Boyd et al v. J.E. Robert Co., Inc. et al
ORDER denying 252 Motion for Reconsideration: For the reasons set forth in the attached Memorandum & Order, Plaintiffs' motion for reconsideration is denied. The parties shall inform the Second Circuit of the disposition of this motion, transmit a copy of this Memorandum & Order to the Second Circuit, and file an affidavit in this docket confirming such transmittal no later than 10/1/13. Ordered by Judge Kiyo A. Matsumoto on 9/27/2013. (Tsai, Denise)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
NOT FOR PUBLICATION
JOAN GRANT BOYD, ET AL.,
MEMORANDUM AND ORDER
J.E. ROBERT CO., ET AL.,
MATSUMOTO, United States District Judge:
Plaintiffs Joan Grant Boyd, Randa Jones, Sybil Taylor,
and Tonya Warters (collectively, “Plaintiffs”) commenced this
action on behalf of themselves and a putative class of others
similarly situated against Defendants J.E. Robert Co., Inc. and
JER Revenue Services, LLC (collectively, the “JER Defendants” or
“JER”), and NYCTL 1996-1 Trust, NYCTL 1997-1 Trust, NYCTL 1998-1
Trust, and NYCTL 1999-1 Trust (collectively, the “Trust
Defendants”), alleging violations of the Fair Debt Collection
Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”) and New York
statutory and common law.
On June 3, 2011, the JER Defendants
and Trust Defendants each filed a motion for summary judgment,
and the court referred those motions to Magistrate Judge Ramon
E. Reyes. (See Order dated 2/13/12.)
On August 27, 2012, Judge Reyes issued a Report and
Recommendation, recommending that Defendants’ motions for
summary judgment be granted in part and denied in part. (ECF No.
241, Report and Recommendation dated 8/27/12 (“R&R”) at 1.)
JER Defendants, Trust Defendants, and Plaintiffs each filed
timely objections to the R&R and subsequently submitted
responses to each other’s objections. (See ECF No. 243, JER
Defendants’ Objections to R&R (“JER Obj.”); ECF No. 244, Trust
Defendants’ Objections to R&R (“Trust Obj.”); ECF No. 245,
Plaintiffs’ Objections to R&R (“Pls. Obj.”); ECF No. 247,
Plaintiffs’ Response to Defendants’ Objections (“Pls. Resp. to
Obj.”); ECF No. 248, Trust Defendants’ Response to Pls. Obj.
(“Trust Resp. to Pls. Obj.”); ECF No. 249, JER Defendants’
Response to Pls. Obj. (“JER Resp. to Pls. Obj.”).)
dated October 2, 2012, the court sustained Defendants’
objections to Judge Reyes’ R&R, adopted in part and modified in
part the R&R, granted Defendants’ respective motions for summary
judgment, dismissed Plaintiffs’ FDCPA claims, and declined to
exercise supplemental jurisdiction over Plaintiffs’ state law
(ECF No. 250, Order Adopting in Part and Modifying in
Part R&R (“10/2/12 Order”).)
Presently before the court is Plaintiffs’ fullybriefed motion for reconsideration pursuant to Local Civil Rule
6.3. 1 (ECF No. 252, Plaintiffs’ Motion for Reconsideration dated
10/17/12 (“Pls. Mot. for Recon.”); ECF No. 257, JER Defendants’
Opposition to Pls. Mot. for Recon. (“JER Opp.”); ECF No. 258,
Trust Defendants’ Opposition to Pls. Mot. for Recon. (“Trust
Opp.”); ECF No. 259, Plaintiffs’ Reply (“Pls. Reply.”); ECF No.
262, Plaintiffs’ Letter Providing Supplemental Authority (“Pls.
For the reasons set forth below, Plaintiffs’ motion
for reconsideration is denied.
The court foregoes a recitation of the extensive
procedural history and facts of this case, which have been set
forth previously in Judge Reyes’ R&R, this court’s Order
adopting in part and modifying in part Judge Reyes’ R&R, and
this court’s prior Order on Defendants’ motion to dismiss.
(10/2/12 Order at 3-23; R&R at 2-7; ECF No. 191, Order Adopting
Report and Recommendation dated 2/2/11 (“2/2/11 Order”).)
STANDARD OF REVIEW
“Under Local Civil Rule 6.3, the standard for a motion
for reconsideration is ‘strict.’” Norton v. Town of Islip, No.
04-CV-3079, 2013 WL 84896, at *3 (E.D.N.Y. Jan. 7, 2013) (citing
On November 2, 2012, Plaintiffs timely filed a Notice of Appeal
of the court’s October 2, 2012 Order. (ECF No. 254, Notice of Appeal dated
11/2/12.) On February 27, 2013, the Second Circuit granted Plaintiffs’
motion to hold the appeal in abeyance pending determination of the instant
motion for reconsideration. (ECF No. 260, Order of Second Circuit granting
Motion to Hold Appeal in Abeyance.)
Schrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995)).
“A motion for reconsideration may be granted only if a court
overlooked (1) factual matters that were put before it on the
underlying motion or (2) controlling legal authority.” Rollins
v. N.Y. State Div. of Parole, No. 03-CV-5952, 2007 WL 539158, at
*2 (E.D.N.Y. Feb. 16, 2007); see also Virgin Atl. Airways v.
Nat’l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992) (“The
major grounds justifying reconsideration are an intervening
change of controlling law, the availability of new evidence, or
the need to correct a clear error or prevent manifest
injustice.” (internal quotation marks omitted)).
“A motion for
reconsideration is ‘not intended as a vehicle for a party
dissatisfied with the Court’s ruling to advance new theories
that the movant failed to advance in connection with the
underlying motion.’” WestLB AG v. BAC Fla. Bank, 912 F. Supp. 2d
86, 95 (S.D.N.Y. 2012) (quoting Parrish v. Sollecito, 253 F.
Supp. 2d 713, 715 (S.D.N.Y. 2003)).
Indeed, “Local Rule 6.3
generally precludes a movant from ‘advancing new facts, issues
or arguments not previously presented to the court.’” Id.
(quoting United States v. Tillman, No. 07-CR-1209, 2009 WL
1270301, at *1 (S.D.N.Y. May 6, 2009)).
Nor is a motion for
reconsideration “a chance for a party to take a ‘second bite at
the apple.’” Id. (quoting Rafter v. Liddle, 288 F. App’x 768,
769 (2d Cir. 2008)).
“It is within the sound discretion of the district
court whether or not to grant a motion for reconsideration.”
Markel Am. Ins. Co. v. Linhart, No. 11–CV–5094, 2012 WL 5879107,
at *2 (E.D.N.Y. Nov. 16, 2012).
In exercising this discretion,
the court must be mindful that “a motion for reconsideration ‘is
not favored and is properly granted only upon a showing of
Nakshin v. Holder, 360 F. App’x
192, 193 (2d Cir. 2010) (quoting Marrero Pichardo v. Ashcroft,
374 F.3d 46, 55 (2d Cir. 2004)).
Plaintiffs argue that the court committed clear error
by granting Defendants’ respective motions for summary judgment
and therefore request reconsideration of the court’s October 2,
2012 Order adopting in part and modifying in part Judge Reyes’
R&R and dismissing Plaintiffs’ FDCPA claims (the “October 2012
(Pls. Mot. for Recon. at 1-2.)
specifically maintain that the court erred by (1) finding that
the New York City Tax Liens, which included charges for
municipal water and sewer services, were not “debts” within the
meaning of the FDCPA and (2) determining that Defendants’
efforts to enforce and foreclose on the Tax Liens did not
constitute debt collection activities actionable under the
(Id. at 2-23.)
Upon review of the relevant case law and
statutory authority, the court finds no clear error in its
October 2012 Order and therefore denies Plaintiffs’ motion for
reconsideration, which fails to identify any controlling legal
authority or facts overlooked by the court and instead merely
attempts to relitigate and rehash arguments already considered
and rejected by the court.
The Court’s October 2012 Order
A brief review of this court’s October 2012 Order is
necessary before addressing the arguments raised in Plaintiffs’
motion for reconsideration.
First, in its October 2012 Order, this court held that
the Tax Liens on the Jones and Boyd Properties were not debts
subject to the FDCPA because the mandatory tax, water, and sewer
obligations levied on those properties did not arise from the
type of consumer “transaction” contemplated by the FDCPA.
10/2/12 Order at 29-30 (citing Beggs v. Rossi, 145 F.3d 511 (2d
Cir. 1998) (per curiam)).)
Specifically, the court reasoned
that, similar to municipal taxes, the municipal water and sewer
charges imposed upon Plaintiffs were levied upon Plaintiffs as
an incident to property ownership and did not arise from a
consensual transaction, where parties negotiate or contract for
consumer services or goods, as contemplated by the FDCPA.
at 28-34 (citing Beggs, 145 F.3d at 512; Turner v. Cook, 362
F.3d 1219, 1227 (9th Cir. 2004); Hawthorne v. Mac Adjustment,
Inc., 140 F.3d 1367, 1371 (11th Cir. 1998).)
In support of this
conclusion, the court explained that Plaintiffs “Jones and Boyd
did not negotiate or enter into any contract or agreement with
the City with respect to the utility charges” and that the
“properties owned by Jones and Boyd were required by the New
York City Administrative Code to be connected to City water and
sewage mains and supplied with water at rates provided by the
City.” (Id. at 32 (citing N.Y.C. Admin. Code § 27-2024).)
Furthermore, the court determined that because “New
York City’s ‘water and sewer infrastructure is funded by revenue
it collects through water and sewer rates’ from the City’s
property owners,” the municipal water and sewer charges, like
taxes, “are imposed upon New York City property owners to fund a
public service: maintenance of the City’s water and sewer
(Id. at 34 (quoting N.Y.C. Environmental
Protection, “About DEP Water Rates,” http://home.nyc.gov/html
/dep/html/water_rates/index.shtml (last visited 9/21/13)).)
The court therefore concluded that the relationship between the
City and Plaintiffs with respect to the water and sewer charges
“resembles more the relationship between taxpayer and taxing
authority than it does the consensual, transactional ‘pro tanto
exchange’ between parties envisaged by the statutory definition
(Id. at 34 (citing Beggs, 145 F.3d at 512).)
Moreover, the court noted that the municipal statutory
scheme further supported the court’s conclusion that the water
and sewer charges imposed on Plaintiffs were more akin to taxes
than consumer debts under the FDCPA.
(Id. at 34-35.)
particular, the court explained that Section 1045-j(5) of the
City’s Public Authority Law — which provides that unpaid water
and sewer charges shall constitute a lien upon the premises
served, which lien “shall bear interest at the same rate as
would unpaid taxes” and “may be foreclosed against the lot of
building served in the same manner as a lien for such taxes,”
N.Y. Pub. Auth. Law § 1045-j(5) — strongly reinforces the
court’s finding that “water and sewer charges are to be treated
in the same manner as taxes,” under the FDCPA.
Finally, the court rejected Plaintiffs’ contention
that the unpaid water charges on the Boyd Property were debts
because such charges were metered based on water usage.
id. at 35-36.)
In rejecting Plaintiffs’ argument, the court
reasoned that “[t]hough metered usage arguably may be one factor
in determining the nature of a lien, no court has held that it
is the determinative factor.”
In addition, the court
explained that Plaintiffs proffered no evidence that “Boyd even
requested water and sewer services from the City after . . . a
negotiation or business dealing or any form of exchange with the
(Id. at 36.)
Instead, the court noted, “Boyd was
required to avail herself of City resources and pay concomitant
charges for those resources as she used them, irrespective of
the method by which the charges were determined by the City.”
Accordingly, the court concluded that the water charges
imposed on the Boyd Property, although metered, did not arise
from a consensual transaction and therefore do not constitute
debts under the FDCPA.
(Id. at 36-37 (citing Bass v. Stolper,
Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322, 1326 (7th
Second, the court alternatively found that Defendants’
efforts to enforce and foreclose on the Tax Liens constituted
the enforcement of security interests rather than debt
collection practices under the FDCPA.
(Id. at 42-43.)
support of this determination, the court cited to authority from
several other federal courts finding that the enforcement of a
security interest through the foreclosure process is not debt
collection under the FDCPA where, as here, no monetary judgment
is sought against the debtor in enforcing a lien on property.
(See id. at 42-46 (citing cases).)
Finding this precedent
persuasive, the court held that “because the judicial
foreclosures against the Jones and Boyd Properties did not seek
monetary judgments against individual debtors, those foreclosure
actions . . . are not debt collection activities under §§ 1692e
and 1692f of the FDCPA.”
(Id. at 54.)
After dismissing Plaintiffs’ FDCPA claims, the court
declined to exercise supplemental jurisdiction over Plaintiffs’
remaining state law claims and granted Defendants’ respective
motions for summary judgment.
(Id. at 54-55.)
The Tax Liens Are Not “Debts” Under the FDCPA.
In their motion for reconsideration, Plaintiffs first
urge the court to abandon its previous determination that the
Tax Liens are not debts within the meaning of the FDCPA.
Mot. for Recon. at 2-14.)
To that end, Plaintiffs contend that
the court’s previous Order misconstrued controlling authority
regarding the meaning of the statutory terms “debt” and
“transaction” and, at the very least, incorrectly held that the
water charges on the Boyd Property, which were metered based on
usage, were not debts under the FDCPA.
As discussed in
further detail below, Plaintiffs’ arguments are unavailing and
fail to demonstrate any exceptional circumstances warranting
reconsideration of this court’s October 2012 Order.
Accordingly, as this court previously found, the Tax Liens on
the Jones and Boyd Properties are not debts within the meaning
of the FDCPA.
Controlling Second Circuit Authority
Plaintiffs claim that the court’s October 2012 Order
“fundamentally misconstrues” the Second Circuit’s per curiam
opinion in Beggs v. Rossi, 145 F.3d 511 (2d Cir. 1998). (Pls.
Mot. for Recon. at 3-9).
Plaintiffs maintain that, contrary to
this court’s reasoning, Beggs does not require a debt to arise
from a consensual transaction, whereby parties negotiate or
contract for consumer-related goods.
(Id. at 5-6.)
argue that Beggs instead held that a debt is subject to the
FDCPA if it “‘has arisen as a result of the rendition of a
service or purchase of property or other item of value.’”
at 4 (quoting Beggs, 145 F.3d at 512).)
In Plaintiffs’ view,
this court ran afoul of the Second Circuit’s clear guidance in
Beggs by requiring that a debt arise from a consensual
(Id. at 5-8.)
As further support for their reading of Beggs and their
concomitant interpretation of the statutory term “transaction,” Plaintiffs
cite to Karpova v. Snow, 402 F. Supp. 2d 459 (S.D.N.Y. 2005), a non-FDCPA
case in which the Southern District of New York discussed the meaning of the
term “transaction” in the context of Iraqi Sanctions Regulations. (Pls. Mot.
for Recon. at 8-9). The Southern District’s interpretation of the regulatory
term “transaction” in Karpova provides scant guidance in the FDCPA context,
and Plaintiffs provide no compelling reason why Karpova’s interpretation of
“transaction” is persuasive in the consumer protection context. Plaintiffs’
reliance on Karpova is therefore unavailing.
Plaintiffs’ argument rests on a misguided view of the
facts and the law, which “fundamentally misconstrues” and
mischaracterizes the Second Circuit’s holding in Beggs.
Beggs, the Second Circuit, relying upon the Third Circuit’s
decision in Staub v. Harris, held that “‘at a minimum, the
[FDCPA] contemplates that the debt has arisen as a result of the
rendition of a service or purchase of property or other item of
value.’” 145 F.3d at 512 (emphasis added) (quoting Staub v.
Harris, 626 F.2d 275, 278 (3d Cir. 1980)).
By arguing that
Beggs “simply requires that the ‘debt’ arise in connection with
‘the rendition of [such] a service or purchase of property” to
be subject to the FDCPA, (Pls. Mot. for Recon. at 5 (alteration
in original) (quoting Beggs, 145 F.3d at 512)), Plaintiffs
conveniently disregard the phrase “at a minimum” and
consequently misinterpret Beggs as setting forth an exhaustive
definition of the statutory term “transaction.”
Plaintiffs’ mistaken assertion, Beggs did not hold that the
FDCPA applies so long as a debt arises out of a rendition of a
service or a purchase of a consumer good.
(Pls. Mot. for Recon.
To the contrary, Beggs held that the FDCPA does not
apply if the purported “debt” does not arise out of a rendition
of a service or a purchase of a consumer good.
differently, Beggs stands for the simple and unremarkable
proposition that the FDCPA requires, at the very least, the
rendition of a service or a purchase of a consumer good. 3
Applying this principle, the Second Circuit in Beggs
determined that an automobile tax was not a debt because such
automobile taxes were levied “upon the ownership of the vehicle
by the citizen,” rather than “upon the purchase or registration
of the vehicle per se,” and therefore did not involve a
rendition of a service or purchase of a consumer good.
In so holding, the Beggs court concluded that the
“relationship between taxpayer and taxing authority does not
encompass that type of pro tanto exchange which the statutory
Beggs is therefore fully consistent
with this court’s holding that the statutory definition of debt
“contemplates a consensual transaction, where parties ‘negotiate
or contract’ for consumer services or goods.”
30-31 (citing Turner, 362 F.3d at 1227).)
(10/2/12 Order at
Plaintiffs’ incorrect claim that this court’s October 2012 Order
misconstrued controlling Second Circuit precedent is
Notably, in Staub, the case which the Second Circuit found
dispositive in Beggs, the Third Circuit stated that it “need not decide
whether ‘transaction’ as used in the FDCPA always connotes the existence of
an underlying contractual relationship.” Staub, 626 F.2d at 278. Thus,
notwithstanding Plaintiffs’ erroneous suggestion to the contrary,
Staub, and by extension Beggs, did not set forth an exhaustive definition of
the statutory term “transaction” or preclude this court’s holding that the
FDCPA contemplates a consensual transaction.
Beyond misinterpreting the Second Circuit’s holding in
Beggs, Plaintiffs also fail to address this court’s conclusion
that, under New York City’s statutory and administrative regime,
the municipal water and sewer charges are more analogous to
taxes than consumer debts.
(See 10/2/12 Order at 32-35.)
Plaintiffs do not dispute that the Jones and Boyd properties
were required by the New York City Administrative Code to be
connected to municipal water and sewage mains and supply their
properties with water at rates determined unilaterally by the
N.Y.C. Admin. Code § 27-2024; N.Y. Pub. Auth. Law
§§ 1045-j(1), (4).
Nor do Plaintiffs dispute that New York
City’s water and sewer infrastructure “is funded by revenue it
collects through water and sewer rates” from City property
“About DEP Water Rates,” http://home.nyc.gov/html/dep/
html/water_rates/index.shtml (last visited 9/23/13).
further concede that Section 1045-j(5) of the City’s Public
Authority Law provides that unpaid sewer and water obligations
constitute a lien on the property that “shall bear interest at
the same rate as would unpaid taxes” and “may be foreclosed
against [the property] in the same manner as a lien for such
N.Y. Pub. Auth. Law § 1045-j(5).
Finally, in their
opposition to summary judgment, Plaintiffs themselves argue that
the unpaid water and sewer charges should be treated as taxes
and insist that “state laws covering the collection of city
taxes apply to the collection of the payments at issue.”
No. 230, Plaintiffs’ Opposition to Defendants’ Motions for
Summary Judgment, at 37.)
These undisputed findings — all of which remain
unaddressed in Plaintiffs’ motion for reconsideration —
elucidate two key points.
First, these findings demonstrate
that the unpaid water and sewer charges did not arise from a
consensual transaction and therefore do not constitute debts
under the FDCPA.
(See 10/2/10 Order at 32-34.)
findings amply support the court’s ultimate conclusion that,
under Beggs, the water and sewer charges are less analogous to
consumer debts and more comparable to taxes and thus fall
outside the protective ambit of the FDCPA.
(Id. at 34-35.)
in Beggs, the relationship between the City and Plaintiffs in
this case resembles more the “relationship between taxpayer and
taxing authority” than it does the “type of pro tanto exchange
which the statutory definition [of debt] envisages.”
The court is therefore unconvinced that its October
2012 Order misconstrued or overlooked controlling precedent.
Plaintiffs next accuse this court of overlooking outof-circuit decisions finding that condominium assessments and
common charges constitute debts within the meaning of the FDCPA.
(Pls. Mot. for Recon. at 7 & n.5 (citing cases).)
do not alter the court’s conclusion that the Tax Liens in this
case do not qualify as debts under the FDCPA.
As a preliminary
matter, these out-of-circuit cases are not controlling precedent
and therefore do not warrant granting Plaintiffs’ motion for
Rollins, 2007 WL 539158, at *2.
In any event,
the cases cited by Plaintiffs can be reconciled with this
court’s reasoning that the water and sewer charges levied
mandatorily upon New York City property owners do not constitute
debts under the FDCPA.
Indeed, the cases cited by Plaintiffs
involved voluntary transactions whereby condominium assessments
were imposed upon property owners pursuant to consensual or
negotiated agreements between the property owners and the
condominium/homeowners associations of which the owners were
members: put simply, the condominium assessments were a
byproduct of business dealings, and not mandatory charges
imposed under municipal law.
See, e.g., Newman v. Boehm,
Moreover, at least some courts have held that condominium
assessments and common charges do not constitute debts under the FDCPA. See
Mediterranean Villas Condo. Ass’n, Inc. v. Moors Master Maint., No. 11-23302,
2012 WL 882508, at *4 (S.D. Fla. Mar. 14, 2012) (“Maintenance fees
assessments applied to all unit owners for costs of maintenance of common
areas are generally not ‘debts’ within the meaning of the FCDPA.”); Azar v.
Hayter, 874 F. Supp. 1314, 1318-19 (N.D. Fla. 1995), aff’d 66 F.3d 342 (11th
Cir. 1995); Bryan v. Clayton, 698 So.2d 1236, 1237 (Fla. Dist. Ct. App.
1997), review denied by 707 So.2d 1123 (Fla. 1998). The court finds that
this split in authority weakens the persuasive force of Plaintiffs’ argument
that, like condominium assessments, the water and sewer charges here should
be treated as debts.
Pearlstein & Bright, Ltd., 119 F.3d 477, 481 (7th Cir. 1997)
(“By paying the purchase price and accepting title to their
home, the Riters became bound by the Declaration of Covenants,
Conditions, and Restrictions of their homeowners association,
which required the payment of regular and special assessments
imposed by the association.”).
Such negotiated and consensual
transactions are conspicuously absent in the instant case.
earlier noted, Jones and Boyd were required to utilize municipal
water and sewer services and to pay for such services at rates
determined by the City.
And it is undisputed that the municipal
statutory scheme treats unpaid water and sewer charges like
N.Y. Pub. Auth. Law § 1045-j(5).
Plaintiffs offer no compelling reason why this court should
treat the municipal water and sewer charges like condominium
As such, the court is not persuaded by Plaintiffs’
reliance on out-of-circuit cases finding that condominium
assessments, which are factually distinct from the mandatory
statutory municipal sewer and water charges here, constitute
debts under the FDCPA.
Equally as unpersuasive is Plaintiffs’ claim that this
court’s October 2012 Order conflicts with the FTC Staff
Commentary relied upon in Beggs.
(Pls. Mot. for Recon. at 9-
Plaintiffs argue that the FTC Staff Commentary excludes
unpaid taxes as debts but does not “include water or sewer
charges among the obligations that are excluded from the ‘debts’
subject to the FDCPA.”
(Pls. Mot. for Recon. at 10.)
to Plaintiffs’ unsubstantiated assumption, the FTC Staff
Commentary does not purport to provide an exhaustive list of all
obligations excluded from the FDCPA.
Indeed, the Introduction
to the FTC Staff Commentary expressly clarifies that the
“Commentary should be used in conjunction with the statute . . .
and is not intended as a substitute for the statutory text” and
that the “Commentary should be not considered as a reflection of
all court rulings under the FDCPA.”
Federal Trade Commission,
“Statements of General Policy or Interpretation,” Staff
Commentary on the Fair Debt Collection Practices Act, 53 Fed.
Reg. 50097, 50102 (Dec. 13, 1988).
Consequently, the absence of
“water and sewer charges” from the Staff Commentary’s
illustrative and non-exhaustive list of exclusions does not
necessarily render such municipal utility charges “debts” within
the meaning of the FDCPA.
To the contrary, the FTC Staff
Commentary reinforces this court’s conclusion that the water and
sewer charges, which resemble municipal taxes rather than
consumer debts, fall outside the purview of the FDCPA.
10/2/12 Order at 32-35.)
Boyd’s Metered Water Usage
Plaintiffs contend that, at the very least, this court
committed clear error by finding that the metered water usage on
the Boyd Property did not constitute a debt under the FDCPA.
(Pls. Mot. for Recon. at 10-12.)
Plaintiffs specifically take
issue with this court’s finding that “‘no court has held that
[metered usage] is the determinative factor’” in resolving
whether the water and sewer charges are debts under the FDCPA.
(Id. at 11 (quoting 10/2/12 Order at 36).)
Plaintiffs, the Third Circuit in Piper expressly held that a
payment obligation arising from metered water usage is a
consensual transaction subject to the FDCPA.
(Id. at 11-12
(quoting Piper v. Portnoff Law Assocs., 396 F.3d 227, 233 n.8
(3d Cir. 2005).)
In Piper, the Third Circuit provided the following
analysis with respect to the unpaid water service fees in that
It is true, as [defendant] stresses, that a
property owner in Pennsylvania may incur an
obligation to pay a water service fee even
though he has not connected his property to
the municipal water system, but that is not
the situation before us. Nor does this fact
render erroneous the Pollice [v. Nat’l Tax
2000), Court's characterization of normal
water/sewer fees in Pennsylvania as arising
from a “consensual . . . transaction.”
is apparent from the Pipers’ account with
the City that their service was metered in
the normal fashion and that the amount of
their obligation to pay was based on the
amount of water they chose to use.
distinguishes the situation before us from
tax assessments which Pollice held to not be
debts within the meaning of the FDCPA.
396 F.3d at 233 n.8 (internal citation omitted).
this language in Piper, Plaintiffs argue that the water charges
on the Boyd Property likewise arose from a consensual
transaction because they were metered according to usage.
Mot. for Recon. at 11-12.) 5
In pursuing this argument, however, Plaintiffs ignore
the critical distinction between the municipal scheme in Piper
and the municipal water and sewer regime in the City of New
Unlike in Piper, Boyd did not, and could not,
“voluntarily elect to avail [her]self of municipal water/sewer
services,” Piper, 396 F.3d at 233 n.8; rather, Boyd was required
to do so by New York City municipal law.
As this court
previously noted in its October 2012 Order, Plaintiffs fail to
demonstrate that the administrative regime for water and sewer
services in the City of Pittsburgh is comparable to the
5 The court has also received and considered Plaintiffs’
unauthorized letter, dated September 25, 2013, in which Plaintiffs bring to
the court’s attention the recent decision, Reilly v. Northeast Revenue
Servs., No. 12-CV-02312, 2013 U.S. Dist. LEXIS 108554 (M.D. Pa. Aug. 1,
administrative regime in the City of New York.
Plaintiffs concede that, unlike in New York City, where the
municipal water board serves as the sole water and sewage
provider, private companies serve the water and sewage needs of
property owners in the City of Pittsburgh and serve as an
alternative to municipal public utilities.
(10/2/12 Order at 40
& n.16 (citing Pennsylvania American Water Company,
http://www.amwater.com/ paaw/about-us/page9704.html (last
This fact lends credence to the court’s
determination that water users in Piper exercised a level of
consent not present in the instant case.
fail to establish any similarity between the “normal water/sewer
fees in Pennsylvania” in Piper and the mandatory water and sewer
charges imposed by New York City in this case. 6
Finally, to the extent that Piper holds that metered
usage alone gives rise to a consensual transaction under the
FDCPA, this court declines to adopt such reasoning where, as
here, property owners have no choice in determining whether or
not to use municipal water services.
Irrespective of whether
Boyd’s water charges were metered based on usage, Boyd was
Significantly, Plaintiffs do not contest this court’s finding
that the bundled Tax Liens are unique and distinguishable from the municipal
liens in Pollice and Piper, which, unlike the Tax Liens, were not composed of
mixed obligations bundled into one instrument. (10/2/12 Order at 40-41.)
This distinction likewise renders Pollice and Piper inapposite.
required by law to connect her property to municipal water mains
and pay for such water at rates determined by the City or face
foreclosure of a lien on their properties for unpaid water and
Given these facts, it simply cannot be said that
the water charges on the Boyd Property — metered or not — arose
from a consensual transaction.
Because Plaintiffs have failed to identify any facts
or controlling precedent overlooked by the court in its October
2012 Order, reconsideration is not warranted with respect to the
court’s finding that the Tax Liens do not constitute debts
within the meaning of the FDCPA.
III. The FDCPA Does Not Apply to the Enforcement of Security
Interests Against Property.
Plaintiffs additionally challenge this court’s
alternative holding that Defendants’ efforts to foreclose on the
Tax Liens constituted the enforcement of security interests
rather than debt collection practices subject to the FDCPA.
(Pls. Mot. for Recon. at 14-19.)
Plaintiffs maintain that
unauthorized amounts collected during foreclosure are subject to
the FDCPA and argue that this court mistakenly held that
“defendant’s actual collection of the allegedly improper amounts
did not constitute the ‘collection or attempt to collect a debt’
subject to § 1692(f)(1) because it occurred during a
(Pls. Mot. for Recon. at 15.)
view, the court’s decision is at odds with the weight of
decisional authority as well as the position adopted by the
Consumer Financial Protection Bureau (“CFPB”) in a recent amicus
brief. (Id. (citing cases 7).)
Plaintiffs’ argument is flawed in several respects.
First and foremost, Plaintiffs misrepresent the scope of this
court’s holding in the October 2012 Order.
Plaintiffs’ broad mischaracterization, this court did not find
that Defendants’ actions fell outside of the FDCPA “because [the
challenged collection activities] occurred during foreclosure.”
(Id.) (emphasis added).
Instead, the court held that the
foreclosure actions as to the Tax Liens did not seek monetary
judgments against Plaintiffs and were therefore not debt
collection activities for purposes of the FDCPA, but, rather,
constituted the enforcement of Defendants’ security interests in
(10/2/12 Order at 42, 54.)
Central to this court’s
holding was the undisputed fact that the foreclosure complaints
did not request deficiency judgments against Jones or Boyd and
Plaintiffs cite to decisions from numerous federal Courts of
Appeals in support of their argument. See, e.g., Glazer v. Chase Home Fin.
LLC, 704 F.3d 453, 459-64 (6th Cir. 2013); Wallace v. Washington Mut. Bank,
F.A., 683 F.3d 323, 328 (6th Cir. 2012); Birster v. Am. Home Mortg. Serv.,
Inc., 481 F. App’x 579 (11th Cir. 2012); Reese v. Ellis, Painter, Ratterree &
Adams, LLP, 678 F.3d 1211, 1217-18 (11th Cir. 2012); Wilson v. Draper &
Goldberg, 443 F.3d 373, 376 (4th Cir. 2006); Kaltenbach v. Richards, 464 F.3d
524, 527 (5th Cir. 2006); Piper, 396 F.3d at 234-35.
instead proceeded solely against the Jones and Boyd Properties,
both of which were subject to Tax Liens.
(Id. at 47-48.)
court rejects Plaintiffs’ attempt to assign error in this
court’s October 2012 Order by misconstruing the court’s holding.
In any case, to the extent that the appellate court
cases and the CFPB amicus brief cited by Plaintiffs support the
proposition that the enforcement of security interests through
lien foreclosure constitutes debt collection, 8 the court declines
to follow the misguided reasoning in these non-controlling
As this court previously found, the enforcement of a
security interest through foreclosure proceedings that do not
seek monetary judgments against debtors is not debt collection
for purposes of the FDCPA.
In so holding, the court
respectfully parts ways with the federal appellate courts that
have held to the contrary and instead joins the many federal
district courts, including at least one in the Second Circuit,
that have determined that foreclosure activities do not
constitute debt collection under the FDCPA.
See, e.g., Proa v.
Wells Fargo Bank, N.A., No. 13-CV-759, 2013 WL 4508364, at *5
JER Defendants persuasively argue that many of appellate cases
cited by Plaintiffs do not fully support the proposition that the
foreclosures on property liens constitute debt collection activities
particularly where, as here, no deficiency judgments have been sought; to
that end, JER Defendants provide several reasons why these Circuit Court
cases are distinguishable on their facts and, in any event, not controlling.
(JER Opp. at 7-8.) Although the court finds merit in JER Defendants’
argument, the court need not distinguish these cases because, as set forth
infra, the reasoning adopted by these cases is tenuous.
n.2 (S.D. Cal. Aug. 22, 2013) (“[T]he acts Defendants took to
enforce a security interest do not qualify as debt collection
within the scope of § 1692e.”); DeMoss v. Peterson, Fram &
Bergman, No. 12-CV-2197, 2013 WL 1881058, at *2 (D. Minn. May 6,
2013) (“[T]his court has previously held that foreclosure
activities do not constitute debt collection under the FDCPA.”);
Lara v. Aurora Loan Servs. LLC, No. 12-CV-904, 2013 WL 1628955,
at *7 (S.D. Cal. Apr. 16, 2013)(“[N]umerous district courts,
including several in the Ninth Circuit, have also held that the
activity of foreclosing on [a] property pursuant to a deed of
trust is not collection of a debt within the meaning of the
FDCPA.” (internal quotation marks omitted) (alterations in
original)); Derisme v. Hunt Leibert Jacobson P.C., 880 F. Supp.
2d 311, 325 (D. Conn. 2012) (“[I]t appears that a majority of
courts who have addressed this question have also concluded that
foreclosing on a mortgage does not qualify as debt collection
activity for purposes of the FDCPA.”); Kangas v. Kieffer, No.
12-CV-8, 2012 WL 1424388, at *5 (D.N.D. Apr. 24, 2012) (“[T]he
Court finds that Kieffer and Gray & Associates are not subject
to the Fair Debt Collection Practices Act in this case because
their foreclosure activities in this particular case do not
constitute debt collection.”), aff’d, 495 F. App’x 749 (8th Cir.
2012); Zhang v. Countrywide Home Loans, Inc., No. 11-CV-03475,
2012 WL 1245682, at *11 (N.D. Cal. Apr. 13, 2012) (“The question
of whether a foreclosure constitutes debt collection under the
FDCPA has not been decided by the Ninth Circuit, but district
courts throughout the Ninth Circuit have concluded that it does
not.” (internal quotation marks omitted)); Meyer v.
Citimortgage, Inc., No. 11-CV-13432, 2012 WL 511995, at *7 (E.D.
Mich. Feb. 16, 2012) (“To the extent plaintiffs' various,
unspecified FDCPA claims concern the enforcement of the
mortgage, these claims fail because the FDCPA are not applicable
to the enforcement of a security interest, because the FDCPA
does not consider foreclosure to be debt collection.”); Bray v.
Bank of Am., No. 09-CV-75, 2011 WL 30307, at *7 (D.N.D. Jan. 5,
2011) (“In Gray, the district court concluded foreclosure
activities are not debt collection, as contemplated by the Fair
Debt Collection Practices Act.”), appeal dismissed, 435 F. App’x
571 (8th Cir. 2011) and aff'd, 497 F. App’x 685 (8th Cir. 2013);
Speleos v. BAC Home Loans Serv., L.P., 824 F. Supp. 2d 226, 232
(D. Mass. 2011) (“The statute itself, however, distinguishes
debt collection from security interest enforcement in its
definition of a ‘debt collector.’”); Geist v. OneWest Bank, No.
10-C-1879, 2010 WL 4117504, at *3 (N.D. Cal. Oct. 19, 2010)
(“Although the Ninth Circuit has not yet addressed whether a
foreclosure action constitutes ‘debt collection’ under the
FDCPA, district courts throughout the Ninth Circuit have
concluded that it does not.” (collecting cases)); Odinma v.
Aurora Loan Servs., No. 09-C-4674, 2010 WL 2232169, at *11 (N.D.
Cal. June 3, 2010) (“[F]oreclosure is not debt collection under
the federal Fair Debt Collection Practices Act.”); Aniel v. T.D.
Serv. Co., No. 10-C-3185, 2010 WL 3154087, at *1 (N.D. Cal. Aug.
9, 2010) (“Plaintiffs’ allegations relating to the FDCPA claim
relate to foreclosure proceedings and courts throughout this
circuit have concluded that foreclosure does not constitute
‘debt collection’ under the FDCPA.”); Jozinovich v. JP Morgan
Chase Bank, N.A., No. 09-C-3326, 2010 WL 234895, at * 6 (N.D.
Cal. Jan. 14, 2010) (“[T]he activity of foreclosing on [a]
property pursuant to a deed of trust is not the collection of a
debt within the meaning of the FDCPA.” (alterations in original)
(internal quotation marks omitted)); Siegel v. Deutsche Bank
Nat’l. Trust Co., No. 08-CV-517, 2009 WL 3254491, at *4 (D. Neb.
Oct. 8, 2009) (“A mortgage foreclosure is not a debt collection
activity.”), aff’d, 409 F. App’x 975 (8th Cir. 2011); Landayan
v. Washington Mut. Bank, No. 09-C-916, 2009 WL 3047238, at *3
(N.D. Cal. Sept. 18, 2009) (“A claim cannot arise under FDCPA
based upon the lender enforcing its security interest under the
subject deed of a trust because foreclosing on a mortgage does
not constitute an attempt to collect a debt for purposes of the
FDCPA.”); Salazar v. Tr. Corps., No. 08-CV-2142, 2009 WL 690185,
at *6 (S.D. Cal. Mar. 12, 2009) (“The Court accordingly finds
that the foreclosure on plaintiff’s home is not the collection
of a debt within the meaning of the FDCPA.”); Gray v. Four Oak
Court Ass’n, Inc., 580 F. Supp. 2d 883, 888 (D. Minn. 2008)
(“[T]he enforcement of a security interest, including a lien
foreclosure, does not constitute the ‘collection of any
debt.’”); Rosado v. Taylor, 324 F. Supp. 2d 917, 924 (N.D. Ind.
2004) (“Security enforcement activities fall outside the scope
of the FDCPA because they aren’t debt collection practices.”);
Hulse v. Ocwen Fed. Bank, FSB, 195 F. Supp. 2d 1188, 1204 (D.
Or. 2002) (“Foreclosing on a trust deed is distinct from the
collection of the obligation to pay money. . . .
funds is not the object of the foreclosure action.
lender is foreclosing its interest in the property.”); cf.
Glazer v. Chase Home Fin., LLC, 704 F.3d 453, 460 (6th Cir.
2013) (“The view adopted by a majority of district courts, and
the one followed below, is that mortgage foreclosure is not debt
This view follows from the premise that the
enforcement of a security interest, which is precisely what
mortgage foreclosure is, is not debt collection.” (citing but
disagreeing with district court cases)).
In this court’s view, the prevailing approach among
federal district courts is correct and based upon a proper
reading of the FDCPA’s statutory language.
The district court
in Gray v. Four Oak Court Association provides the following
analysis to support the conclusion that the enforcement of
security interests is distinct from debt collection under the
The FDCPA does not define “the collection of
definition of a “debt collector” clearly
reflects Congress's intent to distinguish
between “the collection of any debts” and
“the enforcement of security interests.” 15
U.S.C. § 1692a(6).
The first sentence of
that definition defines a debt collector as
“any person who uses any instrumentality of
interstate commerce or the mails in any
business the principal purpose of which is
regularly collects or attempts to collect,
directly or indirectly, debts owed or due or
asserted to be owed or due another.” Id. §
The third sentence of § 1692a(6)
provides that for purposes of § 1692f(6), a
debt collector is also “any person who uses
any instrumentality of interstate commerce
or the mails in any business the principal
purpose of which is the enforcement of
security interests.” If a party satisfies
the first sentence, it is a debt collector
for purposes of the entire FDCPA.
party satisfies only the third sentence, its
debt collector status is limited to §
1692f(6). However, if the enforcement of a
security interest was synonymous with debt
collection, the third sentence would be
surplusage because any business with a
interests would also have the principal
purpose of collecting debts.
avoid this result, the court determines that
the enforcement of a security interest,
including a lien foreclosure, does not
constitute the “collection of any debt.”
580 F. Supp. 2d at 887-88 (footnote and citation omitted); see
also Armacost v. HSBC Bank USA, No. 10-CV-274, 2011 WL 825151,
at *5-6 (D. Idaho Feb. 9, 2011) (adopting statutory
interpretation of Gray), adopted by 2011 WL 809166 (D. Idaho
Mar. 2, 2011); Jara v. Aurora Loan Servs., LLC, et al., No. 11C-419, 2011 WL 6217308, at *5 (N.D. Cal. Dec. 14, 2011) (finding
statutory interpretation of Armacost persuasive).
The court is persuaded by the statutory interpretation
set forth in Gray and fully adopts its reasoning.
As the Gray
court aptly observed, construing the enforcement of security
interests as debt collection under the FDCPA renders superfluous
some of the statutory text.
580 F. Supp. 2d at 887-88.
well-settled that courts should avoid statutory interpretations
that render provisions superfluous: ‘It is our duty to give
effect, if possible, to every clause and word of a statute.’”
State Street Bank & Trust Co. v. Salovaara, 326 F.3d 130, 139
(2d Cir. 2003) (quoting Duncan v. Walker, 533 U.S. 167, 174
(2001)); see also United States v. Aleynikov, 676 F.3d 71, 81
(2d Cir. 2012) (rejecting interpretation as “inconsistent with
one of the most basic interpretative canons, that a statute
should be construed so that effect is given to all its
provisions, so that no part will be inoperative or superfluous,
void or insignificant” (internal quotation marks omitted)).
canon against surplusage therefore militates strongly in favor
of Gray’s statutory interpretation.
The Sixth Circuit recently rejected the interpretive
approach adopted by Gray.
See Glazer, 704 F.3d at 463-64.
Specifically, the Sixth Circuit explained that the FDCPA does
not “except from debt collection the enforcement of security
interests” but rather “operates to include certain persons under
the Act (though for a limited purpose); it does not exclude from
the Act’s coverage a method commonly used to collect a debt.”
Id. (citing Piper, 396 F.3d at 236).
In reaching this
determination, the Glazer court asserted that “[o]ther than
repossession agencies and their agencies, we can think of no
others whose only role in the collection process is the
enforcement of security interests.
A lawyer principally engaged
in mortgage foreclosure does not meet this criteria, for he must
communicate with the debtor regarding the debt during the
Id. at 464.
the Sixth Circuit reasoned, do not have to communicate with
debtors because they “typically ‘enforce’ a security interest .
. . when the debtor is not present.” Id.
Glazer’s reasoning is unconvincing and has been
See Natividad v. Wells Fargo Bank, N.A.,
No. 12-CV-3646, 2013 WL 2299601, at *6-7 (N.D. Cal. May 24,
2013) (rejecting the reasoning and analysis of Glazer).
example, the district court in Natividad has recently identified
several of Glazer’s flaws:
Nothing in the [FDCPA] supports Glazer’s
considered an enforcer of security interests
if there are communications between it and
An entity, such as a trustee,
is enforcing a security interest when it
pursues nonjudicial foreclosure as much as a
repossession agency is enforcing a security
interest when it takes possession of a
vehicle. That entities pursuing nonjudicial
mandated communications to debtors — such as
a notice of default — does not automatically
deprive them of their role as enforcers of
appears to assume that the third sentence
only includes repossessors, as opposed to
also excluding repossessors from the other
provisions of the Act.
However, under the
articulated by the [Glazer] court, the
After all, [according to the
Glazer court’s own reasoning,] the ultimate
goal of repossessing a vehicle is to pay
down an outstanding debt — just as the
ultimate goal of foreclosing on a mortgage
is to satisfy the loan amount.
the purpose of determining what actions
comprise collecting debt, and therefore who
qualifies as a “debt collector” under the
Act, the actions of repossessors are not
distinguishable from the actions of persons
pursuing mortgage foreclosure.
Id. at *7.
The FDCPA by its own terms contemplates a
distinction between the “collection of any debts” and “the
enforcement of security interests.”
15 U.S.C. § 1692a(6).
Glazer court overlooks this basic statutory distinction and
engages in statutory interpretation that this court declines to
Speleos, 824 F. Supp. 2d at 232 (“The statute itself,
however, distinguishes debt collection from security interest
enforcement in its definition of a ‘debt collector.’”).
The court therefore concludes — as it did in its
October 2012 Order — that where, as here, no monetary judgment
The Glazer court also relies upon 15 U.S.C. § 1692i(a)(1) to
support its holding that the enforcement of security interests constitutes
debt collection under the FDCPA. 704 F.3d at 462. Section 1692i(a)(1) is a
venue provision that requiers a debt collector who brings a legal action
against a consumer “to enforce an interest in real property securing the
consumer’s obligation” to file the action in the judicial district where the
property is located. 15 U.S.C. § 1692i(a)(1). This provision, the Glazer
court argues, suggests that “filing any type of mortgage foreclosure action,
even one not seeking a money judgment on the unpaid debt, is debt collection
under the Act.” Id. This is not so. Although § 1692i is a venue provision
that, by its terms, applies to only “debt collectors,” the Glazer court
erroneously assumes that these debt collectors are debt collectors because of
their mortgage foreclosure activities, rather than because of other
activities that qualify as debt collection under the FDCPA. There is nothing
in the text of § 1692i to support the Glazer court’s assumption. See
Natividad, 2013 WL 2299601, at *8 (“[T]he [Glazer] court’s conclusion fail[s]
to recognize that the entire FDCPA can apply to a party whose principal
business is enforcing security interests but who nevertheless fits
§ 1692(a)(6)’s general definition of a debt collector.”).
is sought against a debtor, the enforcement of a security
interest through lien foreclosure does not constitute debt
collection for purposes of the FDCPA. 10
* * *
At bottom, Plaintiffs’ motion for reconsideration is a
thinly veiled attempt to obtain a second bite at the apple by
relitigating issues already considered by the court.
Plaintiffs’ motion raised some meritorious arguments, which it
does not, Plaintiffs fail to identify any clear error or
controlling precedent or facts overlooked in this court’s
October 2012 Order.
Having failed to do so, Plaintiffs are not
entitled to reconsideration.
For the reasons set forth above, Plaintiffs’ motion
for reconsideration is denied.
The parties shall inform the
Second Circuit of the disposition of this motion, transmit a
Plaintiffs conclude their motion for reconsideration by arguing
that the sole inquiry under § 1692f(1) is whether defendants collected
unauthorized amounts. (Pls. Mot. for Recon. at 20-22.) Plaintiffs thus
argue that “the Court’s finding that ‘defendant’s judicial foreclosures did
not attempt to collect money from the debtor’ is not only irrelevant for
purposes of § 1692f(1), but logically inconsistent as well.” (Id. at 23.)
This argument misses the mark. To be liable under § 1692f(1), a debt
collector must “collect or attempt to collect [a] debt.” 15 U.S.C. § 1692f.
Thus, this court’s finding that Defendants’ judicial foreclosures did not
attempt to collect monetary judgments from Plaintiffs is of central relevance
to determining whether Defendants’ actions in enforcing the Tax Liens against
the Jones and Boyd Properties constitute debt collection activities for
purposes of § 1692f(1). In any event, Plaintiffs have pointed to no
controlling legal authority or facts that this court overlooked and therefore
are not entitled to reconsideration on this, or any other, issue.
copy of this Memorandum and Order to the Second Circuit, and
file an affidavit in this docket confirming such transmittal no
later than October 1, 2013.
September 27, 2013
Brooklyn, New York
KIYO A. MATSUMOTO
United States District Judge
Eastern District of New York
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