United States District Court, S.D. New York
OPINION AND ORDER
Edgardo Ramos U.S.D.J.
Hunter (“Plaintiff”) brings this action against
Defendants Palisades Acquisition XVI, LLC
(“Palisades”), Sharinn & Lipshie, P.C.
(“S&L”), and Harvey Sharinn
(“Sharinn”) alleging violations of the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 et seq., and New York General Business
Law § 349 (“Section 349”). Before the Court
is Defendant Palisades' motion to dismiss the First
Amended Complaint (“FAC”) in its entirety
pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure and, in the alternative, to strike Exhibits C and S
from the FAC pursuant to Rule 12(f) of the Federal Rules of
following reasons, Palisades' motion is DENIED.
is a Delaware limited liability company that purchases
charged-off consumer debt in bulk or purchases the right to
collect consumer debts already in default and attempts to
collect on the debt. FAC (Doc. 30) ¶¶ 10, 150(c).
In April 2007, Palisades sued Plaintiff, a home health aide,
in Bronx County Civil Court, claiming that Palisades had
purchased a debt of $2, 572.21 from Direct Merchants Bank
resulting from Plaintiff's credit card debt. FAC
¶¶ 14- 18; Ex. A. Palisades was represented in that
action (the “Collections Lawsuit”) by Wolpoff
& Abramson, L.L.P. and filed an affidavit of service
sworn to by Loai F. Sarsour (“Sarsour”).
Id. ¶¶ 21, 25.
Plaintiff never had an account with Direct Merchants Bank and
believes she has fully paid off every credit card she has
ever owned. Id. ¶ 19. Plaintiff claims she was
unable to raise these points in the Collections Lawsuit
because she was never served with the summons and complaint.
Id. ¶ 22. The affidavit of service filed by
Sarsour in the Collections Lawsuit claimed that service was
effectuated on April 18, 2007 (a Wednesday) at 2:36 p.m. by
leaving the documents with a relative of Plaintiff named
James Hunter, who was described as “a 55-year old black
man with black hair who was approximately 6' tall and
weighed around 210 pounds.” Id. ¶¶
25, 28; Ex. B. Plaintiff does not know and is not related to
anyone by the name of James Hunter. Id. ¶ 29.
Plaintiff's husband, who lived with her, was named Samuel
Hunter. Id. In 2007, he “worked every
weekday” and did not arrive home until 9:00 p.m.
Id. ¶ 30. Mr. Hunter did not match the physical
description listed in Sarsour's affidavit. Id.
Plaintiff did not live with any other adult men. Id.
¶ 29. Sarsour also attested that he mailed a copy of the
summons and complaint to the same address. Id.
¶ 27. Neither Plaintiff nor her husband,
however, received any papers relating to the Collections
Lawsuit in the mail. Id. ¶ 31.
2007, Palisades moved for a default judgment against
Plaintiff. Id. ¶ 39. In doing so, one of
Palisades' employees swore to having “personal
knowledge of the facts of the case, ” including that
Plaintiff had opened an account with Direct Merchants Bank,
incurred charges, and defaulted on her debt. Id.
¶ 40. On June 19, 2007, Palisades obtained a default
judgment against Plaintiff for $2, 834.13. Id.
¶ 45. Plaintiff never received a copy of the judgment or
any notice that judgment had been entered against her.
Id. ¶ 47.
early 2014, nearly seven years later, Plaintiff first learned
of the Collections Lawsuit when she and her husband attempted
to modify the mortgage loan for their house. Id.
¶¶ 48-59. At that point, they were informed that a
judgment had been entered against Plaintiff in the
Collections Lawsuit. Id. She filed a pro se
Order to Show Cause in the Collections Lawsuit, seeking to
vacate the default judgment because she was never served.
Id. ¶ 50; Ex. E. A hearing on Plaintiff's
Order to Show Cause was held on March 12, 2014. Id.
¶ 55. Palisades did not appear at the hearing; the
presiding judge vacated the judgment and set a trial for
April 21, 2014. Id. ¶ 56. Palisades also did
not appear at the trial; at that point, the presiding judge
dismissed the Collections Lawsuit. Id. ¶ 58.
The order vacating the Collections Lawsuit is publicly
accessible through the New York Unified Court System's
eCourts website. Id. ¶ 71; Ex. I.
year later, on November 11, 2015, Palisades, now represented
by S&L,  sent an Information Subpoena and
Restraining Notice (the “Notice”) to JP Morgan
Chase Bank (“Chase”). Id. ¶ 66; Ex.
H. The Notice stated that Palisades had a judgment against
Plaintiff for $2, 834.13 and demanded that Chase restrain any
bank accounts owned by Plaintiff. Id. Plaintiff had
a consumer checking account and a savings account with Chase
at that time. Id. ¶ 68. On November 16, 2015,
Chase placed a hold on Plaintiff's checking account.
Id. ¶ 69.
Notice was signed by Defendant Sharinn and listed the index
number for the vacated Collections Lawsuit. Id.
¶ 66. The managing attorney of S&L, Amanda
Moreno (“Moreno”) explained, in a 2014
deposition, the process S&L attorneys undertake to review
a consumer's file before commencing debt collection
activities. Id. ¶ 81. Moreno explained that,
when a different law firm litigated the underlying judgment,
S&L's policy was not to undertake debt collection
activity until S&L had copied the entire court file or
been forwarded the pleadings. Id. ¶ 83; Ex. J.
According to Moreno, S&L “review[s] what is done by
other attorneys to make sure that [they]'re following in
the correct footsteps.” Id. ¶ 84; Ex. J.
was not the law firm of record in the Collections Lawsuit.
Id. ¶¶ 61-62, 86. The law firm of record,
Wolpoff & Abramson, was accused in a 2010 lawsuit of
“perpetrat[ing] a massive scheme of debt collection
fraud” and subsequently “abandoned a huge volume
of pending debt collection suits in New York.”
Id. ¶¶ 60, 87. The process server who
signed an affidavit of service in the Collections Lawsuit,
Sarsour, was accused in a 2013 lawsuit of perpetrating sewer
service. Id. ¶¶ 34-35, 74. That
lawsuit was brought against Palisades' parent company,
Asta Funding. Id.; Ex. C; Ex. S. Had Sharinn or
another attorney working for S&L copied the court file or
researched the Collections Lawsuit before issuing the Notice,
they would have seen that the Collections Lawsuit had been
vacated in 2014. Id. ¶ 71; Ex. I.
November 16, 2015, the same day Chase placed a hold on
Plaintiff's account, $75.00 was debited from
Plaintiff's checking account under the transaction
heading “Nas-Coal 16 Nov15678.” Id.
¶¶ 94-95; Ex. K. On November 25, 2015, Chase sent
Plaintiff a letter explaining that there was a $5, 668.26
hold placed on her account at the request of a judgment
creditor. Id. ¶ 97. Chase also sent Plaintiff a
copy of the Notice, as required by New York law. Id.
¶ 97-100; Ex. L. The letter Chase sent Plaintiff was
labeled at the bottom left with the phrase
“COAL-16Nov15-678.” Id. Ex. L. The
letter also explained that Chase “may charge
[Plaintiff] a Legal Processing Fee of $75.00” for
processing the Notice. Id.
never received a notice of assignment when Palisades
purchased Plaintiff's alleged credit card debt from
Direct Merchants Bank. Id. ¶ 91. Plaintiff also
never received any notice of the Collections Lawsuit.
Id. ¶ 31. The Notice forwarded to her by Chase
was therefore the first communication she received from
Palisades concerning the alleged debt. Id. ¶
101. Plaintiff alleges that the Notice did not contain
certain disclosures required by § 1692g(a) of the FDCPA.
She also alleges that she did not receive those disclosures
within five days of receiving the Notice. Id. ¶
Plaintiff learned of the hold on her account, she was very
upset. Id. ¶ 103. She needed the restrained
money in order to pay her monthly bills, including her
mortgage payment. Id. While Plaintiff's Chase
account was restrained, she suffered emotional distress,
including anger, frustration, and anxiety. Id.
¶ 136. She was afraid that late payments on her mortgage
would increase her monthly mortgage to a level that she could
not afford. Id. ¶ 140. Plaintiff also suffered
from physical symptoms during this time period, including
severe, recurring headaches, high blood pressure, a
diminished appetite, and insomnia. Id. ¶¶
November 2015, Plaintiff's daughter attempted to use the
checking account to pay Plaintiff's monthly bills despite
the hold; the payments did not go through and Plaintiff
incurred additional “returned item fees” on her
account. Id. ¶¶ 104, 109. Plaintiff went
to a local Chase office multiple times to release the hold,
but was told she needed to contact S&L. Id.
point, a Chase employee transferred $2, 100 to
Plaintiff's savings account for her use. Id.
¶ 107. This transfer caused an insufficient funds fee to
be charged to Plaintiff's account. Id. ¶
109. The Chase employee also used funds from Plaintiff's
savings account to pay her mortgage bill. Id. ¶
107. Although the bill was paid, it was late, and Plaintiff
incurred a late fee from her mortgage lender. Id.
¶ 110. Plaintiff was able to pay the remainder of her
bills without using her bank account by using, among other
methods, a Western Union wire transfer. Id. ¶
111. Plaintiff alleges that this resulted in additional
charges to her accounts. Id. On December 2, 2015,
Chase debited an additional $937.01 from Plaintiff's
account in a transaction labeled “NAS-COAL.” She
incurred an extended overdraft fee and a service fee from
that debit. Id. ¶ 112.
to lift the hold on her account, Plaintiff retained CAMBA
Legal Services, Inc. (“CAMBA”) for assistance.
Id. ¶ 114. On December 15, 2015, Plaintiff sent
a letter to S&L informing them that the judgment in the
Collections Lawsuit had been vacated and demanding the
release of the restraint on her account. Id. ¶
115; Ex. M. Plaintiff demanded that the S&L Defendants
provide her with documentation and information on the alleged
debt pursuant to the FDCPA and New York City laws.
Id. Plaintiff also informed S&L that they should
contact CAMBA regarding the debt in the future. Id.
However, neither Palisades nor S&L responded to
Plaintiff's letter. Id. ¶ 117. Because the
hold remained on her Chase account, Plaintiff again paid her
monthly bills “using unconventional means, ”
which she alleges resulted in additional fees being charged
to her accounts. Id.
December 23, 2015, Chase sent Plaintiff a letter informing
her that her account was overdrawn by $238.00 and that she
needed to make a deposit in that amount to keep her account
open. Id. ¶ 127. Chase sent another letter
informing Plaintiff of her account status on or around
January 5, 2016. Id. Plaintiff did not deposit any
money into her account because she believed that any
additional funds she deposited would be frozen by Defendants.
Id. ¶ 130. For this same reason, Plaintiff
cashed her paychecks instead of depositing them at Chase, and
was required to pay $6 for every check she needed to cash.
Id. ¶ 135. She also believed that the overdraw
was caused by the “NAS-COAL” debits of almost $1,
000, the hold on her checking account, and the returned item
and late fees incurred as a result of Plaintiff's
attempts to remain in timely payment of her bills despite the
hold on her account. Id. ¶ 130.
January 8, 2016, Plaintiff checked her Chase account and saw
that the hold remained. Id. ¶ 118. That day, a
CAMBA employee called S&L and spoke with an attorney
there, Mike Ponzio (“Ponzio”). Ponzio requested
that CAMBA send S&L a copy of the vacatur of the
Collections Lawsuit judgment. Id. ¶ 119. An
attorney at CAMBA sent the letter on January 11, 2016, again
demanding that S&L lift the restraint and return the
funds to Plaintiff's Chase account. Id. ¶
120. On January 13, 2016, an employee working for S&L
faxed a letter to CAMBA informing them that S&L had
reached out to Chase to withdraw the restraint on
Plaintiff's account. Id. ¶ 122; Ex. P.
January 27, 2016, S&L mailed CAMBA a letter enclosing a
check to Plaintiff for $830.16, which they stated represented
“monies received from the Marshal in connection with a
levy at JP Morgan Chase Bank.” Id. ¶ 124.
S&L also informed CAMBA that an additional check for
$106.85 would be sent to Plaintiff from the Marshal's
office for additional Marshal fees. Id. On February
3, 2016, Plaintiff received a check for $106.85. Id.
point after January 8, 2016, Chase closed Plaintiff's
checking and savings accounts because Plaintiff's
accounts remained overdrawn. Id. ¶ 131. After
receiving the checks from the Marshal's office and
S&L, Plaintiff opened a new checking account at a
different bank. Id. ¶ 132.
filed this lawsuit on November 11, 2016. Complaint (Doc. 1).
Plaintiff filed the FAC on February 24, 2017 (Doc. 30).
Plaintiff asserts three causes of action: (1) violations of
the FDCPA, 15 U.S.C. §§ 1692c, 1692e, 1692f, and
1692g based on Defendants' Notice and restraint of
Plaintiff's Chase account; (2) violations of New York
General Business Law § 349 based on Defendants'
conduct in connection with the Collections Lawsuit as well as
the subsequent Notice and restraint of Plaintiff's Chase
account; and (3) conversion based on Defendants'
restraint of Plaintiff's Chase account. FAC ¶¶
filed its motion to dismiss or to strike on March 30, 2017.
See Memorandum of Law in Support of Defendant
Palisades' Motion to Dismiss and Motion to ...