Question presented in (un)fair debt collection action by National Collegiate Student Loan Trust defendant who turned the tables on collection law firm that sued her: Whether the statement that the Trust is an "original creditor" in the boilerplate pleadings violated the federal Fair Debt Collection Practices Act, 15 U.S.C.1692 et seq. (the "FDCPA") and/or Section 349 of the New York State General Business Law. Winslow v Forster & Garbus, LLP, No. CV 15-2996 (AYS), USDC E.D New York (Dec 13, 2017).
BARBARA WINSLOW, on behalf of herself and all others similarly situated, Plaintiff,
FORSTER & GARBUS, LLP, RONALD FORSTER, Esq. and MARK GARBUS, Esq., Defendants.
United States District Court, E.D. New York.
Barbara Winslow, on behalf of herself and all others similarly situated, Plaintiff, represented by Benjamin Silverman, Kakalec & Schlanger, LLP.
Barbara Winslow, on behalf of herself and all others similarly situated, Plaintiff, represented by Evan Stone Rothfarb, Kakalec & Schlanger LLP & Daniel Adam Schlanger, Kakalec & Schlanger, LLP.
Forster & Garbus, LLP, Defendant, represented by Aaron R. Easley, Sessions Fishman Nathan & Israel LLC & Glenn M. Fjermedal, Davidson Fink LLP.
Forster Ronald, Esq., Defendant, represented by Glenn M. Fjermedal, Davidson Fink LLP.
Mark A. Garbus, Esq., Defendant, represented by Glenn M. Fjermedal, Davidson Fink LLP.
MEMORANDUM AND ORDER
ANNE Y. SHIELDS, Magistrate Judge.
This is an action commenced by Plaintiff Barbara Winslow ("Plaintiff" or "Winslow"), pursuant to the Fair Debt Collection Practices Act, 15 U.S.C.1692 et seq. (the "FDCPA") and Section 349 of the New York State General Business Law ("Section 349"). Plaintiff styles this action as a class action brought on behalf of herself, and others similarly situated against Defendants Forster & Garbus, LLP ("F&G"), Ronald Forster, Esq. ("Forster"), and Mark Garbus, Esq. ("Garbus") ("Foster" and "Garbus" collectively the "Individual Defendants"). See Complaint ("Compl."), Docket Entry ("DE") 1. Presently before the Court are Defendants' motion for summary judgment, and Plaintiff's motion to certify this matter as a class action.
B. The State Court Action
On May 30, 2014, F&G filed a lawsuit against Winslow in the Civil Court of the City of New York, County of Kings (Index No. 31934-2014) (the "State Court Action"). DE 60-25. The State Court Action was filed on behalf of F&G's client, which is stated on the face of the complaint in the State Court Action to be "National Collegiate Student Loan Trust 2005-3, a Delaware Statutory Trust" (the "Trust"). The State Court Action sought a judgment in the amount of $11,369.67, and named only the Trust as plaintiff.
The factual recitations in support of the complaint in the State Court Action state, inter alia, that the Trust is "the original creditor and is not required to be licensed" by the New York City Department of Consumer Affairs, that the Trust is "authorized" to proceed with the action, and that Winslow borrowed money from "Plaintiff or Plaintiff's assignor." DE 60-25. That complaint makes no mention of Bank of America — the entity that originally extended the Loan to Winslow. DE 60-25; and DE 1, Ex. A. It is not disputed that at the time of the filing of the State Court Action, the Trust had not filed a certificate with the New York State Department of State designating the Secretary of State of the State of New York as an agent for service of process pursuant to Section 18(2) of the New York State General Associations Law. Def. Counter 56.1 Resp. ¶ 1, DE 61, Ex. 1.
B. Disposition of the FDCPA Claims
1. The Original Creditor Claim
As noted, Plaintiff claims that reference to the Trust as the original creditor is false because the entity that extended the Loan to Plaintiff was Bank of America, and not the Trust. Defendants contend that the statement is not false because the Trust became the "original creditor" and owner of Plaintiff's debt when it was "charged off." In support of their motion, Defendants rely on the definition of the term "original creditor" as it appears in the New York State Uniform Rules for New York Trial Courts ("Uniform Rules"). Def. Mem. in Supp. of SJ at 4.
The Uniform Rule upon which Defendants rely states that "original creditor" means: "the financial institution that owned the consumer credit account at the time the account was charged off, even if that financial institution did not originate the account." It defines "charged off" consumer debt as "a consumer debt that has been removed from an original creditor's books as an asset and treated as a loss or expense." 22 N.Y.C.R.R. § 202.27-a.
While this language may at first appear to support Defendants' position, a full reading of the statute makes clear that the statute does not apply here, and in no way requires dismissal of Plaintiff's claims of falsity. First, the Uniform Rule relied upon appears under the heading of "Defaults" (§ 202.27), and the subheading "Proof of default judgement in consumer credit matters (Uniform Civil Rules for the Supreme Court and the County Court)" (§ 202.27a). The State Court Action was a first attempt to collect a debt, and was not an action seeking enforcement of a previously entered default judgment. Moreover, the same section that defines "original creditor," states that in actions where an original creditor is seeking a default judgment, the original creditor must submit an affidavit of facts and supporting documentation, including credit agreements and charge-off information. 22 N.Y.C.R.R. § 202.27(c), (d). Furthermore, even if the Uniform Rule definition of "original creditor" applied to the State Court Action, it would not require summary dismissal of Plaintiff's FDCPA claim because the state court action was filed by Defendants in May of 2014, and the definitional provisions relied upon did not take effect until October 1, 2014.
More importantly, New York State procedural and definitional rules for seeking enforcement of a default judgment are vastly different than the definitions that Congress chose to use in the FDCPA. Indeed, as Justice Gorsuch noted in a recent FDCPA decision, the statutory definitions are precise. Thus, Justice Gorsuch stated:
In the very definitional section , Congress expressly differentiated between a person "who offers" credit (the originator) and a person "to whom a debt is owed" (the present debt owner). § 1692a(4). Elsewhere, Congress recognized the distinction between a debt "originated by" the collector and a debt "owed or due" another. § 1692a(6)(F)(ii). And elsewhere still, Congress drew a line between the "original" and "current" creditor. § 1692g(a)(5).
As the FDCPA draws distinctions between the party who offers credit, and a person to whom a debt is owed, and a line between original and current creditor, there can be no question but that pursuant to the FDCPA, the original creditor with respect to the Loan is Bank of America. Here, it is undisputed that the complaint in the State Court Action falsely identifies the Trust as the original creditor. It also confusingly states that "Defendant [Winslow] borrowed money from Plaintiff or Plaintiff's Assignor pursuant to a promissory note. See DE 1, Ex. A. It is of no moment that the Trust owned the debt at the time it was allegedly "charged off." According to § 1692g(a)(5), that would simply mean that at the time of the charge off, the Trust was the current creditor, but not the original creditor. In light of the plain meaning of the word "original", the FDCPA definitions, and the fact that the Uniform Rules mandate no particular definition of original creditor within the context of federal law, this Court hold that Defendants' statement that the Trust was the original creditor is a false and misleading statement.
Further, the Court holds that this false statement as to the Trust's status as the "original creditor" is material as a matter of law. As noted in Fritz v. Resurgent Capital Servs., LP, 955 F. Supp. 2d 163, a false statement as to the owner of a debt "could easily mislead the least sophisticated consumer as to the nature and legal status" thereof and could "impede the consumer's ability to respond." Id. at 171. Accord Tourgeman v. Collins Fin. Servs., 755 F.3d 1109, 1121-22 (9th Cir. 2014) (misrepresentation as to the identity of the original creditor was a critical piece of information that was material under the FDCPA); Valle v. Green Tree Servs., LLC., 2017 WL 1053848, at *6 (D. Conn. 2017).
CASE STYLE AND WL CITE:: BARBARA WINSLOW, on behalf of herself and all others similarly situated, Plaintiff, v. FORSTER & GARBUS, LLP, RONALD FORSTER, Esq. and MARK GARBUS, Esq., Defendants. United States District Court, E.D. New York.December 13, 2017 Slip Copy 2017 WL 6375744 (Approx. 20 pages).