Pletos. Mrs. Pletos’ letter requested review
of certain LWA documents. On February 5, 2016, Defendant Finkelman sent
email correspondence to Plaintiffs’ counsel and asked if it would be appropriate for
him to respond to Plaintiffs directly on behalf of the LWA. First Am. Compl., Ex.
13 at Pg ID 483. Plaintiffs’ counsel responded to Finkelmann’s letter in relevant
First of all, as an Association member, she has the right to
whatever she asked for. No attorney should be necessary for that
communication. As a result, when they calculate dues, please do not
charge the Association for your fees so needlessly incurred. Except
for the 1/10 of an hour it costs to give the appropriate legal advice to
hand over the documents.
The Association should be communicating with Mrs. Pletos
directly. Tell them to put on their big boy pants and play the part of
Association members like they are obligated to do.
Id. On February 12, 2016, Defendant Finkelmann sent a letter to Plaintiffs
regarding Mrs. Pletos’ letter requesting review of certain LWA documents. Id.,
Ex. 17 at Pg ID 495.
On February 25, 2016, the LWA sent Plaintiffs Invoice Number 2016-007,
which stated that Plaintiffs owed the following to the LWA:
12/31/15 Account Balance:
2016 General Dues:
Legal Fees 1/1/16 to 1/31/16
Late Fees 1/1/16 to 1/31/16
Interest 1/1/16 to 1/31/16
Total Amount Due 2/29/16:
On February 26, 2016, the Plaintiffs sent a letter to the LWA indicating that
Invoice Number 2016-007 was invalid for a variety of reasons. Id., Ex. 19 at Pg
In their letter, the Plaintiffs asserted that the election of the LWA
Directors was illegal, and that the Directors and Officers of the LWA have
committed fraud and other purported abuses. Id. These complaints are identical to
those addressed and resolved by the Macomb County Circuit Court and affirmed
by the Michigan Court of Appeals.
Also, on February 26, 2016, Plaintiffs responded to Defendant Finkelmann’s
February 12, 2016 letter. Plaintiffs again raised a series of complaints concerning
the identity of the Directors and Officers of the LWA, whether the Makower
Defendants were authorized to act on behalf of the LWA, and the LWA’s refusal to
permit document inspection and financial review. Id., Ex. 20 Pg ID 509-10.
When the Michigan Supreme Court denied leave to appeal, the Makower
Defendants sent correspondence to Plaintiffs’ counsel concerning the outstanding
balance due on the state court judgment on April 1, 2016. Id., Ex. 22 at Pg ID 12627. His letter states in relevant part:
As you probably are aware at this point, the Supreme Court declined
the application for leave on this matter. As a result, I believe that it
would be appropriate for the Pletos’ to pay the outstanding balance. I
understand that the Association’s records show an amount due that is
much higher than the $25,000 bond, but we can start with the Bond
amount in my opinion, and determine what’s to be done regarding
any subsequent amount.
Please let me know if you will reach out to your clients regarding
payment of the bond amount to the Association at this time. If I
don’t hear back from you in the next week, I’ll contact the Bond
Company regarding this matter. Thank you.
Plaintiffs’ counsel responded on April 2, 2016 stating:
No, I was not aware as nothing has appeared at my office.
Nevertheless, I looked it up and you are correct about the denial.
As for the alleged amounts due and owing, please provide an itemized
invoice of the purported charges. As you recall, the bond was 1.5
times the amount of the judgment. Now you are saying that the
amount allegedly exceeds the bond amount. It doesn’t make sense.
Id. at Pg ID 126. Defendant responded to Plaintiffs’ counsel on April 4, 2016
indicating that “[t]he original judgment was actually for $20,552.64 through
October 7, 2013 (see attached), so the bond was not actually for 1.5 times the
amount. I’ll provide an updated ledger from my client, and will also produce the
legal slip listing for the amounts incurred by the Association since that judgment
was entered.” Id.
On April 13, 2016, Defendant Finkelman sent Plaintiffs’ counsel a letter
indicating that, with judgment interest of $1,607.02, the total judgment outstanding
On April 14, 2016, Defendant Finkelmann sent “a revised
accounting through March 2016” to Plaintiffs’ counsel, wherein he removed legal
fees that were not incurred as a result of the state court litigation. Id. at Pg ID 134.
On April 15, 2016, Defendant Finkelman contacted CNA Surety, which
issued Plaintiffs’ appeal bond and informed the company that Plaintiffs had been
unsuccessful on appeal and that Plaintiffs’ counsel had failed to respond to him
concerning receipt of the appeal bond. Id., Ex. 23 at Pg ID 139.
He asked that
CNA Surety send the bond directly to the LWA. When he did not receive a
satisfactory answer, he filed a motion for judgment against CNA Surety for
judgment on the bond. The Plaintiffs objected and the trial court held that
“the bond was meant to satisfy the entire Judgment amount.” See Mot. Summ. J.,
Ex E, Pg ID 820 (emphasis in original). The state court therefore granted the
LWA’s motion for judgment “in the amount of $24,798.03 as of September 20,
2016 . . . .” Defs.’ Mot., Ex. E at Pg ID 821.
Plaintiffs filed a motion for reconsideration, which the Court denied on
October 20, 2016. Id., Ex. F. The state court concluded that “plaintiffs have not
identified any meritorious defenses that Western Surety may have to payment on
the bond. Moreover, in light of plaintiffs’ continuing recalcitrance in paying any
portion of the Judgment amount, defendant was justified in approaching Western
Surety.” Id. at Pg ID 826.
Prior to the state court’s entry of judgment against Western Surety, Plaintiffs
filed the instant action. In addition to their FDCPA, RICO and state law claims,
Plaintiffs also seek an accounting and injunctive relief ordering the Makower and
LWA Defendants to “immediately cease and desist from any collection activity
until the rights and responsibilities of the parties can be ascertained.” First. Am.
Compl., ¶ 176 at Pg ID 381.
On July 18, 2016, Defendant Finkelmann sent email correspondence to
Plaintiffs concerning Mrs. Pletos’ letter requesting review of certain LWA
documents. Id., Ex. 25 at Pg ID 537. On August 1, 2016, Plaintiffs sent a
responsive letter to Defendant Finkelmann. Id. at Pg ID 539. While Defendant
Finkelmann’s July 18, 2016 letter discussed how best to effectuate the Plaintiffs
review of the requested LWA documents, Plaintiffs responded that they “do not
find it necessary to establish a protocol for the inspection or review of corporate
documents.” Id. They also demanded “immediate identification of the Directors,
Officers, and Committee Members between 2012 and the present, verification of
any alleged debt, and distribution of all records, including but limited to those
items identified in our January 23, 2016 and February 26, 2016 letters to the
Association and/or yourself.” Id., at Pg ID 540.
LAW & ANALYSIS
A. Standards of Review
Federal Rule of Civil Procedure 12(b)(1) authorizes a party to challenge the
court’s subject matter jurisdiction. In analyzing the motion
[t]here is no presumption that the factual allegations set forth in the
complaint are true and the court is "free to weigh the evidence and
satisfy itself as to the existence of its power to hear the case." [United
States v. Ritchie, 15 F.3d 592, 598 (6th Cir. Cir.), cert. denied, 513
U.S. 868 (1994)]. The court has wide discretion to consider materials
outside the pleadings in assessing the validity of its jurisdiction. Ohio
Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990).
The plaintiff bears the burden of demonstrating subject matter
jurisdiction. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d
1125, 1134 (6th Cir. 1996).
Ashley v. United States, 37 F.Supp.2d 1027, 1029 (W.D. Mich. 1997). “A court
lacking jurisdiction cannot render judgment but must dismiss the cause at any stage
of the proceedings in which it becomes apparent that jurisdiction is lacking.”
Sweeton v. Brown, 27 F.3d 1162, 1169 (6th Cir. 1994) (quoting United States v.
Siviglia, 686 F.2d 832, 835 (10th Cir. 1981), cert. denied, 461 U.S. 918 (1983)).
Federal Rule of Civil Procedure 12(b)(6) allows the court to make an
assessment as to whether the plaintiff has stated a claim upon which relief may be
granted. See Fed. R. Civ. P. 12(b)(6). “Federal Rule of Civil Procedure 8(a)(2)
requires only ‘a short and plain statement of the claim showing that the pleader is
entitled to relief,’ in order to >give the defendant fair notice of what the ... claim is
and the grounds upon which it rests.=@ Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957)). Even though
the complaint need not contain Adetailed@ factual allegations, its Afactual allegations
must be enough to raise a right to relief above the speculative level on the
assumption that all of the allegations in the complaint are true.@ Ass=n of Cleveland
Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Bell
Atlantic, 550 U.S. at 555).
The court must construe the complaint in favor of the plaintiff, accept the
allegations of the complaint as true, and determine whether plaintiff=s factual
allegations present plausible claims. To survive a Rule 12(b)(6) motion to dismiss,
plaintiff=s pleading for relief must provide Amore than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.@ Id. (citations
and quotations omitted). A[T]he tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal conclusions.@ Ashcroft
v. Iqbal, 556 U.S. 662, 668 (2009).
ANor does a complaint suffice if it tenders
>naked assertion[s]= devoid of >further factual enhancement.=@ Id. A[A] complaint
must contain sufficient factual matter, accepted as true, to >state a claim to relief
that is plausible on its face.=@ Id. The plausibility standard requires Amore than a
sheer possibility that a defendant has acted unlawfully.@ Id. A[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has allegedBbut it has not >show[n]=B >that the pleader is
entitled to relief.=@ Id.
Federal Rule of Civil Procedure 56(a) empowers the court to render
summary judgment forthwith Aif the pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law." See Redding v. St. Eward, 241 F.3d 530,
532 (6th Cir. 2001). The Supreme Court has affirmed the court's use of summary
judgment as an integral part of the fair and efficient administration of justice. The
procedure is not a disfavored procedural shortcut. Celotex Corp. v. Catrett, 477
U.S. 317, 327 (1986); see also Cox v. Kentucky Dept. of Transp., 53 F.3d 146, 149
(6th Cir. 1995).
The standard for determining whether summary judgment is appropriate is
"'whether the evidence presents a sufficient disagreement to require submission to
a jury or whether it is so one-sided that one party must prevail as a matter of law.'"
Amway Distributors Benefits Ass=n v. Northfield Ins. Co., 323 F.3d 386, 390 (6th
Cir. 2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)).
The evidence and all reasonable inferences must be construed in the light most
favorable to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986); Redding, 241 F.3d at 532 (6th Cir. 2001).
"[T]he mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact." Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original); see also National
Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir. 2001).
If the movant establishes by use of the material specified in Rule 56(c) that
there is no genuine issue of material fact and that it is entitled to judgment as a
matter of law, the opposing party must come forward with "specific facts showing
that there is a genuine issue for trial." First Nat'l Bank v. Cities Serv. Co., 391 U.S.
253, 270 (1968); see also McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th
Cir. 2000). Mere allegations or denials in the non-movant's pleadings will not
meet this burden, nor will a mere scintilla of evidence supporting the non-moving
party. Anderson, 477 U.S. at 248, 252. Rather, there must be evidence on which a
jury could reasonably find for the non-movant. McLean, 224 F.3d at 800 (citing
Anderson, 477 U.S. at 252).
B. The Rooker Feldman Doctrine
The Makower Defendants argue that the Court lacks jurisdiction to provide
Plaintiffs with the relief they seek. The Rooker-Feldman doctrine bars lower
federal courts from conducting appellate review of final state-court judgments
because the United States Supreme Court is vested with sole jurisdiction to review
such claims. Exxon Mobil Corp. v. Saudi Basics Indus. Corp., 544 U.S. 280, 291
When determining whether the Rooker-Feldman doctrine bars a
plaintiff’s claims, a court’s inquiry focuses on “whether the source of the injury
upon which plaintiff bases his federal claim is the state court judgment.”
McCormick v. Braverman, 451 F.3d 382, 394 (6th Cir. 2004). “If the source of
the injury is the state court decision, then the Rooker-Feldman doctrine would
prevent the district court from asserting jurisdiction. If there is some other source
of injury, such as a third party’s actions, then the plaintiff asserts an independent
claim.” Id. at 393.
Plaintiffs argue that the Rooker-Feldman doctrine does not bar their claims
because the source of their injuries was the Makower “Defendants independent
actions that constituted violations of the FDCPA and MDCPA, RICO violations,
abuse of process, fraud, and criminal acts.” Plfs.’ Resp. at Pg ID 1126. However,
the McCormick court noted that where the third parties actions “are the product of
a state court judgment, then a plaintiff’s challenge to those actions are in fact a
challenge to the judgment itself.” McCormick, 451 F.3d. at 394.
Here, Plaintiffs allege that the Makower Defendants violated the FDCPA by
contacting Plaintiffs’ attorney and by contacting CNA Surety regarding the bond.
Such actions undertaken by the Makower Defendants were the product of the state
Moreover, contrary to Plaintiffs’ arguments, Plaintiffs are
attempting to relitigate issues already decided by the state courts.
maintain that their Amended Complaint involves actions undertaken after their
state-court complaint was filed. Yet, the issues before this Court were previously
litigated by the state courts. For instance, Plaintiffs’ claim that the Makower
Defendants violated the FDCPA by contacting CNA Surety regarding the bond
and that the post-judgment amount was incorrect. However, these issues have
been addressed by the state court. As such, Plaintiffs’ claims are barred by the
Rooker Feldman doctrine.
Even if the Rooker Feldman doctrine did not bar Plaintiffs’ claims, their
claims under the FDCPA still fail. As an initial matter, to the extent that Plaintiffs
rely on communications prior to September of 2015, such communications are
barred by the statute of limitations. The United States Code provides that “[a]n
action to enforce any liability created by [the FDCPA] may be brought . . . within
one year from the date on which the violation occurs.” 15 U.S.C. § 1692k(d).
When a communication with a debtor allegedly violates the FDCPA, each
communication is a single, discrete potential violation. Purnell v. Arrow Fin.
Servs., LLC, 303 F. App’x 297, 303 (6th Cir. 2008). To be timely, “the violation
must occur within the limitations period, not just be the later effects of an earlier
time-barred violation.” Id. at 302.
Plaintiffs allege that the Makower Defendants violated the FDCPA based on
communications that were sent or received on August 29, 2012, October 26, 2012,
February 19, 2015, and February 21, 2015. Plaintiffs did not file their complaint
until September 2, 2016. Thus, any FDCPA claim based on communications that
predate September 2, 2015 are time-barred and must be dismissed with prejudice.
Plaintiffs argue that their claims are not time-barred because Defendants
fraudulent concealment equitably tolled the statute of limitations.
argument is without merit. It is well settled that “circumstances which will lead to
equitable tolling are rare” and it is available “only in compelling circumstances”
in which “some extraordinary circumstance stood in [the plaintiff’s] way.” Turner
v. Lerner, Sampson & Rothfuss, 776 F. Supp.2d 498, 504 (N.D. Ohio
2011)(internal citations omitted). Plaintiffs’ Complaint fails to allege the requisite
elements for equitable tolling. Plaintiffs do not allege any facts which would
suggest they were prevented from discovering or exercising due diligence to
discover their claims.
A plaintiff is required to “prove affirmative acts of
concealment.” Pinney Dock & Transp. Co. v. Penn Cent. Corp., 838 F.2d 1445,
1472 (6th Cir. 1988). Plaintiffs have failed to raise such allegations in their
pleading. Thus, they are not entitled to rely on equitable tolling to excuse their
failure to bring their FDCPA claims prior to the expiration of the statute of
Thus, the only communications that are relevant for purposes of the
Makower Defendants’ present motion include:
1) The February 5, 2016 email communication from Defendant
Finkelmann to Plaintiffs’ counsel, which indicated that Finkelmann
had received a letter from Ms. Pletos requesting a review of a variety
of LWA documents and whether he had permission from Plaintiffs’
counsel to contact Plaintiffs directly. Plfs.’ Resp., Ex. 13 at Pg ID
2) The February 12, 2016 letter from Defendant Finkelmann to
Plaintiffs concerning Ms. Pletos’ letter asking for a review of LWA
3) The April 1, 2016 email correspondence from Defendant
Finkelmann to Plaintiffs’ counsel asking for payment of the judgment
and release of the bond to pay for the judgment.
4) The April 4, 2016 email communication from Defendant
Finkelmann to Plaintiffs’ counsel concerning payment of the
5) The April 12, 2016 email correspondence from Defendant
Finkelmann to Plaintiffs’ counsel concerning payment of the
outstanding judgment and other fees.
6) The April 14, 2016 email correspondence from Defendant
Finkelmann to Plaintiffs’ counsel concerning payment of the
outstanding judgment and other fees.
7) The April 15, 2016 demand letter from Defendant Finkelmann to
CNA Surety seeking to claim the bond.
8) The July 18, 2016 letter from Defendant Finkelmann to the
Plaintiffs concerning Ms. Pletos request for inspection of documents.
However, none of these communications violated the FDCPA. As to the
communications sent on February 5, 2016, February 12, 2016 and July 18, 2016,
these were not communications “in connection with collection of any debt.”
Defendant Finkelmann was merely responding to Mrs. Pletos’ request to review
Indeed, Plaintiffs’ counsel informed Finkelmann that Ms.
Pletos was “likely seeking information unrelated to matters that have been in
litigation.” See Am. Compl., Ex. 13.
Plaintiffs assert that there are issues of fact regarding the 2016
communications. Yet, Plaintiffs do not deny that the February 5, 2016, February
12, 2016 and July 18, 2016 communications concerned Ms. Pletos request to
review LWA documents.
Plaintiffs claim that these communications also
addressed verification of a debt and the identity of the creditor. However, no such
words are found in these communications.
As to the communications from Defendant Finkelmann to Plaintiffs’
counsel, Plaintiffs claim that the Makower Defendants violated 15 U.S.C. §
1692c(b) by communicating with Plaintiffs’ counsel without receiving prior
consent directly from the Plaintiffs, or by express permission of the court. Yet,
section 1692c(b) authorizes counsel to communicate with the consumer’s attorney
in connection with the collection of a debt. 15 U.S.C. § 1692c(b) (“[W]ithout the
prior consent of the consumer given directly to the debt collector, or the express
permission of a court of competent jurisdiction, or as reasonably necessary to
effectuate a post judgment judicial remedy, a debt collector may not
communication . . . with any person other than the consumer, his attorney. . . .” 15
U.S.C. § 1692c(b) (emphasis supplied).
As to the communications to CNA Surety, such communications cannot
support a claim under the FDCPA based on the doctrine of collateral estoppel. To
establish collateral estoppel, a party “must demonstrate that: (1) the subject matter
of the second action [is] the same; (2) the parties or their privies [are] the same;
and (3) the prior judgment [was] on the merits.”
Southfield Educ. Ass’n v.
Southfield Bd. of Educ., 570 F. App’x 485, 488 (6th Cir. 2014).
FDCPA claim against the Makower Defendants is based on Plaintiffs’ assertion
that Defendants had no right to contact CNA Surety to collect on the state court
judgment. However, the state courts have already resolved this issue against the
Specifically, the state trial court granted the Makower Defendants’ motion
for judgment against CNA Surety for judgment on the bond on September 20,
2016. In so holding, the trial court concluded that “[P]laintiffs have not identified
any meritorious defenses that Western Surety may have to payment of the bond.
Moreover, in light of plaintiffs’ continuing recalcitrance in paying any portion of
the Judgment amount, defendant was justified in approaching Western Surety.”
Pg ID 826. Therefore, Plaintiffs likewise do not have a viable FDCPA claim
based on the communications to CNA Surety.
Plaintiffs likewise fail to state a viable RICO claim. To state a RICO claim,
Plaintiffs must plead the following elements: (1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity. Moon v. Harrison Piping Supply,
465 F.3d 719, 723 (6th Cir. 2006). An enterprise is a “group of persons associated
together for a common purpose of engaging in a course of conduct.” 800537
Ontario Inc. v. Auto Enterprises, Inc., 113 F. Supp.2d 1116, 1121 (E.D. Mich.
2000). It is “an ongoing structure of persons associated through time, joined in
purpose and organized in a manner amenable to hierarchical or consensual
decision-making.” Id. at 1122. A “certain amount of organizational structure” is
required so as to “eliminate simple conspiracies from RICO’s reach.” Id. “The
hallmark of a RICO enterprise is its ability to exist apart from the pattern of
wrongdoing.” Id. This requirement “avoid[s] the danger of guilt by association that
arises because RICO does not require proof of a single agreement as in a
conspiracy case . . . .” Id. RICO’s aim is “criminal enterprises” rather than
“individuals who associate for the commission of sporadic crime.” Id.
Here, Plaintiffs fail to plead a viable RICO claim. Plaintiff’s allegations
with respect to a RICO enterprise are woefully inadequate. Plaintiffs attempt to
establish the existence of an enterprise by alleging the Makower and LWA
Defendants are “comprised of a group of individuals associating with each other
through the LWA Association.” First Am. Compl., ¶ 143. Plaintiffs fail to allege
the structural features of the alleged enterprise.
Additionally, Plaintiffs have not sufficiently pled a pattern of racketeering
activity. To establish a “pattern of racketeering” in a federal RICO case, Plaintiffs
must allege that two predicate acts “are related and that they amount to or pose a
threat of continued criminal activity.” H.J. Inc. v. Northwestern Bell Tel. Co., 492
U.S. 229, 239 (1989). These predicate acts of racketeering may include mail fraud
under 18 U.S.C. § 1341 or wire fraud under 18 U.S.C. § 1343. “Mail fraud occurs
when an individual devises a plot to defraud and subsequently uses the mail in
furtherance of it.” Wallace v. MidWest Financial, 714 F.3d 414, 419 (6th Cir.
2013). Plaintiffs claim that the Defendants violated RICO by committing various
FDCPA violations. However, the Court has already determined that Plaintiffs
cannot state a FDCPA claim that withstands Rule 12(b)(6) scrutiny, and even if
they could, a successful FDCPA claim cannot form the basis for a RICO claim.
Kevelighan v. Trott & Trott, P.C., 771 F. Supp.2d 763, 777 (E.D. Mich.
2010)(“[T]he FDCPA, by its terms, incorporates claims that generally sound in
contract . . . and cannot be the basis for a RICO claim. Id. at 778 n.19. Plaintiffs
have likewise failed to allege a RICO claim.
The LWA Defendants argue that res judicata bars Plaintiffs’ claims because
they have already been litigated, or could have been litigated in the state court
action. This Court “must give preclusive effect to a state-court judgment as that
judgment receives in the rendering state.” Buck v. Thomas M. Cooley Law School,
597 F.3d 812, 816-17 (6th Cir. 2010). In Michigan, res judicata applies where the
moving party shows “(1) the prior action was decided on the merits, (2) both
actions involve the same parties or their privies, and (3) the matter in the second
case was, or could have been resolved in the first.” Adair v. State, 470 Mich. 105,
119; 680 N.W.2d 386 (2004).
The Court is not convinced that res judicata applies to all of Plaintiffs’
claims. While the majority of Plaintiffs’ claims appear to be barred by the doctrine
of res judicata, it is not clear that all of the claims could have been raised during
the state court litigation. However, collateral estoppel bars Plaintiffs’ FDCPA
claim against the LWA Defendants because the state courts have already
concluded that the LWA is not a debt collector under the FDCPA.
In order for collateral estoppel to apply, three requirements must be met.
Specifically, “a question of fact essential to the judgment must have been actually
litigated and determined by a valid and final judgment.” McCormick, 451 F.3d at
397. Next, “the same parties must have a full and fair opportunity to litigate the
issue” and finally, “there must be mutuality of estoppel.” Id. Here, Plaintiffs
raised claims under the FDCPA in the state courts, as well as had a full and fair
opportunity to litigate their claims. Lastly, mutuality of estoppel is present because
the Plaintiffs and the LWA were parties to the proceedings before the state court
and this Court and both parties are bound by the state court’s judgment.
As such, Plaintiffs are collaterally estopped from arguing that the LWA is a
debt collector subject to the FDCPA. Plaintiffs’ FDCPA claim against the LWA is
also subject to dismissal.
Moreover, as previously discussed in section III.D.,
supra, Plaintiffs have failed to allege a RICO claim against any of the Defendants
in the instant proceedings. Thus, even if res judicata does not preclude Plaintiffs’
claims against the LWA Defendants, their claims are nonetheless subject to
dismissal pursuant to collateral estoppel and/or for failure to state a claim.
State Law Claims
As to Plaintiffs’ state law claims, though the Court may, under 28 U.S.C. §
1367, exercise supplemental jurisdiction over the state law claims ancillary to the
relief sought, for the reasons set forth below, the Court declines to exercise
supplemental jurisdiction over Plaintiff’s state law claims.
Under the standard enunciated in United Mine Workers v. Gibbs, 383 U.S.
715 (1966), and codified in 28 U.S.C. § 1367(c), this Court has broad discretion to
exercise its supplemental jurisdiction. Even where the district court “arguably
ha[s] supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. §
1367(a), the [district] court has discretion to decline to exercise its supplemental
jurisdiction.” Cirasuola v. Westrin, No. 96-1360, 1997 U.S. App. LEXIS 2242, *3
(6th Cir. April 18, 1997). Section 1367(c) provides that district courts may decline
to exercise supplemental jurisdiction over related state claims if:
the claim raises a novel or complex issue of State law,
the claim substantially predominates over the claim or claims
over which the district court has original jurisdiction,
the district court has dismissed all claims over which it has
original jurisdiction, or
in exceptional circumstances, there are other compelling
reasons for declining jurisdiction.
28 U.S.C. § 1367(c). The United States Supreme Court has stated that:
Our decisions have established that pendent jurisdiction ‘is a doctrine
of discretion, not of plaintiff’s right,’ and that district courts can
decline to exercise jurisdiction over pendent claims for a number of
Accordingly, we have indicated that district courts should deal with
cases involving pendent claims in the manner that best serves the
principles of economy, convenience, fairness, and comity which
underlie the pendent jurisdiction doctrine.
City of Chicago v. International College of Surgeons, 522 U.S. 156, 172-73 (1997)
(internal citations and quotations omitted). In determining whether to exercise its
supplemental jurisdiction, this Court must consider judicial economy, convenience,
fairness and comity, and also avoid needless decisions of state law. Id. at 173;
Gibbs, 383 U.S. at 726.
Here, the Court finds that declining supplemental jurisdiction is appropriate
because all of Plaintiffs’ federal claims are subject to Rule 12(b)(6) dismissal. Id.
at 726 (concluding that if all of the federal claims are dismissed before trial,
supplemental jurisdiction should be declined).
For the reasons discussed above, the Makower Defendants’ Motion to
Dismiss [#13] is GRANTED IN PART and DENIED IN PART.
Defendants’ Motion for Summary Judgment [#9] is GRANTED IN PART and
DENIED IN PART. Plaintiffs’ federal claims are HEREBY DISMISSED WITH
PREJUDICE. The Court declines to exercise supplemental jurisdiction over
Plaintiffs’ state law claims. Plaintiff’s Motion to Supplement Complaint [#39] is
This action is DISMISSED.
Dated: August 30, 2017
/s/Gershwin A. Drain
GERSHWIN A. DRAIN
United States District Judge
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
August 30, 2017, by electronic and/or ordinary mail.
/s/ Tanya Bankston
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