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Coburn v. P.N. Financial

United States District Court, E.D. New York

January 15, 2015

DONNA COBURN (POWELL), Plaintiff,
v.
P.N. FINANCIAL, Defendant

For Donna Coburn (Powell), Plaintiff: Mark H. Rephen, LEAD ATTORNEY, M. Harvey Rephen & Associate, New York, NY; Alan J Sasson, Law Office of Alan J. Sasson, P.C., Brooklyn, NY; Yitzchak Zelman, Law Office of Alan J. Sasson, Brooklyn, NY.

REPORT & RECOMMENDATION

STEVEN I. LOCKE, United States Magistrate Judge.

Presently before the Court in this Fair Debt Collections Practices Act action, 15 U.S.C. § 1692, et seq . (" FDCPA" or the " Act"), on referral from the Hon. Arthur D. Spatt, is Plaintiff's Donna Coburn (Powell) (" Plaintiff" or " Coburn") motion for a default judgment. Specifically, Judge Spatt has ordered that a recommendation be issued as to " whether the motion for a default judgment should be granted, and if so, to determine what relief [is] appropriate, including reasonable attorney's fees and costs." DE [13].

Background

The Complaint in this action DE [1], filed on February 26, 2013, contains a single count bare-bones recitation of factual allegations. According to the Complaint, Plaintiff, Donna Coburn (Powell), who is a " consumer" for FDCPA purposes, is a resident of Hicksville, New York. Defendant PN Financial, which is a " debt collector" under the FDCPA, is an Illinois limited liability company with its " main" office address in Skokie, Illinois.

On or about June 12, 2012, Defendant sent Plaintiff a " Collection Letter, " (the " Letter"), which is not attached to the Complaint or the motion papers. This Letter allegedly states that " Because you have refused to address this debt despite being given every opportunity to do so, be advised that as of June 27th 2012, if you have not accepted our terms and conditions, we will have exhausted all methods of resolution." The Letter continues, " [y]ou have been repeatedly advised of your long overdue balance . . . . However, there is still time to avoid any interest and/or penalties if you resolve this matter June 27, 2012 [ sic ]. This will be your final opportunity to resolve this matter without additional expense of penalties [ sic ] or interest."

On or about September 28, 2012, Plaintiff's representative, Alberto Reyes, Jr., from an entity identified only as " Asset Management" contacted Defendant to discuss the alleged debt. During this conversation Mr. Reyes was advised by an unidentified representative of Defendant that " [t]hey will put the account back on the credit report if she does not pay."

According to the Complaint, the Letter was false, deceptive and misleading because: (1) Plaintiff never refused to address the debt; (2) it fails to identify what " opportunities" Plaintiff had been given to resolve the debt; (3) it states that Defendant will attempt to force Plaintiff to resolve the debt by adding penalties and/or interest, without explaining what penalties and interest are to be added; and (4) it claims that Defendant will put the " account back on [Coburn's] credit report if she does not pay, " despite that the " statute of limitations is from July 2002 and has long since passed."

The body of the Complaint also makes Fed.R.Civ.P. 23 class allegations, but no motion for class certification was ever filed and no class was ever certified.

Based on these allegations, Plaintiff claims that Defendant has violated the FDCPA by: making a threat to take action that cannot be legally taken, 15 U.S.C. § 1692e(5); using false, deceptive and misleading representations in connection with the collection of a debt, 15 U.S.C. § 1692e(10); and making an unlawful claim for interest for the purpose of obtaining payment on an expedited basis, 15 U.S.C. § 1692f(1). The Clerk entered a certificate of default on August 22, 2013 DE [7], and on May 1, 2014, after receiving a notice of impending dismissal, DE [8], Plaintiff filed her motion for entry of a default judgment in her favor. It is this motion that is presently pending before the Court.

Discussion

A. Default judgment standard

Motions for default judgments are governed by Fed.R.Civ.P. 55, which establishes a two-step process for obtaining a default judgment against a defaulting party. See Gonzalez v. Healthcare Recovery Mgt. Inc., 13-CV-1002, 2013 WL 4851709 *1 (E.D.N.Y. Sept. 10, 2013) (applying Rule 55 in the FDCPA context) (citing Priestley v. Headminder, Inc., 647 F.3d 497, 504 (2d Cir. 2011)); Mira v. Maximum Recovery Solutions, Inc., CV 11-1009, 2012 WL 4511623 *2 (E.D.N.Y. Aug. 31, 2012) (same). Initially, the Clerk of the Court enters a default against the party that has failed to plead or otherwise defend the action. See Fed.R.Civ.P. 55(a); Gonzalez, 2013 WL 4851709 at *1; DE [7]. Once the default is entered, and where the amount sought is not for a sum certain, a default judgment may be obtained by motion. See Fed.R.Civ.P. 55(b)(2); Gonzalez, 2013 WL 4851709 at *1.

Once the default is entered by the Clerk of the Court, and the appropriate motion is filed, the Court accepts the factual allegations set forth in the Complaint as true, and all inferences are drawn in favor of the moving party. See id.; Ehrlich v. Royal Oak Fin. Servs., Inc., CV-12-3551, 2012 WL 5438942 at *1 (E.D.N.Y. Nov, 7, 2012) (" A default constitutes an admission of all well-pleaded factual allegations in the complaint pertaining to liability") (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)) (applying standard in FDCPA context); see also Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981) (" at the inquest, the court should have accepted as true all of the factual allegations of the complaint, except those relating to damages"). Nevertheless, the Court must engage in an independent analysis as to whether liability has been established. See Chudomel v. Dynamic Recovery Servs., Inc., 12-CV-5365, 2013 WL 5970613 *6 (E.D.N.Y. Nov. 8, 2013) (" courts are required to determine whether the [plaintiff's] allegations establish the [defendant's] liability as a matter of law") (internal quotations omitted). Further, the default does not constitute an admission as to damages. See Id. at *7 (addressing damages standard); Gonzalez, 2013 WL 4851709 at *1 (same); Ehrlich, 2012 WL 5438942 at *1 (same). In this regard, the Court need not hold an evidentiary hearing on damages. Rather, damages may be established by affidavits and other documentary evidence. See Id. at *1.

B. FDCPA standards

The FDCPA was enacted to " eliminate abusive debt collection practices by debt collectors, " 15 U.S.C. § 1692(e), and should be liberally construed. See Katz v. Sharinn & Lipshie, PC, 12-CV-2440, 2013 WL 4883474 *1 (E.D.N.Y. Sept. 11, 2013) (collecting cases). In order to establish a claim, a plaintiff must show that: (1) the plaintiff is a " consumer" within the meaning of the Act; (2) the defendant is a " debt collector"; and (3) the defendant must have engaged in conduct in violation of the statute. Id. A " consumer" is " any natural person obligated or allegedly obligated to pay any debt." 15 U.S.C. § 1692a(3). A " debt collector" is " any person who uses any instrumentality of interstate commerce or the mails in any business the principle purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6).

The portions of the Act that Plaintiff alleges Defendant violated are as follows:

A debt collector may not use any false, deceptive, or misleading representations or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
* * *
(5) The threat to take an action that cannot legally be taken or that is not intended to be taken.
* * *
(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or obtain information concerning a consumer.
* * *

15 U.S.C. § 1692e.

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:
(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.
* * *

15 U.S.C. § 1692f.

C. Plaintiff's motion

Accepting the factual allegations in the complaint as true, and drawing all inferences in favor of Plaintiff, the Court recommends that the motion for a default judgment be denied without prejudice. At the outset, the Court notes that Plaintiff submits no evidence whatsoever in support of her motion other than an attorney affidavit with no attachments to establish liability. The Collection Letter is not attached. The documents underlying the original debt are not attached. There is no affidavit from Plaintiff herself or Alberto Reyes, Jr. attesting to any of the relevant facts that would support or supplement the Complaint to allow the Court to assess the merits of the claim. In exercising its discretion, see, e.g., Au Bon Pain, 653 F.2d at 65; Mira, 2012 WL 4511623 at *2, the Court concludes that the record is inadequate to justify a finding of liability. Accordingly, on this basis alone the Court recommends that Plaintiff's motion for a default judgment be denied without prejudice to resubmit the motion with a more complete record in support of her claim.

Nevertheless, even if the Court were inclined to rely solely on the contents of Plaintiff's attorney affidavit, the contents fail to establish liability. Initially, it is reasonable to conclude that Plaintiff is a " consumer" under the FDCPA, as she received a " Collection Letter" from Defendant and she does not deny that some amount of money was owed. In fact, she had her " representative" Alberto Reyes, Jr. place a call to look into Defendant's claims. Similarly, it is reasonable to conclude that Defendant was a " debt collector" given that it was allegedly the source of the Collection Letter and responded to Mr. Reyes's inquiries made on Plaintiff's behalf. Accordingly, the issue is whether the allegations in the Complaint adequately allege the Defendant violated the FDCPA. They do not.

As set forth above, Plaintiff alleges four ways in which P.N. Financial's Letter allegedly violated the Act. Initially, Plaintiff claims that contrary to the statements set forth in the Collection Letter, she never refused to address the debt. This statement is ambiguous at best. There are no allegations as to what the debt actually was for, to whom it was owed, or what she did about the debt prior to receiving the Letter. There are also no allegations that she disputed that she owed a debt or the amount of the debt, which is also not alleged, or disputed that she was repeatedly advised of her debt. Without more substantial allegations, there is simply no way to determine whether this allegation supports a claim.

Next Plaintiff contends that the Collection Letter improperly fails to identify the various opportunities to resolve the matter the Plaintiff purportedly ignored. Plaintiff does not allege however, that this statement is untrue--only that it lacks specificity. The FDCPA prohibits the use of false, misleading or deceptive practices or unfair or unconscionable means to collect a debt. Without an allegation explaining how Defendant's statement concerning ignored opportunities is deceptive, false or misleading, this allegation does not support a cause of action.

The third claim is that the Letter unlawfully states that Plaintiff can avoid interest and/or penalties by resolving the matter before June 27, 2012. The Act however creates a violation where there is a claim for interest or other expense unless such amount is expressly authorized in the parties' agreement. 15 U.S.C. § 1692f(1). There are no allegations in the Complaint however, concerning the parties' underlying agreement, and the agreement is not attached to either the Complaint or the moving papers. Accordingly, without more detail this claim will not support a cause of action either.

The final contention is that the Letter is unlawful because it states that Defendant will put the account back on Plaintiff's credit report if she fails to pay. According to Plaintiff, this would be impossible because the statute of limitations " is from July 2002 and has long since passed." Again, there are no supporting factual allegations. Plaintiff's claim seems to imply that the original debt dates from July 2002, and that the statute of limitations for some unspecified claim that Defendant might make would bar the claim if it were ever asserted--but none of this is alleged in the Complaint or addressed in the motion papers. The Court declines to make such a leap on Plaintiff's behalf without further supporting allegations.

Accordingly, Plaintiff's limited allegations on their face, even if in a form acceptable to the Court, are insufficient to establish liability. As a result, the Court recommends that on this alternative basis, namely that Plaintiff's allegations are insufficient to merit the relief sought, Plaintiff's motion for a default judgment again be denied without prejudice and with leave to refile.

CONCLUSION

For the reasons set forth herein, the Court recommends that Plaintiff's motion for a default judgment be denied without prejudice and with leave to refile consistent with the reasoning and conclusions of this Report and Recommendation.

OBJECTIONS

A copy of this Report and Recommendation is being sent to Plaintiff by electronic filing. Plaintiff is directed to serve a copy on Defendant and to electronically file an affidavit of service with the Court within ten (10) days. Pursuant to 28 U.S.C. § 636(b)(1)(C) and Rule 72 of the Federal Rules of Civil Procedure, any objections to this Report and Recommendation must be filed within fourteen (14) days of service. Each party has the right to respond to the other's objections within fourteen (14) days after being served with a copy. See Fed.R.Civ.P. 6(a), 6(e), 72. A courtesy copy of any objections filed is to be sent to the Chambers of the District Judge. Any request for an extension of time for filing objections must be directed to the District Judge prior to the expiration of the period for filing objections. Failure to file objections will result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 155, 106 S.Ct. 466, 474-75, 88 L.Ed.2d 435 (1985); Caidor v. Onondaga Cnty., 517 F.3d 601, 604 (2d Cir. 2008); Beverly v. Walker, 118 F.3d 900, 901 (2d Cir.1997). Plaintiff is directed to serve a copy of this Report and Recommendation on Defendant at Defendant's last known address.


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