Lee v. Forster & Garbus LLP et al

Filing 21

ORDER denying 9 Motion to Dismiss for Failure to State a Claim -- For the reasons set forth in the ATTACHED WRITTEN MEMORANDUM AND ORDER, defendants' motion to dismiss the complaint is denied in its entirety. This matter is referred back to the magistrate judge for further pretrial proceedings, including settlement discussions. SO ORDERED by Judge Dora Lizette Irizarry on 3/1/2013. (Irizarry, Dora)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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EUN JOO LEE, on behalf of herself and all
:
others similarly situated,
:
:
Plaintiff,
:
:
-against:
:
FORSTER & GARBUS LLP and NCOP
:
XI, LLC,
:
:
Defendants.
:
:
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DORA L. IRIZARRY, U.S. District Judge:

MEMORANDUM AND ORDER
12-cv-420 (DLI) (CLP)

Plaintiff Eun Joo Lee (“Plaintiff”), individually and behalf of all others similarly situated,
brought this putative class action against defendants Forster & Garbus LLP (“Forster”) and
NCOP XI, LLC (“NCOP” and, collectively with Forster, “Defendants”) asserting claims
pursuant to the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.
Defendants moved to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
Plaintiff opposed the motion. For the reasons set forth below, Defendants’ motion is denied.
BACKGROUND
NCOP allegedly purchased the right to collect from Plaintiff a consumer debt that
Plaintiff initially owed to Capital One and was already in default,. (See Am. Compl., Dkt. Entry
4, ¶¶ 17, 21.) NCOP, through its representative, Forster, first attempted to collect the debt by
sending Plaintiff a form letter, dated January 31, 2011 (“Collection Letter”). (Id. ¶ 23 & Ex. A.)
The reference line at the top of the Collection Letter read “AMOUNT DUE: $2,812.15,”
followed by reference and account numbers for the debt and a line that read, “Re: NCOP XI,
LLC A/P/O CAPITAL ONE.” (Id. ¶ 26 & Ex. A.) Plaintiff alleges that Defendants sent similar

form letters to hundreds, if not thousands, of other consumers in New York State. (Id. ¶ 28.)
On January 30, 2012, Plaintiff filed the instant action against NCOP and Forster on
behalf of herself and all others similarly situated and, on February 15, 2012, Plaintiff filed an
amended complaint. In the amended complaint, Plaintiff alleges that the Collection Letter
violated Sections 1692e, f, and g of the FDCPA because it failed to set forth the name of the
current creditor and was deceptive. (See id. ¶ 35.) More specifically, Plaintiff claims that there
is no such entity as “NCOP XI, LLC A/P/O CAPITAL ONE” and the abbreviation “A/P/O” is
confusing. (Id.)
Defendants moved to dismiss the amended complaint, asserting that: i) the Collection
Letter properly identifies the creditor; ii) the allegedly misleading statement is not material; iii)
the Collection Letter was sent by Forster, not NCOP; and iv) Plaintiff’s claims against Forster
are barred by her filing for bankruptcy. (See Defs.’ Mem. of Law in Supp. of Mot. to Dismiss
Am. Compl., Dkt. Entry 9-1 (“Defs.’ Mem.”).) Plaintiff opposed the motion, asserting that: i)
the Collection Letter is misleading because it fails to make it clear to whom Plaintiff owed
money; ii) Defendants’ failure to identify the creditor is material; iii) both NCOP and Forster are
responsible for the Collection Letter; and iv) the trustee of Plaintiff’s bankruptcy estate
abandoned her FDCPA claims and, therefore, this action is not barred. (See Pl.’s Mem. of Law
in Opp’n to Defs.’ Mot. to Dismiss, Dkt. Entry 12 (“Pl.’s Opp’n”).)
LEGAL STANDARD
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain
statement of the claim showing that the pleader is entitled to relief.” The pleading standard
under Rule 8 does not require “detailed factual allegations,” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007), “but it demands more than an unadorned, the-defendant-unlawfully-harmed-me

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accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint does not “suffice if it
tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. (quoting Twombly,
550 U.S. at 557). A plaintiff’s obligation to provide the grounds of his entitlement to relief
“requires more than labels and conclusions, and a formulaic recitation of the elements of a cause
of action will not do.” Twombly, 550 U.S. at 555. Nevertheless, on a Rule 12(b)(6) motion, the
court must accept as true all factual statements alleged in the complaint and draw all reasonable
inferences in favor of the nonmoving party. Taylor v. Vt. Dep’t of Educ., 313 F. 3d 768, 776 (2d
Cir. 2002).
DISCUSSION
I.

FDCPA
A.

Failure to Identify the Creditor

Plaintiff claims that the Collection Letter did not comply with Sections 1692e, f, and g of
the FDCPA because it did not identify the entity to which Plaintiff owed money. (Am. Compl. ¶
35.)

Section 1692e broadly prohibits debt collectors from using “any false, deceptive, or

misleading representation or means in connection with the collection of any debt.” 15 U.S.C. §
1692e. A communication is deceptive and, thus, in violation of 15 U.S.C. § 1692e, “when it can
be reasonably read to have two or more different meanings, one of which is inaccurate.”
Beauchamp v. Fin. Recovery Servs., Inc., 2011 WL 891320, at *2 (S.D.N.Y. Mar. 14, 2011).
Somewhat similarly, under Section 1692f, “[a] debt collector may not use unfair or
unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. Section
1692g specifically requires debt collectors to identify, inter alia, “the name of the creditor to
whom the debt is owed” in their initial communication, or within five days of their initial
communication, with the debtor. 15 U.S.C. § 1692g(a)(2).

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“In this Circuit, the question of whether a communication complies with the FDCPA is
determined from the perspective of the least sophisticated consumer.” Jacobsen v. Healthcare
Fin. Servs., Inc., 516 F. 3d 85, 90 (2d Cir. 2008) (internal quotation marks omitted). The “least
sophisticated consumer” standard is “‘an objective standard, measured by how the “least
sophisticated consumer” would interpret the notice received from the debt collector.’” DeSantis
v. Computer Credit, Inc., 269 F. 3d 159, 161 (2d Cir. 2001) (quoting Russell v. Equifax A.R.S.,
74 F. 3d 30, 34 (2d Cir. 1996)). The purpose of applying the “least sophisticated consumer”
standard to review claims of FDCPA violations is to:

“(1) ensure the protection of all

consumers, even the naive and the trusting, against deceptive debt collection practices, and (2)
protect debt collectors against liability for bizarre or idiosyncratic interpretations of collection
notices.” Kropelnicki v. Siegel, 290 F. 3d 118, 127 (2d Cir. 2002) (internal quotation marks and
alterations omitted). “Ultimately, the critical question [in determining whether a communication
violates the FDCPA] is . . . whether the notice fails to convey the required information clearly
and effectively and thereby makes the least sophisticated consumer uncertain as to the meaning
of the message.” Weiss v. Zwicker, 664 F. Supp. 2d 214, 216 (E.D.N.Y. 2009) (citations and
internal quotation marks omitted).
Plaintiff has stated a plausible claim that the Collection Letter was misleading to the least
sophisticated customer and failed to identify the creditor to which Plaintiff owed the debt.
NCOP was the entity to which Plaintiff owed money and it is mentioned in the Collection Letter
twice, but the letter does not clearly and effectively convey its role in connection with the debt.
Cf. Russell, 74 F. 3d at 35 (“We recognize there are many cunning ways to circumvent § 1692g
under cover of technical compliance, but purported compliance with the form of the statute
should not be given sanction at the expense of the substance of the Act.” (citation omitted)).

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Specifically, the entity is listed in two “reference” lines as “NCOP XI, LLC A/P/O CAPITAL
ONE.” (Am. Compl. Ex. A.) Listing NCOP on the reference lines, particularly when followed
by the unusual abbreviation “A/P/O” and the name of the original creditor, easily could have
failed to alert the least sophisticated consumer that her debt was now owned by NCOP. See
Sparkman v. Zwicker & Assocs., P.C., 374 F. Supp. 2d 293, 300-01 (E.D.N.Y. 2005) (Debt
collector failed to identify creditor adequately where “[t]he name of the creditor . . . does appear
in the subject line of the Collection Letter, but is not identified as the creditor.”); see also
McMillan v. Collection Prof’ls, Inc., 455 F. 3d 754, 758 (7th Cir. 2006) (“If the required
information is not communicated to the debtor, or if it is provided in a manner that is ‘confusing’
to the consumer, § 1692g has been violated.”).
This failure to identify the creditor also could have been unfair and deceptive to the least
sophisticated consumer for purposes of Section 1692e and Section 1692f. See Suquilanda v.
Cohen & Slamowitz, LLP, 2011 WL 4344044, at *7 (S.D.N.Y. Sept. 8, 2011) (holding that the
plaintiff stated a claim for relief where creditor was misidentified in a letter). There is nothing
identifying the relationship of either NCOP or Capital One to the debt and the Collection Letter
does not explain why these entities appear in the letter. The court is also unaware of any
commonly understood meaning of “A/P/O” and Defendants do not define the term in the
Collection Letter or their motion papers.
Defendants assert that Plaintiff could not have been confused by the Collection Letter
because she could have replied to contact information provided in the Collection Letter and
challenged the debt or sought more information. (See Defs.’ Mem. 8.) However, under the
objective least sophisticated consumer standard, “it is not necessary for a plaintiff to show that
she herself was confused by the communication she received; it is sufficient for a plaintiff to

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demonstrate that the least sophisticated consumer would be confused.” Jacobsen, 516 F. 3d at
91.
Defendant asserts that listing Capital One in the Collection Letter would have alerted
Plaintiff that Defendants were attempting to collect her credit card debt, but this argument misses
the mark. Identifying the debt owed is different from identifying the current owner of the debt,
especially when, like here, the original creditor sold the debt to a third party. Defendants also
contend that they listed Capital One because they were attempting to comply with New York
City Administrative Code § 20-493.1, which requires debt collectors to identify the original
creditor in communications with the debtor. (Defs.’ Mem. 8-11.) Defendants maintain that they
should not be punished for complying with local laws. (Id.) This argument is based on a
misreading of the amended complaint. Plaintiff does not allege that the Collection Letter was
misleading simply because it provided the name of the original creditor. The Collection Letter
allegedly was misleading because it provided the name of the creditor, followed by an odd
abbreviation and the name of the original creditor, and did not identify NCOP and Capital One as
the current creditor and the original creditor, respectively. (See Am. Compl. ¶¶ 26-27, 35.)
Defendants fare no better insisting that any misidentification in the Collection Letter was
immaterial. As an initial matter, this argument only could apply to the alleged Section 1692e and
Section 1692f violations. Section 1692(g)(2) specifically requires debt collectors to identify the
creditor to whom the debt is owed in the initial communication or within five days of the initial
communication. There is nothing in the statute requiring the identity of the creditor to be
“material” to the communication.

In addition, even assuming, arguendo, that a deceptive

statement must be material to violate Section 1692e and Section 1692f, failing to identify the
creditor here was not immaterial as a matter of law. The entity to which a debtor owes money

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potentially affects the debtor in the most basic ways, such as what the debtor should write after
“pay to the order of” on the payment check to ensure that the debt is satisfied. 1 Accordingly,
Defendants’ materiality argument is without merit.
B.

NCOP’s Liability

Defendants also contend that Plaintiff’s claim against NCOP is deficient because Forster
sent the Collection Letter on its own. (Defs.’ Mem. 13-14.) However, Plaintiffs have alleged
that both Defendants drafted and sent the Collection Letter, and the court must accept these
allegations as true for purposes of the instant motion. (See Am. Compl. ¶ 23.) Defendants’
factual assertions otherwise are premature. In addition, “[c]ourts have concluded that where the
principal is a ‘debt collector,’ the principal may be liable for its agent’s FDCPA violations.”
Suquilanda, 2011 WL 4344044, at *4. Plaintiff has alleged that NCOP regularly attempts to
collect debts and is a debt collector, and that Forster was NCOP’s agent for purposes of
collecting Plaintiff’s debt. (Am. Compl. ¶¶ 13-15, 19.) Therefore, Plaintiff has stated viable
claims against NCOP.
II.

Plaintiff’s Bankruptcy
Defendants assert that Plaintiff is barred from bringing claims against Forster because,

following her receipt of the Collection Letter, she declared bankruptcy and did not list a FDCPA
claim against Forster in the schedule of assets and liabilities (“Schedule”) she filed in her
bankruptcy proceeding. (Defs.’ Mem. 12-13.) Plaintiff counters that she listed FDCPA claims
1

Defendants suggest in their reply memorandum of law that a check made payable to “NCOP
XI, LLC A/P/O CAPITAL ONE” would have been acceptable. (Defs.’ Reply Mem. of Law,
Dkt. Entry 15, at 2.) Defendants’ conjecture is not supported by any of the allegations in the
amended complaint or the Collection Letter incorporated therein and, therefore, cannot be
considered by this court. See McCarthy v. Dun & Bradstreet Corp., 482 F. 3d 184, 191 (2d Cir.
2007) (On the motion to dismiss, the court’s review “is limited to the facts as asserted within the
four corners of the complaint, the documents attached to the complaint as exhibits, and any
documents incorporated in the complaint by reference.”).
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against NCOP in the Schedule, which provided sufficient notice that the trustee could bring
FDCPA claims against Forster. (Pls.’ Opp’n 13-19.)
When a bankruptcy petition is filed, the debtor must file a financial statement with the
bankruptcy court, including a schedule of assets that are part of the estate. See 11 U.S.C. §
521(a)(1)(B). The estate’s assets that must be listed on the schedule include “all legal or
equitable interests of the debtor in property,” “wherever located and by whomever held.” 11
U.S.C. § 541(a)(1). In addition, the debtor must disclose in the schedule all “causes of action
owned by the debtor or arising from property of the estate.” Chartschlaa v. Nationwide Mut. Ins.
Co., 538 F. 3d 116, 122 (2d Cir. 2008) (per curiam). Any assets listed in the schedule of assets
that are not administered by the estate’s trustee by the time the bankruptcy case is closed are
considered abandoned. 11 U.S.C. § 554(c). Abandoned assets “normally return[] to the debtor
when the bankruptcy court closes the case.” Chartschlaa, 538 F. 3d at 122.
However, property that is not disclosed on the schedule remains part of the estate. Id.; 11
U.S.C. § 554(d). “Courts have held that because an unscheduled claim remains the property of
the bankruptcy estate, the debtor lacks standing to pursue the claims after emerging from
bankruptcy, and the claims must be dismissed.” Rosenshein v. Kleban, 918 F. Supp. 98, 103
(S.D.N.Y. 1996); see also In re Drexel Burnham Lambert Grp., Inc., 160 B.R. 508, 514
(S.D.N.Y. 1993) (“[A]ny asset not scheduled . . . remains property of the bankrupt estate, and the
debtor loses all rights to enforce it in his own name.”). Courts also have held that debtors are
barred by the doctrine of judicial estoppel from bringing unscheduled claims. See Coffaro v.
Crespo, 721 F. Supp. 2d 141, 145 (E.D.N.Y. 2010) (“[J]udicial estoppel is commonly invoked in
order to prevent a party who failed to disclose a claim in bankruptcy proceedings from asserting
that claim after emerging from bankruptcy.” (internal quotation marks omitted)).

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Here, Plaintiff apparently listed in the Schedule her FDCPA claim for an estimated
$1,000 against NCOP, but did not list a claim against Forster, 2 and the trustee did not bring
claims against either NCOP or Forster. (See Defs.’ Mem. 12; Pl.’s Opp’n 15.) The issue thus
becomes whether the description of Plaintiff’s FDCPA claim in the Schedule was sufficiently
detailed under 11 U.S.C. § 521(a)(1) for claims against Forster to have been abandoned. The
statute does not provide guidance as to the level of detail necessary in a schedule of assets and,
as one court in this circuit noted, “few courts have addressed the level of specificity with which
debtors must describe assets in order to comply with 11 U.S.C. § 521(a)(1).” Tilley v. Anixter
Inc., 332 B.R. 501, 509 (D. Conn. 2005). However, a review of authority from outside of this
circuit and from courts of concurrent jurisdiction inside this circuit reveals that courts typically
look at whether the schedule gives the trustee enough information about the claim so he or she
can decide if the claim is worth pursuing. See In re Furlong, 660 F. 3d 81, 87 (1st Cir. 2011)
(“As investigation is part of the Trustee’s duties under § 704, a debtor is required only to do
enough itemizing to enable the trustee to determine whether to investigate further.” (citations and
internal quotation marks omitted)); Cusano v. Klein, 264 F. 3d 936, 946 (9th Cir. 2001)
(Schedule was adequate where “listing was not so defective that it would forestall a proper
investigation of the asset.”); Payne v. Wood, 775 F. 2d 202, 206 (7th Cir. 1985) (Purpose of
schedule of assets “is to allow the trustee to decide which claims to challenge.”); Tilley, 332 B.R.
at 509 (“[I]n order for a bankruptcy trustee to accurately determine how much property an estate
has available for distribution to creditors, the schedule of assets must put him or her on notice of
all potential assets.”).

2

Neither party submitted the Schedule to this court, but the court assumes for discussion
purposes that the above description generally is accurate because the parties do not appear to
dispute that the Schedule listed the FDCPA claim against NCOP but not against Forster.
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The court agrees that it is sensible to require debtors to provide enough information for
the trustee to be able to determine whether it is in the best interests of the estate to pursue the
claim. If the trustee cannot evaluate the claim, then the estate’s creditors may be deprived of a
valuable asset. On the other hand, if the trustee has enough information to decide that the claim
is not worth pursuing and no claim is brought, the creditors and the courts can be assured that the
trustee made a purposeful decision to abandon the claim. In this instance, based on the parties’
representations, it appears that the Schedule provided sufficient information about Plaintiff’s
potential FDCPA claims for the trustee to have been able to make an educated decision not to
bring the claims against both Defendants. Even though the Schedule did not list Forster as a
possible defendant in any FDCPA action, a minimal investigation by the trustee would have
revealed that Forster was a potential defendant in any such an action. The trustee would have
needed only to take a cursory look at the Collection Letter to see that it was written on Forster’s
letterhead and sent from Forster’s offices. The trustee then easily could have decided that
Forster was responsible for any alleged FDCPA violations arising out of the Collection Letter.
Thus, the trustee abandoned Plaintiff’s FDCPA action against both NCOP and Forster when it
did not bring FDCPA claims before Plaintiff’s bankruptcy case was closed.

Accordingly,

Plaintiff is not barred from bringing this action either on standing or judicial estoppel grounds.
CONCLUSION
For the foregoing reasons, Defendants’ motion to dismiss is denied in its entirety.
SO ORDERED.
Dated: Brooklyn, New York
March 1, 2013
_______________/s/_____________
DORA L. IRIZARRY
United States District Judge

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