Caldwell v. Gutman, MINTZ, Baker & Sonnenfeldt, P.C.

KEN CALDWELL AND LISA CALDWELL, Plaintiffs,

v.GUTMAN, MINTZ, BAKER & SONNENFELDT, P.C., ET AL., Defendants.

No. 08-CV-4207 (JFB)(WDW)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

DATED: March 28, 2012

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Ken Caldwell and Lisa Caldwell (collectively "Caldwells" or "plaintiffs") filed an amended complaint against Gutman, Mintz, Baker & Sonnenfeldt, P.C. ("Gutman"); Century Credit-Collections Corporation a.k.a. Century Credit & Collections ("Century"); Gary Kavulich ("Kavulich") and David Lichtenstein ("Lichenstein") (collectively "defendants") alleging violations of the Fair Credit Reporting Act ("FCRA"), the New York City Consumer Protection Law § 5-77, New York State General Business Law § 349(a), and common law fraud. Before this Court is defendants' motion to dismiss the Second Amended Complaint, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

As discussed below, the motion is granted in its entirety as to the federal claims. In a Memorandum and Order, dated March 30, 2010, the Court dismissed all of the claims, but gave plaintiffs leave to re-plead the FCRA claim. Since that decision, plaintiffs have failed to allege a plausible claim under the FCRA because they have not alleged that defendants obtained their address from a consumer reporting agency by "false pretenses." See 15 U.S.C. § 1681q. In particular, plaintiffs' two theories of false pretenses set forth in the amended complaint - namely, (1) that defendant Century failed to possess a valid license, or (2) that defendants did not hold the deed to the condo at issue - cannot prevail as a matter of law. In particular, an alleged failure to possess a license, without more, does not amount to an FCRA violation. Moreover,any FCRA claims premised on the defendants' purported non-ownership of the condo by plaintiffs are barred by collateral estoppel. Thus, the FCRA claim must be dismissed as a matter of law, with prejudice.

Similarly, the state law claims in the amended complaint also cannot survive a motion to dismiss.¹ Although the Court dismissed the claim under Section 349 of the New York General Business Law with prejudice in the March 30, 2010 Memorandum and Order, plaintiffs have attempted again to re-plead that claim. Plaintiffs also added new claims for common law fraud and an alleged violation of Section 5-77 of New York City Consumer Protection Law, which were not addressed by the Court's March 30, 2010 Memorandum and Order. The state claims claims, for the reasons set forth in the March 30, 2010 Memorandum and Order and infra, cannot survive a motion to dismiss and are dismissed with prejudice.

I. BACKGROUND

The following facts are taken from the Second Amended Complaint filed on April 7, 2011, ECF No. 65 ("Am. Compl."), and are not findings of fact by the Court.² Instead, the Court will assume the facts in the complaint to be true and, for purposes of the pending 12(b)(6) motion to dismiss, will construe them in a light most favorable to plaintiffs, the non-moving party.

Plaintiffs were renting a condo at 711 Shadwell Court, apartment 1F in Newport News, Virginia (hereinafter the "condo"). (Am. Compl. at 2.³ ) David Lichtenstein, the owner of The Lightstone Group ("Lightstone") and Fairfield Presidential Associates, L.P. ("FPA"), took steps to collect on the debt allegedly owed to FPA by plaintiffs for rent payment. Lichtenstein enlisted the help of Gutman to collect the debt. (Id.) Gutman hired Century to obtain plaintiffs' addresses. (Id.) On December 7, 2005 Century contacted Experian Credit Bureau and obtained plaintiffs' address at 711 Shadwell Court. (Id.) Gutman subsequently sent plaintiffs letters on January 3, 2006 on behalf of FPA. (Id.) Plaintiffs allege that Gutman never verified the ownership of the deed to plaintiffs' condo and that, in fact, FPA did not hold the deed to plaintiffs' condo and thereby had no right to any debt plaintiffs may have owed for rent. (Id. at 2-3.)

Gutman filed a suit against plaintiffs on behalf of FPA and Lichtenstein in New York City Civil Court. (Id. at 3.) In that lawsuit, plaintiffs argued - as they do now in their amended complaint - that FPA was not the owner of plaintiffs' condo and was thereby not entitled to collect on any debt that may have been owed by plaintiffs. (Id.) The state-court lawsuit resulted in a judgment against plaintiffs. (See Affidavit Accompanying Defendants' Motion toDismiss, June 2, 2009, ECF No. 21, Exs. B, C, D.)

II. PROCEDURAL HISTORY

Plaintiffs, who are proceeding pro se, filed the complaint in this case on October 7, 2008 against defendants Gutman, Russell Polirer ("Polirer"), FPA, Lightstone, Fairfield Presidential Management Corporation ("FPMC"), Lichtenstein, and Debbie Ketay ("Ketay"). Plaintiffs alleged numerous federal and state law claims. Gutman and Polirer answered the complaint on November 26, 2008. FPA, Lightstone, FPMC, Lichtenstein, and Ketay answered on December 10, 2008. On May 5, 2009, all defendants notified the Court that they intended to move for judgment on the pleadings, and the Court issued a briefing schedule that same day. On May 29, 2009, plaintiffs filed a letter motion seeking leave to file an amended complaint. On June 2, 2009, in accordance with the briefing schedule previously issued by the Court, defendants filed their motion for judgment on the pleadings. On June 19, 2009, the Court advised plaintiffs that they were permitted to file a proposed amended complaint with their response to the motion to dismiss.

On November 6, 2009, this Court referred defendants' motion to Magistrate Judge Wall for a Report and Recommendation ("R & R"). On January 27, 2010, Magistrate Judge Wall recommended that defendants be granted judgment on the pleadings and also recommended, sua sponte, that plaintiffs' motion to amend their complaint be denied. Defendants served plaintiffs with the R & R by mail on February 3, 2010. On February 18, 2010, this Court received objections to the R & R from plaintiffs. On March 30, 2010, this Court issued a Memorandum and Order adopting in part the R & R, granting defendants' motion to dismiss the complaint, but giving plaintiffs leave to re-plead their FCRA claim and plead any violations of the New York City Consumer Protection Law.

Plaintiffs filed an amended complaint on May 4, 2010 against defendants Gutman, Fairfield, Lichtenstein, Polirer, Mintz, and Century. Defendants filed a motion to dismiss on July 8, 2010. Plaintiffs filed their opposition brief on August 10, 2010. Defendants filed their reply on August 20, 2010.

The plaintiffs subsequently moved to amend their complaint to add defendants Century Credit and Collections and Gary Kavulich. The Court granted that request on March 14, 2011. Plaintiffs filed the amended complaint on April 7, 2011. Defendants filed their motion to dismiss on June 9, 2011.⁴ Plaintiff filed a "preliminary statement" July 19, 2011, and defendants filed a reply on July 19, 2011.

The Court has fully considered the arguments and submissions of the parties.

III. STANDARD OF REVIEW

In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff. See Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005). "In order to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege a plausible set of facts sufficient 'to raise a right to relief above the speculative level.'" Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d Cir. 2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). This standard does not require "heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955.

The Supreme Court clarified the appropriate pleading standard in Ashcroft v. Iqbal, setting forth a two-pronged approach for courts deciding a motion to dismiss. 556 U.S. 662, 129 S. Ct. 1937 (2009). The Court instructed district courts to first "identify[ ] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." 129 S.Ct. at 1950. Though "legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. Second, if a complaint contains "well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id.

Where, as here, the plaintiff is proceeding pro se, "[c]ourts are obligated to construe the [plaintiff's] pleadings . . . liberally." McCluskey v. New York State Unified Ct. Sys., No. 10-CV-2144 (JFB)(ETB), 2010 WL 2558624, at *2 (E.D.N.Y. June 17, 2010) (citing Sealed Plaintiff v. Sealed Defendant, 537 F.3d 185, 191 (2d Cir. 2008)); McEachin v. McGuinnis, 357 F.3d 197, 200 (2d Cir. 2004)). A pro se plaintiff's complaint, while liberally interpreted, still must "'state a claim to relief that is plausible on its face.'" Mancuso v. Hynes, 379 Fed. App'x 60, 61 (2d Cir. 2010) (citing Iqbal, 129 S.Ct. at 1949); see also Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (applying Twombly and Iqbal to pro se complaint).

Claims concerning fraud are subject to heightened pleading standards. See Fed. R. Civ. P. 9(b) ("In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally."). "[I]n order to comply with Rule 9(b), 'the complaint must: (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were...