Caldwell et al v. Gutman, Mintz, Baker, & Sonnenfeldt, P.C. et al

Filing 88

ORDER granting 69 Motion to Dismiss; denying 87 Motion to Stay. For the reasons set forth in the attached Memorandum and Order, IT IS HEREBY ORDERED that defendants' motion to dismiss is granted. The Court sua sponte dismisses the complain t against defendant Kavulich. Furthermore, the Court denies plaintiffs' motion for a stay and motion for sanctions. The Clerk of the Court shall enter judgment accordingly and close the case. SO ORDERED. The Court has mailed a copy of the Memorandum and Order to the pro se plaintiffs. Ordered by Judge Joseph F. Bianco on 3/28/2012. (Weber, Rebecca)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 08-CV-4207 (JFB)(WDW)
_____________________

KEN CALDWELL AND LISA CALDWELL,
Plaintiffs,
VERSUS
GUTMAN, MINTZ, BAKER & SONNENFELDT, P.C., ET AL.,
Defendants.
___________________
MEMORANDUM AND ORDER
March 28, 2012
___________________

JOSEPH F. BIANCO, District Judge:
Ken Caldwell and Lisa Caldwell
(collectively “Caldwells” or “plaintiffs”)
filed an amended complaint against Gutman,
Mintz, Baker & Sonnenfeldt, P.C.
(“Gutman”); Century Credit-Collections
Corporation a.k.a. Century Credit &
Collections (“Century”); Gary Kavulich
(“Kavulich”) and David Lichtenstein
(“Lichenstein”) (collectively “defendants”)
alleging violations of the Fair Credit
Reporting Act (“FCRA”), the New York
City Consumer Protection Law § 5-77, New
York State General Business Law § 349(a),
and common law fraud. Before this Court is
defendants’ motion to dismiss the Second
Amended Complaint, pursuant to Rule
12(b)(6) of the Federal Rules of Civil
Procedure.

As discussed below, the motion is
granted in its entirety as to the federal
claims. In a Memorandum and Order, dated
March 30, 2010, the Court dismissed all of
the claims, but gave plaintiffs leave to replead the FCRA claim. Since that decision,
plaintiffs have failed to allege a plausible
claim under the FCRA because they have
not alleged that defendants obtained their
address from a consumer reporting agency
by “false pretenses.” See 15 U.S.C. § 1681q.
In particular, plaintiffs’ two theories of false
pretenses set forth in the amended complaint
– namely, (1) that defendant Century failed
to possess a valid license, or (2) that
defendants did not hold the deed to the
condo at issue – cannot prevail as a matter
of law. In particular, an alleged failure to
possess a license, without more, does not
amount to an FCRA violation. Moreover,

any FCRA claims premised on the
defendants’ purported non-ownership of the
condo by plaintiffs are barred by collateral
estoppel. Thus, the FCRA claim must be
dismissed as a matter of law, with prejudice.

the complaint to be true and, for purposes of
the pending 12(b)(6) motion to dismiss, will
construe them in a light most favorable to
plaintiffs, the non-moving party.
Plaintiffs were renting a condo at 711
Shadwell Court, apartment 1F in Newport
News, Virginia (hereinafter the “condo”).
(Am. Compl. at 2. 3) David Lichtenstein, the
owner
of
The
Lightstone
Group
(“Lightstone”) and Fairfield Presidential
Associates, L.P. (“FPA”), took steps to
collect on the debt allegedly owed to FPA
by plaintiffs for rent payment. Lichtenstein
enlisted the help of Gutman to collect the
debt. (Id.) Gutman hired Century to obtain
plaintiffs’ addresses. (Id.) On December 7,
2005 Century contacted Experian Credit
Bureau and obtained plaintiffs’ address at
711 Shadwell Court.
(Id.)
Gutman
subsequently sent plaintiffs letters on
January 3, 2006 on behalf of FPA. (Id.)
Plaintiffs allege that Gutman never verified
the ownership of the deed to plaintiffs’
condo and that, in fact, FPA did not hold the
deed to plaintiffs’ condo and thereby had no
right to any debt plaintiffs may have owed
for rent. (Id. at 2-3.)

Similarly, the state law claims in the
amended complaint also cannot survive a
motion to dismiss.1 Although the Court
dismissed the claim under Section 349 of the
New York General Business Law with
prejudice in the March 30, 2010
Memorandum and Order, plaintiffs have
attempted again to re-plead that claim.
Plaintiffs also added new claims for
common law fraud and an alleged violation
of Section 5-77 of New York City
Consumer Protection Law, which were not
addressed by the Court’s March 30, 2010
Memorandum and Order. The state claims
claims, for the reasons set forth in the March
30, 2010 Memorandum and Order and infra,
cannot survive a motion to dismiss and are
dismissed with prejudice.
I. BACKGROUND
The following facts are taken from the
Second Amended Complaint filed on April
7, 2011, ECF No. 65 (“Am. Compl.”), and
are not findings of fact by the Court. 2
Instead, the Court will assume the facts in

Gutman filed a suit against plaintiffs on
behalf of FPA and Lichtenstein in New
York City Civil Court. (Id. at 3.) In that
lawsuit, plaintiffs argued – as they do now
in their amended complaint – that FPA was
not the owner of plaintiffs’ condo and was
thereby not entitled to collect on any debt
that may have been owed by plaintiffs. (Id.)
The state-court lawsuit resulted in a
judgment against plaintiffs. (See Affidavit
Accompanying Defendants’ Motion to

1

In addition to the federal question jurisdiction
over the federal claims, the Court has
jurisdiction over the state law claims based upon
diversity jurisdiction.
2
Defendants refer to plaintiffs’ complaint as the
Second Amended Complaint, but it is actually
the third complaint filed by plaintiffs in this
action. Plaintiffs filed their Complaint on
October 7, 2008 (ECF No. 1), their second
amended complaint on May 4, 2010 (ECF No.
43), and their third amended complaint on April
7, 2011 (ECF No. 63). The Court refers to the
third amended complaint as “Am. Compl.”
throughout this Memorandum and Opinion.

3

Plaintiffs have not numbered the pages of their
amended complaint. Accordingly, the page
numbers cited herein refer to the numbers
assigned by the ECF docketing system.
2

2010, this Court issued a Memorandum and
Order adopting in part the R & R, granting
defendants’ motion to dismiss the complaint,
but giving plaintiffs leave to re-plead their
FCRA claim and plead any violations of the
New York City Consumer Protection Law.

Dismiss, June 2, 2009, ECF No. 21, Exs. B,
C, D.)
II. PROCEDURAL HISTORY
Plaintiffs, who are proceeding pro se,
filed the complaint in this case on October 7,
2008 against defendants Gutman, Russell
Polirer (“Polirer”), FPA, Lightstone,
Fairfield
Presidential
Management
Corporation (“FPMC”), Lichtenstein, and
Debbie Ketay (“Ketay”). Plaintiffs alleged
numerous federal and state law claims.
Gutman and Polirer answered the complaint
on November 26, 2008. FPA, Lightstone,
FPMC, Lichtenstein, and Ketay answered on
December 10, 2008. On May 5, 2009, all
defendants notified the Court that they
intended to move for judgment on the
pleadings, and the Court issued a briefing
schedule that same day. On May 29, 2009,
plaintiffs filed a letter motion seeking leave
to file an amended complaint. On June 2,
2009, in accordance with the briefing
schedule previously issued by the Court,
defendants filed their motion for judgment
on the pleadings. On June 19, 2009, the
Court advised plaintiffs that they were
permitted to file a proposed amended
complaint with their response to the motion
to dismiss.

Plaintiffs filed an amended complaint on
May 4, 2010 against defendants Gutman,
Fairfield, Lichtenstein, Polirer, Mintz, and
Century. Defendants filed a motion to
dismiss on July 8, 2010. Plaintiffs filed their
opposition brief on August 10, 2010.
Defendants filed their reply on August 20,
2010.
The plaintiffs subsequently moved to
amend their complaint to add defendants
Century Credit and Collections and Gary
Kavulich. The Court granted that request on
March 14, 2011. Plaintiffs filed the amended
complaint on April 7, 2011. Defendants filed
their motion to dismiss on June 9, 2011.4
Plaintiff filed a “preliminary statement” July
19, 2011, and defendants filed a reply on
July 19, 2011.
The Court has fully considered the
arguments and submissions of the parties.

On November 6, 2009, this Court
referred defendants’ motion to Magistrate
Judge
Wall
for
a
Report
and
Recommendation (“R & R”). On January
27, 2010, Magistrate Judge Wall
recommended that defendants be granted
judgment on the pleadings and also
recommended, sua sponte, that plaintiffs’
motion to amend their complaint be denied.
Defendants served plaintiffs with the R & R
by mail on February 3, 2010. On February
18, 2010, this Court received objections to
the R & R from plaintiffs. On March 30,

4

The motion to dismiss was filed by Gutman,
Mintz, Baker & Sonnenfeldt, P.C., Century
Credit & Collections, Century CreditCollections Corp., and David Lichtenstein. The
motion was not filed on behalf of Gary
Kavulich, who was never served because
plaintiffs failed to provide Kavulich’s proper
address. However, the Court sua sponte
dismisses the claims against defendant Kavulich
for all of the same reasons set forth below that
the claims against the moving defendants are
dismissed.

3

construe the [plaintiff’s] pleadings . . .
liberally.” McCluskey v. New York State
Unified Ct. Sys., No. 10-CV-2144
(JFB)(ETB), 2010 WL 2558624, at *2
(E.D.N.Y. June 17, 2010) (citing Sealed
Plaintiff v. Sealed Defendant, 537 F.3d 185,
191 (2d Cir. 2008)); McEachin v.
McGuinnis, 357 F.3d 197, 200 (2d Cir.
2004)). A pro se plaintiff’s complaint,
while liberally interpreted, still must “‘state
a claim to relief that is plausible on its
face.’” Mancuso v. Hynes, 379 Fed. App’x
60, 61 (2d Cir. 2010) (citing Iqbal, 129 S.Ct.
at 1949); see also Harris v. Mills, 572 F.3d
66, 72 (2d Cir. 2009) (applying Twombly
and Iqbal to pro se complaint).

III. STANDARD OF REVIEW
In reviewing a motion to dismiss
pursuant to Rule 12(b)(6), the Court must
accept the factual allegations set forth in the
complaint as true and draw all reasonable
inferences in favor of the plaintiff. See
Cleveland v. Caplaw Enters., 448 F.3d 518,
521 (2d Cir. 2006); Nechis v. Oxford Health
Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005).
“In order to survive a motion to dismiss
under Rule 12(b)(6), a complaint must
allege a plausible set of facts sufficient ‘to
raise a right to relief above the speculative
level.’” Operating Local 649 Annuity Trust
Fund v. Smith Barney Fund Mgmt. LLC, 595
F.3d 86, 91 (2d Cir. 2010) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007)). This
standard does not require “heightened fact
pleading of specifics, but only enough facts
to state a claim to relief that is plausible on
its face.” Twombly, 550 U.S. at 570, 127
S.Ct. 1955.

Claims concerning fraud are subject to
heightened pleading standards. See Fed. R.
Civ. P. 9(b) (“In alleging fraud or mistake, a
party must state with particularity the
circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other
conditions of a person’s mind may be
alleged generally.”). “[I]n order to comply
with Rule 9(b), ‘the complaint must: (1)
specify the statements that the plaintiff
contends were fraudulent, (2) identify the
speaker, (3) state where and when the
statements were made, and (4) explain why
the statements were fraudulent.’” Lerner v.
Fleet Bank, N.A., 459 F.3d 273, 290 (2d Cir.
2006) (quoting Mills v. Polar Molecular
Corp., 12 F.3d 1170, 1175 (2d Cir. 1993));
accord Knoll v. Schectman, 275 F. App’x
50, 51 (2d Cir. 2008)). Conclusory
allegations of fraud will be dismissed under
Rule 9(b).
See Shemtob v. Shearson,
Hammill & Co., 448 F.2d 442, 444 (2d Cir.
1971).

The Supreme Court clarified the
appropriate pleading standard in Ashcroft v.
Iqbal, setting forth a two-pronged approach
for courts deciding a motion to dismiss. 556
U.S. 662, 129 S. Ct. 1937 (2009). The
Court instructed district courts to first
“identify[ ] pleadings that, because they are
no more than conclusions, are not entitled to
the assumption of truth.” 129 S.Ct. at 1950.
Though “legal conclusions can provide the
framework of a complaint, they must be
supported by factual allegations.” Id.
Second, if a complaint contains “wellpleaded factual allegations, a court should
assume their veracity and then determine
whether they plausibly give rise to an
entitlement to relief.” Id.

The Court notes that in adjudicating a
Rule 12(b)(6) motion, it is entitled to
consider: “(1) facts alleged in the complaint
and documents attached to it or incorporated

Where, as here, the plaintiff is
proceeding pro se, “[c]ourts are obligated to
4

in it by reference, (2) documents ‘integral’
to the complaint and relied upon in it, even
if not attached or incorporated by reference,
(3) documents or information contained in
defendant’s motion papers if plaintiff has
knowledge or possession of the material and
relied on it in framing the complaint, (4)
public disclosure documents required by law
to be, and that have been, filed with the
Securities and Exchange Commission, and
(5) facts of which judicial notice may
properly be taken under Rule 201 of the
Federal Rules of Evidence.” In re Merrill
Lynch & Co., 273 F. Supp. 2d 351, 356-57
(S.D.N.Y. 2003) (internal citations omitted),
aff’d in part and reversed in part on other
grounds sub nom., Lentell v. Merrill Lynch
& Co., 396 F.3d 161 (2d Cir. 2005), cert.
denied, 546 U.S. 935 (2005); see also
Cortec Indus., Inc. v. Sum Holding L.P., 949
F.2d 42, 48 (2d Cir. 1991) (“[T]he district
court . . . could have viewed [the
documents] on the motion to dismiss
because there was undisputed notice to
plaintiffs of their contents and they were
integral to plaintiffs’ claim.”); Brodeur v.
City of New York, No. 04 Civ. 1859 (JG),
2005 U.S. Dist. LEXIS 10865, at *9-10
(E.D.N.Y. May 13, 2005) (court could
consider documents within the public
domain on a Rule 12(b)(6) motion to
dismiss).

and FPA did not hold the deed to the condo
so that none of the defendants had a right to
request plaintiffs’ address in order to collect
any debt plaintiffs may have owed. As set
forth below, both of these theories of
liability under the FCRA fail as a matter of
law.
Plaintiffs allege that Lichtenstein “had
his attorney’s [sic]” at Gutman use Century,
an “illegal and un-license[d] collections
company” make inquiries of Experian Credit
Bureau on December 7, 2005 to obtain
plaintiffs’ address at 711 Shadwell Court in
order to send them indebtedness letters,
which were signed by Kavulich, an attorney
with Gutman. (Am. Compl. at 2.) Plaintiffs
assert that Gutman and Century obtained
plaintiffs’ address under “false pretenses”
because Century is “illegal and not even a
corporate entity recognized by the NYS
Division of Corporation to do business in
NY as well as unlicensed by the NYC Dept.
of Consumer Affairs to collect a debt in
N.Y.C.” (Id. at 8.) Plaintiffs allege that
Kavulich signed the indebtedness letter
“without including his license number” and
without validating the amount of the debt or
the original creditor. (Id. at 9.)
Plaintiffs further allege that Lichtenstein,
Gutman and Century knew that Lichtenstein
and FPA did not actually hold the deed to
plaintiffs’ condo. (Id. at 2-3, 8-9.) Plaintiffs
assert that, because Lichtenstein and the
FPA did not hold the deed to the condo,
defendants had no right to collect on any
debt plaintiffs may have owed.

IV. DISCUSSION
A. FCRA
Plaintiffs assert that defendants violated
the FCRA in the following two ways: (1) by
having an unlicensed collections company
(Century) make inquiries of a consumer
reporting agency in order to obtain
plaintiffs’ address; and/or (2) by making
inquiries for plaintiffs’ address even though
defendants allegedly knew that Lichtenstein

Defendants counter that plaintiffs “have
wholly failed to allege the requisite ‘false
pretenses’” necessary to state a violation of
the FCRA. (Defs.’ Mem. of Law, June 9,
2011, ECF. No. 71, at 5.) Drawing all
reasonable inferences and viewing the facts
5

alleged in the amended complaint in the
light most favorable to plaintiffs, this Court
concludes that plaintiffs have failed again to
state a claim under the FCRA.

issue] was a ‘permissible’ purpose (as set
forth in the FCRA) for which such
information may be furnished by a credit
reporting agency. If no such ‘permissible
purpose’ exists, the person requesting the
information is deemed to have obtained the
information under false pretenses.” Edge v.
Prof’l Claims Bureau, Inc., 64 F. Supp. 2d
115, 117 (E.D.N.Y. 1999) (collecting cases).
“Permissible purposes” for obtaining credit
information are set forth in 15 U.S.C.
§ 1681b.

Section 1681q of the FCRA states that
“[a]ny person who knowingly and willfully
obtains information on a consumer from a
consumer reporting agency under false
pretenses shall be fined . . ., imprisoned for
not more than 2 years, or both.” 15 U.S.C.
§ 1681q. “Obtaining any information from a
consumer reporting agency about a
consumer under false pretenses subjects
defendants to liability under § 1681q even if
the information supplied by the consumer
reporting agency [is] not a consumer
report.” Ali v. Vikar Mgmt. Ltd., 994 F.
Supp. 492, 497 (S.D.N.Y. 1998) (emphasis
in original) (quotation marks omitted).
Further, “Section 1681n of the FCRA
provides a cause of action against any
consumer reporting agency or user who
willfully fails to comply with any provision
of the FCRA.” 5 Id. at 498. “In situations
where one person obtains a credit report for
the use of another . . . the term ‘user’
includes ‘the ultimate destination of a credit
report’ as well as ‘the person who acquires
[a credit report] for another.’” Northrop v.
Hoffman of Simsbury, Inc., 134 F.3d 41, 49
(2d Cir. 1997) (collecting cases).

Although obtaining information in order
to collect debt is a permissible purpose, see
15 U.S.C. § 1681b(a)(3)(A), plaintiffs allege
that in fact Gutman, Century, Kavulich, and
Lichtenstein knew that Lichtenstein and
FPA did not hold the deed to the condo and,
thus, none of the defendants had a right to
request plaintiffs’ address in order to collect
any debt plaintiffs may have owed.
1.

Failure to Possess a License

In response to plaintiffs’ argument that
defendant Century was an unlicensed debt
collection agency, defendants assert that
even assuming arguendo that Century is an
unlicensed debt collection agency (which
defendants vigorously dispute), the apparent
violation of the local or state law regarding
licensing cannot state a plausible FCRA
violation. (Defs.’ Reply, Aug. 20, 2010,
ECF No. 55, at 3.) As set forth below, this
Court agrees.

In assessing allegations of false
pretenses, “courts consider whether the
reason for obtaining the information [at

Courts in the Second Circuit have not
addressed the question of whether failure to
possess a license constitutes a violation of
the FCRA, but they have considered
whether failure to possess a license violates
the Fair Debt Collection Practices Act
(“FDCPA”). The FDCPA states that “[a]
debt collector may not use any false,

5

As this Court explained in a previous decision
in this case, the Second Circuit has held that a
private plaintiff may bring a claim under
§ 1681q through § 1681n, the FCRA’s
enforcement
provision
for
willful
noncompliance with the statute. See Caldwell
v. Gutman, Mintz, Baker & Sonnenfeldt, P.C.,
701 F. Supp. 2d 340, 353 (E.D.N.Y. 2010).
6

*2-3 (E.D.N.Y. June 21, 2006) (dismissing
complaint for failure to state a claim under
the FDCPA because defendant’s alleged
failure to be licensed by the New York City
Department of Consumer affairs did not
establish a violation of the FDCPA); Hirsch
v. United Collection Corp., 03-CV-4884
(RJD), 2004 U.S. Dist. LEXIS 29819, at *9
(E.D.N.Y. Oct. 27, 2004) (dismissing
complaint where plaintiff alleged that
defendant failed to include license number
on collection letter and failed to possess a
license), adopted by 2005 U.S. Dist. LEXIS
42680 (E.D.N.Y. Jan. 28, 2005); Castillo v.
Kenneth K. Frenkel, P.C., 918 N.Y.S.2d
818, 820 (App. Term 2010) (“The failure to
possess a license in violation of New York
City Administrative Code § 20-490 does not
constitute a violation of the FDCPA.”). But
see Williams v. Goldman & Steinberg, Inc.,
No. CV-03-2132 (DGT), 2006 U.S. Dist.
LEXIS 50222, at *1 (E.D.N.Y. July 21,
2006) (holding that defendant’s failure to
possess a license when it sent a collection
letter to a New York City resident violated
the FDCPA).

deceptive, or misleading representation or
means in connection with the collection of
any debt” and provides a non-exhaustive of
conduct that violates the FDCPA. 15 U.S.C.
§ 1692e. Provisions that could implicate
failure to possess a license include: 1) “[t]he
threat to take any action that cannot legally
be taken or that is not intended to be taken,
15 U.S.C. § 1692e(5), and 2) “[t]he use of
any false representation or deceptive means
to collect or attempt to collect any debt or to
obtain information concerning a consumer,”
15 U.S.C. § 1692e(10).
“Ample case law” in the Second Circuit
“indicates that the mere failure to possess a
license in violation of [New York
Administrative Code] § 20-490 does not
constitute a per se violation of the FCDPA.”
Williams v. Deutsche Bank Nat’l Trust Co.,
11 Civ. 2607 (LBS), at *3-4, 2011 U.S. Dist.
LEXIS 132084, 3-4 (S.D.N.Y. Nov. 16,
2011) (collecting cases). One court, for
example, granted a motion to dismiss where
“[p]laintiff’s sole federal claim is that
Defendants’ failure to possess a license in
violation of New York Administrative Code
§ 20-490 violates the Fair Debt Collection
Practices Act (‘FDCPA’), 15 U.S.C.
§ 1692.” Id. at *3; see James v. Merchs. &
Prof’ls, Inc., 03-CV-1167 (CBA)(VVP),
2010 U.S. Dist. LEXIS 20950, at *4-5
(E.D.N.Y. Mar. 8, 2010) (“This Court agrees
that a violation of a state or local law, by
itself, does not amount to a per se violation
of the FDCPA. . . . Plaintiff has not
identified any basis to establish that
defendant’s failure to include a license
number on the letter rendered the
communication
false,
deceptive
or
misleading within the FDCPA, and the
Court’s independent review of the letter
reveals none.”); McDowell v. Vengroff,
Williams, & Assocs., Inc., No. 04 Civ. 1068
(CBA), 2006 U.S. Dist. LEXIS 41493, at

Just as the FDCPA prohibits a debt
collector from using “false, deceptive, or
misleading representation[s] or means in
connection with the collection of any debt,”
15 U.S.C. § 1692e, the FCRA prohibits any
person from “knowingly and willfully
obtain[ing] information on a consumer from
a consumer reporting agency under false
pretenses.” 15 U.S.C. § 1681q. There is no
substantive difference between the FDCPA
and the FCRA with respect to whether
failure to possess a license constitutes a
violation. Moreover, the Court concludes
that the above-referenced analysis by
numerous courts on the license issue in
connection with the FDCPA (with which the
Court agrees) applies with equal force to the
FCRA. Accordingly, mere failure to possess
7

opportunity to litigate the issue in the prior
action.” In re Hyman, 502 F.3d 61, 65 (2d
Cir. 2007) (citations omitted); accord
Hoblock, 422 F.3d at 94. “The party seeking
the benefit of collateral estoppel bears the
burden of proving the identity of the issues,
while the party challenging its application
bears the burden of showing that he or she
did not have a full and fair opportunity to
adjudicate the claims involving those
issues.” Khandhar v. Elfenbein, 943 F.2d
244, 247 (2d Cir. 1991) (citing Kaufman v.
Eli Lilly & Co., 65 N.Y.2d 449, 482 N.E.2d
63, 67, 492 N.Y.S.2d 584 (1985)). Collateral
estoppel generally does not include a
requirement that the parties against whom
plaintiffs litigated in the prior proceeding be
the same parties they litigate against in the
current proceeding. See United States v.
Mendoza, 464 U.S. 154, 158, 104 S. Ct. 568,
78 L. Ed. 2d 379 (1984); see also Amadasu
v. Bronx Lebanon Hosp. Ctr., No. 03 Civ.
6450 (LAK) (AJP), 2005 U.S. Dist. LEXIS
774, 2005 WL 121746, at *8 (S.D.N.Y.
2005) (“[T]he doctrine of collateral estoppel
does not require that the same parties are
named in the earlier action in order to apply
to the instant action.”). Additionally, a
district court may raise the issue of collateral
estoppel sua sponte. Doe v. Pfrommer, 148
F.3d 73, 80 (2d Cir. 1998).

a license, without more, does not constitute
a false pretense for purposes of the FCRA.
Here, plaintiffs have failed to articulate how
the alleged failure to have a license resulted
in a violation of the FCRA. Thus, this
theory alleged in the amended complaint
fails to allege a plausible FCRA claim.
2. Defendants’ Purported Knowledge
Regarding FPA’s Ownership of the
Condo
Plaintiffs also claim that Gutman,
Century, Kavulich, and Lichtenstein violated
the FCRA because they knew that
Lichtenstein and FPA did not hold the deed
to the condo, and therefore had no right to
request plaintiffs’ address in order to collect
any debt plaintiffs may have owed. As set
forth below, this theory of liability under the
FCRA is barred by collateral estoppel.
“‘[C]ollateral estoppel . . . means simply
that when an issue of ultimate fact has once
been determined by a valid and final
judgment, that issue cannot again be
litigated between the same parties in any
future lawsuit.’” Leather v. Ten Eyck, 180
F.3d 420, 424 (2d Cir. 1999) (quoting Schiro
v. Farley, 510 U.S. 222, 232, 114 S. Ct. 783,
127 L. Ed. 2d 47 (1994)). “Collateral
estoppel, like the related doctrine of res
judicata, has the dual purpose of protecting
litigants from the burden of relitigating an
identical issue with the same party or his
privy and of promoting judicial economy by
preventing needless litigation.” Parklane
Hosiery Co. v. Shore, 439 U.S. 322, 326, 99
S. Ct. 645, 58 L. Ed. 2d 552 (1979). “Under
New York law, collateral estoppel bars
relitigation of an issue when (1) the identical
issue necessarily was decided in the prior
action and is decisive of the present action,
and (2) the party to be precluded from
relitigating the issue had a full and fair

Collateral estoppel bars plaintiffs’ FCRA
claim to the extent that the claim is based on
the allegation that Gutman, Century,
Kavulich, and Lichtenstein knew that
Lichtenstein and FPA did not hold the deed
to the condo so that none of the defendants
had a right to request plaintiffs’ address in
order to collect any debt plaintiffs may have
owed.
First, the issue of whether FPA held the
deed to the condo was necessarily decided in
the civil court proceedings. Generally, a
8

denied plaintiffs’ application to appeal to the
Appellate Division. Thus, the requirements
for collateral estoppel are met with respect
to plaintiffs’ FCRA claim to the extent that
that claim is based on FPA’s failure to state
a prima facie case or introduce a certificate
of occupancy and multiple dwelling
registration. Accordingly, collateral estoppel
bars plaintiffs’ FCRA claim.

landlord must show a valid certificate of
occupancy
and
multiple
dwelling
registration to recover for use and
occupancy. See Sheila Props., Inc. v. A Real
Good Plumber, Inc., 59 A.D.3d 424, 425,
874 N.Y.S.2d 145, 147 (App. Div. 2009)
(“An owner of a de facto multiple dwelling
who fails to obtain a proper certificate of
occupancy or comply with the registration
requirements of the Multiple Dwelling Law
cannot recover rent or use and occupancy.
Consequently, the plaintiff is precluded from
recovering use and occupancy.” (citations
omitted)); Meaders v. Jones, No. 2002-529
RI C, 2003 N.Y. Misc. LEXIS 933, at *2
(App. Term. June 24, 2003) (collecting
cases), aff’d 15 A.D.3d 490 (N.Y. App. Div.
2005); see also 74 N.Y. Jur. 2d Landlord
and Tenant § 362 (“Under the Multiple
Dwelling Law, no rent may be recovered by
the owner of the premises for which a
certificate of occupancy has not been
acquired and no action or special
proceedings may be maintained therefor, or
for possession of the premises for nonpayment of rent.”). In any event, the civil
court, by granting judgment on FPA’s use
and occupancy claim, necessarily decided
that FPA was entitled to recover for use and
occupancy, regardless of what evidence was
introduced or FPA’s status as owner of the
premises. To decide plaintiffs’ claims
related to these issues, the Court would need
to re-visit issues that have already been
decided in state court.

Because failure to possess a license does
not constitute a violation of the FCRA, and
because any FCRA claims premised on
FPA’s purported non-ownership of the
condo are barred by collateral estoppel, the
Court concludes that plaintiffs’ claims under
the FCRA must be dismissed, with
prejudice.
Finally, the fact that plaintiffs may still
be attempting to appeal these state court
decisions does not undermine the
application of the doctrine of collateral
estoppels. It is well settled that state-court
decisions still have collateral estoppel effect
even though they are pending on appeal.
See Franklin Dev. Co. v. Atl. Mut. Ins. Co.,
876 N.Y.S.2d 103, 105 (App. Div. 2009)
(“‘The rule in New York is that the
pendency of an appeal does not prevent the
use of the challenged judgment as the basis
of collateral estoppel.’” (quoting Anonymous
v. Dobbs Ferry Union Free Sch. Dist., 797
N.Y.S.2d 120, 121 (App. Div. 2005)));
accord Chariot Plastics v. United States, 28
F. Supp. 2d 874, 881 (S.D.N.Y. 1998). 6

Additionally, plaintiffs had a full and
fair opportunity to litigate these issues in
state court. They appeared for trial in New
York City Civil Court in 2006 and litigated
the issue of ownership of the deed. See Am.
Compl. at 2. Plaintiffs appealed the Civil
Court’s June 4, 2007 decision, and the
Appellate Term affirmed on February 11,
2009. On April 9, 2009, the Appellate Term

6

If the decision is reversed on appeal in state
court, the plaintiffs in this action have the ability
to inform this Court of that fact, and seek to reopen the case pursuant to a motion under Fed. R.
Civ. P. 60(b)(5) (“The Court may relieve a
party . . . from a final judgment . . . [if] it is
based on an earlier judgment that has been
reversed or vacated.”).

9

B. State Law Claims

particular, Section 214 of the New York
Civil Procedure Law and Rules provides a
three-year statute of limitations for “an
action to recover upon a liability, penalty or
forfeiture created or imposed by statute . . .”
N.Y. C.P.L.R. § 214(2); see also People v.
Pharmacia Corp., 895 N.Y.S.2d 682, 68586 (Sup. Ct. 2010). Thus, Section 5-77 has
a three-year limitations period. It is clear
from the amended complaint that the alleged
events that form the basis of plaintiff’s
Section 5-77 claim occurred in 2006.
Accordingly, plaintiffs’ Section 5-77 claims
are barred by the statute of limitations under
New York law, and are dismissed with
prejudice.

In addition to the FCRA claims,
plaintiffs also allege state law claims in their
amended complaint under the Court’s
diversity jurisdiction, based on commonlaw fraud, New York City Consumer
Protection Law § 5-77, 7 and New York State
General Business Law § 349(a). 8 As set
forth below, those claims fail as a matter of
law.
With respect to the common law fraud
claims, as a threshold matter, plaintiffs have
failed to satisfy Rule 9(b) by alleging fraud
with sufficient particularity. See Wilson v.
Dalene, 699 F. Supp. 2d 534, 541 (E.D.N.Y.
2010) (setting forth pleading requirements
of Rule 9(b)). In any event, the fraud claim
suffers from a more fundamental defect.
Specifically, the fraud claims (as well as the
other state claims) are based upon the
issues/claims that were raised, or could have
been raised, in the underlying Civil Court
action. Thus, for the reasons set forth supra
and in the March 30, 2010 Memorandum
and Order, the fraud claims are barred by the
doctrines of res judicata and collateral
estoppel.

Finally, with respect to the claims under
Section 349 of the General Business Law,
the Court has already dismissed such claims
with prejudice based upon, inter alia, the
doctrines of res judicata and collateral
estoppel. That prior analysis continues to
apply, and such claims are again dismissed
with prejudice. 9
In sum, the state claims in the amended
complaint fail as a matter of law and are
dismissed with prejudice.
C.

With respect to the claims under Section
5-77 of the New York City Consumer
Protection Law, such claims must be
dismissed because they are barred by the
applicable statute of limitations. In

Leave to Re-Plead

The Second Circuit has emphasized:
A pro se complaint is to be read
liberally. Certainly the court should

7

The provision, titled “Unconscionable and
Deceptive Trade Practices,” sets forth detailed
rules for debt collection. Rules of the City of
New York, Title 6, Department of Consumer
Affairs, § 5-77.
8
The provision reads: “Deceptive acts or
practices in the conduct of any business, trade or
commerce or in the furnishing of any service in
this state are hereby declared unlawful.” N.Y.
Gen. Bus. § 349(a).

9

In any event, as noted by defendants, the
claims under New York General Business Law
§ 349, which are alleged to have occurred in late
2005 and early 2006, would be barred by the
applicable three-year statute of limitations. See,
e.g., Fownes Brothers & Co. v. JP Morgan
Chase & Co., 92 A.D.3d 582, 583 (N.Y. App.
Div. 2012) (three-year statute of limitations for
Section 349).
10

& Co., 87 F.3d 65, 72 (2d Cir. 1996) (noting
that the Second Circuit has “upheld
decisions to dismiss a complaint without
leave to replead when a party has been given
ample prior opportunity to allege a claim”
(citing Armstrong v. McAlpin, 699 F.2d 79,
93-94 (2d Cir. 1983)).

not dismiss without granting leave to
amend at least once when a liberal
reading of the complaint gives any
indication that a valid claim might be
stated.
Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d
Cir. 2000) (quotations and citations
omitted). Under Rule 15(a) of the Federal
Rules of Civil Procedure, the “court should
freely give leave [to amend] when justice so
requires.” Fed. R. Civ. P. 15(a). Thus, in
dismissing plaintiffs’ claims, the Court has
considered whether to dismiss with or
without prejudice. However, as stated supra,
the Court declines to provide plaintiffs with
an opportunity to re-plead and dismisses the
claims with prejudice for two reasons.

In short, it is clear that no amendments
could overcome the defects identified supra
and in the Court’s March 30, 2010
Memorandum and Order. In particular, as to
the FCRA claim, the Court provided
plaintiffs with an opportunity to identify a
plausible theory of liability based upon
“false pretenses.” However, it is abundantly
claim that plaintiffs’ theories of false
pretenses under Section 1681q fail as a
matter of law and no additional pleading
will cure those defects. Thus, leave to replead would be futile. See Cuoco, 222 F.3d
at 112 (“The problem with [plaintiff’s]
cause[] of action is substantive; better
pleading will not cure it. Repleading would
thus be futile. Such a futile request to
replead should be denied.”); see also
Hayden v. Cnty. of Nassau, 180 F.3d 42, 53
(2d Cir. 1999) (holding that if a plaintiff
cannot demonstrate he is able to amend his
complaint “in a manner which would
survive dismissal, opportunity to replead is
rightfully denied”).

First, plaintiffs have not requested an
opportunity to re-plead, and have failed to
explain how any amendment could possibly
state a plausible legal claim. Thus, the Court
declines to grant leave to re-plead. See, e.g.,
Ackermann v. Doyle, 43 F. Supp. 2d 265,
275 (E.D.N.Y. 1999) (“[T]he Court is
unable to discern a viable cause of action
from the complaint, and the plaintiff did not
request leave to replead. The Court declines
to sua sponte afford the plaintiff leave to
amend on the ground of futility. In the
Court’s view, granting leave to amend
would be unproductive and dismissal with
prejudice is appropriate.”)

D.

Second, plaintiffs have been given ample
opportunity to allege a claim and have failed
to do so. In the March 30, 2010
Memorandum and Order, dismissing the
prior complaint, the Court identified various
pleading defects. However, in the amended
complaint filed after the Court’s decision,
plaintiffs failed to cure those pleading
defects. Under these circumstances, the
Court declines to grant plaintiffs yet another
opportunity. See De Jesus v. Sears, Roebuck

Motion for a Stay

Additionally, plaintiffs seek a stay of
this action pending resolution of their appeal
of New York Civil Court Judge Katherine
A. Levine’s Decision and Order dated
November 25, 2011, and their appeal of a
decision by the New York Civil Court Judge
Alice Fisher Rubin dated June 4, 2007,
which was affirmed on February 11, 2009

11

by the Appellate Term. 10 See Letter from
Plaintiffs to Hon. Joseph F. Bianco, Dec. 21,
2011, ECF No. 87. Judge Levine’s
November 25, 2011 decision dismissed the
Caldwells’ claims against Gutman.

Court applies an “objective standard of
reasonableness.” See MacDraw, Inc. v. CIT
Grp. Equip. Fin., Inc., 73 F.3d 1253, 1257
(2d Cir. 1996). Moreover, “Rule 11 is
violated only when it is patently clear that a
claim has absolutely no chance of success.”
Oliveri v. Thompson, 803 F.2d 1265, 1275
(2d Cir. 1986) (internal quotation marks
omitted). Additionally, “[w]hen divining the
point at which an argument turns from
merely losing to losing and sanctionable, . . .
courts [must] resolve all doubts in favor of
the signer” of the pleading. Rodick v. City of
Schenectady, 1 F.3d 1341, 1350 (2d Cir.
1993) (emphasis in original) (internal
quotation marks omitted).

As noted above, collateral estoppel
applies even if plaintiffs are pursuing
appeals of the state court decisions. If such
an appeal is successful, plaintiffs can
attempt to have this Court vacate its
judgment and re-open this case under Rule
60 of the Federal Rules of Civil Procedure.
In short, in its discretion, the Court does not
believe that a stay is warranted.
Accordingly, the plaintiffs’ motion for a stay
is denied.
E.

The Court has granted defendants’
motion to dismiss. Thus, it is clear that the
motion had merit. Furthermore, the Court
is unaware of any factual or legal
misrepresentations in the defendants’ filings
with the Court, or any other basis for
sanctions. Accordingly, plaintiffs’ motion
for sanctions under Rule 11 is denied.

Motion for Sanctions

Plaintiffs request that the Court sanction
defendants’ attorney pursuant to Rule 11 of
the Federal Rules of Civil Procedure on the
grounds that the attorney “knowingly and
willfully [made] false statements to [the]
court without checking his facts first.” See
Letter from Plaintiffs to Hon. Joseph F.
Bianco, July 20, 2011, ECF No. 75; Letter
from Plaintiffs to Hon. Joseph F. Bianco,
Aug. 3, 2011, ECF No. 80. The Court denies
plaintiffs’ motion. Under Rule 11, to avoid
the risk of sanctions, counsel must undertake
reasonable inquiry to “ensure that papers
filed are well-grounded in fact, legally
tenable, and not interposed for any improper
purpose.” Gal v. Viacom Int’l, Inc., 403 F.
Supp. 2d 294, 307 (S.D.N.Y. 2005) (internal
quotation marks omitted). In considering a
motion for sanctions under Rule 11, this
10

Plaintiffs moved for re-argument, or in the
alternative, leave to appeal to the Appellate
Division. The Appellate Term denied both
requests on April 9, 2009. It is, therefore, not
clear how the plaintiffs intend to appeal this
decision any further.
12

V. CONCLUSION
For the foregoing reasons, the Court
grants defendants’ motion to dismiss the
complaint in its entirety, with prejudice.
The Court, for the same reasons set forth as
to the other defendants, sua sponte dismisses
the complaint, with prejudice, against
defendant Gary Kavulich. The Clerk of the
Court shall enter judgment accordingly and
close the case. The Court certifies, pursuant
to 28 U.S.C. § 1915(a)(3), that any appeal
from this order would not be taken in good
faith; therefore, in forma pauperis status is
denied for purposes of an appeal. See
Coppedge v. United States, 369 U.S. 438,
444-45 (1962).
SO ORDERED.
______________________
JOSEPH F. BIANCO
United States District Judge
Dated: March 28, 2012
Central Islip, New York
*

*

*

Plaintiffs are proceeding pro se: Ken
and Lisa Caldwell, 309 Sandburg Place,
Newark, De. 19702.
Defendants are
represented by:
Kenneth A. Novikoff,
Rivkin Radler LLP, EAB Plaza, Uniondale,
NY 11556.

13