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Vincent v. Money Store

United States District Court, S.D. New York

February 2, 2015

LORI JO VINCENT, ET AL., Plaintiffs,
THE MONEY STORE, ET AL., Defendants.


JOHN G. KOELTL, District Judge.

The plaintiffs, Lori Jo Vincent, Ruth Ann Gutierrez, and Linda and John Garrido bring this purported class action on behalf of themselves and all others similarly situated against the defendants, The Money Store, TMS Mortgage, Inc., and HomEq Servicing Corp. The plaintiffs allege violations of the Fair Debt Collection Practices Act ("FDCPA") in connection with the defendants' allegedly improper debt collection practices. The plaintiffs move for certification of a class based on their FDCPA claim pursuant to Rule 23 of the Federal Rules of Civil Procedure.


The factual background of this case has been set forth in the Court's previous decision on summary judgment, Vincent v. Money Store, No. 03cv2876, 2011 WL 4501325, at *2-3 (S.D.N.Y. Sept. 29, 2011), aff'd in part, vacated in part, remanded, Vincent v. Money Store, 736 F.3d 88 (2d Cir. 2013), and is substantially similar to the facts of a related case, Vincent II, as described in another previous decision. Vincent v. Money Store, 915 F.Supp.2d 553, 557-58 (S.D.N.Y. 2013). Familiarity with those decisions is assumed. The following factual and procedural background relevant to the present motion is undisputed, unless otherwise noted.


The named plaintiffs in this action all took out home mortgage loans on which they defaulted. The defendants serviced those loans. The plaintiffs all received substantially similar letters notifying them of their defaults from the law firm Moss, Codilis, Stawiarski, Morris, Schneider & Prior ("Moss Codilis"). See Grobman Decl. Ex. B ("Breach Letters"). The breach letters also notified them that the servicer of their loans, defendant TMS Mortgage, Inc, intended to enforce the loan by accelerating the sum of the principal and interest, and that Moss Codilis had been retained by the defendants to collect the debt. Id. The defendants and Moss Codilis agreed in what they termed the "Breach Letter Program" that Moss Codilis would receive a $50 fee, later reduced to $35, for every breach letter it sent. Grobman Decl. ¶ 2, Ex. A. Moss Codilis sent out 88, 937 breach letters to borrowers. Grobman Decl. ¶ 4, Ex. C, at 4.

In this action, the plaintiffs allege that the defendants hired Moss Codilis to represent itself as collecting the defendants' debt, when in fact Moss Codilis was just sending out collection letters on attorney letterhead at the defendants' behest. The plaintiffs contend that the defendants' conduct violates the false name exception of the FDCPA. See 15 U.S.C. § 1692a(6). The plaintiffs seek damages based on the fees charged by Moss Codilis, which the plaintiffs contend were passed on to the borrowers.


In a decision dated December 7, 2005, Judge Sprizzo granted summary judgment to the defendants, dismissing the plaintiffs' FDCPA claim.[1] Vincent v. Money Store, 402 F.Supp.2d 501, 503 (S.D.N.Y. 2005). Judge Sprizzo relied on his prior decision in the separate related case of Mazzei v. Money Store, 349 F.Supp.2d 651, 659-60 (S.D.N.Y. 2004). In Mazzei, Judge Sprizzo concluded that the defendant had not violated § 1692a(6) because the defendant had not "pretend[ed] to be someone else" or used a "pseudonym or alias." Id. In a decision issued on September 29, 2011, this Court dismissed the plaintiffs' claims under the Truth in Lending Act ("TILA") and denied the plaintiffs' motion for reconsideration of Judge Sprizzo's opinion. Vincent, 2011 WL 4501325, at *9. Having dismissed all federal claims, this Court declined to exercise supplemental jurisdiction over the plaintiffs' state law claims. Id. at *7.

On appeal, the Court of Appeals of the Second Circuit vacated in part the judgment entered pursuant to this Court's 2011 decision, and reinstated the plaintiffs' FDCPA claim. Vincent v. The Money Store, 736 F.3d 88, 104-05, 109 (2d Cir. 2013). The Court concluded that a creditor could violate the false name exception not only by using a pseudonym or alias to collect its debts, but also by hiring a third party to purport to collect debts independently while the third party was actually under the creditor's control. Id. at 99-103.

The Court noted that Moss Codilis had described the Breach Letter Program as an "exercise in mass processing, " and that Moss Codilis had indicated that "all meaningful collection efforts or attempts to gather' the money owed were handled by The Money Store." Id. at 100-01. It pointed to deposition testimony of one of the principal supervisors of the Breach Letter Program, Christina Nash, in which she testified that the defendants provided Moss Codilis with large spreadsheets of debtors in default, usually over 1000, to be notified by mail the next day. Id. at 104. The Court also explained that Nash's testimony suggested that Moss Codilis's review of the letters prior to sending them was limited to "ministerial tasks, " such as ensuring the address information was complete. Id.

The Court held that, "when determining whether a representation to a debtor indicates that a third party is collecting or attempting to collect a creditor's debts, the appropriate inquiry is whether the third party is making bona fide attempts to collect the debts of the creditor or whether it is merely operating as a conduit' for a collection process that the creditor controls." Id. at 103. Based on what it termed Moss Codilis's "limited involvement, " the Court concluded that a jury could find that its representations through the breach letters that it had been retained by the defendants to collect their debts could violate the false name exception of the FDCPA. Id. at 104.

Subsequent to the decision of the Court of Appeals, this Court denied the plaintiffs' motion to reinstate their state law claims. Vincent v. Money Store, No. 01cv5694, 2014 WL 1087928, at *2-3 (S.D.N.Y. Mar. 19, 2014), reconsideration denied, No. 03cv2876, 2014 WL 1673375 (S.D.N.Y. Apr. 28, 2014). The plaintiffs now move to certify a class based on their claim under the false name exception of the FDCPA, as explained by the Court of Appeals, proposing a class of all borrowers on loans owned or serviced by the defendants who were sent breach letters by Moss Codilis from April 1, 1997, to the present.


Before certifying a class, the Court must determine that the party seeking certification has satisfied the four prerequisites of Rule 23(a): (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation. See Fed.R.Civ.P. 23(a); Teamsters Local 445 Freight Div. Pension Fund v. Bombardier, Inc., 546 F.3d 196, 202-03 (2d Cir. 2008); In re Initial Pub. Offerings Sec. Litig. ("In re IPO"), 471 F.3d 24, 32 (2d Cir. 2006). The Court must find, more specifically, that: "(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class." Fed.R.Civ.P. 23(a). The Court must also find that the class qualifies under one of the three sets of criteria set forth in Rule 23(b). See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997); Teamsters, 546 F.3d at 203; In re IPO, 471 F.3d at 32.

The plaintiffs here seek certification under Rule 23(b)(3), which provides for a class to be maintained where "the questions of law or fact common to the class members predominate over any questions affecting only individual members, and... a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3); see also Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1431 (2013). If the requirements of 23(a) have been met, and the claims fall within the scope of Rule 23(b)(3), a court may, in its discretion, certify the class. See In re IPO, 471 F.3d at 41 ("[A] district judge may certify a class only after making determinations that each of the Rule 23 requirements has been met.").

"Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule-that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011). Plaintiffs seeking class certification bear the burden of demonstrating by a preponderance of the evidence that the proposed class meets each of the requirements for class certification set forth in Rule 23. Teamsters, 546 F.3d at 202. When assessing whether plaintiffs have met this burden, courts must take into account "all of the relevant evidence admitted at the class certification stage." In re IPO, 471 F.3d at 42. A court may certify a class only after determining that "whatever underlying facts are relevant to a particular Rule 23 requirement have been established." Id. at 41. "[T]he obligation to make such determinations is not lessened by overlap between a Rule 23 requirement and a merits issue, " although a court "should not assess any aspect of the merits unrelated to a Rule 23 requirement." Id.; see also Ramirez v. Riverbay Corp., No. 13cv2367, 2014 WL 3800886, at *2-3 (S.D.N.Y. Aug. 1, 2014).


The plaintiffs seek to certify a class of all borrowers on loans serviced or owned by the defendants who, from April 1, 1997, to the present, were sent breach letters by Moss Codilis. The defendants oppose certification based on the plaintiffs' alleged failure to show that the commonality, typicality, and adequacy prongs of Rule 23(a) are satisfied. The defendants also contend that Rule 23(b)'s preponderance and superiority requirements have not been satisfied.[2]


Before turning to the Rule 23 requirements, there are initial problems with the class definition as proposed by the plaintiffs. In their most recent complaint, the plaintiffs sought to bring this action as a class action on behalf of all borrowers who paid certain fees to the defendants "after March 1, 2000." Am. Compl. ¶ 14. Among those fees were the "fees paid to Moss Codilis for the 88, 937 breach letters prepared for HomEq pursuant to Moss Codilis' breach letter program." Id. The current proposed class differs in both the time period identified, and the precipitating event; in the Complaint the borrowers are identified by when they incurred the expenses, but the class proposed in this motion is identified by when they were sent breach letters. The plaintiffs' proposed definition in this motion would also extend the starting date for the class definition back three years to April 1, 1997, from the date alleged in the Complaint, without any attempt by the plaintiffs to amend their complaint in the years since it was filed. This would be improper.

While a district court may carve out a narrower class from an overbroad class proposed in the Complaint, Lundquist v. Sec. P. Auto. Fin. Servs. Corp., 993 F.2d 11, 14 (2d Cir. 1993), the plaintiffs cite no case demonstrating the appropriateness of considerably expanding a class on a certification motion from what was originally proposed in the Complaint. In this case, discovery has already been completed with the scope of the class limited to borrowers incurring expenses after March 1, 2000, as stated in the Amended Complaint. See Oscar v. BMW of N. Am., LLC, No. 09cv11, 2011 WL 6399505, at *6 (S.D.N.Y. Dec. 20, 2011) (denying motion to amend to broaden class due to likelihood of additional discovery being necessary). Even if there would not be additional discovery required for the expansion of this class, there would be problems with the notice provided by the initial statement of the class in the Complaint. "When the initial complaint is clear with respect to the definition of the class, " as it was with respect to the beginning date of the purported class in this case, "the defendants are placed on notice of the nature and scope of the claims asserted against them." Choquette v. City of New York, 839 F.Supp.2d 692, 701 (S.D.N.Y. 2012). Expanding the class now on this motion would be unfair to the defendants. Allowing plaintiffs to expand the class backwards in time would also be at odds with the Supreme Court's decision in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), which treats asserted members of a class as parties to the action and consequently tolls the statute of limitations with respect to them. Any expansion of the class backwards on this motion would cover members whose claims had not been tolled after the Complaint was filed. Accordingly, the plaintiffs should be held to the time period of the class stated in their Complaint.

In addition to the temporal discrepancy between the Complaint and the class proposed in this motion, there is a discrepancy between the class defined by incurring expenses as stated in the Complaint and those being sent letters as sought in the class certification motion. The Complaint sought a class of borrowers who paid fees to the Money Store defendants that were purportedly incurred for fees paid to Moss Codilis for the breach letters. It did not include, for example, borrowers who were sent breach letters but never paid the Money Store defendants a fee for such a letter. The plaintiffs provide no explanation for expanding the class definition without any motion to amend the Complaint. Therefore for purposes of the Rule 23 motion, the Court will consider a class consisting of:

All borrowers of loans owned or serviced by the Money Store defendants and who, after March 1, 2000, reimbursed any of the defendants for fees paid to Moss Codilis for the 88, 937 breach letters ...

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