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Herman v. National Enterprise Systems

September 10, 2008

JEANNE M. HERMAN, AND PLAINTIFF,
v.
NATIONAL ENTERPRISE SYSTEMS, INC., MICHAEL DOE AND RAYMOND DOE, DEFENDANTS.



The opinion of the court was delivered by: Leslie G. Foschio United States Magistrate Judge

REPORT RECOMMENDATION DECISION and ORDER

JURISDICTION

This case was referred to the undersigned by the Hon. William M. Skretny on July 9, 2007 for all pretrial matters. (Doc. No. 7). The matter is presently before the court on Defendant National Enterprise Systems, Inc.'s motion, filed on December 7, 2007, to file an amended answer, (Doc. No. 14), and Plaintiff's Cross-Motion, filed on January 1, 2008, to Strike Affirmative Defenses in Defendant's Answer. (Doc. No. 16).*fn1

BACKGROUND and FACTS*fn2

Plaintiff Jeanne M. Herman ("Plaintiff" or "Herman"), commenced this action on May 24, 2007, seeking compensatory and punitive damages, alleging that National Enterprise Systems, Inc. ("Defendant" or "NES"), Michael Doe, and Raymond Doe*fn3 violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA" or "the Act"), specifically §§ 1692d, d(2), d(5), d(6), 1692e, e(2), e(4), e(5), e(7), e(10), e(14), 1692f, f(1), f(2), f(4)and New York State common law of intentional infliction of emotional distress. In particular, Plaintiff asserts that Defendant, through its collectors, Michael Doe and Raymond Doe, harassed Plaintiff, intending to cause Plaintiff emotional distress, in an effort to obtain from Plaintiff payment on a $1,600 debt to a non-party creditor incurred by Plaintiff's son, Michael G. Herman, Jr. ("Michael Herman"), who, during the time period in question, was in military service in Iraq, and that Defendant made unauthorized withdrawals from Michael Herman's bank account. Complaint ¶¶ 7, 10-11, 15-55.

Upon Michael Herman's default on the subject debt, the non-party creditor, Citibank employed NES to collect the subject debt. Complaint ¶¶ 18-19, 42; Answer ¶¶ 18-19. Plaintiff alleges that beginning in December 2006, NES called Plaintiff multiple times almost every day attempting to collect the subject debt. Complaint ¶ 22. Plaintiff alleges that during virtually every telephone conversation with Defendant, particularly in response to Plaintiff's refusal to pay the subject debt, Michael Doe remarked, "What kind of mother are you?" Complaint ¶ 26. According to Plaintiff, in December of 2006, while conversing with an NES debt collector on the telephone, such employee, in response to Plaintiff informing him that Michael Herman was then on military duty in Iraq, stated, "What's he doing over there, shooting people?" Complaint ¶ 27. Plaintiff asserts this comment caused her to call NES and request that they not call her anymore regarding the subject debt. Complaint ¶ 28. Plaintiff maintains that Defendant then discontinued calling Plaintiff for approximately one month, after which time NES, through Michael and Raymond Doe, resumed calling her as frequently as they had before. Complaint ¶ 29.

According to Plaintiff, in April 2007, NES's collector, Michael Doe, told Plaintiff that a civil lawsuit had been commenced in Texas against Michael Herman, but no reply to the suit had been made. Complaint ¶ 30. During the same conversation, Plaintiff alleges that Michael Doe told Plaintiff if she did not pay $1,600 owed on the debt, her son would need a good lawyer and that the debt would increase to over $5,000, including lawyer fees, by the time Michael Herman returned from Iraq. Complaint ¶ 32. Also, during a phone call which took place in April 2007, Plaintiff asserts that Michael Doe told her she would not see her son upon his return from Iraq because he would be arrested upon setting foot on American soil; that the military did not look favorably on servicemen who did not pay their debts; that her son's pay would be reduced as a result and he would be demoted; and that Michael Herman would be dishonorably discharged unless Plaintiff paid NES $2,400 immediately. Complaint ¶ 31.

Plaintiff alleges that, as a result of these conversations with Defendant, she agreed to pay $1600 to settle the subject debt. Complaint ¶ 33. Defendant admits that Plaintiff agreed to pay $1250 to settle the account.*fn4 Answer ¶ 33. Plaintiff provided NES with Michael Herman's bank account information to make monthly deductions of $300 from Michael Herman's bank account to pay down the subject debt in installments, and Plaintiff alleges it was agreed by Defendant that the first payment was to be deducted on May 1, 2007. Complaint ¶ 34. Defendant contends the agreement was to pay $300 on April 24, 2007 and $950 on April 30, 2007. Answer ¶ 34. Defendant withdrew $300 from Michael Herman's Account on April 24, 2007, and attempted to withdraw $950 on April 30, 2007 from Michael's account, but the latter withdrawal did not occur because there were insufficient funds in the account. Complaint ¶¶ 35-36; Answer ¶¶ 35-36. Plaintiff alleges that Defendant was paid $950 from Michael Herman's*fn5 account on May 1, 2007. Complaint ¶ 37.

Plaintiff contends that her son, Michael, telephoned her from Iraq on May 3, 2007, "in tears," telling Plaintiff that his bank account had been "cleaned out," that he had to borrow money to call her on the telephone, that he could not afford a pack of cigarettes, and that he could not even buy her a Mother's Day present. Complaint ¶ 38. Plaintiff contacted Michael's bank and was informed that NES had withdrawn the money from Michael Herman's account. Complaint ¶ 39. Plaintiff requested that Michael Herman's bank stop NES from withdrawing more money from the account; in response, the bank, according to Plaintiff, informed Plaintiff that NES was known to use different names to make withdrawals from soldiers' bank accounts when similar attempts to block NES's access to such accounts were made, and advised Plaintiff to change the entire bank account number to Michael's account. Complaint ¶ 40. As a result, Plaintiff asserts that Michael Herman's bank account number was changed, and the withdrawals made by NES were reversed. Complaint ¶ 41. Subsequently, on May 7, 2007, Plaintiff claims she received a phone call from an unidentified NES representative, claiming to be the creditor, Citibank, threatening Plaintiff if she did not immediately pay $1,250, that she would be sued because she stopped payment on the checks. Complaint ¶¶ 42, 43. Plaintiff replied she would not pay and that she retained a lawyer, to which the NES caller allegedly replied, "That's good, because you are going to need one." Complaint ¶ 42.

On May 17, 2007, Plaintiff received a telephone call from Raymond Doe who, Plaintiff asserts, falsely represented that he spoke to Michael Herman on April 20, 2007, on which date, according to Doe, Michael Herman authorized the April 24, 2007, April 30, 2007, and May 1, 2007 withdrawals from Michael Herman's account. Complaint ¶ 46. Raymond Doe also told Plaintiff that the civil lawsuit against her son was ongoing. Id. Plaintiff alleges Defendant never sent Plaintiff or Michael Herman written notification prior to withdrawing or attempting to withdraw money from Michael Herman's bank account, Complaint ¶ 50, and that neither Defendant nor the creditor had commenced a civil suit against Michael Herman with respect to the subject debt. Complaint ¶ 54.

On July 5, 2007, NES served its answer asserting 10 affirmative defenses. (Doc. No. 4) ("the Answer"). By papers filed December 7, 2007, NES moved to amend the answer. (Doc. No. 14) ("Defendant's Motion"). In support of Defendant's Motion, NES filed the Affidavit of Troy S. Flascher, Esq. (Doc. No. 14) ("Flascher Affidavit") and a proposed amended answer. (Doc. No. 14) (Flascher Aff. Exh. A) ("Proposed Amended Answer"). In particular, Defendant's Proposed Amended Answer proposed to add three affirmative defenses, i.e., that Plaintiff's claims are barred by the principles of (i) merger, (ii) accord and satisfaction, (iii) laches,*fn6 (iv) estoppel, and (v) waiver. Proposed Amended Answer ¶¶ 11-12.

By papers filed January 2, 2008, Plaintiff filed a Cross-Motion to Strike Affirmative Defenses asserted in the Answer (Doc. No. 16) ("Plaintiff's Cross-Motion"), specifically paragraphs 75, 76, 78, 79, 82, 83 and 84, attached to which is Plaintiff's Memorandum of Law in Opposition to Defendants' Motion, and in Support of Plaintiff's Cross-Motion. (Doc. No. 16) ("Plaintiff's Memorandum"). On January 7, 2008, Defendant filed a Memorandum of Law in Opposition to Plaintiff's Cross-Motion. (Doc. No. 17) ("Defendant's Memorandum"). Oral argument was deemed unnecessary.

Based on the following, Defendant's Motion is GRANTED, in part; DENIED, in part; and DISMISSED as moot, in part. Plaintiff's Cross-Motion should be GRANTED, in part, and DENIED, in part, and DISMISSED as moot, in part.

DISCUSSION

I. Defendant's Request to Add Affirmative Defenses

As stated, Background and Facts, supra, at 6, Defendant moves, pursuant to Fed.R.Civ.P. 15(a), for leave to amend the Answer to include four additional affirmative defenses. Defendant's Motion ¶ 5. Specifically, as noted, Background and Facts, supra, at 6, NES seeks to add the affirmative defenses of merger, accord and satisfaction, estoppel, and waiver. Proposed Amended Answer ¶¶ 11-12. Plaintiff argues that amending the Answer to include these additional defenses would be futile, improper, and unsupported by law, as such defenses, according to Plaintiff, are defenses arising under state law and, as such, inapplicable to claims pursuant to the FDCPA, and are irrelevant to Plaintiff's state law claim based on intentional tort. Plaintiff's Memorandum ¶¶ 7, 9. Specifically, as regards Plaintiff's state law intentional infliction of emotional distress claim, Plaintiff maintains that the existence of any settlement agreement, potentially involving theories of merger, accord and satisfaction, estoppel or waiver, relating to Defendant's effort to collect Plaintiff's son's debt, even if established at trial, is irrelevant to whether NES intentionally inflicted emotional distress on Plaintiff by harassing her as Plaintiff alleges in her second cause of action. Plaintiff's Memorandum ¶ 7. Notably, Defendant does not explicitly allege that there was a settlement covering all of Plaintiff's claims with Defendants.

Under Fed.R.Civ.P. 15(a), leave to amend "shall be freely given when justice so requires." Foman v. Davis, 371 U.S. 178, 182 (1962); Burns v. Imagine Films Entertainment, Inc., 165 F.R.D. 381, 384 (W.D.N.Y. 1996) (quoting Fed.R.Civ.P. 15(a)). Therefore, "an amended pleading may be filed pursuant to Rule 15(a) where the new allegations do not unduly prejudice an opponent, are not the result of undue delay or bad faith, and are not futile." Warren v. Goord, 2006 WL 1582385, at * 7 (W.D.N.Y. May 26, 2006). A motion for leave to amend should be granted unless it is shown that significant burdens on discovery will ensue or that trial will be significantly delayed. Id.

"Whether to permit amendment is committed to the discretion of the court, however, it is an abuse of discretion to deny leave to amend if the denial is not based on valid grounds." Burns, 165 F.R.D. at 384 (citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971); Gomes v. Avco Corp., 964 F.2d 1330, 1335 (2d Cir. 1992); and Usery v. Marquette Cement Manufacturing Co., 568 F.2d 902 (2d Cir. 1977)). "In deciding whether to permit amendment, the court may consider factors such as undue delay in filing, lack of notice to the opposing party, bad faith by the moving party, undue prejudice to the opposing party, failure to cure deficiencies by previous amendments, or futility of amendment." Burns, supra, at 385 (citing Foman, supra, at 182; and Evans v. Syracuse City Sch. Dist., 704 F.2d 44, 46 (2d Cir. 1983)); see also Lundy v. Adamar of New Jersey, Inc., 34 F.3d 1173, 1197 n. 18 (3d Cir. 1994) (citing 3 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE¶ 15.08[2], at 15-49 (2d ed. 1993) (court should not grant leave to amend if opposing party will be prejudiced or trial of issues are "unduly delayed" as a result)). Leave to amend a pleading will be denied when an amendment is offered in bad faith, would cause undue delay or prejudice, or would be futile. Burns, 165 F.R.D. at 385 (citing cases); Foman, supra, at 182; Richardson Greenshields Securities, Inc. v. Lau, 825 F.2d 647 (2d Cir. 1987); Fiske v. Church of St. Mary of the Angels, 802 F.Supp. 872, 877 (W.D.N.Y. 1992). In determining the futility of a claim, the court applies the same standards that govern a motion to dismiss under Fed.R.Civ.P. ...


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