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Nichols v. Niagara Credit Recovery, Inc.

United States District Court, Second Circuit

May 7, 2013

JAMES NICHOLS and KATHERINE NICHOLS, Plaintiffs,
v.
NIAGARA CREDIT RECOVERY, INC., CREDIT RECOVERY GROUP, INC., CAWLEY & BERGMANN, LLP, CAVALRY PORTFOLIO SERVICES, LLC, AND JCS GLOBAL ASSETS, LLC, Defendants.

DENNIS KURZ, ESQ., WEISBERG & MEYERS, LLC, Phoenix, Arizona, Attorneys for Plaintiff.

THOMAS R. DOMINCZYK, ESQ., MAURICE & NEEDLEMAN, P.C., Flemington, New Jersey, Attorneys for Defendant Cavalry Portfolio Services, LLC and Cawley and Bergman, LLP.

CHARLES F. PITARRESI, ESQ., OFFICE OF CHARLES F. PITARRESI, Niagara Falls, New York, Attorneys for Defendant Niagara Credit Recovery, Inc.

MEMORANDUM-DECISION AND ORDER

MAE A. D'AGOSTINO, District Judge.

I. INTRODUCTION

Plaintiffs James and Katherine Nichols filed this action on July 3, 2012, against Defendants Niagara Credit Recovery, Inc. ("NCR"), Credit Recovery Group, Inc. ("CRG"), Cawley & Bergmann, LLP ("Cawley"), Cavalry Portfolio Services, LLC ("CPS"), and JCS Global Assets, LLC ("JCS"), alleging violations of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227. See Dkt. No. 1. Currently before the Court are the following motions: (1) Defendant Cawley's motion to dismiss for failure to state a claim; (2) Defendant CPS's motion to dismiss for failure to state a claim; (3) Plaintiffs' motion to dismiss Defendant NCR's counterclaim; and (4) Plaintiffs' motion for default judgment against Defendant JCS.

II. BACKGROUND

Plaintiffs are residents of Syracuse, New York. See Dkt. No. 1 at § 4. Plaintiff Katherine Nichols entered into a contract for payment with HSBC. See Dkt. No. 5 at 2. Plaintiffs failed to make all payments due under the terms of the contract and defaulted. See id. The remaining balance on the contract was $3, 812.00, plus interest at the rate of 18.9% per annum from May 19, 2009 until paid. See id.

HSBC turned the debt over to JCS for collection, who then retained the services of CPS. See Dkt. No. 9 at 2. Plaintiffs allege that Cawley is the agent in fact of CPS and JCS, and that Cawley assumed responsibility for collecting the debt around September 21, 2010. See Dkt. No.

1 at § 21. In September 2010, Plaintiffs' attorney, Weisberg & Meyers ("Weisberg") sent a letter to Cawley providing notice of its representation of Plaintiffs, and revoking any express permission for Defendants to contact Plaintiffs directly. See id.

On September 21, 2010, Plaintiff Katherine Nichols entered into an agreement with Cawley to settle her account in the amount of $1, 000.00, to be paid by Plaintiff on or before September 24, 2010. See id. at § 22. Plaintiff paid the agreed-upon settlement amount to JCS on September 23, 2010. See id. at § 22. After the settlement was consummated, Plaintiff alleges that JCS violated the terms of the agreement by selling the debt to CRG. See id. at § 24. Defendant NCR then purchased Plaintiffs' contract for payment from CRG and is the sole owner of all right, title and interest in the contract. See id. at § 25.

On January 18, 2012, an NCR employee left a voicemail message at the residential telephone number of Katherine Nichols' father-in-law, William Nichols. See id. at § 26. In the message, NCR's employee stated the following:

This message is for Katherine Nichols. Ms. Nichols, my name's Victoria Joy. I'm contacting you from the pre-legal division at NCR. I'm contacting you in regards to case number XXXXXX-8395. Your file was placed with me for the purpose of legal review and processing. I am currently showing a default status slated for Onondaga County. However, I am in the position to extend to you an out of court option, um, which I would like to discuss with you or your legal representative. The number I can be reached at is XXX-XXX-XXXX extension 503.

See id. Plaintiffs allege that in the message, NCR failed to state that the call was made for the purpose of confirming or correcting location information about Plaintiffs. See id. at § 27.

On January 24, 2012, a similar message was left by NCR employee Victoria Joy on both Katherine and James Nichols' cell phones. See id. at §§ 29-33. In these messages, the NCR employee failed to disclose that the communication was from a debt collector, which Plaintiff's contend amounts to NCR's failure to meaningfully disclose its identity. See id. at § 31. Victoria Joy left messages on Plaintiffs' cell phones again on January 26, January 27, and March 7. See id. at §§ 36-44. On March 8, 2012, NCR sent a letter to Plaintiffs, demanding payment for the account. See id. at § 45. Plaintiffs contend that the repeated phone calls from NCR were made without their prior express consent and were made using an automatic telephone dialing system. See id. at § 47.

Plaintiffs allege that CRG is liable for the actions of NCR, the debt collector it hired to collect the debt from Plaintiffs on its behalf. See id. at § 55. Plaintiffs allege that NCR and CRG violated the following provisions of the FDCPA, 15 U.S.C. § 1692 and the TCPA, 47 U.S.C. § 227(b)(1)(A)(iii):

(1) 15 U.S.C. § 1692b(1) by contacting a third party and failing to state that the call was made for the purpose of confirming or correcting location information about Plaintiffs and by providing the identity of Plaintiffs to a third party without such information being expressly requested, in connection with an attempt to collect a debt from Plaintiffs. See id. at §§ 50-52.
(2) 15 U.S.C. § 1692c(b) et seq., by communicating with a third party in a manner other than that prescribed in the statute and without having received the prior consent of Plaintiffs or the express permission of a court of competent jurisdiction, and without the communication being necessary to effect a post-judgment remedy. See id. at § 57.
(3) 15 U.S.C. § 1692d(6) by placing telephone calls without meaningfully disclosing the caller's identity. See id. at §§ 62, 65.
(4) 15 U.S.C. § 1692e(2)(A) by falsely representing the character, amount, or legal status of Plaintiffs' alleged debt. See id. at § 67.
(5) 15 U.S.C. § 1692e(5) by threatening to take an action against Plaintiffs that cannot be legally taken or that was not actually intended to be taken, which included but was not limited to: threatening to file a lawsuit against Plaintiffs on an alleged debt that was previously settled in full. See id. at §§ 78, 80.
(6) 15 U.S.C. § 1692e(10) by using false representations and deceptive practices in connection with collection of an alleged debt from Plaintiffs. See id. at §§ 83, 85.
(7) 15 U.S.C. § 1692e(11) by failing to notify Plaintiffs during each collection contact that the communication was from a debt collector. See id. at §§ 93, 95.
(8) 15 U.S.C. § 1692f by using unfair or unconscionable means against Plaintiff in connection with an attempt to collect a debt. See id. at §§ 98, 100.
(9) 47 U.S.C. § 227(b)(1)(A)(iii) by placing non-emergency calls to Plaintiffs' cellular telephones, without the prior express consent of Plaintiffs, using an automatic ...

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