Opinion
09 Civ. 2631 (SAS).
December 17, 2009
For Plaintiff (pro se): Patreinnah Acosta-Pelle, Bronx, NY.
For Defendants: Mitchell Lee Williamson, Esq., Pressler Pressler, LLP, Cedar Knolls, NJ.
OPINION AND ORDER
I. INTRODUCTION
Patreinnah Acosta-Pelle, proceeding pro se, alleges that New Century Financial Services Inc. ("New Century"), Pressler Pressler LLP, Lori R. Centani, Michael J. Ross and Heather Caprio (collectively, "Defendants") violated the Fair Debt Collection Practices Act ("FDCPA"). Following initial discovery, both parties have moved for summary judgment. Because Acosta-Pelle's claims arise from the same transaction as a counterclaim that Acosta-Pelle previously asserted in state court, and the state court has already issued a final judgment on that counterclaim, Acosta-Pelle's claims are barred by the doctrine of claim preclusion.
See 15 U.S.C. § 1692.
II. BACKGROUND
This case stems from a suit filed in New York state court by New Century Financial Services ("New Century"), a debt collection agency. According to New Century, it purchased Acosta-Pelle's "defaulted Discover card account" on April 10, 2007, and "subsequently retained Pressler Pressler, L.L.P . . . to make collection efforts on the same." After initial attempts to collect the debt were unsuccessful, New Century filed an action in the Civil Court of the City of New York. The state court entered a default judgment against Acosta-Pelle but later vacated that judgment and dismissed the complaint without prejudice. For the purposes of these cross summary judgment motions, Defendants admit that "there was not good service of the complaint and therefore a default judgment should not have been entered."
Defendants' Joint Rule 56.1 Statement of Material Facts ¶ 1.
See id. ¶¶ 2-6; 10/5/07 Verified Complaint Filed in Civil Court of the City of New York ("State Court Compl."), Ex. A to Acosta-Pelle Complaint ("Compl.").
See Plaintiff's Local Rule 56.1 Statement of Material Facts ("Pl. 56.1") ¶ 19.
Memorandum of Law in Support of Defendants' Motion for Summary Judgment ("Def. Mem.") at 1.
In that action, Acosta-Pella also asserted a counterclaim against New Century to recover damages caused by the default judgment — including costs associated with the attachment of Acosta-Pelle's bank accounts pursuant to that judgment. Although the state court dismissed New Century's complaint, it allowed Acosta-Pelle to proceed with her counterclaim. Acosta-Pelle sought to recover the following damages: (1) a legal processing fee at JP Morgan Chase; (2) a legal processing fee at Bank of America; (3) returned check fees at JP Morgan Chase; (4) a fee charged to certify a document for purposes of a court proceeding; (6) lost salary and travel expenses due to a court appearance; (7) postage costs; (8) hardship; and (9) wage garnishment. While it is unclear whether the counterclaim was tried before a jury, both parties agree that there was a trial on the merits, and that the state court judge issued a decision and judgment in favor of Acosta-Pelle for the amount of $185.60. New Century has paid that award in full.
See Pl. 56.1 ¶¶ 15, 21.
See id. ¶ 19.
See id. ¶ 21.
See id. ¶ 22
See id.
Several months later, on March 23, 2009, Acosta-Pelle filed a complaint in this Court seeking relief under the FDCPA. The complaint named New Century, Pressler Pressler, Heather Caprio (a New Century account manger), and Lori Cetani and Michael Ross (both Pressler Pressler attorneys) as defendants. It made the following factual allegations: (1) Defendants brought a state court action "deceptively and falsely" alleging that Acosta-Pelle owed principal and interest on a credit card account; (2) Defendants — relying upon a "spurious and conclusory affidavit" wherein Caprio swore to personal knowledge of Acosta-Pelle's discovery account — "deceptively and falsely" obtained a default judgment against Acosta-Pelle; (3) Defendants wrongly "executed seizures of [Acosta-Pelle's] bank accounts" pursuant to that judgment; (4) Defendants used "unfair practices in an attempt to collect alleged non-existent debts;" (5) Defendants failed to "effectively convey [Acosta-Pelle's] 30 day debt verification/dispute rights" as required by the FDCPA; and (6) "defendants New Century and Pressler utilize unlawful and illegal methods to purchase alleged delinquent accounts by using unconscionable practices to obtain private information concerning owners of such accounts which they use in judgment procurements [sic]."
See Compl. ¶¶ 6-10.
Id. ¶¶ 13-15.
Id. ¶¶ 16-20.
Id. ¶¶ 22-23.
Id. ¶ 26.
Id. ¶ 27.
Id. ¶ 28.
III. APPLICABLE LAW
A. Legal Standard
Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." "'An issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. A fact is material if it might affect the outcome of the suit under the governing law.'" "[T]he burden of demonstrating that no material fact exists lies with the moving party. . . ."
SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009) (quoting Roe v. City of Waterbury, 542 F.3d 31, 34 (2d Cir. 2008)).
Miner v. Clinton County, N.Y., 541 F.3d 464, 471 (2d Cir. 2008) (citing McCarthy v. Dun Bradstreet Corp., 482 F.3d 184, 202 (2d Cir. 2007)).
In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact. "When the burden of proof at trial would fall on the nonmoving party, it ordinarily is sufficient for the movant to point to a lack of evidence to go to the trier of fact on an essential element of the nonmovant's claim." The non-moving party must do more than show that there is "'some metaphysical doubt as to the material facts,'" and it "'may not rely on conclusory allegations or unsubstantiated speculation.'" However, "'all that is required [from a non-moving party] is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.'"
Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008). Accord In re September 11 Litig., No. 21 MC 97, 2007 WL 2332514, at *4 (S.D.N.Y. Aug. 15, 2007) ("Where the nonmoving party bears the burden of proof at trial, the burden on the moving party may be discharged by showing — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case.") (quotation marks omitted).
Higazy v. Templeton, 505 F.3d 161, 169 (2d Cir. 2007) (quoting Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).
Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005) (quoting Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 428 2d Cir. 2001)).
Kessler v. Westchester County Dep't of Soc. Servs., 461 F.3d 199, 206 (2d Cir. 2006) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986)).
In determining whether a genuine issue of material fact exists, the court must "constru[e] the evidence in the light most favorable to the non-moving party and draw all reasonable inferences" in that party's favor. However, "[i]t is a settled rule that '[c]redibility assessments, choices between conflicting versions of the events, and the weighing of evidence are matters for the jury, not for the court on a motion for summary judgment.'" Summary judgment is therefore "appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law."
Sledge v. Kooi, 564 F.3d 105, 108 (2d Cir. 2009) (citing Anderson, 477 U.S. at 247-50, 255).
McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006) (quoting Fischl v. Armitage, 128 F.3d 50, 55 (2d Cir. 1997)). Accord Anderson, 477 U.S. at 249.
Pyke v. Cuomo, 567 F.3d 74, 76 (2d Cir. 2009).
B. Claim Preclusion
When a claim has been fully litigated, the doctrine of claim preclusion generally bars the future litigation both of that claim and of any closely related claims. However, every jurisdiction has its own rules regarding the application of that doctrine and a "federal court must give a state court judgment the same preclusive effect as would be given a judgment under the law of the State in which the judgment was rendered." Because the relevant antecedent judgment in this case occurred in New York state court, New York law governs my application of preclusion law.
O'Connor v. Pierson, 568 F.3d 64, 69 (2d Cir. 2009).
New York "has adopted a transactional approach to claim preclusion." Under that approach, "once a claim is brought to final conclusion all other claims [between the same parties] arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy." "A pragmatic test [is] applied to make this determination — analyzing whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage."
McKitchen v. Brown, 481 F.3d 89, 104 (2d Cir. 2007) (citations and quotation marks omitted).
O'Brien v. City of Syracuse, 54 N.Y.2d 353, 357 (1981).
Xiao Yang Chen v. Fischer, 6 N.Y.3d 94, 100-01 (2005) (quotation marks and citations omitted).
"The primary purposes of [claim preclusion] are grounded in public policy concerns and are intended to ensure finality, prevent vexatious litigation and promote judicial economy." However, courts must be careful not to apply the doctrine "too harshly", and thus, "'[i]n properly seeking to deny a litigant two days in court, . . . deprive [the litigant] of one.'"
Id. (citations omitted).
Id. (quoting Reilly v. Reid, 45 N.Y.2d 24, 28 (1978)).
IV. DISCUSSION
It is undisputed that Acosta-Pelle and New Century were parties to the antecedent state court action, and that the award of damages in that action was a final judgment entered after the state court conducted a trial on the merits. Accordingly, in determining whether Acosta-Pelle's claims are barred by the doctrine of claim preclusion, I must only decide two preliminary issues regarding the applicability of claim preclusion to this case and whether Acosta-Pelle's claims arise out of the same transaction as the counterclaim she asserted in state court.
See State Court Compl., Ex. A to Compl. Acosta-Pelle has named four other defendants that were not parties to the state court action. However, there are no genuine issues of material fact as to the liability of these parties. With regards to three of those defendants-Pressler Pressler and two Pressler Pressler attorneys — Acosta-Pelle has submitted no evidence suggesting that they are "debt collectors" subject to liability under FDCPA. 15 U.S.C. § 1692(a)(6). See also Goldstein v. Hutton, et al., 374 F.3d 56, 60-63 (2d Cir. 2004) (holding that the plaintiff must establish either that a defendant law firm regularly engages in debt collection activities or that the law firm's principal business is debt collection for that law firm to be deemed a debt collector subject to FDCPA liabilty). Accordingly, Acosta-Pelle's claims against these three defendants are dismissed.
With respect to the fourth defendant, Caprio, Acosta-Pelle makes two allegations implicating Caprio in Defendants' attempt to collect Acosta-Pelle's alleged debt. First, Acosta-Pelle alleges that Caprio made false statements in an affidavit used to obtain the default judgment against her in state court. See Compl. ¶ 18. However, Caprio's affidavit explictly states that it is based upon Caprio's review of Acosta-Pelle's "books and records." Id. ¶ 1. Acosta-Pelle offers no evidence suggesting that Caprio's affidavit misrepresented these records in violation of FDCPA. See 15 U.S.C. ¶ 1692(e) (prohibiting the use of "any false, deceptive or misleading representation[s] . . . in connection with the collection of any debt"). Second, Acosta-Pelle alleges that, because Caprio reviewed Acosta-Pelle's records, she would have known that Acosta-Pelle had "responded in writing [to the debt collector that sold Acosta-Pelle's alleged debt to New Century] disputing the alleged debt's validity and amount." Plaintiff's Opposition to Defendants' Motion for Summary Judgment ("Opp. Mem.") at 9. Putting aside the fact that Acosta-Pelle's theory of liability relating to this allegation is unclear, the only supporting evidence that Acosta-Pelle has offered is an unaddressed "sample letter" containing boiler-plate language disputing an unspecified debt. See Sample Letter, Ex. K to Opp. Mem., at 1. This sample letter is insufficient to create a genuine issue of material fact as to whether Caprio knew that Acosta-Pelle disputed the alleged debt. Accordingly, Acosta-Pelle's claims against Caprio are dismissed.
See Pl. 56.1 ¶ 22.
A. Preliminary Issues
The first preliminary issue is whether, under New York law, claim preclusion can be applied to the counterclaim that Acosta-Pelle raised in New York state court. Because New York, unlike the federal system, does not have a compulsory counterclaim rule, a party is generally not barred from bringing a claim that it could have, but did not, assert as a counterclaim in a prior action. However, when a counterclaim has been asserted in the prior action, claim preclusion applies to that counterclaim in "full measure." Accordingly, the doctrine of claim preclusion can properly be applied to bar claims arising out of the same series of transactions as the counterclaim that Acosta-Pelle asserted in state court.
See Modell Co. v. Minister, Elders Deacons of the Reformed Protestant Dutch Church of City of New York, 68 N.Y.2d, 462 n. 2 (1986).
David D. Siegel, New York Practice § 452 (4th ed. 2009) ("Res Judicata ordinarily applies in full measure to claims interposed by way of counterclaim, cross-claim, third-party claim, and the like, as long as there was sufficient jurisdiction in the first action to dispose of the claim.").
The second preliminary issue is whether Defendants — by failing to assert the defense of claim preclusion in their answer — have properly raised the issue of claim preclusion. Because claim preclusion is an affirmative defense, it may be waived if it is not pled in a timely manner ( e.g., asserted by the defendant in its answer). However, while a district court is not obligated to entertain the application of the preclusion doctrine if a defendant fails to assert it in his or her answer, the court may do so to "serve the strong public policy in economizing the use of judicial resources" — particularly where the opposing party has been given notice of the affirmative defense and an opportunity to respond. In this case, Defendants asserted that this action was barred by principles of preclusion both at an initial conference and in memoranda accompanying their motion for summary judgment. In addition, at that initial conference, I explained to Acosta-Pelle that the doctrine might apply in this case, and subsequently questioned her with the aim of determining whether the doctrine should bar her claims. To the extent that a pro se litigant can be expected to respond to the assertion of a relatively complex legal doctrine such as claim preclusion, Acosta-Pelle has been given that opportunity. Acosta-Pelle has addressed the issue of claim preclusion in her brief, and although her treatment of the issue is minimal, it is highly unlikely that the issue would have been more fully briefed had Defendants asserted the affirmative defense in their answer. Accordingly, in order to promote the efficient use of judicial resources, I am permitting the application of claim preclusion to the claims in this case.
See Fed.R.Civ.P. 8(c)(1). Although, New York law governs the substantive content of the claim preclusion doctrine applied in this case, federal law still governs the procedural rules relating to whether claim preclusion was properly raised. See Curry v. City of Syracuse, 316 F.3d 324, 331 (2d Cir. 2003) (applying federal law to determine whether the defense of collateral estoppel was properly raised and New York law to determine the substantive content of that doctrine).
See McKitchen, 481 F.3d at 104.
See id.
Curry, 316 F.3d at 331.
See id. (affirming a district court's decision to apply the doctrine of collateral estoppel where the defendant raised the defense for the first time in its reply memorandum).
See 7/28/09 Transcript of Initial Conference ("Tr.") at 2-3.
See, e.g., Def. Mem. at 5-6.
See Tr. at 4-9.
See Opp. Mem. at 8.
B. Same Transaction or Series of Transactions
As described, in the antecedent state court action, Acosta-Pelle asserted a counterclaim against New Century to recover damages — including costs associated with the attachment of Acosta-Pelle's bank accounts — caused by a default judgment wrongly obtained by New Century. The majority of Acosta-Pelle's claims in this case arise out of the same transaction underlying that action. Specifically, Acosta-Pelle seeks relief for the methods by which Defendants' obtained the default judgment and executed the attachment on her bank accounts pursuant to that judgment, and for bank charges and other injuries caused by the attachment of those accounts. Although Acosta-Pelle now makes these arguments in the guise of FDCPA violations, the asserted claims arise out of the same factual basis as the counterclaim Acosta-Pelle litigated in state court and are consequently barred by the doctrine of claim preclusion.
See Pl. 56.1 ¶¶ 15, 21.
See Compl. ¶¶ 13-21.
See id. ¶¶ 22-24.
The legal basis for Acosta-Pelle's asserted state court counterclaim is unclear. However, under New York law, it is irrelevant if the legal theory asserted in the antecedent state court action differs from the legal theory asserted in this action. See O'Brien, 54 N.Y.2d at 357. Likewise, under New York law, it is irrelevant that Acosta-Pelle may now be seeking injunctive relief for the first time. See id.
Acosta-Pelle makes two general allegations that arguably do not arise out of the same series of transactions that formed the basis for her state court counterclaim. Acosta-Pelle alleges that Defendants violated the FDCPA by "using unfair practices . . . to collect the alleged non-existent debts" and that "defendants New Century and Pressler [ Pressler] utilize unlawful and illegal methods to purchase alleged delinquent accounts by using unconscionable practices to obtain private information concerning owners of such accounts which they use in judgment procurements [sic]." However, Acosta-Pelle has not adduced any specific evidence — apart from evidence relating to the precluded claim that Defendants wrongly obtained a default judgment against Acosta-Pelle — supporting these general allegations. Accordingly, these claims are also dismissed.
Compl. ¶ 26.
Id. ¶ 28.
Acosta-Pelle has made the specific allegation that "Defendants violated [the FDCPA] by failing to effectively convey the 30 day debt verification/dispute rights set forth therein." Compl. ¶ 27. But the only evidence submitted by either party regarding this allegation suggests exactly the opposite — that Defendants did provide the statutorily required letter informing Acosta-Pelle of her rights under the FDCPA. Compare 4/11/07 letter from Pressler Pressler to Acosta-Pelle, Ex. A to Declaration of Mitchell L. Williamson, Counsel for Defendants, at 1, with FDCPA, 15 U.S.C § 1692(g). Acosta-Pelle asserts that she did not receive this letter or any other communication from New Century prior to the commencement of the state court action. See Pl. 56.1 ¶¶ 2-10. However, section 1692(g) only requires a debt collector to inform an alleged debtor of his or her rights after the debt-collector has had "an initial" communication with the debtor, 15 U.S.C. § 1692(g)(a), and expressly states that "a formal pleading in a civil action" does not constitute an "initial communication," id. § 1692(g)(d). Because no notice of rights was required under the facts asserted by Acosta-Pelle, it is irrelevant whether she actually received the notice sent by New Century. Accordingly, this claim is dismissed.
IV. CONCLUSION
For the aforementioned reasons, Defendants' motion for summary judgment is granted. The Clerk of Court is directed to close these motions (Docket Nos. 16 and 19).
SO ORDERED: