WEISS v. MCELWEE, ESQ. et al
Filing
43
OPINION. Signed by Judge Jose L. Linares on 1/7/2016. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
SANFORD WEISS, on behalf of himself and all
others similarly situated,
Civil Action No.: 14-1858 (JLL) (JAD)
Plaintiffs,
OPINION
V.
KENNETH L. McELWEE, ESQ., et al.,
Defendants.
LINARES, District Judge.
This matter comes before the Court by way of cross-motions for summary judgment filed
by Plaintiff Sanford Weiss ("Plaintiff') and Defendants Kenneth L. McElwee, Esq. and Macrich
Associates, LLC (collectively "Defendants") pursuant to Federal Rule of Civil Procedure 56.
(ECF Nos. 32, 33.) The Court has considered the parties' submissions and decides this matter
without oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the
reasons set forth below, the Court grants Defendants' motion for summary judgment in part.
BACKGROUND 1
Macrich Associates, LLC ("Macrich") is in the business of purchasing New Jersey tax
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These background facts are taken from the parties' statements of material facts, pursuant to Local Civil Rule 56.1.
(ECF No. 32-8, Plaintiff's Rule 56.l Statement of Facts ("PL SMF"); ECF No. 33-2, Defendants' Rule 56.1
Statement of Facts ("De£ SMF"); ECF No. 38-1, Defendants' Responses to Plaintiffs Statement of Material Facts
("De£ Opp. SMF"); ECF No. 40, Plaintiff's Counter Statement of Facts ("PL Opp. SMF"). The Court will
"disregard all factual and legal arguments, opinions and any other portions of the 56.1 Statement which extend
beyond statements of facts." Globespanvirata, Inc. v. Tex. Instrument, Inc., 2005 U.S. Dist. LEXIS 27820, at *10
(D.N.J. Nov. 10, 2005); see also L. Civ. R. 56.1 ("Each statement of material facts ... shall not contain legal
argument or conclusions of law.").
sale certificates. (Def. SMF if 1.) Defendants allege that Kenneth McElwee, Esq. ("McElwee")
is the sole manager and employee of Macrich, and that he purchases tax sale certificates on
behalf of Macrich. (Id.
if 2.)
At issue in this case are tax liens associated with a storage unit in a condominium
complex located at 919 Park Avenue, Hoboken, New Jersey, known on the tax map of the
Hoboken City tax assessor as block 184, lost 12 COOlB (the "Tax Liens"). (Def. SMF ifif 6, 7;
Pl. Opp. SMF
ifif 6, 7.) On behalf of Marcrich, McElwee commenced a tax sale foreclosure
proceeding with respect to the Tax Liens in the Superior Court of New Jersey, Chancery
Division, Hudson County, captioned Macrich Associates, LLC v. Sanford Weiss, et als., Docket
No. F-023431-13 on July 3, 2013. (Def. SMF if 19; PL Opp. SMF if 19.) Plaintiff claims that he
is the wrong "Sanford Weiss" and that Defendants filed the tax sale foreclosure complaint
against him in error. (Def. SMF if 25; Pl. Opp. SMF if 25.)
On November 13, 2013, attorney Laura S. Mann, Esq. ("Mann") began representing
Plaintiff in the tax sale foreclosure proceeding.
(Def. SMF
if 36; Pl. Opp. SMF if 36.)
Defendants allege that Mann threatened to take certain legal action against McElwee if McElwee
did not dismiss Plaintiff from the tax sale foreclosure proceeding, and that Mann promised to not
take such action if Plaintiff was dismissed. (Def. SMF
ifif 37-55.) In particular, Defendants
contend that Plaintiff made a promise not to file an action under the Fair Debt Collection
Practices Act ("FDCP A") if Defendants dismissed him from the underlying tax sale foreclosure
proceeding, that Defendants relied on this promise, and that Plaintiff nevertheless breached this
agreement. (See id.) Plaintiff denies these allegations. (Pl. Opp. SMF ifif 37-55.)
Plaintiff commenced this action on March 24, 2014 with the filing of a proposed class
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action Complaint alleging violations of the FDCPA. (ECF No. 1 ("Compl.").) Specifically, the
Complaint alleges that by naming the allegedly wrong "Sanford Weiss" in the tax sale
foreclosure proceeding, Defendants violated Section 1692e(2)(A), which makes it a violation for
a debt collector to falsely represent the "legal status" of a debt; Section 1692e(5), which makes it
a violation for a debt collector to threaten "to take any action that cannot legally be taken";
Section l 692e(l 0), which prohibits the use of any false or deceptive means to collect, or attempt
to collect, a debt; Section 1692e(l l), which prohibits a debt collector from failing to disclose in
the initial written communication that the debt collector is attempting to collect a debt and in
subsequent communications that the communication is from a debt collector; Section 1692f,
which makes it a violation to use unfair or unconscionable means to collect or attempt to collect
any debt; and, Section l 692g, which requires the debt collector to give what is commonly
referred to as a thirty-day (30) notice within five (5) days of its initial communication with the
consumer and send the consumer a written notice containing
( 1) the amount of the debt;
(2) the name of the creditor to who the debt is owed;
(3) a statement that unless the consumer, within thirty days after
receipt of the notice, disputes the validity of the debt, or any
portion thereof, the debt will be assumed to be valid by the debt
collector,
(4) a statement that if the consumer notifies the debt collector in
writing within the thirty-day period that the debt, or any portion
thereof, is disputed, the debt collector will obtain verification of
the debt or a copy of a judgment against the consumer and a copy
of such verification or judgment will be mailed to the consumer by
the debt collector;
(5) a statement that, upon the consumer's written request within the
thirty-day period, the debt collector will provide the consumer with
the name and address of the original creditor, if different from the
current creditor.
See id. Defendants filed an Answer on May 28, 2014. (ECF No. 8.) Thereafter, Defendants
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moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(b) (ECF No. 17),
which was denied by this Court on January 23, 2015. (ECF Nos. 26, 27.)
On November 6, 2015, Plaintiff filed a motion for summary judgment. (ECF No. 32; see
ECF No. 32-6 ("Pl. Mov. Br.").) Defendants cross-moved on November 11, 2015. (ECF No.
33; ECF No. 33-1 ("Def. Mov. Br.").) On November 22, 2015, Defendants filed a brief in
opposition to Plaintiff's motion (ECF No. 38 ("Def. Opp. Br.")), and on November 23, 2015,
Plaintiff filed a brief in opposition to Defendant's motion (ECF No. 39 ("Pl. Opp. Br.")). 2 The
motions are now ripe for adjudication.
LEGAL STANDARDS
A. Motion for Summary Judgment
Summary judgment is appropriate when, drawing all reasonable inferences in the nonmovant' s favor, there exists no "genuine dispute as to any material fact" and the movant is
entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986). "[T]he moving party must show that the non-moving party has
failed to establish one or more essential elements of its case on which the non-moving party has
the burden of proof at trial." McCabe v. Ernst & Young, LLP, 494 F.3d 418, 424 (3d Cir. 2007)
(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)).
The Court must consider all facts and their reasonable inferences in the light most
favorable to the non-moving party. See Pa. Coal Ass'n v. Babbitt, 63 F.3d 231, 236 (3d Cir.
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On November 30, 2015, Defendants filed a reply brief in further support of their cross-motion for summary
judgment without first seeking leave of the Court. (ECF No. 42.) Under Local Civil Rule 7.l(h), "[n]o reply brief
in support of the cross-motion shall be served and filed without leave of the assigned district or magistrate judge."
L.Civ.R. 7.l{h). Accordingly, the Court will disregard Defendants' reply brief.
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1995). If a reasonable juror could return a verdict for the non-moving party regarding material
disputed factual issues, summary judgment is not appropriate. See Anderson, 477 U.S. at 242-43
("At the summary judgment stage, the trial judge's function is not himself to weigh the evidence
and determine the truth of the matter but to determine whether there is a genuine issue for
trial.").
B. Fair Debt Collection Practices Act
The purpose of the FDCP A is "to eliminate abusive debt collection practices by debt
collectors, to insure that those debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote consistent State action to protect
consumers against debt collection abuses." 15 U.S.C. § 1692(e). When Congress passed the
legislation in 1977, it found that "(a]busive debt collection practices contribute to the number of
personal bankruptcies, to marital instability, to the loss of jobs, and invasions of individual
privacy." Id. § 1692(a). "As remedial legislation, the FDCPA must be broadly construed in
order to give full effect to these purposes." Caprio v. Healthcare Revenue Recovery Grp., LLC,
709 F.3d 142, 148 (3d Cir. 2013). Accordingly, the Court must "analyze the communication
giving rise to the FDCPA claim 'from the perspective of the least sophisticated debtor."'
Kaymark v. Bank of America, NA., 783 F.3d 168, 174 (3d Cir. 2015) (quoting Rosenau v.
Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008). Furthermore, "(t]he FDCPA is a strict liability
statute to the extent it imposes liability without proof of an intentional violation." Allen ex rel.
Martin v. LaSalle Bank, NA., 629 F.3d 364, 368 (3d Cir. 2011).
"To prevail on an FDCP A claim, a plaintiff must prove that (1) she is a consumer, (2) the
defendant is a debt collector, (3) the defendant's challenged practice involves an attempt to
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collect a 'debt' as the Act defines it, and (4) the defendant has violated a provision of the
FDCPA in attempting to collect the debt." Douglass v. Convergent Outsourcing, 765 F.3d 299,
303 (3d Cir. 2014) (citation omitted).
ANALYSIS
In support of his motion for summary judgment, Plaintiff argues that Defendants were
attempting to collect a "debt" within the meaning of the FDCP A. (PL Mov. Br. at 4-6.) Next,
Plaintiff summarily contends that he is entitled to summary judgment on his various FDCP A
claims because the alleged conduct of Defendants constitute a violation of those provisions. (Id.
at 6-8.) Finally, Plaintiff requests that the determination of damages be reserved for a trial by
JUry. (Jd.
at 8.)
Defendants move for summary judgment on multiple grounds. First, they argue that the
tax sale foreclosure proceeding at issue did not seek to collect a "consumer debt" within the
meaning of the FDCPA, such that the activities are therefore not governed by the FDCPA. (Def.
Mov. Br. at 6-18.) Second, Defendants contend that there is no evidence in the record by which
a reasonable juror could conclude that Defendants are "debt collectors" within the meaning of
the FDCP A. (Id. at 18-19.) Third, Defendants claim that even if their actions fell within the
scope of the FDCPA, the "bona fide error" defense would apply.
(Id. at 19-25.)
Fourth,
Defendants assert that the Plaintiffs FDCPA action is barred under the doctrines of promissory
and equitable estoppel. (Id. at 25-30.) Finally, Defendants argue that because Plaintiff filed this
action in bad faith and for the purposes of harassment, Defendants should be granted an award of
their reasonable attorneys' fees pursuant to 15 U.S.C. § 1692k(a)(3). (Id. at 30-39.)
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A. Defendants Are Entitled To Summary Judgment With Respect to Dismissal of
Plaintiff's Complaint Because Plaintiff Has Failed To Establish That Defendants
Were Attempting To Collect A "Debt" Within The Meaning Of The FDCPA.
The Court grants Defendants' motion for summary judgment on the FDCPA claims
because Plaintiff cannot show that the tax sale foreclosure proceeding involved a "debt" within
the meaning of the FDCP A. Although the complaint filed in the tax sale foreclosure proceeding
makes reference to "sewer service charges and costs," this is not enough by itself to bring the
matter within the purview of the FDCP A.
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). In other words, "a
'debt' is created whenever a consumer is obligated to pay money as a result of a transaction
whose subject is primarily for personal, family or household purposes." Po/lice v. Nat'/ Tax
Funding, L.P., 225 F.3d 379, 401 (3d Cir. 2000).
In the Third Circuit, a per capita tax obligation is not a "debt" for purposes of the
FDCPA. Staub v. Harris, 626 F.2d 275, 276-79 (3d Cir. 1980). "(A]t a minimum, the [FDCPA]
contemplates that the debt has arisen as a result of the rendition of a service ... or other item of
value. The relationship between taxpayer and taxing authority does not encompass the type of
pro tanto exchange which the statutory definition [of 'debt'] envisages." Id. at 278.
However, sewer charges are distinguishable from property taxes, if they arise from a
consensual consumer transaction.
In Po/lice, the Third Circuit analyzed claims under the
FDCPA arising from obligations owed by homeowners in Pittsburgh, Pennsylvania. 225 F.3d at
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400-03. The Third Circuit reaffirmed its holding that property taxes are not "debt," id. at 401402, but concluded that the homeowners' water and sewer obligations met the definition of
"debt" because the obligation to pay money to the government entity arose out of a "consensual
consumer transaction[]"-i.e., specifically "requesting water and sewer service[.]" Id. at 400,
401. This conclusion was reiterated more recently in Piper, when the Third Circuit held-also in
the context of homeowners in Pennsylvania-that "whenever a homeowner voluntarily elects to
avail himself of municipal water/sewer services, in whatever manner, and thereby incurs an
obligation to pay for such services, there is the kind of pro tanto exchange contemplated by the
FDCPA." Piper v. Portnoff Law Associates, Ltd., 396 F.3d 227, 233 n.8 (3d Cir. 2005) (citing
Pol/ice, 225 F.3d at 401).
Thus, although there is no holding directly on point, Third Circuit precedent suggests that
an obligation to pay for sewer services qualifies as "debt" only if it arises as a result of a
consensual consumer transaction in which a homeowner voluntarily elects or requests to receive
the services. See Piper, 396 F.3d at 233. In other words, if the amount of the obligation imposed
for sewer services is mandatory, then it does not qualify as a "debt." See Po/lice, 225 F .3d at
401-02.
Such a distinction was specifically adopted in a recent Second Circuit decision. In Boyd
v. JE. Robert Co., the Second Circuit concluded that liens for mandatory water and sewer
charges imposed by New York City were not "debt" for purposes of the FDCPA because the fact
that they were mandatory made them more akin to property taxes as opposed to transactions
envisaged by the drafters of the FDCPA. 765 F.3d 123, 126 (2d Cir. 2014). The Second Circuit
distinguished the holdings in Po/lice and Piper by noting that "the character of the water and
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sewer charges in Pennsylvania-which was essential to the analysis-differed from the character
of the charges levied on plaintiffs [by New York City] in this case."
Id. at 126 n.4.
"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
Accordingly, the Third Circuit cases are
connection with the property ownership.
distinguishable from the instant case." Id.; cf Piper, 396 F .3d at 233 n.8 (noting that because the
amount of plaintiffs' obligation to pay "was based on the amount of water they chose to use," the
transaction was "consensual [in] nature" and distinguishable from tax assessments). Thus, to
prevail on his FDCPA claim here, Plaintiff must show that any alleged sewer charges were
consensual in nature, and not mandatory.
Defendants are entitled to summary judgment because there is no evidence in the record
suggesting that any alleged sewer charges arose from a consensual transaction. Plaintiff thus
cannot prove that "the defendant's challenged practice involves an attempt to collect a 'debt' as
the Act defines it," as required to prevail on an FDCPA claim. See Douglass, 765 F.3d at 303
(citation omitted); see also McCabe, 494 F.3d at 424 (3d Cir. 2007) (movant entitled to summary
judgment when it shows that "the non-moving party has failed to establish one or more essential
elements of its case on which the non-moving party has the burden of proof at trial") (citation
omitted).
There is no evidence whatsoever to show that sewer charges actually exist with respect to
the property at issue.
The only credible evidence Plaintiff has presented on this point are
conclusory references made in a single paragraph of the complaint filed in the tax sale
foreclosure proceeding (see Compl., Ex. A
if 15), which Defendants maintain were included
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simply as part of cautionary boilerplate. More to the point, Plaintiff cannot show that the sewer
charges arose from a consensual transaction because he is unable to show that they existed in the
first place.
Plaintiff has thus failed to meet his burden of showing that Defendants were
attempting to collect a "debt" within the meaning of the FDCPA, and Defendants are entitled to
summary judgment as a matter of law. No reasonable jury could conclude otherwise, especially
in light of evidence presented by Defendants as part of their motion for summary judgment
which affirmatively establishes that there are no sewer charges attached to the property, see ECF
No. 33-4, and statutes provided in their brief which suggest that any sewer charges would be
mandatory if they were to exist. (See Def Mov. Br. at 13-14). Accordingly, the Court will grant
Defendants' motion for summary judgment and dismiss Plaintiff's complaint with prejudice. 3
B. There Is A Fact Dispute As To Whether Defendants Are Entitled to Attorneys'
Fees.
Defendants separately move for attorneys' fees under the FDCPA, alleging that Plaintiff
brought this action in bad faith for the purposes of harassment.
(Def Mov. Br. at 30-40.)
Defendants contend that Plaintiff made a promise not to file an action under the FDCPA if
Defendants dismissed him from the underlying tax sale foreclosure proceeding, that Defendants
relied on this promise, and that Plaintiff nevertheless breached this agreement. (See Def. SMF iMf
37-55.) Plaintiff denies these allegations, (Pl. Opp. SMF irir 37-55; ECF No. 39-1, Ex. 3 ("Mann
Cert.")), and avers in conclusory fashion that the Court should "give little credence to this silly
argument" and points to this Court's denial of Defendants' motion for judgment on the pleadings
as proof that Plaintiff did not bring this action in bad faith. (PL Opp. Br. at 18.)
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The Court declines to substantively address the rest of Defendants' arguments with respect to its motion for
summary judgment on Plaintiffs FDCP A claim (as doing so would be dicta), but simply notes in part that it has
serious doubts as to Plaintiffs ability to establish that Defendants are "debt collectors" within the meaning of the
FDCPA.
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The FDCPA specifically allows for attorneys' fees for a prevailing defendant: "On a
finding by the court that an action under this section was brought in bad faith and for the purpose
of harassment, the court may award to the defendant attorney's fees reasonable in relation to the
work expended and costs."
15 U.S.C. § 1692k(a)(3). "This provision should be construed
narrowly so as not to discourage private litigation under the FDCPA. The limited purpose of this
provision is to discourage malicious and harassing lawsuits by consumers." Kondratick v.
Beneficial Consumer Disc. Co., No. 04-4895, 2006 WL 305399, at *10 n.4 (E.D. Pa. Feb. 8,
2006) (citation omitted).
As indicated, there are comprehensive and fundamental fact disputes as to whether
Plaintiff or her attorney acted in bad faith in initiating this lawsuit, in spite of an alleged covenant
not to file suit. (Compare Def. SMF
ml 37-55, with Pl. Opp. SMF iii! 37-55.) Defendants'
allegations that Plaintiff specifically covenanted not to file suit under the FDCP A in exchange
for a dismissal at least suggest that Plaintiff brought this action in bad faith and for the purpose
of harassment. However, since the Court is unable to weigh the evidence before it at this stage,
see Anderson, 477 U.S. at 242-43, it will deny Defendants' motion on this point.
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CONCLUSION
For the reasons above, the Court grants Defendants' motion for summary with respect to
Plaintiffs FDCPA claim, but denies the motion with respect to attorneys' fees. An appropriate
Order accompanies this Opinion.
DATED: January
2016
JOSE ¥.LINARES
UNIJIED STATES DISTRICT JUDGE
t>
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