United States District Court, S.D. New York
February 3, 2005.
EVGUENIY FEDOTOV, on behalf of himself and all others similarly situated, Plaintiff,
PETER T. ROACH AND ASSOCIATES, P.C., Defendant.
The opinion of the court was delivered by: CHARLES HAIGHT, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Evgueniy Fedotov brings this purported class action against
defendant Peter T. Roach and Associates ("Roach"), a law firm, for
alleged violations of the Fair Debt Collection Practices Act ("FDCPA" or
"Act"), 15 U.S.C. §§ 1692 et seq. Pursuant to Rule 56 of the Federal Rules
of Civil Procedure, defendant moves for summary judgment, claiming that
plaintiff does not have standing to pursue this lawsuit, and, pursuant to
Rule 23(a)(4), for an order denying class certification on the ground
that plaintiff is not a proper class representative. For the reasons
discussed below, defendant's motion for summary judgment is denied. I do
not reach the question of class certification, but rather direct the
plaintiff to submit papers in opposition to defendant's motion for denial
of class certification.
On October 28, 2003, defendant law firm sent a collection letter to
plaintiff Fedotov demanding payment of $2,506.98, allegedly on behalf of
Citibank (South Dakota) N.A.
("Citibank").*fn1 It is the contents of that letter, discussed in detail
below, which form the basis of this lawsuit.
On November 7, 2003, Fedotov filed a voluntary petition for relief
under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of New York. Schedule B of that petition
is entitled "Personal Property" and enumerates "Potential Claim under
Fair Debt Collection Practices Act, Maximum Statutory Damages of $1,000"
as one of Fedotov's assets. The petition also lists Roach acting as a
putative collection agent for Citibank as a "Creditor Holding Unsecured
Nonpriority Claims." Thereafter, in a notice dated November 11, 2003 from
the Bankruptcy Court, Roach was informed of Fedotov's Chapter 7 petition
and of the creditor's meeting scheduled for December 15, 2003. Roach
avers, and Fedotov does not dispute,
that after receiving this notice, Roach took no further action with
regard to the collection of this debt. On February 20, 2004, the
Bankruptcy Court issued an Order of Discharge and Order of Final Decree,
which fully administered the estate and released Fedotov from all
dischargeable debts. The bankruptcy case was closed on February 23,
On November 7, 2003 the same day he filed his bankruptcy petition
plaintiff filed this purported class action, alleging that two statements
in Roach's October 28, 2003 collection letter violate provisions of the
FDCPA, including 15 U.S.C. §§ 1692e, 1692e(10), and 1692g(a)(3). First,
the collection letter states "[p]lease be advised that this office has
been retained by the above referenced client in their claim against you."
Plaintiff claims that this statement is untrue and thus violates
15 U.S.C. §§ 1692e and 1692(e)(10) which prohibit "false, deceptive, or
misleading representation[s] [used] to collect or attempt to collect any
debt or to obtain information concerning a consumer." Second, the letter
states, "[u]nless you, the recipient of this notice, within thirty (30)
days after receipt dispute the validity of this debt or any portion
thereof, the debt will be assumed to be valid." Plaintiff claims that
this statement violates 15 U.S.C. § 1692g(a)(3) which requires that the
debtor be notified that only the debt collector may presume the validity
of the debt. Plaintiff requests class certification, injunctive relief,
statutory damages, costs, and attorneys' fees. The purported "nationwide"
class consists of "all consumers who have received debt collection
notices and/or letters from the defendant which contain one or more of
the violations of the FDCPA specified in this complaint, from the period
beginning one year prior to the filing of plaintiff's complaint and
thereafter." Compl. ¶ 5.
Defendant filed an Answer on January 6, 2004 in which he denied
that the statements contained in the October 28, 2003 collection
letter violate the FDCPA. In addition, the Answer sets
forth four affirmative defenses: (i) the complaint fails to state a claim
upon which relief can be granted; (ii) any alleged violation resulted from
a bona fide error notwithstanding the maintenance of procedures
reasonably adapted to avoid any such error;*fn2 (iii) this Court lacks
personal jurisdiction over the defendant; and (iv) insufficiency of
process. On April 23, 2004, defendant filed a motion in this Court seeking
summary judgment and an order denying plaintiff class certification.
The motion for summary judgment is premised on defendant's assertion
that, as a consequence of plaintiff's Chapter 7 Bankruptcy petition, he
no longer has standing to bring this action. According to defendant, the
implications of plaintiff's bankruptcy petition are twofold. First,
through plaintiff's Chapter 7 filing, the asset of this cause of action
passed to the Bankruptcy Trustee, leaving plaintiff without standing to
pursue his claim. And second, because plaintiff's debts were fully
discharged in bankruptcy, he no longer has any collectible debt, without
which he also has no standing to pursue his claim under the FDCPA.
Finally, defendant moves this Court, presumably in the alternative,*fn3
to deny plaintiff class certification based on his alleged lack of
A. Standard of Review on Motion for Summary Judgment Pursuant to Rule
Rule 56 of the Federal Rules of Civil Procedure directs that a court
shall grant a motion for summary judgment "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue
of material fact and that the moving party is entitled to a judgment as a
matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett,
477 U.S. 317 (1986). "The party seeking summary judgment bears the burden
of establishing that no genuine issue of material fact exists and that
the undisputed facts establish her right to judgment as a matter of law."
Rodriguez v. City of New York, 72 F.3d 1051, 1060-61 (2d Cir. 1995). In
determining whether a genuine issue of material fact exists, a court must
resolve all ambiguities and draw all reasonable inferences against the
moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986). If there is "any evidence in the record from
any source from which a reasonable inference could be drawn in favor of
the non-moving party," then summary judgment should be denied. Chambers
v. TRM Copy Centers Corp., 43 F.3d 29, 37 (2d. Cir. 1994).
B. Abandonment of this Cause of Action by the Bankruptcy Trustee
Upon commencement of a bankruptcy action, the Bankruptcy Code requires
that "[t]he debtor shall (1) file . . . a schedule of assets and
liabilities . . . and a statement of the debtor's financial affairs."
11 U.S.C. § 521(1). The assets scheduled under § 521(1) comprise a
bankruptcy estate, and all of the debtor's nonexempt assets become assets
of that estate. 11 U.S.C. § 541(a). The bankruptcy estate encompasses
"all legal or equitable interests of the debtor in property as of the
commencement of the case," id. at § 541(a)(1); Seward v. Devine,
888 F.2d 957, 963 (2d Cir. 1989), including all pre-petition causes of
action belonging to the debtor. Kunica v. St. Jean Financial, Inc.,
233 B.R. 46, 52 (S.D.N.Y. 1999); see also Seward, 888 F.2d at 963 ("The
bankruptcy estate . . . includ[es] any causes of action possessed by the
debtor."); Rosenshein v. Kleban, 918 F.Supp. 98
(S.D.N.Y. 1996). Hence, by operation of § 541 of the Bankruptcy Code, any
causes of action belonging to Fedotov, including this one, became the
property of the bankruptcy estate when he sought protection under the
However, a long-standing principle of bankruptcy law allows a Trustee
to abandon property, including causes of action, if such property is
burdensome or of inconsequential value to the bankruptcy estate. See,
e.g., Brown v. O'Keefe, 300 U.S. 598 (U.S. 1937); Meyer v. Fleming,
327 U.S. 161 (1942); Vreugdenhill v. Navistar Intern. Transp. Corp.,
950 F.2d 524 (8th Cir. 1991). This principle was articulated in the
Bankruptcy Code in § 554(c), which provides that "any property scheduled
under section 521(1) of this title not otherwise administered at the time
of the closing of a case is abandoned to the debtor." 11 U.S.C. § 554(c);
see also Ball v. Nationscredit Financial Services Corp., 207 B.R. 869, 872
(N.D.Ill. 1997) ("If a cause of action that preexisted the filing of the
bankruptcy petition is . . . abandoned by the trustee, then it is
property of the debtor and the debtor will have standing to pursue the
cause of action in his or her own name.") (citing In re Bronner,
135 B.R. 645, 647 (9th Cir. B.A.P. 1992)). Therefore, by operation of
law, property, including a cause of action, properly scheduled pursuant
to § 521(1) and not administered by the Trustee, reverts to the debtor's
possession once the bankruptcy estate is fully administered and the
bankruptcy case is closed.
The parties agree that plaintiff scheduled this cause of action in his
Chapter 7 bankruptcy petition. Schedule B of plaintiff's petition is
entitled "Personal Property" and includes descriptions of multiple types
of property. Item 20 of Schedule B instructs the debtor to list "[o]ther
contingent and unliquidated claims of every nature, including tax
refunds, counterclaims of the debtor, and rights of setoff claims." Under
that item, plaintiff lists "Potential Claim under Debt Collection
Practices Act, Maximum Statutory Damages of $1,000." The form is marked
as signed by plaintiff Fedotov and his
wife Natalia Fedotova and dated November 3, 2003.
Moreover, as both parties agree, and the pleadings and the evidence
submitted therewith demonstrate, the Trustee chose not to administer
Fedotov's cause of action against Roach.*fn4 Plaintiff says that
"[p]ursuant to the Trustee's subsequent issuance of a `Report of No
Distribution' the Trustee chose not to adopt and administer the
prosecution of this lawsuit." The docket report of the bankruptcy case
also supports plaintiff's statement. In an entry dated December 29,
2003, the report states that the Trustee has fully administered the
estate and that no property was received or distributed because the
estate "has no nonexempt property to distribute." On February 20, 2004,
the "Discharge of Debtor, Order of Final Decree" recites that Fedotov's
estate has been fully administered and orders that he be released from
all dischargeable debts and that his bankruptcy case be closed. The last
entry in the docket report of plaintiff's bankruptcy case, dated February
23, 2004, reads "Case Closed."
Roach, as the moving party, has the burden to demonstrate that there is
no material dispute concerning whether the bankruptcy Trustee properly
abandoned this cause of action. Based on the foregoing, it is abundantly
clear that Roach has failed to carry his burden: the evidence indicates
that this cause of action was, in fact, abandoned by the bankruptcy
Trustee to Fedotov, by operation of law pursuant to § 554(c), upon the
closing of Fedotov's bankruptcy case on February 23, 2004. That the
Trustee would abandon this cause of action is no surprise: as plaintiff
admits, the benefit of a successful outcome in this action would be
limited to the statutorily-authorized maximum award of $1,000.
15 U.S.C. § 1692k(a)(2).
C. The Absence of Collectible Debt and Plaintiff's Standing
As discussed in detail above, on February 20, 2004 the Bankruptcy Court
discharged all of plaintiff's debts, including the $2,506.98 debt
allegedly owed to Citibank and which was the subject of defendant's
October 28, 2003 collection letter. Defendant maintains that as a
consequence of the bankruptcy action, plaintiff no longer has any
collectible debt and thus lacks standing to pursue this claim.*fn5 By
focusing on whether or not plaintiff currently has actual debt, defendant
betrays a significant misunderstanding of the FDCPA and the protections
it provides. Whether a valid debt actually exists either at the time a
FDCPA action is filed or even at the time the allegedly offending
collection practice is employed is irrelevant to identifying a
violation of the Act. Rather, the inquiry focuses on whether the conduct
employed by a debt collector contravenes the FDCPA's mandates.
The FDCPA was enacted by Congress as part of the Consumer Credit
Protection Act, 15 U.S.C. § 1601 et seq., "to eliminate abusive debt
collection practices by debt collectors." 15 U.S.C. § 1692(e). The Act
"establishes certain rights for consumers whose debts are placed in the
hands of professional debt collectors for collection." DeSantis v.
Computer Credit, Inc., 269 F.3d 159, 161 (2d Cir. 2001). "In the most
general terms, the FDCPA prohibits a debt collector from using certain
methods in its effort to collect a `debt' from a consumer." Bass v.
Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322, 1324 (7th
The FDCPA is based on the premise "[t]hat every individual, whether or
not he owes [a] debt, has a right to be treated in a reasonable and civil
manner." 123 Cong.Rec. 10241 (1977)
(remarks of Rep. Frank Annunzio). The Act defines the term "debt" to
include "any obligation or alleged obligation of a consumer to pay money
arising out of a transaction." 15 U.S.C. § 1692a(5) (emphasis added).
Moreover, it defines "consumer" as "any natural person obligated or
allegedly obligated to pay any debt." U.S.C. § 1692a(3) (emphasis
supplied). As such, the Act protects consumers from "unscrupulous debt
collectors, regardless of whether a valid debt actually exists." Baker
v. G.C. Services Corp., 677 F.2d 775, 777 (9th Cir. 1982). Hence,
standing is afforded an aggrieved consumer to proceed under the Act so
long as the collector was engaged in an attempt to collect an alleged
debt. Here, in fact, there is no dispute that the October 28, 2003
collection letter was sent in an attempt to collect an actual debt owed
to Citibank. Plaintiff's action, based entirely on the contents of
defendant's collection letter, was filed on November 7, 2003, well within
the one year statutory period established by the FDCPA.
15 U.S.C. § 1692k(d).
A review of plaintiff's claims further demonstrates that the existence
vel non of a current debt is wholly irrelevant to the adjudication of
those claims. Plaintiff's complaint alleges that two statements contained
in defendant's collection letter violate the FDCPA. First, plaintiff
claims that defendant's assertion that his firm had been retained by
Citibank to collect a debt was false and misleading in violation of §§
1692e and 1692(e)(10), which read as follows:
A debt collector may not use any false, deceptive, or
misleading representation or means in connection with
the collection of a debt. Without limiting the
general application of the foregoing, the following
conduct is a violation of this section: . . . (10)
The use of any false representation or deceptive
means to collect or attempt to collect any debt or to
obtain information concerning a consumer.
Second, plaintiff avers that the collection letter violates the
requirements of § 1692g(a)(3) of the Act because it fails to inform the
debtor that if he or she fails to dispute the debt within thirty days,
only the debt collector may presume the debt to valid. Section
1692g(a)(3) reads as follows:
Within five days after the initial communication with
a consumer in connection with the collection of any
debt, a debt collector shall, unless the following
information is contained in the initial communication
or the consumer has paid the debt, send the consumer
a written notice containing . . . (3) a statement
that unless the consumer, within thirty days after
receipt of the notice, disputes the validity of the
debt, or any portion thereof, the debt will be
assumed to be valid by the debt collector. . . .
Whether or not Fedotov currently has any collectible debt is not relevant
to either of these claims. The sine qua non of this action is whether
Roach's letter, either by inclusion or omission, violated these
provisions of the Act. As a recipient of the allegedly-offending
collection letter, therefore, Fedotov has standing to proceed against
Roach under the FDCPA.
For the foregoing reasons, Roach's motion for summary judgment
D. Class Certification
Relying on his argument that, by virtue of his Chapter 7 Bankruptcy
petition plaintiff does not have standing to pursue this claim, defendant
moves for a denial of class certification. Plaintiff responds that
defendant's motion is premature because there is no motion for class
certification before this Court.
Rule 23(c)(1)(A) of the Federal Rules of Civil Procedure provides that
"[w]hen a person sues or is sued as a representative of a class, the
court must at an early practicable time determine by order whether to
certify the action as a class action." This is normally accomplished by
plaintiff's motion for certification. See, e.g., East Tex. Motor Freight
Sys. v. Rodriguez, 431 U.S. 395, 404 (1977). "The defendant need not wait
for the plaintiff to act, however. The defendant may move for an order
denying class certification." 5-23 Moore's Federal Practice 3d § 23.82
(citing Bryant v. Food Lion, Inc., 774 F. Supp. 1484, 1495 (D.S.C.
1991) and Brown v. Milwaukee Spring Co.,
82 F.R.D. 103, 104 (E.D. Wis. 1979)). Irrespective of which party makes
the motion, the plaintiff will bear the burden of establishing the
certification requirements of Rule 23. Amchem Products, Inc. v. Windsor,
521 U.S. 591, 614 (1997); Caridad v. Metro-North Commuter Railroad,
191 F.3d 283, 291 (2d Cir. 1999); Cromer Finance Ltd. v. Berger,
205 F.R.D. 113, 120 (S.D.N.Y. 2001).
Hence, defendant's Motion for Denial of Class Certification a
procedural "preemptive strike" against this purported class action is
properly before this court. While I have addressed the substance of
defendant's arguments that undergird his motion, I do not reach the
question of class certification. Rather, I direct plaintiff to submit
papers in opposition to defendant's motion. That submission should include
affidavits, declarations, or any other evidence which he would normally
submit pursuant to a Motion for Class Certification under Rule 23 of the
Federal Rules. Defendant, as the moving party, will have an opportunity
to file a reply, if so advised.
For the foregoing reasons:
1. Defendant's motion for summary judgment is denied.
2. On or before February 25, 2005, plaintiff is
directed to file and serve papers in opposition to
defendant's Motion to Deny Class Certification,
including affidavits, declarations, or any other
evidence normally submitted pursuant to a Motion for
3. On or before March 4, 2005, defendant is directed
to file and serve reply papers, if so advised.
4. The Court reserves judgment on defendant's Motion
for Denial of Class Certification.
5. If the Court desires oral argument, counsel will
It is SO ORDERED.