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Rutty v. Esagoff

United States District Court, E.D. New York

May 16, 2017

ROBERT R. RUTTY, Plaintiff,



         Plaintiff Robert R. Rutty, formerly the mortgagor of a residential property in Queens, New York, initiated this action against certain of the individuals and entities involved in a previous court proceeding that led to the foreclosure of his residential property in Queens. The Court granted summary judgment in the prior action in favor of the mortgagee, and the property was sold in foreclosure in March 2017. After the Notice of Sale was posted but before the foreclosure auction, Rutty brought suit under the Fair Debt Collection Practices Act (“FDCPA”), New York General Business Law § 349(a), and New York Penal Law § 105.25, seeking damages and a litany of injunctive relief, including restraining the auction from taking place and referral to the U.S. Attorney for prosecution. Defendants moved to dismiss the complaint, and for the following reasons, the Court grants the motion to dismiss.


         On September 29, 2006, plaintiff executed a note and mortgage in the principal amount of $134, 000 and interest to Mortgage Electronic Registration Systems Inc. (“MERS”), as nominee for People's Choice Home Loan, for the residential property located at 217-03 137th Road, Springfield Gardens, New York 11413 (the “Subject Property”). Pursuant to the terms of the mortgage and note, defendant was required to make monthly payments of principal and interest starting November 1, 2006, until the maturity date. Defendant failed to make his January 2011 payment and has failed to make all subsequent payments.

         On November 13, 2015, defendant Gustavia Home, LLC (“Gustavia”) took physical possession of the note. On taking physical ownership of the note, Gustavia sent defendant a 90-day notice of default on November 18, 2015. On March 11, 2016, the mortgage was assigned by written assignment from MERS to NPL Capital, LLC, and the note was transferred by a proper allonge. Shortly thereafter on March 28, 2016, the mortgage was assigned from NPL Capital, LLC to Gustavia, and the note was also transferred by a proper allonge. Gustavia is the current owner and holder of the note and mortgage executed by plaintiff Rutty in 2006. Gustavia commenced an action seeking to foreclose on the Subject Property in June 2016 (the “Foreclosure Action”), which this Court presided over. See Gustavia Home, LLC v. Rutty, 16 Civ. 2823 (BMC)(VMS).

         Plaintiff Rutty defended the Foreclosure Action pro se. By a Memorandum Decision and Order dated January 24, 2017, this Court granted Gustavia's motion for summary judgment. On February 1, 2017, the Court entered a Judgment of Foreclosure and Sale. Thereafter, on March 9, 2017, Gustavia filed a Notice of Sale, indicating that the Subject Property was to be sold on March 30, 2017. The Subject Property was sold at that foreclosure sale.

         After the filing of the Notice of Sale, but before the sale, plaintiff filed this action pro se against Gustavia, the Margolin & Weinreb Law Group, LLP, which is the firm that represented Gustavia in the Foreclosure Action, Janet Nina Esagoff, Esq., the particular attorney that represented Gustavia, Jared Dotoli, the sole member and manager of Gustavia, Barbara Engle, the Assistant Vice President of MERS, the entity with which plaintiff executed his mortgage, and Charlotte Benedict, a notary public (the “defendants”). As to the latter two, Engle was the individual who assigned the mortgage on March 11, 2016, and Benedict notarized that assignment.


         I. Collateral Estoppel

         Plaintiff brings this action pursuant to the FDCPA, New York General Business Law § 349(a), and New York Penal Law § 105.25. Before reaching those claims, the Court observes that much of plaintiff's complaint is a transparent attempt to relitigate the issues he previously raised - and lost - in the Foreclosure Action. However, those attempts at relitigation are barred by collateral estoppel. “The fundamental notion of the doctrine of collateral estoppel, or issue preclusion, is that an issue of law or fact actually litigated and decided by a court of competent jurisdiction in a prior action may not be relitigated in a subsequent suit between the same parties or their privies.” Ali v. Mukasey, 529 F.3d 478, 489 (2d Cir. 2008) (quoting United States v. Alcan Aluminum Corp., 990 F.2d 711, 718-19 (2d Cir. 1993)) (internal quotation marks omitted). “Accordingly, collateral estoppel applies when: (1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and actually decided, (3) there was a full and fair opportunity for litigation in the prior proceeding, and (4) the issues previously litigated were necessary to support a valid and final judgment on the merits.” Ali, 529 F.3d at 489 (quoting Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 44 (2d Cir. 1986)). By virtue of the doctrine of collateral estoppel, plaintiff is precluded from claiming that the foreclosure was improper, that the assignments were backdated, that certain entities dissolved, and the myriad other factual issues that this Court had to previously consider in the Foreclosure Action. All of those issues were actually litigated and actually decided by this Court, as they were necessary for the Court to consider them in the Foreclosure Action. Further, plaintiff's arguments that he was deprived of due process are belied by the Foreclosure Action docket, which demonstrates that plaintiff had a full and fair opportunity for litigation. Consequently, the Court cannot revisit those arguments again - the foreclosure was valid.

         II. FDCPA

         “Congress enacted the FDCPA ‘to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.'” Vincent v. The Money Store, 736 F.3d 88, 96 (2d Cir. 2013) (quoting 15 U.S.C. § 1692(e)); see also Benzemann v. Citibank, N.A., 806 F.3d 98, 100 (2d Cir. 2015). “To accomplish these goals, the FDCPA creates a private right of action for debtors who have been harmed by abusive debt collection practices.” Benzemann, 806 F.3d at 100 (citing 15 U.S.C. § 1692k). Importantly, “[t]he relevant provisions of the FDCPA apply only to the activities of a ‘debt collector, '” Schuh v. Druckman & Sinel, L.L.P., 602 F.Supp.2d 454, 462 (S.D.N.Y. 2009) (citing 15 U.S.C. §§ 1692e, 1692f, 1692g), and “[a]s a general matter, creditors are not subject to the FDCPA, ” Maguire v. Citicorp Retail Servs., Inc., 147 F.3d 232, 235 (2d Cir. 1998).

         To establish a violation under the FDCPA for damages, “(1) the plaintiff must be a ‘consumer' who allegedly owes the debt or a person who has been the object of efforts to collect a consumer debt, [] (2) the defendant collecting the debt is considered a ‘debt collector, ' and (3) the defendant has engaged in any act or omission in violation of FDCPA requirements.” Plummer v. Atl. Credit & Fin., Inc., 66 F.Supp.3d 484, 488 (S.D.N.Y. 2014); see also Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85, 91 (2d Cir. 2008) (“[The FDCPA] grants a private right of action to a consumer who receives a communication that violates the Act.”).

         Plaintiff's FDCPA allegation against Gustavia, Dotoli, Esagoff, and the Margolin & Weinreb Law Group fails for the simple reason that none of the parties are debt collectors under the FDCPA. “The relevant provisions of the FDCPA apply only to the activities of a ‘debt collector.'” Schuh, 602 F.Supp.2d at 462. The statute defines “debt collector” as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly ...

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