Raydos v. Cohen & Slamowitz, LLP et al

Filing 50

DECISION AND ORDER dismissing plaintiff's complaint in ite entirety. The Clerk of Court shall take all steps necessary to close the case. Signed by Hon. Richard J. Arcara on 9/9/2009. (JMB)

U N IT E D STATES DISTRICT COURT W E S T E R N DISTRICT OF NEW YORK

C H R IS T O P H E R M. RAYDOS, P l a i n t if f , D E C IS IO N AND ORDER 0 8 -C V - 4 A v.

COHEN & SLAMOW IT Z , LLP and M E T R O PORTFOLIOS, INC., D e fe n d a n ts .

IN T R O D U C T IO N A t a pretrial conference on July 7, 2009, this Court gave the parties notice a n d an opportunity to submit briefing regarding its sua sponte inquiry about s u b je c t matter jurisdiction. The Court asked the parties to address two questions: w h e th e r the Rooker-Feldman doctrine 1 or the full faith and credit statute 2 deprives th is Court of jurisdiction over this case; and, if the Court had jurisdiction, what the a p p lic a b le statute of limitations should have been in an underlying state lawsuit tha t concluded with a default judgment against plaintiff. The parties have s u b m itte d supplemental briefing addressing these two questions. Oral argument

See Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923); D.C. Ct. of Appeals v . Feldman, 460 U.S. 462 (1983).
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2 8 U.S.C. § 1738.

re g a rd in g these two questions was held on August 31, 2009. For the reasons b e lo w , the Court finds that the full faith and credit statute does deprive it of s u b je c t matter jurisdiction over this case. Consequently, the Court will dismiss th is case. B AC K G R O U N D T h is case concerns allegations of improper debt collection practices that vio la te d the Fair Debt Collection and Practices Act ("FDCPA"), 15 U.S.C. § § 1692­1692p. In approximately January 2001, plaintiff opened a credit card a c c o u n t with Providian National Bank. In February 2002, plaintiff failed to make a p a ym e n t that was due then. As a result, plaintiff defaulted on his credit card d e b t. Plaintiff's credit card debt was assigned more than once thereafter, but was a s s ig n e d to defendant Metro Portfolios, Inc. ("Metro Portfolios") no later than J a n u a ry 2007. Metro Portfolios hired defendant Cohen & Slamowitz, LLP ("Cohen"), a law firm , to collect the debt. On January 5, 2007, with permission from Metro P o rtfolio s , Cohen filed a lawsuit (the "State Lawsuit") against plaintiff in Lockport C ity Court to recover the credit card debt that plaintiff owed. Plaintiff does not c o n te s t that he was served with a copy of the summons and complaint from the S ta te Lawsuit. Although he was served in connection with the State Lawsuit, p la in tiff did not appear in it or otherwise defend against it. On April 13, 2007, the

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L o c k p o rt City Court Clerk entered a default judgment (the "State Judgment") a g a in s t plaintiff in the State Lawsuit in the amount of $1,674.97. According to plaintiff's complaint, plaintiff and defendants communicated w ith each other for the first time in a telephone conversation in November 2007. In this telephone conversation, defendants informed plaintiff that a judgment had b e e n entered against him with respect to the defaulted credit card debt. Later th a t month, plaintiff sent Cohen a letter disputing his liability for the debt in q u e s tio n . Despite the letter disputing liability, plaintiff contends, defendants p ro c e e d e d to enforce the State Judgment by arranging with the Niagara County S h e riff for wage garnishment and restraint of plaintiff's bank account. Plaintiff u ltim a te ly paid defendants $1,944.36. O n January 3, 2008, plaintiff filed the complaint in this case. In the single c a u s e of action listed in the complaint, plaintiff accused defendants of two types o f conduct that violated various provisions of the FDCPA. First, plaintiff alleged th a t defendants attempted to collect the debt in question without adequate proof o r verification. Plaintiff later withdrew this claim through a motion to dismiss that h e filed on June 29, 2009 and that the Court granted on August 19, 2009. S e c o n d , plaintiff alleged that defendants commenced the State Lawsuit after the a p p lic a b le statute of limitations expired. This allegation is the remaining basis for th is case. Plaintiff contends that New Hampshire law would have controlled and

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w o u ld have set the applicable limitations period for the State Lawsuit at three ye a rs , which would have made the State Lawsuit untimely by about two years. Defendants contend that the applicable limitations period would have been six ye a rs because either New York or Utah law would have controlled. Plaintiff concluded the complaint with demands for actual and statutory d a m a g e s , along with costs, disbursements, and reasonable attorney fees. Plaintiff withdrew the demand for actual damages through a second motion to d is m is s that he filed on July 20, 2009 and that this Court granted on August 19, 2009. After discovery ended and after mediation concluded unsuccessfully, this C o u rt set a trial date of July 21, 2009. Upon reviewing the parties' pretrial s u b m is s io n s , however, the Court became concerned that determining what the a p p lic a b le statute of limitations should have been in the State Lawsuit emerged a s the primary issue to be resolved, either through motions in limine or at trial. In p a rtic u la r, the Court became concerned that commenting on the applicable s ta tu te of limitations for the State Lawsuit necessarily would require commenting o n the validity of the State Judgment in violation of the Rooker-Feldman doctrine o r the full faith and credit statute. At the final pretrial conference, the Court gave th e parties notice that it would review its jurisdiction over this case sua sponte. The parties then were given an opportunity to brief and to argue the two q u e s tio n s noted above. 4

D IS C U S S I O N P la in tiff's decision to withdraw his claim for actual damages narrowly moots th e Court's concern about the Rooker-Feldman doctrine. Under the RookerF e ld m a n doctrine, "a federal suit complains of injury from a state-court judgment, e ve n if it appears to complain only of a third party's actions, when the third party's a c tio n s are produced by a state-court judgment and not simply ratified, a c q u ie s c e d in, or left unpunished by it. Where a state-court judgment causes the c h a lle n g e d third-party action, any challenge to that third-party action is n e c e s s a rily the kind of challenge to the state judgment that only the Supreme C o u rt can hear." Hoblock v. Albany County Bd. of Elections, 422 F.3d 77, 88 (2d C ir. 2005). Initially, plaintiff sought actual damages in addition to statutory d a m a g e s . The actual damages, presumably, would have included the $1,944.36 th a t defendants collected from plaintiff to satisfy the debt in question. Defendants w o u ld have had no right to collect that money without the State Judgment. The S ta te Judgment, therefore, caused at least part of any actual damages that p la in tiff could have claimed in this case. Since plaintiff has withdrawn his actual d a m a g e s claim, there are no alleged damages left that arose directly from the L o c k p o rt City Court Clerk's act of entering the State Judgment. Nonetheless, a review of the full faith and credit statute remains necessary. The parties have asked the Court to declare what limitations period applied to the S tate Lawsuit. The Court might have resolved that issue if defendants here 5

m e re ly threatened a lawsuit, or perhaps filed one but never prosecuted it to u ltim a te disposition. Here, though, the conclusion of the State Lawsuit with a ju d g m e n t, albeit judgment by default, warrants a more cautious approach to e n s u re that the finality, if any, of the State Judgment receives appropriate re s p e c t. F u ll Faith and Credit J u d g m e n ts of any New York court "shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they h a ve by law or usage in the courts of such State, Territory or Possession from w h ich they are taken." 28 U.S.C. § 1738; see also Kremer v. Chemical Const. C o rp ., 456 U.S. 461, 481­82 (1982) ("It has long been established that § 1738 d o e s not allow federal courts to employ their own rules of res judicata in d e te rm in in g the effect of state judgments. Rather, it goes beyond the common la w and commands a federal court to accept the rules chosen by the State from w h ic h the judgment is taken.") (citation omitted). Under Section 1738, this Court is required "to give preclusive effect to state court judgments whenever the courts o f that state would do so." Bray v. N.Y. Life Ins., 851 F.2d 60, 62 (2d Cir. 1988). The Court must turn to New York law to determine what finality New York courts w o u ld assign to a judgment from a New York lawsuit that could have been d ism iss e d on statute of limitations grounds--according to plaintiff--but was not.

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P la in tiff's decision not to argue the issue of the statute of limitations in state c o u rt constitutes a waiver of that argument. "A defense of the Statute of L im ita tio n s is deemed waived if not asserted in a timely fashion in either an a n s w e r or motion to dismiss." State v. Nadell, 579 N.Y.S.2d 216, 216 (App. Div. 3 d Dep't 1992) (citation omitted). In plaintiff's remaining claim, he accuses d e fe n d a n ts of commencing the State Lawsuit after the applicable limitations p e rio d expired. Implied in this claim is an assertion that the state judgment s h o u ld not have happened, and that plaintiff never would have had money forcibly w ith d ra w n from his bank account had defendants recognized the applicable s ta tu te of limitations and declined to file suit. Nonetheless, plaintiff never a p p e a re d in the State Lawsuit to act on these assertions, despite receiving s e rvic e of process. The state judgment against plaintiff was entered on April 13, 2 0 0 7 . Even if the Court accepts the allegation in plaintiff's complaint that plaintiff d id not know about the State Judgment or any effort to enforce it until November 2 0 0 7 , plaintiff had at least five months under New York law to appear in state c o u rt and to make a motion to vacate the judgment on the grounds of the statute o f limitations. See N.Y. CPLR 5015(a)(1) ("The court which rendered a judgment o r order may relieve a party from it upon such terms as may be just, on motion of a n y interested person with such notice as the court may direct, upon the ground o f . . . excusable default, if such motion is made within one year after service of a c o p y of the judgment or order with written notice of its entry upon the moving 7

p a rty, or, if the moving party has entered the judgment or order, within one year after such entry."). The issue of the statute of limitations is one of the grounds for d ism iss a l specified explicitly under New York law. See N.Y. CPLR 3211(a)(5) ("A p a rty may move for judgment dismissing one or more causes of action asserted a g a in s t him on the ground that . . . the cause of action may not be maintained b e c a u s e of . . . statute of limitations . . . ."). Plaintiff did not avail himself of these p ro vis io n s of the CPLR in state court, and the time to do so appears to have e xp ire d . As a result, whatever the applicable of limitations in the State Lawsuit s h o u ld have been, the State Judgment crystallized the resolution that the State L a w s u it was timely. O n c e plaintiff waived his opportunity in state court to challenge attempts to c o lle c t the debt in question, he gave the State Judgment preclusive effect. "Under New York's transactional-analysis approach to res judicata, once a claim is brought to a final conclusion, all other claims arising out of the same tra n s a c tio n or series of transactions are barred even if based upon different th e o rie s or if seeking a different remedy. The doctrine is applicable to a judgment tak e n by default which has not been vacated, as well as to defenses which were o r could have been raised in the action." Santiago v. Lalani, 681 N.Y.S.2d 577, 5 7 8 (App. Div. 2d Dep't 1998) (internal quotation marks and citations omitted). Here, the State Lawsuit involved the same parties and gave plaintiff an o p p o rtu n ity to challenge the State Lawsuit as untimely and to challenge any 8

a tte m p t at debt collection as improper. The State Judgment resolved the issue of th e statute of limitations by establishing that the State Lawsuit definitively was tim e ly. Plaintiff cannot separate his FDCPA claim from the State Judgment b e c a u s e there is no way to determine the applicable limitations period solely for th e claim, without impacting the State Judgment. As a result, this case n e c e s s a rily is an attempt to relitigate a claim whose resolution in state court d e s e rve s full faith and credit from this Court. Since plaintiff has no claims left that d o not hinge on the statute of limitations, this case will be dismissed. T h e central case that plaintiff cited in his supplemental briefing for this is s u e is distinguishable and does not change the Court's analysis. In arguing that th e full faith and credit statute does not deprive this Court of jurisdiction, plaintiff q u o te s extensively from Buford v. Palisades Collection, LLC, 552 F. Supp. 2d 800 (N .D . Ill. 2008). Plaintiff notes correctly that the district court in Buford separated the act of filing an untimely lawsuit from the attempts to collect on debts that were th e heart of the underlying state lawsuits. The critical distinction between Buford a n d this case, however, lies in the same statute of limitations issue that concerns th e Court here. The debts in question in Buford were cellular telephone service d e b ts . Federal law explicitly sets a two-year limitations period for lawsuits aimed a t collecting cellular telephone service debts. See 47 U.S.C. § 415(a) ("All a c tio n s at law by carriers for recovery of their lawful charges, or any part thereof, s h a ll be begun within two years from the time the cause of action accrues, and 9

n o t after."). Section 415 definitively resolved the applicable limitations period b e fo re and apart from any of the state judgments. The issue of the statute of lim ita tio n s thus was not a part of the underlying state judgments. As a result, the d is tric t court in Buford could not be seen as revisiting an issue resolved by the u n d e rly in g state judgments. In contrast, the issue of the statute of limitations in th is case has been resolved solely because of the State Judgment. That re s o lu tio n has a preclusive effect on this case. This Court will not revisit the issue o f the statute of limitations or make any comment about it except to note that the S ta te Lawsuit was timely as dictated by the State Judgment and the full faith and c re d it statute. P la in tiff also has cited the cases of Kelly v. Wolpoff & Abramson, L.L.P., N o . 07-CV-91, 2007 W L 2381536 (D. Colo. Aug. 17, 2007); Anderson v. G a m a c h e & Myers, P.C., No. 07-CV-336, 2007 W L 1577610 (E.D. Mo. 2007); a n d Zhang v. Haven-Scott Assocs., Inc., No. CIV.A. 95-2126, 1996 W L 355344 (E .D . Pa. 1996), in opposition to dismissal of this case. These cases hold under va ryin g circumstances that FDCPA violations can be separated from underlying s ta te litigation. None of these cases contains an issue about an applicable lim ita tio n s period that a state judgment resolved and that a federal court was a s k e d to revisit. These cases thus do not require a different conclusion.

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C O N C L U S IO N F o r all of the foregoing reasons, the Court hereby dismisses plaintiff's c o m p la in t in its entirety. The Clerk of the Court is directed to close this case.

SO ORDERED.

s/ Richard J. Arcara
HONORABLE RICHARD J. ARCARA CHIEF JUDGE UNITED STATES DISTRICT COURT DATED: September 9, 2009

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