Ruffin v. Kirschenbaum & Phillips, P.C., 20-CV-05422 (PMH)

RONALD RUFFIN on behalf of himself and all others similarly situated, Plaintiff, v. KIRSCHENBAUM & PHILLIPS P.C., et al., Defendants.

No. 20-CV-05422 (PMH)

United States District Court, S.D. New York

March 9, 2022

MEMORANDUM OPINION AND ORDER

PHILIP M. HALPERN, United States District Judge.

Ronald Ruffin (“Plaintiff”) brings this putative class action against Kirschenbaum & Phillips P.C (“K&P”), LVNV Funding LLC (“LVNV”), Resurgent Capital Services, Limited Partnership (“Resurgent”) and Sherman Financial Group, LLC (“Sherman” and together with LVNV Resurgent, and Sherman, the “LVNV Defendants”) for violating the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., N.Y. General Business Law (“GBL”) § 349, and N.Y. Judiciary Law (“Jud. Law”) § 487. (See Doc. 33, “FAC”). K&P and the LVNV Defendants (collectively “Defendants”) move to dismiss the First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) or, alternatively, for summary judgment under Rule 56.

Defendants' joint motion is supported by attorney declarations, together with exhibits, and a memorandum of law. (Doc. 58; Doc. 59 “Marshall Decl.”; Doc. 60, “Scully Decl.”; Doc. 61, “Def. Br.”). Plaintiff's opposition consists of a brief (Doc. 61, “Pl. Opp.”) and declaration in opposition (Doc. 65, “Pl. Decl.”). The motion was fully briefed with the service of Defendants' attorney reply declaration (Doc. 63) and reply memorandum of law (Doc. 64, “Reply Br.”). All motion papers were filed on June 8, 2021.

For the reasons set forth below, Defendants' motion to dismiss is GRANTED IN PART and their motion for summary judgment is DENIED.

BACKGROUND

An Income Execution dated July 24, 2019, which was prepared and signed by K&P, was served on Plaintiff in September 2019 with a notice dated September 5, 2019, by the Westchester County Sheriff's Civil Unit. (FAC ¶¶ 39, 41, 44). Plaintiff alleges that the Income Execution stated that a judgment had been “duly entered” against him, and that it directed him to “satisfy the judgment with interest together with . . . fees and expenses.” (Id. ¶ 42). The Income Execution sought to enforce a $2, 858.32 default judgment entered against Plaintiff on December 12, 2007, concerning a 2005 state court action in the Supreme Court of New York, County of Westchester. (Id. ¶ 33). Plaintiff, however, contends that he was not served with the 2005 state court action that had been commenced by LVNV in 2005. (Id. ¶¶ 30, 32, 63).

Plaintiff alleges that LVNV had employed Solomon & Solomon, P.C., a law firm that is not a defendant in this action, who, through a process server company called American Legal Process (“ALP”), obtained the default judgment. Plaintiff alleges further that the basis for the default was a false affidavit of service signed by an ALP employee, Gene Gagliardi, and notarized by its owner, William Singler. (Id. ¶¶ 31, 34). K&P was later substituted as counsel for LVNV in the state court action (id. ¶ 38), and Plaintiff alleges that by then, K&P knew or should have known that the judgment obtained against him was based on a false affidavit because: (1) ALP is infamous for its systemic sewer service practice, which had resulted in default judgments in tens of thousands of New York state court collection actions (id. ¶¶ 35, 50); (2) ALP's owner, Singler, pled guilty to felony scheming to defraud in a suit brought by the State of New York against ALP and Singler based upon the sewer service scheme, which was widely reported in early 2010 (id. ¶¶ 36-37, 50); (3) K&P was named as a Respondent in an Erie County Supreme Court case concerning ALP's sewer service scheme, entitled In the Matter of the Petition of Honorable Ann Pfau, Chief Administrative Judge of the New York State Unified Court System v. Forster & Garbus, et al. (“Matter of Pfau”), and K&P entered into a Consent Order in that action (id. ¶ 46); (4) the submissions in Matter of Pfau included a chart showing that ALP process servers, including Gagliardi (the process server in Plaintiff's state court action), signed affidavits of service placing them at two or more locations simultaneously in thousands of instances (id. ¶¶ 47-48); and (5) the ALP scheme was highlighted in other court decisions in which K&P was counsel of record (id. ¶¶ 50-52).

Plaintiff alleges that although Defendants had or should have had knowledge of fraudulently prepared affidavits of service by ALP since at least 2010, they continue to enforce the collection actions relating to those judgments, have not performed independent investigations of the judgments obtained based on ALP's service, and continue to affirmatively assert the veracity of the ALP affidavits in the course of enforcing the default judgment. Indeed, “[w]hen faced with Orders to Show Cause regarding vacatur of judgments obtained by means of ALP judgments, K&P doubles down, knowingly misrepresenting the law and, without reference to the ALP Sewer Service Scheme or its knowledge of Singler's guilty plea, urging the Court to rely upon the affidavits of service that it has every reason to believe are perjured.” (Id. ¶ 72). On September 23, 2019, Plaintiff filed such an order to show cause in the state court action alleging that, inter alia, he had not been served, and K&P responded with such an affirmation on October 23, 2019. (Id. ¶¶ 53-60). On December 6, 2019, the state court judgment was vacated. (Id. ¶ 61). Plaintiff commenced this action on July 14, 2020.

STANDARD OF REVIEW

I. Federal Rule of Civil Procedure 12(b)(6)

A Rule 12(b)(6) motion enables a court to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “To survive a motion to dismiss, 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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556). The factual allegations pled “must be enough to raise a right to relief above the speculative level ....” Twombly, 550 U.S. at 555.

“When there are well-ple[d] factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. Thus, the Court must “take all well-ple[d] factual allegations as true, and all reasonable inferences are drawn and viewed in a light most favorable to the plaintiff[].” Leeds v Meltz, 85 F.3d 51, 53 (2d Cir. 1996). The presumption of truth, however, “‘is inapplicable to legal conclusions,' and ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.'” Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal, 556 U.S. at 678 (alteration in original)). Therefore, a plaintiff must provide “more than labels and conclusions” to show entitlement to relief. Twombly, 550 U.S. at 555. II. Federal Rule of Civil Procedure 56

Federal Rule of Civil Procedure 56 provides that “a party may file a motion for summary judgment at any time until 30 days after the close of all discovery.” Fed.R.Civ.P. 56(b). “Although summary judgment is generally not appropriate until after some discovery has occurred in a case, . . . a motion for summary judgment in lieu of an answer is appropriate where the facts are undisputed and no amount of discovery would change the outcome.” Smith v. United States Dep't of Just., No. 18-CV-03371, 2021 WL 2480412, at *3 (S.D.N.Y. June 17, 2021) (citing Green v. Harris, 309 F.Supp.3d 10, 12 (W.D.N.Y. 2018)); see also Anderson v. Rochester-Genesee Reg'l Transp. Auth., 337 F.3d 201, 202 (2d Cir. 2003) (procedurally proper to move for summary judgment in lieu of an answer); 5 Borough Pawn, LLC. v. Marti, 753 F.Supp.2d 186, 190 (S.D.N.Y. 2010) (same); Cover v. Am. Postal Workers Union, AFL-CIO, No. 05-CV-02430, 2006 WL 8441397, at *4 (S.D.N.Y. July 21, 2006) (same), aff'd, 357 Fed.Appx. 336 (2d Cir. 2009).

Rule 56 directs that a “court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A party moving for summary judgment must include with its motion for summary judgment a Statement of Facts, i.e., a “separate, short, and concise statement of the material facts to which the moving party contends there is no genuine issue to be tried.” Local Civ. R. 56.1(a).

III. Consideration of Documents

The Court, in deciding a Rule 12(b)(6) motion, “is entitled to consider facts alleged in the complaint and documents attached to it or incorporated in it by reference, documents ‘integral' to the complaint and relied upon in it and facts of which judicial notice may properly be taken under Rule 201 of the Federal Rules of Evidence.” Heckman v. Town of Hempstead, 568 Fed.Appx. 41, 43 (2d Cir. 2014); Manley v. Utzinger, No. 10-CV-02210, 2011 WL 2947008, at *1 n.1 (S.D.N.Y. July 21, 2011) (“The Court may consider . . . documents incorporated into the complaint by reference, and documents possessed by or known to the plaintiff and upon which plaintiff relied in bringing the suit.”). Still, even if a document is not incorporated into the complaint by reference, the Court may consider it “where the complaint ‘relies heavily upon its terms and...