Opinion
DOCKET NO. A-0397-13T4
02-18-2015
PALISADES COLLECTION, LLC, Plaintiff-Respondent, v. ELLIOT S. KUCHINSKY, Defendant-Appellant.
Allen B. Gillman argued the cause for appellant (Gillman and Gillman, LLC, attorneys; Mr. Gillman, on the brief). Randi A. Wolf argued the cause for respondent (Spector Gadon & Rosen, P.C., attorneys; Ms. Wolf, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino and Leone. On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3805-12. Allen B. Gillman argued the cause for appellant (Gillman and Gillman, LLC, attorneys; Mr. Gillman, on the brief). Randi A. Wolf argued the cause for respondent (Spector Gadon & Rosen, P.C., attorneys; Ms. Wolf, on the brief). PER CURIAM
Defendant Elliot S. Kuchinsky appeals the dismissal of his counterclaims against plaintiff Palisades Collection, LLC. Defendant claims damages due to the service of a motion and order to enforce an information subpoena, and an inadequate computer-generated report of his credit card debt. We affirm.
I.
We discuss only those parts of this case's involved procedural history that are relevant to this appeal. Defendant allegedly owed a credit card debt to Chase Bank USA, N.A., which sold that debt to plaintiff. In 2008, plaintiff filed a complaint in the Special Civil Part and served defendant. Plaintiff submitted a "Computer-Generated Report of Financial Information" (Report) stating defendant owed $2681, and default judgment was entered against defendant for that amount.
In 2011, plaintiff served defendant directly with an information subpoena, copying his counsel. When defendant did not answer the information subpoena, plaintiff served defendant directly with a motion to enforce litigant's rights (Motion). Defendant's counsel claimed this violated R.P.C. 4.2 and the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.A. §§ 1692 to 1692p (2014). Plaintiff's counsel responded that the Motion had been served in compliance with Rule 6:7-2, and that counsel was copied with the Motion.
The Special Civil Part granted the Motion and issued an order (Order) finding that defendant violated litigant's rights by failing to answer the information subpoena, and warning that if he failed to answer within ten days, "a warrant for defendant's arrest shall issue out of this Court without further notice." Plaintiff served the Order on defendant directly and defendant's counsel received a copy of this Order.
Defendant requested an order to show cause to vacate the default judgment under Rule 4:50-1(f). The Special Civil Part vacated the default judgment because the Report did not comply with Rule 6:6-3(a). Defendant then filed an answer and counterclaims, seeking actual, statutory, and punitive damages, counsel fees, and costs.
The case was transferred to the Law Division. After discovery, plaintiff dismissed its own complaint with prejudice. Plaintiff later moved to dismiss defendant's counterclaims. Defendant submitted certifications in opposition. On September 16, 2013, Judge Martin E. Kravarik granted plaintiff's motion. Defendant appeals.
II.
Plaintiff moved to dismiss defendant's counterclaims for "failure to state a claim upon which relief can be granted." R. 4:6-2(e). "Such a motion must be based on the pleadings themselves." Roa v. Roa, 200 N.J. 555, 562 (2010). However, if on such a motion, "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided by R. 4:46." R. 4:6-2. Here, defendant and his counsel each presented the court with certifications "in opposition to plaintiff's motion for summary judgment." The Law Division did not exclude those certifications, and it considered other portions of the record. "Hence, our review proceeds as one of a motion for summary judgment." Cheng Lin Wang v. Allstate Ins. Co., 125 N.J. 2, 14-15 (1991); see Hurwitz v. AHS Hosp. Corp., 438 N.J. Super. 269, 294 (App. Div. 2014).
Summary judgment must be granted if "there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). The court must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Because "appellate courts 'employ the same standard [of review] that governs the trial court,'" we review these determinations de novo, and the "trial court rulings 'are not entitled to any special deference.'" Henry v. N.J. Dept. of Human Servs., 204 N.J. 320, 330 (2010) (citation omitted). We must hew to that standard of review.
III.
Defendant's counterclaims alleged that plaintiff violated 15 U.S.C.A. § 1692c(a)(2) by serving the Motion and Order on defendant directly even though he was represented by counsel. That subsection of the FDCPA states:
Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt—
. . . .
(2) if the debt collector knows the consumer is represented by an attorney with respect to such debt[.]
[15 U.S.C.A. § 1692c(a).]
Here, plaintiff had "the express permission of a court of competent jurisdiction," ibid., because the Supreme Court so provided in the Rules of Court. Under § 1692c(a), "[c]ourt rules permitting service could be interpreted as granting such express permission." Thomas v. Law Firm of Simpson & Cybak, 392 F.3d 914, 920 (7th Cir. 2004).
Rule 6:7-2 expressly provides that an information subpoena, a motion to enforce such a subpoena, and an order granting the motion, will all be served on the judgment-debtor directly. "An information subpoena may be served upon the judgment debtor, without leave of court [.]" R. 6:7-2(b)(1). If "a judgment- debtor fails to obey . . . an information subpoena," then "[t]he notice of motion shall contain a return date and shall be served on the judgment-debtor." R. 6:7-2(e). "If the judgment-debtor has failed to appear in court on the return date and the court enters an order to enforce litigant's rights," then "[t]he judgment-creditor shall serve a copy of the signed order upon the judgment-debtor." R. 6:7-2(f). The information subpoena, motion, and order must be served on "the judgment-debtor either in person or simultaneously by regular and certified mail, return receipt requested." R. 6:7-2(e); see R. 6:7-2(c), (f).
Rule 6:7-2 clearly uses the term "judgment-debtor" to refer to judgment-debtors themselves, rather than the judgment-debtor's attorney. In this rule and elsewhere, the Supreme Court knew how to refer to a party's "attorney" as distinct from the party, and did so repeatedly. E.g., R. 6:7-2(a), (b)(2), (e); see also R. 6:7-1(e). For example, the Court required that "[t]he original subpoena, with the answers to the written questions annexed thereto shall be returned to the judgment creditor, if pro se, or judgment creditor's attorney." R. 6:7-2(b)(1). It is thus particularly telling that the Court chose to require service on the "judgment debtor" directly. Ibid.
The Supreme Court's choice to require service of the information subpoena, motion, and order on the judgment-debtor directly reflects that it is the judgment-debtor who must answer the information subpoena or face arrest. "Answers shall be made in writing, under oath or certification, by the person upon whom served, if an individual, or by an officer, director, agent or employee having the information sought, if a corporation, partnership or sole proprietorship." R. 6:7-2(b)(1) (emphasis added). The notice of motion must warn "that if the judgment-debtor fails to appear in court on the return date or to furnish the required answers, he or she shall be arrested and confined to the county jail until he or she has complied with the . . . information subpoena." R. 6:7-2 (e)(3). If the judgment-debtor fails to comply, "the court will issue an arrest warrant." R. 6:7-2(f). A warrant for arrest can issue only if "a copy of the signed order to enforce litigant's rights has been served upon the judgment-debtor as provided in this rule," and "[i]f the notice of motion and order to enforce litigant's rights were served on the judgment-debtor by mail, the warrant may be executed only at the address to which they were sent." R. 6:7-2(g) (emphasis added).
Rule 6:7-2's intent to warn the judgment-debtor directly is also evident from the rule's required forms for the information subpoena and motion. See Rule 6:7-2(b)(1), (e). The "Information Subpoena and Written Questions" form instructs the judgment-debtor that "You must answer each question" or "You will be compelled to appear" in court, and that "Failure to Comply with this Information Subpoena May Result in Your Arrest and Incarceration." Pressler & Verniero, Current N.J. Court Rules, Appendix XI-L to R. 6:7-2 (2014). The "Notice of Motion for Order Enforcing Litigant's Rights" form warns judgment-debtors that the court may find they failed to comply with the "information subpoena served upon you," may compel "you to immediately furnish answers," and may direct "that, if you fail to appear in court on the date written above, you will be arrested by an Officer of the Special Civil Part or the Sheriff and confined in the county jail until you comply." "Notice of Motion for Order Enforcing Litigant's Rights" Pressler & Verniero, supra, Appendix XI-M to R. 6:7-2.
This form (revised Sept. 1, 2014) is currently available at http://www.judiciary.state.nj.us/civil/forms/11840_infor_sub_wri tten_quest.pdf.
This form is currently available at http://www.judiciary.state.nj.us/rules/app11m.pdf (last visited Feb. 3, 2015).
By requiring service of the information subpoena, motion, and order on the judgment-debtor directly, Rule 6:7-2 prevents arrest unless the judgment-debtor has directly received prior notice. As we have noted in analyzing this rule, the need for due process "is met only if the arrest is preceded by 'notice and opportunity for hearing appropriate to the nature of the case.'" New Century Fin. Servs., Inc. v. Nason, 367 N.J. Super. 17, 25 (App. Div. 2004) (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S. Ct. 652, 656-57, 94 L. Ed. 865, 873 (1950)). The requirement to serve the judgment-debtor directly is another "critical safeguard" by which Rule 6:7-2 ensures the judgment-debtor has notice "'reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'" Id. at 25-26 (quoting Mullane, supra, 339 U.S. at 314, 70 S. Ct. at 657, 94 L. Ed. at 873).
Because plaintiff had "the express permission of a court of competent jurisdiction" to serve defendant directly, 15 U.S.C.A. § 1692c(a)(2), its actions fell within the FCDPA's exception and "the FDCPA and our court rules do not conflict." Hodges v. Sasil Corp., 189 N.J. 210, 230 (2007). Thus, the Law Division correctly held that plaintiff did not violate 15 U.S.C.A. § 1692c(a)(2).
The Law Division added that a creditor is permitted to communicate with an objecting consumer "to notify the consumer that the debt collector or creditor may [or intends to] invoke specified remedies." 15 U.S.C.A. § 1692c(c)(2), (3); see Heintz v. Jenkins, 514 U.S. 291, 296, 115 S. Ct. 1489, 1491-92, 131 L. Ed. 2d 395, 400 (1995). We need not discuss that provision, particularly as defendant never claimed plaintiff violated it.
Plaintiff also did not violate Rule 1:5-1 or R.P.C. 4.2, which contain similar exceptions. Rule 1:5-1 requires service upon a party's attorney of record "unless otherwise provided by rule or court order." R.P.C. 4.2 provides that a party's lawyer may not communicate with a person the lawyer knows to be represented by counsel "unless the lawyer . . . is authorized by law or court order to do so."
Accordingly, we uphold the dismissal of defendant's counterclaims which were based on plaintiff's service of defendant directly. Of course, a plaintiff who knows a judgment-debtor is represented by counsel should also serve on counsel a copy of an information subpoena, motion, and order. Here, it is undisputed that defendant's counsel received a copy of each.
IV.
Defendant's counterclaims alleged that plaintiff's use of the Report in obtaining a judgment of default constituted use of a "false, deceptive, or misleading representation or means in connection with the collection of any debt," 15 U.S.C.A. § 1692e, an "unconscionable means to collect or attempt to collect any debt," 15 U.S.C.A. 1692f, and a fraud upon the court. Defendant argues that the Report was a sham document because the Special Civil Part found it did not comply with Rule 6:6-3(a).
Rule 6:6-3(a) details what documents a plaintiff seeking a default judgment must submit to the clerk to establish the amount owed. "If plaintiff's records are maintained electronically and the claim is founded on an open-end credit plan," such as a credit card, it "shall be sufficient to support the entry of judgment" to attach to the plaintiff's affidavit either "a copy of the periodic statement for the last billing cycle," or
a computer-generated report setting forth the previous balance, identification of transactions and credits, if any, periodic rates, balance on which the finance charge is computed, the amount of the finance charge, the annual percentage rate, other charges, if any, the closing date of the billing cycle, and the new balance[.]
[R. 6:6-3(a).]
Plaintiff's Report attempted to establish that information, but the Report began by showing an existing balance in 2005, and the only subsequent transactions were the accruals of interest through 2008. In seeking to vacate the default judgment, defendant contended the Report failed to comply with "the specific, exact, demanding and precise provisions" of Rule 6:6-3(a). Specifically, defendant argued the 2008 Report could not satisfy our subsequent decision in LVNV Funding, L.L.C. v. Colvell, 421 N.J. Super. 1 (App. Div. 2011), where we ruled a credit agency's "computer-generated statement does not comply with Rule 6:6-3(a) because it does not specify any transactions comprising the debt owed by defendant," namely "the original MasterCard transactions by defendant." Id. at 7-8. Plaintiff countered that Colvell should not be read to undo existing judgments, and that defendant waited too long to challenge the judgment.
The Special Civil Part judge ruled: "Having considered the length of time and having considered the fact that [Rule 6:6-3] was not complied with, and also having considered the — station of life of [defendant], who is elderly, unemployed and not in [] good health, I have decided to vacate the judgment[.]" The court also cited defendant's certification, which stated he believed a debt management company was handling his debts. The court noted defendant "deserved his chance to put the plaintiff to its proofs, and have the plaintiff supply the proofs, that should have been supplied when the plaintiff applied for judgment, in the first place."
Defendant's certification added that "I subsequently learned [the company] had made no payments to my creditors and defrauded me of the money I paid to them."
Defendant argues that the Special Civil Part found the Report was fabricated and a sham, and that court's finding was the law of the case. However, that court made no such finding, instead ruling only that Rule 6:6-3 "was not complied with." Indeed, defendant did not request or justify such a finding. As the Law Division stated, "the insufficiency of proofs does not operate as a per se 'scheme to submit sham documents.'"
We do not opine on the correctness of that ruling. See New Century Fin. Servs. v. Oughla, 437 N.J. Super. 299, 328-29 (quoting legislative history of the FD CPA stating "'it should be sufficient proof for entry of a default judgment . . . if the plaintiff attaches . . . a computer-generated report setting forth the financial information required to be in'" a credit account's "'periodic statement for the last billing cycle.'").
Defense counsel merely argued to the Special Civil Part that Colvell required stringent enforcement of the requirements of Rule 6:63(a), adding that "[o]therwise, you end up with a situation, okay, where people flaunt the rules, ignore them, create sham documents, [and] prey upon people[.]" Defense counsel stated that defendant was asking only to vacate the judgment and require plaintiff to submit proofs that "comply with the rules."
Defendant notes that, in interrogatory responses and depositions, plaintiff did not, and ultimately could not, identify which person prepared the computer-generated Report. However, as the Law Division found, "defendant does not point to anything in the record either by way of deposition or interrogatories to suggest that the plaintiff's computer generated report was fraudulent" or "calculated to interfere with the judicial system."
After reaching this conclusion, the Law Division noted that plaintiff argued that the Report was supported by five Chase credit card statements it recently provided to the court. Defendant contends the statements were not properly authenticated. Even if we ignore those statements, defendant still failed to proffer evidence to support his claims of fraud, falsehood, or unconscionability.
Thus, defendant submitted nothing to show that the Report was intentionally "false, deceptive, or misleading," or "unconscionable." 15 U.S.C.A. §§ 1692e, 1692f. Defendant also failed to submit evidence that plaintiff committed a fraud on the court by "sentiently set[ting] in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense." Triffin v. Automatic Data Processing, Inc., 394 N.J. Super. 237, 251 (App. Div. 2007) (internal quotation marks and citation omitted). The Law Division properly found there was no genuine issue of material fact and dismissed defendant's counterclaims which were based on the Report.
V.
Finally, defendant's counterclaims alleged that plaintiff's improper service of defendant directly, and its fraudulent use of the Report, constituted the intentional infliction of emotional distress. As the Law Division ruled, that allegation fails because service was not improper and the Report was not fraudulent.
In any event, defendant claims his emotional distress arose from the statement in the Order that "[f]ailure to comply with this order may result in your arrest." However, that precise warning is included in the "Order to Enforce Litigant's Rights" form required by Rule 6:7-2(f). Pressler & Verniero, supra, Appendix XI-O to R. 6:7-2. As set forth above, similar warnings are included in the information subpoena and motion forms required by the rule, id. at Appendix XI-L, XI-M, and the rule itself mandates that the motion warn the judgment-debtor that the order may contain such a provision, R. 6:7-2(e)(3). Defendant cannot sue plaintiff for doing what Rule 6:7-2 and its forms require.
This form (eff. Sept. 1, 2004) is currently available at http://www.judiciary.state.nj.us/rules/app11o.pdf
--------
Thus, the Law Division properly granted summary judgment dismissing defendant's counterclaims in their entirety.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION