The opinion of the court was delivered by: Gary L. Sharpe District Court Judge
MEMORANDUM-DECISION AND ORDER
Plaintiff Kathleen Unangst brings this action against defendant Evans Law Associates, P.C. under the Fair Debt Collection Practices Act (FDCPA).*fn1 (Compl., Dkt. No. 1.) Evans filed a counterclaim in response to Unangst's complaint. (Dkt. No. 7.) Pending is Unangst's motion to dismiss Evans's counterclaim for lack of subject matter jurisdiction. (Dkt. No. 9.) For the reasons that follow, Unangst's motion is granted.
On June 24, 2010, plaintiff Kathleen Unangst filed suit against defendant Evans Law Associates, P.C. under the FDCPA. (See Compl., Dkt. No. 1.) Unangst alleges that Evans, as a debt collection agency, called her several times per week, including at her work, demanding payment for an alleged debt; threatened to garnish her wages; threatened to take legal action against her; and failed to identify itself as a debt collector in subsequent communications. (See id. at ¶¶ 11-16.) In her complaint, Unangst seeks statutory damages, attorneys' fees and costs, and a declaration that Evans violated the FDCPA. (See id. ¶¶ 17-20.) On August 31, 2010, Evans filed an answer to Unangst's complaint, in which it denied the alleged violations of the FDCPA and counterclaimed against Unangst seeking payment of the unpaid account. (See Dkt. No. 7.)
"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). "In resolving a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), a district court ... may refer to evidence outside the pleadings." Id. at 113. "When the question to be considered is one involving the jurisdiction of a federal court, jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998). Thus, "a plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Makarova, 201 F.3d at 113.
The standard for a district court's exercise of supplemental jurisdiction over a defendant's counterclaim is codified in 28 U.S.C. § 1367. See Jones v. Ford Motor Credit Co., 358 F.3d 205, 212 (2d Cir. 2004). Subsection 1367(a) of the statute states:
Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.
28 U.S.C. § 1367. Thus, in order for a federal court to exercise supplemental jurisdiction over a defendant's counterclaim, the counterclaim and the plaintiff's original claim must share a "sufficient factual relationship" to form part of the same constitutional "case." Jones, 358 F.3d at 214. This standard has eliminated much of the necessity of distinguishing between compulsory and permissive counterclaims, at least in the Second Circuit. See id. at 211-13; see also Fentner v. Tempest Recovery Servs., Inc., No. 07-CV-561A, 2008 WL 4147346, at *2 (W.D.N.Y. Sept. 2, 2008).
District courts within the Second Circuit have held that in the specific context of FDCPA lawsuits where the defendant has counterclaimed for the underlying debt, the claim and counterclaim, absent any unique circumstances, are not sufficiently related to form the same case or controversy for purposes of supplemental jurisdiction. See Fentner, 2008 WL 4147346, at *2; Berrios v. Sprint Corp., No. CV-97-0081, 1998 WL 199842, at *9 (E.D.N.Y. Mar. 16, 1998); Leatherwood v. Universal Bus. Serv. Co., 115 F.R.D. 48, 50 (W.D.N.Y. 1987). Although this court has previously found that such a claim and counterclaim in an FDCPA action may be sufficiently related to exercise supplemental jurisdiction, this was because the plaintiff had alleged fraud by the defendant in calculating the amount of the debt. See Padilla v. Clovis & Roche, Inc., No. 1:07-CV-00267, 2007 WL 4264582, at *3 (N.D.N.Y. Nov. 30, 2007). Based on that allegation, the court found that a sufficient factual relationship existed between the FDCPA claim and the counterclaim for the debt. See id.
Here, although the two claims arise from the same general
transaction-namely, Unangst's debt to Evans-the FDCPA claim alleging
unfair or deceptive business practices is only tangentially related to
Evans's counterclaim that Unangst breached her contract to repay the
debt. The facts required to prove Unangst's FDCPA claim are not the
same as, nor are they even relevant to, those required to prove
Evans's counterclaim for payment of the debt. Unangst's claim is based
on the unfair and deceptive business practices that Evans allegedly
engaged in in its attempts to collect the debt: telephone calls,
threats, and failures to identify itself as a debt collector. (See
Compl. ¶¶ 11-15, Dkt. No. 1.) Evans, meanwhile, would
required to prove facts establishing that Unangst owes a debt that she
has not paid. Courts have generally acknowledged that in this context,
"the validity of the underlying debt is not material to the FDCPA
claim." Fentner, 2008 WL 4147346, at *2 (citing Stover v. Northland
Grp., Inc., No. 05 CV 0476E, 2007 WL 1969724 (W.D.N.Y. July 6, 2007);
McCartney v. First City Bank, 970 F.2d 45 (5th Cir. 1992)). In other
words, an FDCPA claim requires only an "alleged" debt;*fn2
the plaintiff can bring an FDCPA claim without a showing that
a valid debt actually exists, so the facts regarding the existence of
the debt are immaterial to Unangst's FDCPA claim. Because the two
claims do not share a sufficient factual relationship to form part of
the same case or controversy, Evans's counterclaim should be dismissed
for lack of subject matter jurisdiction.
While not directly ruling on the issue, the court notes Unangst's argument and finds persuasive the line of cases which have held that even if supplemental jurisdiction were found, there are strong policy reasons that would support declining the exercise of supplemental jurisdiction under 28 U.S.C. § 1367(c)(4). See Leatherwood, 115 F.R.D. at 50; Sparrow v. Mazda Am. Credit, 385 F. Supp. 2d 1063, 1071 (E.D. Cal. 2005); Fentner, 2008 WL 4147346, at *3. Specifically, opening the door for defendants to counterclaim against FDCPA plaintiffs for the underlying debt ...