Opinion
14582/05
02-20-2015
Colonial Credit Corp, a/a/o Bally's Fitness Center, Claimant, v. Stephanie Beyers, Defendant.
For Claimant: Eltman, Eltman & Cooper 140 Broadway, 26th Floor NY NY 10005 Defendant self-represented
For Claimant:
Eltman, Eltman & Cooper
140 Broadway, 26th Floor
NY NY 10005
Defendant self-represented
Philip S. Straniere, J.
"I can't get no satisfaction" may have been Mick Jagger's problem, but as set forth below, a "satisfaction" has been issued to the defendant in this litigation, yet plaintiff and its revolving counsel continue to treat this as open litigation. At least Mick Jagger, if in need of a "satisfaction," could make an application to the court pursuant to CPLR §5020. There does not appear to be an equivalent statute to rectify the situation currently before the court.
"Satisfaction" words and music by Mick Jagger & Keith Richards
Background:
Colonial Credit Corp., as assignee of Bally's Fitness Center, commenced this action in 2005 against the defendant, Stephanie Beyers, alleging that the defendant failed to make payments under the terms of a note. Defendant failed to appear and answer and a default judgment was entered against the defendant on August 7, 2006 after the defendant failed to comply with the terms of a stipulation of settlement.
Interestingly, although the court file discloses that the summons and complaint were filed with the clerk on October 18, 2005, plaintiff filed a "claim affidavit," which is usually submitted to obtain a default judgment, dated September 15, 2005. This is a month before the summons and complaint was filed and about two months before the pleadings were served on the defendant.
On December 6, 2005, defendant entered into an out-of-court written stipulation of settlement of the claim with the plaintiff. Because it was negotiated between the parties outside of court, the stipulation was not allocuted. Apparently defendant failed to make payments as agreed to under the terms of the stipulation and defendant entered the default judgment. A review of the file discloses that the default judgment was entered without submitting proof of mailing to the defendant of the five-day notice of cure any default as provided in the stipulation.
The court will not again address the issue, which it has in numerous other decisions, of how Colonial Credit, a Maryland corporation which was dissolved in that state on March 25, 2009, was able to bring this action when it never registered with the New York Secretary of State. [For an analysis of this issue see Centurion Capital Corp. v Guarino, 38 Misc 3d 1216(A) (2012) & 35 Misc 3d 1219(A) (2012)].
On July 30, 2007, plaintiff filed a "satisfaction of judgment." The satisfaction, dated July 16, 2007, was prepared by Wolpoff & Abramson LLP as attorney for plaintiff. Wolpoff & Abramson LLP registered with the New York Department of State as a "Foreign Registered Limited Liability Partnership" on January 20, 2005. It is still listed as an "active" entity even though courts in other states have determined that Wolpoff & Abramson merged with Mann Bracken. At some point a receiver was appointed for Mann Bracken. This court has received hundreds of documents indicating that information as well. It should be noted that there are two Mann Bracken entities. Mann Bracken LLC was marked "Inactive" in New York with a surrender of authority being filed on November 5, 2008. That is the same date a new entity, Mann Bracken LLP, registered in New York as a foreign limited liability partnership.
On February 1, 2010 Mann, Bracken LLP entered into a Stipulation and Consent with the New York Attorney General in which "Mann Bracken represents that it has no continuing business presence in New York State and no longer represents any clients in New York State and will not represent clients in New York State in the future." [For an analysis of the Wolpoff & Abramson, and Mann Bracken history of representing consumer credit plaintiffs in New York and whether that was being done in conformity with New York law see an unpublished decision, Great Seneca Financial Corp. v Ali, Index #1481/06, Civil Court, Richmond County; see also Centurion Capital v Guarino, 35 Misc 3d 1219(A) (2012)].
The satisfaction was filed on July 30, 2007 while Wolpoff was still active in New York and prior to Colonial Credit filing a certificate of dissolution in Maryland in March 2009.
Were this the end of the story, there would be no need for the court to be involved with this file. What makes this review of this file troubling is that in spite of there being a satisfaction of judgment recorded with the clerk of the court, counsel, and presumably their clients, have continued to act for the last seven years as if this was still active litigation.
Likewise, were this the only time this has occurred, that is the court discovering a consumer credit file with a satisfaction having been recorded but the plaintiff continuing to treat the file as active, the court might treat it as an aberration, but having reviewed hundreds, if not thousands of consumer credit files over the last few years and having this situation arise on several occasions it just reinforces the perception in the consumer debtor advocacy community that the third-party debt buying industry needs to be better regulated if not abolished. Many consumer debtor advocates are probably saying that this situation exists because the court system and the legislature have had too much "Sympathy For The Devil" and permitted such tactics to go on too long unchecked. Hopefully some of these problems will be corrected by the recently instituted Uniform Rules for the Civil Court §208.14.
Somewhere in third-party debt buyer land, attorneys are still preparing documents on this file as if the plaintiff could claim that the defendant was still "Under My Thumb"and that in spite of the satisfaction of judgment, the debt did "Not Fade Away."
Five years after Wolpoff issued the satisfaction of judgment, an undated consent to change attorney, was acknowledged on June 26, 2012 seeking to change the original attorney of record from Wolpoff & Abramson, LLP, to Houslanger & Associates, PLLC. The form is signed by Cheryl Rose as Receiver for Mann Bracken as agent for Wolpoff & Abramson. It does not indicate if Rose is the Receiver for Mann Bracken LLC which went inactive in November 2008 or Mann Bracken LLP which signed the stipulation with the Attorney General in February 2010 that it was no longer representing clients in New York.
What makes this document interesting is that the caption on the consent to change attorney is "Palisades Collection, LLC as successor to Great Seneca Financial Corp." There is no reference in the file to Great Seneca before submission of this form in June 2012. Great Seneca is an entity that has remarkably similar history to Colonial Credit including filing a certificate of dissolution in Maryland on the same date. A representative of Palisades has signed the consent to change attorney. There is no evidence of an assignment of the judgment to Palisades in the court file.
Owing to these discrepancies, called to the court's attention by the clerk, the court reviewed the file and on October 16, 2012 issued an order setting the matter for a hearing on December 18, 2012. The order required the plaintiff to provide 1) proof of assignment from Bally's to Colonial Credit; 2) proof of the authority of the Receiver; 3) proof of the assignment to Great Seneca; 4) proof of the assignment to Palisades Collection; 5) proof of notice being given to the defendant. Apparently believing that "Time Is On My Side, " neither plaintiff nor any of the counsel involved with the file provided any of this information.
Further review of the file at that time, led to the discovery of the satisfaction of judgment. The court issued a second order dated January 24, 2013 declaring the consent to change attorney moot as the judgment had been satisfied and precluding any enforcement actions by the plaintiff. The court by doing so believed that as far as this litigation was concerned, "It's All Over Now."
Once again establishing that the third-party debt buying industry has no idea what each hand is doing, the court is now in receipt of a new "consent to change attorney" form dated September 3, 2014. Is it any wonder that courts dealing with consumer credit cases may be facing their "19th Nervous Breakdown" and in the need of a "Mother's Little Helper?"
The outgoing attorney on the September 2014 consent to change attorney is listed as Mann Bracken LLC, but no longer as the agent for Wolpoff & Abramson. Considering that Mann Bracken LLC went "inactive" in New York in November 2008, how it had the authority to sign anything in September 2014 must be questioned.
The incoming attorney is now Eltman, Eltman & Cooper, PC and not Houslanger & Associates. The alleged holder of the debt is Palisades Acquisition XVI and not Palisades Collection, LLC, the owner of the debt in the previous consent to change attorney. There is no indication if Palisades Acquisition is a corporation, partnership or a limited liability company.
This consent is dated September 3, 2014. However, the acknowledgement is originally dated August 28, 2014 before the date of the document, but the notary properly corrected the acknowledgement date to the same date it was signed. It should be pointed out that there are numerous other similar forms where the notary did not change the notarization date, thereby submitting a document notarized before it was signed.
Attached to the form is a limited power of attorney dated January 16, 2014, from Palisades Collection, LLC and its subsidiaries authorizing Eltman, Eltman & Cooper, PC to be its attorney-in-fact. There is no list of what entities are subsidiaries of Palisades Collection.
In order to make some sense of this file, which appears to be "Out of Control," the court ordered Mann Bracken, Houslanger & Associates, PLLC, and Eltman, Eltman & Cooper PC, to appear at the courthouse on February 2, 2015 at 9:30 AM in Part 56 to explain why they should not either be held in contempt or assessed costs for filing consents to change attorney more than five and seven years after this matter was satisfied. In actuality the court should have indicated sanctions might be assessed as costs would only be available if the defendant was making an application.
Needless to say, none of these law firms appeared, nor did any plaintiff, nor did anyone seek an adjournment. Apparently those entities believed that this was "Their Satanic Majesties Request" which could be ignored and not a court order.
Not only is the fact that the third-party debt buyer world is carrying this claim as open on its books in spite of the fact a satisfaction was filed, potentially causing problems for the defendant, because this is a file from 2005, every time an application is made, the court must retrieve the file from offsite storage at the court systems' expenses.
The question must be asked: Are there any remedies available to the court to deal with this situation? And as to the various plaintiffs and their counsel, when it comes to their respective futures will the court "Paint It Black?"
In the hope that this will be "The Last Time" the court will have to deal with this file, the court makes the following determinations:
A. Rules of the Chief Administrative Judge:
1. §130-1.1. Costs; sanctions.
This rule permits the court, in its discretion to award to any party or to an attorney costs, in the form of actual reasonable expenses incurred resulting from frivolous conduct. As the defendant is not making any application, the issue becomes can the court impose sanctions against plaintiff and its counsel. The Rule provides:
(a)...In addition to or in lieu of awarding costs, the court, in its discretionmay impose financial sanctions upon any party or attorney in a civil actionor proceeding who engages in frivolous conduct as defined in the Part,...
(b) The court, as appropriate, may make such award of costs or impose suchsanctions against either an attorney or a party to the litigation or both....
(c) For purposes of this part, conduct is frivolous if:
(1) it is completely without merit in law or fact and cannot be supported by areasonable argument for an extension, modification or reversal of existinglaw;...or
(3) it asserts material factual statements that are false.
....In determining whether the conduct was frivolous, the court shall consideramong other issues, (1) the circumstances under which the conduct tookplace, including the time available for investigating the legal or factual basisof the conduct; and (2) whether or not the conduct was continued when itslack of legal or factual basis was apparent, should have been apparent, orwas brought to the attention of counsel or the party.
(d) An award of costs or sanctions may be made...upon the court's owninitiative, after a reasonable opportunity to be heard.
A review of the background of this lawsuit establishes that the plaintiff and its counsel have been treating this satisfied litigation as if it were still a viable action. The court has issued more than one order to the plaintiff and counsel informing them of the defects in the proceeding and asking that plaintiff and counsel take steps to remedy the situation. The court set the matter for a hearing on February 2, 2015 and no one appeared for the plaintiff.
The actions of plaintiff in continuing to file consents to change attorney on a satisfied action, meets the definition of "frivolous conduct" especially since 2012, when the court first attempted to have plaintiff and counsel deal with the situation all to no avail.
2. Rule §130-1.2. Order awarding costs or imposing sanctions.
This section provides that:
The court may award costs and sanctions or both only upon a written decision setting forth the conduct on which the award or imposition is based, the reasons why the court found the amount awarded or imposed to be appropriate or both shall be entered as a judgment of the court. In no event shall the amount of the sanctions imposed exceed $10,000 for any single occurrence of frivolous conduct.
Based on the existence of frivolous conduct as detailed in this decision, the court is imposing sanctions.
3. Rule §130-1.3. Payment of sanctions.
This section provides that:
Payments of sanctions by an attorney shall be deposited with the Lawyers'Fund for Client Protection....Payments of sanctions by a party who is not anattorney shall be deposited with the clerk of the court for transmittal to theCommissioner of Taxation and Finance.
The sanctions imposed on the plaintiffs and their counsel shall be paid as set forth in the above section.
B. Rules of Professional Conduct.
Rule 3.1. Non-Meritorious Claims and Contentions.
(a) A lawyer shall not bring or defend a proceeding, or assert or controvertan issue therein, unless there is a basis in law and fact for doing so that is notfrivolous....
(b) A lawyer's conduct is "frivolous" for the purposes of this Rule if:...
(3) the lawyer knowingly asserts material factual statements that are false.
It is not for the court to determine if twice filling consents to change attorney forms with the court years after the litigation has been satisfied constitutes a violation of the Rules of Professional Conduct as "frivolous." As set forth above, the fact that the plaintiff and its counsel do not know the proper status of the litigation; have been given notice from the court of the problems with the file; and have ignored court orders in that regard; clearly have imposed unnecessary work on the entire court staff and required the court system to retrieve the file from offsite storage to deal with the baseless filings, is frivolous conduct under the Rules of the Chief Administrative Judge. Whether it is for the purpose of the Rules of Professional Conduct is not for the court to decide.
Conclusion:
The facts set forth above establish that the actions of the plaintiff and its ever changing counsel impeded the workings of the court. The conduct of filing consents to change attorney forms after the action has been satisfied and then after having been informed by the court of the fact that the claim had been satisfied to continue to ignore court orders issued in an attempt to rectify the situation, amounts to frivolous conduct under the Rules of the Chief Administrative Judge.
The court imposes the following sanctions:
1. Palisades Collections LLC$500.00assessed as $250.00 for each of the two consent to change attorney forms issued after the debt was satisfied.
2. Mann Bracken$500.00assessed as $250.00 for each of the two consent to change attorney forms it signed as outgoing counsel after having replaced the attorney of record which issued the satisfaction in July 2007.
3. Houslanger & Associates, PLLC$250.00assessed as $250.00 for being the incoming attorney on the June 2012 consent to change attorney form and failing to address the situation after having been notified by the court in 2012.
4. Eltman, Eltman & Cooper, PC$250.00assessed as $250.00 for being the incoming attorney on the September 2014 consent to change attorney form and failing to address the situation after having been notified by the court in 2015.
The clerk will be directed to enter the above sanctions as judgments on April 1, 2015. The parties will make the payments to the proper entities as set forth in the Rules of the Chief Administrative Judge.
The above entities will have until March 26, 2015 to stay the above sanctions by submitting proof to the court that this file has been closed; that the debt has been satisfied; that steps have been taken to ensure that the debt has not been sold to any other third-party debt buyer; and that no further filings such as consents to change attorneys will occur.
The failure to comply by March 26, 2015, will lead to the entry of the judgments on April 1, 2015. In addition, the sanctions will remain stayed but subject to being imposed if the parties file additional papers on this file in the future.
Perhaps the above sanctions will be sufficient to have third-party debt buyers pay a little more attention to their files and establish a remedy for the court to use in the future in similar situations. As noted by Mick Jagger
You can't always get what you want
But you try sometimes you just might find
"You Can't Always Get What You want" by Mick Jagger & Keith Richards
Notes: All songs referred to were recorded by the Rolling Stones and written by Mick Jagger and Keith Richards except for those listed below.
"Not Fade Away" words and music by Charles Hardin and Norman Petty (Charles Hardin being Buddy Holly's first and middle names and last name is actually Holley).
"Time Is On My Side" words and music by Jerry Ragovoy.
"It's All Over Now" words and music by Bobby Womack and Shirley Womack.
"Out of Control" words and music by Ricky Stephen Smith and Jim Richards.
"The Last Time" words and music by Chris DuBois, Tony Lane, and David Lee.
"Their Satanic Majesties Request" is an album.
Keith Richards is married to Staten Islander Patti Hansen.
The foregoing constitutes the decision and order of the court.
Dated:February 20, 2015
Staten Island, NYHON. PHILIP S. STRANIERE
Judge, Civil Court