Rutty v. Krimko et al

Filing 79

MEMORANDUM DECISION AND ORDER dated 10/16/18 that since there is neither diversity nor federal question jurisdiction, the motions to dismiss 67 72 51 are granted and plaintiffs second amended complaint is dismissed for lack of subject matter jurisdiction. Krimkos motion to dismiss for failure to state a claim against him 69 49 is denied as moot. ( Ordered by Judge Brian M. Cogan on 10/16/2018 ) c/m *Forwarded for jgm. (Guzzi, Roseann)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------------------------- X
:
ROBERT R. RUTTY,
:
:
Plaintiff,
:
:
- against : MEMORANDUM
: DECISION & ORDER
MERLVIN R. KRIMKO, ESQ., POWER
:
HOME SALES 172 INC., SLF NEW YORK : 17-cv-6090 (BMC) (VMS)
HOLDINGS LLC, THE MARGOLIN &
:
WEINREB LAW GROUP, LLP, ALAN H.
:
WEINREB, ESQ., and GUSTAVIA HOME, :
:
LLC,
:
Defendants.
:
---------------------------------------------------------- X

C/M

COGAN, District Judge.
This is the third of three cases related to the foreclosure by Gustavia Home, LLC, on an
investment property of plaintiff pro se located in Queens. After the Court dismissed plaintiff’s
federal claims, it ordered plaintiff to show why the Court had diversity jurisdiction over the
limited partnership and limited liability company defendants. In light of plaintiff’s pro se status,
the Court granted him an additional opportunity to remedy the jurisdictional defect.
Plaintiff declined to do so, and instead moved to amend his complaint for a second time
to add a federal claim under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, against
defendant Gustavia and its counsel The Margolin & Weinreb Law Group, LLP, thus attempting
to invoke federal question jurisdiction. The Court concluded that plaintiff failed to state a claim
against Gustavia because it is a creditor, not a debt collector. However, in light of the Second
Circuit’s liberal amendment policy for pro se plaintiffs, see Nielsen v. Rabin, 746 F.3d 58, 62

(2d Cir. 2014), the Court granted plaintiff leave to amend his FDCPA claim against Margolin &
Weinreb.
Plaintiff has filed a second amended complaint. It pleads eight causes of action against
various combinations of defendants, including breach of contract, wrongful foreclosure, slander
of title, slander of credit, professional negligence, and violations of New York General Business
Law § 349, the Federal Debt Collection Practices Act, and the Fair Credit Reporting Act.
Plaintiff still has not alleged the citizenship of the partners and members of the defendants that
are limited partnerships and limited liability companies – SLF New York Holdings LLC,
Margolin & Weinreb, and Gustavia 1 – and therefore has not invoked diversity jurisdiction. All
defendants except Power Home Sales 172 Inc. have moved to dismiss.
Plaintiff brings a Federal Debt Collection Practices Act claim against defendants
Gustavia, Alan Weinreb, and Margolin & Weinreb. The FDCPA defines “debt collector” as
“any person who uses any instrumentality of interstate commerce or the mails in any business the
principal purpose of which is the collection of any debts, or who regularly collects or attempts to
collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15
U.S.C. § 1692a(6) (emphasis added). As the Court explained in its July 23, 2018 order granting
plaintiff leave to amend, because Gustavia was attempting to collect its own debt through the
mortgage foreclosure, plaintiff cannot bring an FDCPA claim against Gustavia for its role in that
foreclosure. See Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718, 1724 (2017).

The Court notes that Gustavia, as the plaintiff in the underlying mortgage foreclosure action, pleaded that it is a
single-member limited liability company and that its sole member is domiciled in Florida. See Compl. at 2,
Gustavia Home, LLC v. Rutty, 2018 WL 2198742 (No. 16-CV-2823) (E.D.N.Y. June 2, 2016). However, even
assuming that the Court could cure pro se plaintiff’s jurisdictional pleading deficiency in this case based on
Gustavia’s pleading in the related case, it could not do so for defendants SLF New York Holdings LLC and The
Margolin & Weinreb Law Group, LLP, because they were not parties to the underlying foreclosure action and
therefore their citizenship was not alleged in that complaint. Plaintiff has not alleged these defendants’ citizenship
despite multiple opportunities to do so.
1

2

As to Alan Weinreb 2 and the firm, Margolin & Weinreb, plaintiff alleges that their
actions in “filing and maintaining the foreclosure action and opposing plaintiff’s motion for
relief which sought to dismiss the frivolous complaint constitute a false, deceptive, and/or
misleading practice in attempt [sic] to collect a [d]ebt.” Most of this statement is a bare legal
conclusion, not a factual allegation. The only portion that is a factual allegation – “filing and
maintaining the foreclosure action and opposing plaintiff’s motion for relief” – does not state a
claim. As the Court cautioned plaintiff in its order granting leave to amend, claims premised on
the invalidity or unenforceability of Gustavia’s note must fail because this Court has already
concluded in another of plaintiff’s related cases that Gustavia was entitled to foreclose on
plaintiff’s mortgage based on its valid note. See Gustavia Home, LLC v. Rutty, No. 16-CV2823, 2018 WL 2198742, at *3 (E.D.N.Y. May 14, 2018). Plaintiff’s FDCPA claim is therefore
dismissed.
Plaintiff’s other federal claim is under the Fair Credit Reporting Act against Gustavia and
SLF New York Holdings. Plaintiff alleges that Gustavia is a furnisher of information under
FCRA and that it “failed to adequately conduct an investigation with respect to the disputed
information,” “failed to conduct an investigation findings [sic] to the consumer reporting
agencies after plaintiff filed a motion to dismiss the complaint,” “failed to notify the credit
reporting agency that the information provided by such person was incomplete or inaccurate,”
and “failed to file a motion to vacate the Referee’s Deed and the subsequent Deed to SLF New

“[T]he FDCPA’s definition of ‘debt collector’ includes lawyers who regularly, through litigation, attempt to collect
consumer debts.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 593 (2010). Plaintiff’s
second amended complaint does not state that either Alan Weinreb or Margolin & Weinreb regularly collect debts
owed another, but because his claim fails for other reasons, the Court need not conclude whether his allegations that
these defendants attempted to collect his debt due another on this occasion would be sufficient based on his pro se
status.
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3

York Holdings LLC and further vacate the order of reference and summary judgment which it
obtained through false pretenses.”
Subsection (a) of 15 U.S.C. § 1681s-2 prohibits a “furnisher” from knowingly reporting
inaccurate information, failing to correct and update information, and failing to investigate a
dispute raised directly to the furnisher by a consumer. At least some of plaintiff’s claims,
particularly his claim that Gustavia failed to “conduct an investigation . . . after plaintiff filed a
motion to dismiss the complaint” and “failed to file a motion to vacate the Referee’s Deed” could
be construed to fall under this subsection. These claims must fail because § 1681s-2(a) does not
provide a private cause of action; subsection (a)’s text plainly limits to enforcement exclusively
to federal agencies and officials and to state officials. See 15 U.S.C. § 1681s-2; see also
Longman v. Wachovia Bank, N.A., 702 F.3d 148, 151 (2d Cir. 2012).
Plaintiff’s other allegations could be construed as claims under § 1681s-2(b), which sets
out certain duties for furnishers if they receive a particular notice of dispute from a consumer
reporting agency. Those duties include, among other things, “conduct[ing] an investigation with
respect to the disputed information,” “review[ing] all relevant information provided by the
consumer reporting agency,” and “report[ing] the results of the investigation to the consumer
reporting agency.” 15 U.S.C. § 1681s-2(b)(1).
To state a claim under § 1681s-2(b)(1), a plaintiff must allege facts tending to show that:
(1) defendant is a “furnisher of information” within the meaning of the statute; (2) defendant
received the notice of the consumer dispute from a consumer reporting agency (not from plaintiff
himself), and that defendant acted in “willful or negligent noncompliance” with the statute.
Markovskaya v. Am. Home Mortg. Servicing, Inc., 867 F. Supp. 2d 340, 343 (E.D.N.Y. 2012)
(internal quotation marks and citation omitted).

4

Plaintiff has failed to state a FCRA claim against either Gustavia or SLF New York.
First, plaintiff has not alleged that SLF New York provided information about plaintiff to a
consumer reporting agency or in any other way acted as a furnisher of information. The
complaint does not mention SLF New York taking any action at all except purchasing the deed
(the only other reference to SLF New York vis-à-vis the FCRA claim is plaintiff’s allegation that
Gustavia violated FCRA by failing to file a motion to vacate the deed to it). Plaintiff therefore
has failed to state a claim under the FCRA against SLF New York.
As to Gustavia, the complaint alleges that it “regularly and in the course of business,
furnishes information to one or more consumer reporting agencies about their transactions or
experiences with any consumer. But plaintiff does not plead any facts to show that Gustavia
received notice of a dispute from a consumer reporting agency, as described in § 1681i(a)(2).
Plaintiff’s complaint does not allege that Gustavia received any kind of notice at all. Plaintiff
therefore fails to state a FCRA claim against Gustavia as well. 3
Since there is neither diversity nor federal question jurisdiction, the motions to dismiss
[67] [72] [51] are granted and plaintiff’s second amended complaint is dismissed for lack of
subject matter jurisdiction. Krimko’s motion to dismiss for failure to state a claim against him
[69] [49] is denied as moot. The Clerk is directed to enter judgment dismissing the complaint.
SO ORDERED.

Digitally signed by Brian
M. Cogan
U.S.D.J.

Dated: Brooklyn, New York
October 16, 2018
All of plaintiff’s FCRA allegations, like his sparse FDCPA allegations, are premised on the invalidity or
unenforceability of Gustavia’s note. As the Court warned plaintiff in its July 23, 2018 order granting him leave to
amend, the Court has already concluded that the note was valid and that Gustavia’s foreclosure on plaintiff’s
mortgage and SLF New York’s subsequent purchase of the deed to his property based on that note were also valid.
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