Opinion
No. CV09 5030251 S
December 16, 2009
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO DISMISS (#101)
PROCEDURAL HISTORY
On July 1, 2009, the plaintiff, CUDA Associates, LLC (CUDA Associates), filed this vexatious litigation action against the defendants, Sharon Evon and Sarah Poriss. According to the complaint this action arises out of the parties' dealings in two other law suits: (1) a 2008 Superior Court case that CUDA Associates brought in the judicial district of Hartford against Evon in an effort to collect upon a credit card account opened by Evon and (2) an action that Evon brought, by and through her attorney Poriss, in the United States District Court for the District of Connecticut, against CUDA Associates for violations of the Fair Debt Collections Practices Act, 15 U.S.C. § 1692 et seq. (hereafter "FDCPA" or "the Act").
Cuda Associates, LLC v. Evon, Superior Court, judicial district of Hartford, Docket No. CV 08 5016615. Hereafter referred to as the "2008 case."
Evon v. CUPA Associates, LLC, No. 3:09-CV-00483 (D.Conn.) filed on March 25, 2009. Hereafter referred to as the "federal action."
In its complaint, CUDA Associates allege the following facts: CUDA Associates brought suit in the 2008 case to collect on Evon's credit card account, which it had purchased and held in its own name. CUDA Associates and Evon reached a settlement agreement and the court, Bentivegna, J., entered judgment against Evon on February 28, 2008. CUDA Associates' attorney subsequently filed an application, order and execution in an effort to collect on the judgment entered against Evon. Evon thereafter retained Poriss as her attorney, and on June 23, 2009, Poris filed a motion to open the February 28, 2008 judgment on behalf of Evon. The court, Graham, J., granted the motion to open the judgment on August 31, 2008.
Apparently Citibank South Dakota issued the credit card to Evon, and CUDA Associates later became a successor in interest to Citibank's debts. See Cuda Associates, LLC v. Evon, supra, Superior Court, Docket No. CV 08 5016615.
On March 25, 2008, after the motion to open had been filed in the 2008 case, but before it had been granted, Evon commenced her federal action, by and through her attorney Poriss, in which she alleged that CUDA Associates violated the FDCPA in its post-judgment collection activities by misrepresenting the amount of the debt owed in its applications for bank executions. More specifically, Evon claimed that CUDA Associates violated 15 U.S.C. §§ 1692c(b) and 1692(2) by making false representations on its applications for bank executions as the applications stated that Evon had not paid any money toward the debt when she claimed to have paid $290. CUDA Associates filed a motion to dismiss the federal action for misjoinder of Evon's claims with those of another plaintiff. In response to the motion, on June 10, 2009, Evon voluntarily withdrew her claims against CUDA Associates.
In addition to Evon, Poriss represented Patrick Smith, the other plaintiff in the federal action.
CUDA Associates now brings this four-count vexatious litigation action, pursuant to General Statutes § 52-568, against both Evon and Poriss, claiming that the defendants brought the federal action without probable cause or, alternatively, brought it without probable cause and with a malicious intent to unjustly vex and trouble the plaintiff. CUDA Associates alleges that Evon and Poriss, as the attorney familiar with the facts and events of the 2008 case, including the application of bank executions, knew or should have known that: (1) § 1692c(b) of the FDCPA does not apply to post-judgment collection activities; (2) CUDA Associates was not acting as a debt collector as defined by the FDCPA, as it did not take any steps to collect debts owed or asserted to be owed or due another, but rather sought to execute on a judgment entered in its own name; (3) the federal court did not have subject matter jurisdiction to consider the allegations made in the federal action, as the 2008 case had been opened and was pending before the Connecticut Superior Court; (4) Evon failed to avail herself of the right to claim an exemption or exception to the bank execution initiated in the 2008 case, or to have a hearing to address the alleged $290 discrepancy; (5) Evon's assets were never frozen and/or seized due to the bank execution in the 2008 case, nor has she incurred any damages from the alleged bank execution; and (6) as a matter of law, CUDA Associates was not obligated to file a new application, order and execution with the Superior Court every time Evon made a minimum payment on the judgment in the 2008 case. In counts one and thee, CUDA Associates seek double damages against Evon and Poriss, respectively, for vexatious litigation under General Statutes § 52-568(1). Alternatively, in counts two and four, it seeks treble damages against Evon and Poriss, respectively, for vexatious litigation with malice under General Statutes § 52-568(2).
On August 5, 2009, the defendants filed a motion to dismiss CUDA Associates' complaint for lack of subject mailer jurisdiction on the ground that its causes of action for vexatious litigation are preempted by the FDCPA, 15 U.S.C. § 1692 et seq. The defendants filed a memorandum of law in support of their motion. CUDA Associates filed its objection to the motion to dismiss on October 15, 2009. The matter was heard at short calendar on October 19, 2009.
DISCUSSION
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Caruso v. Bridgeport, 285 Conn. 618, 627, 941 A.2d 266 (2008). "Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction." St. George v. Gordon, 264 Conn. 538, 545, 825 A.2d 90 (2003). It is "[t]he plaintiff [who] bears the burden of proving subject matter jurisdiction, whenever and however raised." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n. 12, 829 A.2d 801 (2003). "[I]n determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Connor v. Statewide Grievance Committee, 260 Conn. 435, 443, 797 A.2d 1081 (2002).
In the present case, the defendants argue that CUDA Associates' claims for vexatious litigation under General Statutes § 52-568 are preempted by the FDCPA, specifically 15 U.S.C. § 1692n, as Congress has provided an exclusive remedy for debt collectors in 15 U.S.C. § 1692k(a)(3). CUDA Associates counters that its statutory vexatious litigation claims are valid independent causes of action that are not preempted by the FDCPA. CUDA Associates maintains that 15 U.S.C. § 1692k(a)(3) does not provide an exclusive remedy against consumers who vexatiously bring suit, and further maintains that § 1692k(a)(3) does not provide any remedy against an attorney who commenced a baseless FDCPA claim.
The issue of whether the FDCPA preempts a statutory cause of action for vexatious litigation has not been previously addressed by Connecticut appellate courts. Accordingly, the court must consider the issue in light of the following principles. "The question of preemption is one of federal law, arising under the supremacy clause of the United States constitution . . . Determining whether Congress has exercised its power to preempt state law is a question of legislative intent." (Citation omitted.) Serrano v. Serrano, 213 Conn. 1, 5, 566 A.2d 413 (1989). "The Supreme Court has limited preemption to three circumstances. English v. General Electric Co., 496 U.S. 72, 78, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). First, state law is preempted `when Congress has made its intent known through explicit statutory language . . .' Id., 79. Second, a state law implicitly is preempted when it `regulates conduct in a field that Congress intended the [f]ederal [g]overnment to occupy exclusively.' Id. The intent to occupy a particular field `may be inferred from a scheme of federal regulation . . . so pervasive as to make reasonable the inference that Congress left no room for the [s]tates to supplement it, or where an [a]ct of Congress touch[es] a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.' . . . Id. Even with implied field preemption, however, when Congress has legislated `in a field which the [s]tates have traditionally occupied . . . [a court starts] with the assumption that the historic police powers of the [s]tates were not to be superseded by the [f]ederal [a]ct unless that was the clear and manifest purpose of Congress.' . . . Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947) . . . Third, and finally, a state law may be preempted when `it is impossible for a private party to comply with both state and federal law . . . and where under the circumstances of [a] particular case, [the challenged state law] stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress . . . What is a sufficient obstacle is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects . . .' Crosby v. National Foreign Trade Council, 530 U.S. 363, 372-73, 120 S.Ct 2288, 147 L.Ed.2d 352 (2000)." Connecticut Coalition Against Millstone v. Connecticut Sitting Council, 286 Conn. 57, 70-71, 942 A.2d 345 (2008). Furthermore, "[t]here is a strong presumption against federal preemption of state and local legislation." (Internal quotation marks omitted.) Dowling v. Slotnik, 244 Conn. 781, 794, 712 A.2d 396, cert. denied sub nom. Slotnik v. Considine, 525 U.S. 1017, 119 S.Ct. 542, 142 L.Ed.2d 451 (1998).
The constitution of the United States, article six provides in relevant part: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding."
In Mullin v. Guidant Corp., 114 Conn.App. 279, 283, 970 A.2d 733, cert. denied, 292 Conn. 921, 974 A.2d 722 (2009), the Appellate Court stated: "Federal preemption of a state law or cause of action does not necessarily implicate the court's subject matter jurisdiction." There are times when federal preemption should be raised as a special defense. See, e.g., Stokes v. Norwich Taxi, LLC, 289 Conn. 465, 488-89, 958 A.2d 1195 (2008) (because 29 U.S.C. § 216(b) confers concurrent jurisdiction on state and federal courts to hear claims brought pursuant to the Fair Labor Standards Act, it "does not dictate the choice of forum, [and the court] agree[s] . . . that the defendants waived the special defense of federal preemption by failing to plead it"). Where, however, "Congress has designated another forum for the resolution of a certain class of disputes . . . such designation deprives the courts of jurisdiction to decide those cases . . ." (Citation omitted; internal quotation marks omitted.) Mullin v. Guidant Corp., supra, 114 Conn.App. 284 n. 4. Because "[i]t is axiomatic . . . that the subject matter jurisdiction requirement may not be waived by any party;" Mullin v. Guidant Corp., supra, 284; this court may properly address the question of federal preemption in the context of the defendants' motion to dismiss.
To determine whether General Statutes § 52-568 is preempted by the FDCPA, it is first necessary to look at Congress' intent in enacting the federal act. After recognizing that the "use of abusive, deceptive, and unfair debt collection practices by many debt collectors . . . contribute[s] to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy;" 15 U.S.C. § 1692(a); Congress sought to redress such consumer injuries by enacting the FDCPA. Congress stated that "[i]t is the purpose of this title . . . to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e).
Congress has set forth remedies available for those who are harmed by violations of the Act. Section 1692k of the Act provides in relevant part: "any debt collector who fails to comply with any provision of this title . . . with respect to any person is liable to such person in an amount equal to the sum of . . . in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorneys fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorneys fees reasonable in relation to the work expended and costs." 15 U.S.C. § 1692k(a)(3). The FDCPA also contains a clause that relates to the issue of preemption, which states: "This title . . . does not annul, alter, or affect, or exempt any person subject to the provisions of this title . . . from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title . . . and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this title . . . if the protection such law affords any consumer is greater than the protection provided by this title." 15 U.S.C. § 1692n.
The express language of § 1692n indicates that Congress elected not to preempt all state laws, but rather seeks to preempt only those state laws that do not protect consumers from abusive debt collection practices in the manner consistent with the Act. According to the United States Supreme Court, "[p]reemption fundamentally is a question of congressional intent . . . and when Congress has made its intent known through explicit statutory language, the courts' task is an easy one." (Citation omitted.) English v. General Electric Co., supra, 496 U.S. 79. As one court stated in regard to § 1692n, "Congress specifically provided for state laws regarding debt-collection practices to remain valid unless inconsistent with the FDCPA . . . Congress intended to allow states to continue to legislate in this area, and it granted concurrent jurisdiction. A statute's specific provision for concurrent state and federal jurisdiction and/or the application of both state and federal law weighs against complete preemption . . . Further, no court has held that the FDCPA completely preempts applicable state law or even that it preempts the field." (Citations omitted; internal quotation marks omitted.) Virgil v. Reorganized M.W. Co., Inc., 156 F.Sup.2d 624, 631 (S.D.Miss. 2001).
Indeed, in at least one other jurisdiction a court has specifically stated that "[t]he Act's preemption clause, 15 U.S.C. § 1692n, does not purport to preempt state law malicious prosecution claims. Instead, it is specifically addressed to the `laws of any State with respect to debt collection practices' and provides that state laws are not preempted by the FDCPA `if the protection such [laws afford] any consumer is greater than the protection provided by [the Act]' . . . [Section] CT Page 2002 15 U.S.C. § 1692k(a)(3), which provides a remedy for persons harmed by bad faith litigation brought under the Act, is merely collateral to the intent and purposes of the Act. It is certainly not impossible or unreasonable to expect persons (especially attorneys) who bring actions under the FDCPA to comply with both federal and state law requirements prohibiting bad faith litigation or malicious prosecution." Ziobron v. Crawford, 667 N.E.2d 202, 206-07 (Ind.Ct.App. 1996), cert. denied, 683 N.E.2d 585 (Ind. 1997).
A cause of action for malicious prosecution under Indiana law is similar to a cause of action for vexatious litigation under General Statutes § 52-568, which provides: "Any person who commences and prosecutes any civil action or complaint against another, in his own name or the name of others, or asserts a defense to any civil action or complaint commenced and prosecuted by another (1) without probable cause, shall pay such other person double damages, or (2) without probable cause, and with a malicious intent unjustly to vex and trouble such other person, shall pay him treble damages." Section 52-568 is not in conflict with the FDCPA, as it does not seek to place inconsistent responsibilities on consumers or debt collectors. "[S]tate law claims of [vexatious litigation] against [consumers and their] attorneys who abuse the remedies afforded by the FDCPA do not stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Ziobron v. Crawford, supra, 667 N.E.2d 207. Rather, "[i]f anything, the availability of the state law remedy will serve to protect the integrity and purposes of the Act;" id.; as it will help protect those debt collectors who have refrained from using abusive debt collection practices from defending a false suit filed by consumers.
"The essence of malicious prosecution [under Indiana law] rests on the notion that the plaintiff has been improperly subjected to legal process . . . The elements of a malicious prosecution action are: (1) the defendant instituted or caused to be instituted an action against the plaintiff; (2) the defendant acted maliciously in so doing; (3) the defendant had no probable cause to institute the action; and (4) the original action was terminated in the plaintiff's favor." (Citation omitted.) Crosson v. Berry, 829 N.E.2d 184, 189 (Ind.Ct.App. 2005), cert. denied 841 N.E.2d 186 (Ind. 2005).
As the Connecticut Supreme Court recently stated: "A vexatious suit is a type of malicious prosecution action, differing principally in that it is based upon a prior civil action, whereas a malicious prosecution suit ordinarily implies a prior criminal complaint. To establish either cause of action, it is necessary to prove want of probable cause, malice and a termination of suit in the plaintiff's favor . . . A statutory action for vexatious litigation under General Statutes § 52-568 . . . differs from a common-law action only in that a finding of malice is not an essential element, but will serve as a basis for higher damages." (Citations omitted; internal quotation marks omitted.) Falls Church Group v. Tyler, Cooper and Alcorn, LLP, 281 Conn. 84, 94, 912 A.2d 1019 (2007).
Further, while 15 U.S.C. § 1692k(a)(3) permits a debt collector to pursue remedies against a consumer, "§ 1692k(a)(3) does not authorize the award of attorneys fees and costs against a [consumer's] attorney." Hyde v. Midland Credit Management, Inc., 567 F.3d 1137, 1140 (9th Cir. 2009). The FDCPA does not contain a provision allowing a debt collector to recover damages from a consumer's attorney, even when there is evidence demonstrating lack of probable cause, bad faith or intentional malice on the part of the attorney who commenced the action. Absent a state law claim for vexatious litigation, a consumer's attorney would be immune from suit for any wrongdoing the attorney engaged in when she filed the false lawsuit. This court does not believe it was Congress' intent to grant immunity to consumers' attorneys, as doing so would not serve the purposes set forth in the Act, 15 U.S.C. § 1692. Section 1692n, therefore, does not preempt a state law cause of action for vexatious litigation against a consumer's attorney and does not prevent CUDA Associates from pursuing its state law vexatious litigation claims against both Evon and Poriss.
CONCLUSION
There is no indication that "Congress intended to preempt a state law claim seeking compensation for [vexatious litigation] under the FDCPA." Ziobron v. Crawford, supra, 667 N.E.2d 207. Therefore, a claim under § 1692k(a)(3) of the Act is not an exclusive remedy, and it does not prohibit or preempt state law vexatious litigation claims against consumers or their attorneys. Accordingly, for the foregoing reasons, this court denies the defendants' motion to dismiss the action for lack of subject matter jurisdiction.