The opinion of the court was delivered by: Honorable Richard J. Arcara Chief Judge United States District Court
At a pretrial conference on July 7, 2009, this Court gave the parties notice and an opportunity to submit briefing regarding its sua sponte inquiry about subject matter jurisdiction. The Court asked the parties to address two questions: whether the Rooker-Feldman doctrine*fn1 or the full faith and credit statute*fn2 deprives this Court of jurisdiction over this case; and, if the Court had jurisdiction, what the applicable statute of limitations should have been in an underlying state lawsuit that concluded with a default judgment against plaintiff. The parties have submitted supplemental briefing addressing these two questions. Oral argument regarding these two questions was held on August 31, 2009. For the reasons below, the Court finds that the full faith and credit statute does deprive it of subject matter jurisdiction over this case. Consequently, the Court will dismiss this case.
This case concerns allegations of improper debt collection practices that violated the Fair Debt Collection and Practices Act ("FDCPA"), 15 U.S.C. §§ 1692--1692p. In approximately January 2001, plaintiff opened a credit card account with Providian National Bank. In February 2002, plaintiff failed to make a payment that was due then. As a result, plaintiff defaulted on his credit card debt. Plaintiff's credit card debt was assigned more than once thereafter, but was assigned to defendant Metro Portfolios, Inc. ("Metro Portfolios") no later than January 2007.
Metro Portfolios hired defendant Cohen & Slamowitz, LLP ("Cohen"), a law firm, to collect the debt. On January 5, 2007, with permission from Metro Portfolios, Cohen filed a lawsuit (the "State Lawsuit") against plaintiff in Lockport City Court to recover the credit card debt that plaintiff owed. Plaintiff does not contest that he was served with a copy of the summons and complaint from the State Lawsuit. Although he was served in connection with the State Lawsuit, plaintiff did not appear in it or otherwise defend against it. On April 13, 2007, the Lockport City Court Clerk entered a default judgment (the "State Judgment") against plaintiff in the State Lawsuit in the amount of $1,674.97.
According to plaintiff's complaint, plaintiff and defendants communicated with each other for the first time in a telephone conversation in November 2007. In this telephone conversation, defendants informed plaintiff that a judgment had been entered against him with respect to the defaulted credit card debt. Later that month, plaintiff sent Cohen a letter disputing his liability for the debt in question. Despite the letter disputing liability, plaintiff contends, defendants proceeded to enforce the State Judgment by arranging with the Niagara County Sheriff for wage garnishment and restraint of plaintiff's bank account. Plaintiff ultimately paid defendants $1,944.36.
On January 3, 2008, plaintiff filed the complaint in this case. In the single cause of action listed in the complaint, plaintiff accused defendants of two types of conduct that violated various provisions of the FDCPA. First, plaintiff alleged that defendants attempted to collect the debt in question without adequate proof or verification. Plaintiff later withdrew this claim through a motion to dismiss that he filed on June 29, 2009 and that the Court granted on August 19, 2009. Second, plaintiff alleged that defendants commenced the State Lawsuit after the applicable statute of limitations expired. This allegation is the remaining basis for this case. Plaintiff contends that New Hampshire law would have controlled and would have set the applicable limitations period for the State Lawsuit at three years, which would have made the State Lawsuit untimely by about two years. Defendants contend that the applicable limitations period would have been six years because either New York or Utah law would have controlled.
Plaintiff concluded the complaint with demands for actual and statutory damages, along with costs, disbursements, and reasonable attorney fees. Plaintiff withdrew the demand for actual damages through a second motion to dismiss that he filed on July 20, 2009 and that this Court granted on August 19, 2009.
After discovery ended and after mediation concluded unsuccessfully, this Court set a trial date of July 21, 2009. Upon reviewing the parties' pretrial submissions, however, the Court became concerned that determining what the applicable statute of limitations should have been in the State Lawsuit emerged as the primary issue to be resolved, either through motions in limine or at trial. In particular, the Court became concerned that commenting on the applicable statute of limitations for the State Lawsuit necessarily would require commenting on the validity of the State Judgment in violation of the Rooker-Feldman doctrine or the full faith and credit statute. At the final pretrial conference, the Court gave the parties notice that it would review its jurisdiction over this case sua sponte. The parties then were given an opportunity to brief and to argue the two questions noted above.
Plaintiff's decision to withdraw his claim for actual damages narrowly moots the Court's concern about the Rooker-Feldman doctrine. Under the Rooker-Feldman doctrine, "a federal suit complains of injury from a state-court judgment, even if it appears to complain only of a third party's actions, when the third party's actions are produced by a state-court judgment and not simply ratified, acquiesced in, or left unpunished by it. Where a state-court judgment causes the challenged third-party action, any challenge to that third-party action is necessarily the kind of challenge to the state judgment that only the Supreme Court can hear." Hoblock v. Albany County Bd. of Elections, 422 F.3d 77, 88 (2d Cir. 2005). Initially, plaintiff sought actual damages in addition to statutory damages. The actual damages, presumably, would have included the $1,944.36 that defendants collected from plaintiff to satisfy the debt in question. Defendants would have had no right to collect that money without the State Judgment. The State Judgment, therefore, caused at least part of any actual damages that plaintiff could have claimed in this case. Since plaintiff has withdrawn his actual damages claim, there are no alleged damages left that arose directly from the Lockport City Court Clerk's act of entering the State Judgment.
Nonetheless, a review of the full faith and credit statute remains necessary. The parties have asked the Court to declare what limitations period applied to the State Lawsuit. The Court might have resolved that issue if defendants here merely threatened a lawsuit, or perhaps filed one but never prosecuted it to ultimate disposition. Here, though, the conclusion of the State Lawsuit with a judgment, albeit judgment by default, warrants a ...