Cinelli v. Capital Res. Mgmt.

ANTHONY CINELLI, individually and on behalf of all others similarly situated, Plaintiff, v. CAPITAL RESOURCE MANAGEMENT, INC. Defendant.

18-cv-06128 (DLI) (RML)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

March 31, 2020

MEMORANDUM & ORDER

DORA L. IRIZARRY, United States District Judge:

Plaintiff Anthony Cinelli ("Plaintiff"), brings this putative class action against Defendant Capital Resource Management, Inc. ("Defendant"), alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA"). Defendant moved for an order granting judgment on the pleadings or, alternatively, summary judgment and for attorney's fees. Dkt. Entry No. 20. Plaintiff opposed. Dkt. Entry No. 25. Defendant replied. Dkt. Entry No. 27. For the reasons set forth below, Defendant's motion is treated as one for judgment on the pleadings, which is denied in its entirety as is the request for attorney's fees.

BACKGROUND

Unless otherwise noted, the following facts are drawn from the Complaint, and are presumed true for purposes of this decision. Plaintiff is a "consumer" as defined by § 1692a(3) of the FDCPA. Complaint ("Compl."), Dkt. Entry No. 1 ¶¶ 5-6. Defendant is a "debt collector" as defined by § 1692a(6) of the FDCPA. Compl. ¶¶ 7-9. On July 12, 2018, Defendant sent a debt collection letter to Plaintiff (the "Letter"). Id. ¶ 14. The Letter, which included a payment stub that could be used to remit payment to Defendant, stated "[f]or additional payment options, visit us at www.crmcollect.com" (the "Payment Portal"). Debt Collection Letter, Compl. Ex. 1. In order to use the Payment Portal to pay the debt by credit card, Plaintiff was required to agree to certain terms and conditions, including, "If I do dispute or chargeback this payment then I will be responsible for the actual fees, costs and penalties associated with my dispute or chargeback of this payment plus a $10.00 processing fee" (the "Processing Fee"). See, Affidavit of Laura J. Lowenstein dated April 1, 2019, Dkt. Entry No. 21 Ex. 6 ("Lowenstein Affidavit") ¶ 4.¹

Plaintiff alleges that the Processing Fee violates § 1692f of the FDCPA because the Processing Fee is not authorized by the agreement creating the debt or otherwise permitted by law. Compl. ¶¶ 23-27. Plaintiff further alleges that the Processing Fee violates § 1692e of the FDCPA because it is: (1) a false representation of the character, amount, or legal status of the debt; (2) a false representation of any services rendered or compensation that lawfully may be received by any debt collector for the collection of a debt; (3) a threat to take action that cannot be taken legally or that is not intended to be taken; and (4) a false representation or deceptive means to collect or attempt to collect any debt. Id. ¶ ¶ 30, 32, 34, 36.

LEGAL STANDARD

As an initial matter, the Court must determine whether to treat the instant motion as one for judgment on the pleadings or for summary judgment. "Federal courts have complete discretion to determine whether or not to accept the submission of any material beyond the pleadings offered in conjunction with a Rule 12(c) motion, and thus complete discretion in determining whether to convert the motion to one for summary judgment." Stephens v. Bayview Nursing & Rehab. Ctr., 2008 WL 728896, at *2 (E.D.N.Y. Mar. 17, 2008) (internal citations omitted); Carione v. United States, 368 F. Supp.2d 186, 191 (E.D.N.Y. 2005) (same). As discovery has not occurred yet inthis matter, the Court declines to consider material beyond the pleadings and convert Defendant's motion to one for summary judgment.

Under Rule 12(c) of the Federal Rules of Civil Procedure, "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). "Judgment on the pleadings is appropriate where material facts are undisputed and where a judgment on the merits is possible merely by considering the contents of the pleadings." Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639, 642 (2d Cir. 1988). In deciding a Rule 12(c) motion, "a court may consider only the complaint, any written instrument attached to the complaint as an exhibit, any statements or documents incorporated in it by reference, and any document upon which the complaint heavily relies." In re Thelen LLP, 736 F.3d 213, 219 (2d Cir. 2013). "A matter is deemed integral to the complaint when the complaint relies heavily upon its terms and effect." Palin v. New York Times Co., 940 F.3d 804, 811 (2d Cir. 2019) (quotation marks and citation omitted). "Typically, an integral matter is a contract, agreement, or other document essential to the litigation." Id. (citation omitted).

"The standard for granting a Rule 12(c) motion for judgment on the pleadings is identical to that of a Rule 12(b)(6) motion for failure to state a claim." Patel v. Contemporary Classics of Beverly Hills, 259 F.3d 123, 126 (2d Cir. 2001). To withstand such a motion, a complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) ). The Court assumes the truth of the facts alleged and draws all reasonable inferences in the nonmovant's favor. See, Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009). Although the complaint need not contain "'detailed factual allegations,'" simple "[t]hreadbarerecitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).

DISCUSSION

The FDCPA was enacted to "protect consumers from a host of unfair, harassing, and deceptive debt collection practices without imposing unnecessary restrictions on ethical debt collectors." S. Rep. No. 95-382 at 1696 (1977). "[B]ecause the FDCPA is primarily a consumer protection statute, we must construe its terms in liberal fashion to achieve the underlying Congressional purpose." Avila v. Riexinger & Associates, LLC, 817 F.3d 72, 75 (2d Cir. 2016) (internal citations and quotation marks omitted).

"In order to successfully state a claim under the FDCPA, (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, and (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." Morgan v. Northstar Location Servs. LLC, 2019 WL 3531461, at *3 (E.D.N.Y. Aug. 1, 2019) (citations omitted). Plaintiff plausibly has alleged that he is a "consumer," and Defendant is a "debt collector" within the meaning of the FDCPA, neither of which Defendant disputes. See, Compl. ¶¶ 5-9. Accordingly, the issue before the Court is whether Plaintiff plausibly has alleged that Defendant engaged in conduct violative of the FDCPA.

A. Section 1692f(1)

Section 1629f of the FDCPA provides, "[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1629f. Section 1629f(1) prohibits "[t]he collection of any amount (including any interest, fee, charge or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreementcreating the debt or permitted by law." Under the FDCPA, a debt collector "may impose a service charge if (i) the customer expressly agrees to the charge in the contract creating the debt or (ii) the charge is permitted by law." Tuttle v. Equifax Check, 190 F.3d 9, 13 (2d Cir. 1999) (citing 15 U.S.C. § 1692f(1).

Courts in this district have permitted § 1692f claims to go forward when a debt collector collects or attempts to collect processing or transaction fees that are not authorized by the agreement creating the debt or permitted by law. See, Campbell v. MBI Associates, Inc., 98 F. Supp.3d 568, 582-83 (E.D.N.Y. 2015) (granting plaintiff's summary judgment motion on a § 1692f claim where collection letter stated, "[t]here will be a $5.00 processing fee for all credit cards."); Quinteros v. MBI Associates, Inc., 999 F. Supp.2d 434, 439 (E.D.N.Y. 2014) (finding that plaintiff stated a § 1692f(1) claim where collection letter stated, "[t]here will be a $5.00 processing fee for all credit cards or checks over the phone."); Shami v. Nat'l Enter. Sys., 2010 WL 3824151, at *1 (E.D.N.Y. Sept. 23, 2010) ("Shami I") (denying motion to dismiss a § 1692f(1) claim where the collection letter stated, "[t]ransaction fees will be charged if you use the automated phone system or the internet to make payment on this account.").

Defendant advances two arguments as to why the Processing Fee does not violate § 1692f(1) of the FDCPA. First, Defendant argues that the language in the Payment Portal constituted a "new agreement" between Plaintiff and Defendant wherein Plaintiff agreed to pay a $10.00 fee only where Plaintiff: (i) made a payment by credit card via the Payment Portal; and (ii) subsequently sought to dispute or chargeback the payment. Def.'s Mem. of Law, Dkt. No. 23 at 5-7. Second, Defendant contends that the Complaint fails to allege that: (i) Plaintiff paid the debt through the Payment Portal; (ii) Plaintiff subsequently disputed or sought to chargeback the payment; or (iii) Defendant sought to collect the $10.00 fee from Plaintiff. Id.

Defendant's contention that the Processing Fee does not violate the FDCPA because the Payment Portal constituted a "new agreement" between Plaintiff and Defendant is unavailing. Section 1692f(1) prohibits "[t]he collection of any amount . . . unless such amount is expressly authorized by the agreement creating the debt or permitted by law." 15 U.S.C. § 1692f(1). By maintaining that the Processing Fee is part of a "new agreement" between Plaintiff and Defendant, Defendant effectively concedes that the Processing Fee is not authorized by the agreement creating the...