Somerset v. Stephen Einstein & Assocs., P.C.

351 F.Supp.3d 201

Julie SOMERSET, Individually and on Behalf of All Others Similarly Situated, Plaintiff,

v.STEPHEN EINSTEIN & ASSOCIATES, P.C. and Stephen Einstein, Defendants.

2:17-cv-07539 (ADS)(ARL)

United States District Court, E.D. New York.

Signed January 4, 2019

Bromberg Law Office, P.C. Attorneys for the Plaintiff, 26 Broadway, 21st floor, New York, NY 10004, By: Brian L. Bromberg, Esq., Of Counsel.

The Law Office of Joseph Mauro, LLC, Attorneys for the Plaintiff, 306 McCall Avenue, West Islip, NY 11795, By: Joseph Mauro, Esq., Of Counsel.

Wilson Elser, Attorneys for the Defendants, 150 East 42nd Street, New York, NY 10017, By: Joseph L Francouer, Esq., Of Counsel.

Stephen Einstein & Associates, Attorneys for the Defendants, 39 Broadway, Suite 1250, New York, NY 10006, By: Anthony Scott Poulin, Esq., Of Counsel.

Blank Rome LLP, Attorneys for the Defendants, 405 Lexington Avenue, New York, NY 10174, By: Hilary Felice Korman, Esq., Scott Evan Wortman, Esq., Of Counsel.

MEMORANDUM OF DECISION & ORDER

ARTHUR D. SPATT, United States District Judge

The plaintiff Julie Somerset (the "Plaintiff") initiated this putative class action against Stephen Einstein & Associates, P.C. ("Einstein, P.C.") and Stephen Einstein ("Einstein") (collectively, the "Defendants") for damages stemming from alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C., 1692 et seq . ("FDCPA").

Presently before the Court is a motion by the Defendants, pursuant to Federal Rule of Civil Procedure ("FED. R. CIV. P." or "Rule") 12(b)(6) to dismiss the complaint, and a motion by the Plaintiff to amend the complaint. The Defendants had adequate notice and time to respond to the proposed amended complaint (the "Amended Complaint"), and thus the Court will consider the motion to dismiss in light of the new allegations in the Amended Complaint. See Eskenazi-McGibney v. Connetquot Cent. Sch. Dist. , 84 F.Supp.3d 221, 226 (E.D.N.Y. 2015) (Spatt, J.) ("Here, as the Defendants had sufficient opportunity to respond to the proposed amended complaint, the merits of the Defendants' motions to dismiss will be considered in light of the amended complaint."); Schwartzco Enterprises LLC v. TMH Mgmt., LLC , 60 F.Supp.3d 331, 338 (E.D.N.Y. 2014) (Spatt, J.) ("Where, as here, the Plaintiff seek[s] to amend his complaint while a motion to dismiss is pending, a court has a variety of ways in which it may deal with the pending motion to dismiss, from denying the motion to dismiss as moot to considering the merits of the motion in light of the amended complaint.").

Accordingly, the outcome of the Plaintiff's motion to amend turns on the Amended Complaint's ability to survive the Defendants' motion to dismiss. See Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals , 282 F.3d 83, 88 (2d Cir. 2002) (noting that "[a]n amendment to a pleading will be futile if a proposed claim could not withstand a motion pursuant to Rule 12(b)(6)"); Lopez-Serrano v. Rockmore , 132 F.Supp.3d 390, 399 (E.D.N.Y. 2015) (Spatt, J.) ("If the PSAC cannot survive the motion to dismiss, then the Plaintiff's cross-motion to amend will be denied as futile.").

For the following reasons, the Court denies the Defendants' motion to dismiss and grants the Plaintiff's motion to amend.

I. BACKGROUND

Unless otherwise stated, the following facts are drawn from the Amended Complaint, and construed in a light most favorable to the Plaintiff.

A. THE RELEVANT FACTS

The Plaintiff is a citizen of the State of New York from whom the Defendants attempted to collect a consumer debt allegedly owed by the Plaintiff. ECF 14-2 ¶ 2. Einstein, P.C. is a professional corporation doing business in New York State, whose principal purpose is the collection of debts using the mail and telephone. Id. ¶ 3. Einstein is an attorney and principal of Einstein P.C. Id. ¶ 4.

On or about January 10, 2017, the Defendants drafted and mailed an "Income Execution" directed to the Plaintiff's employer and forwarded to the Plaintiff. Id. ¶ 9. The Plaintiff alleges that she received said Income Execution, and that the Income Execution was the first and only communication received by the Plaintiff from the Defendants. Id. ¶¶ 10–11. The Amended Complaint alleges that the Income Execution lacks the language required by FDCPA Sections 1692e(11) and 15 USC 1692g(a). Id. ¶¶ 12–13.

In addition, the Amended Complaint claims that the Income Execution falsely indicated that there was a valid judgement against the Plaintiff from a company called Rushmore Recoveries X, LLC. Id. ¶ 14. In particular, the Income Execution sought to enforce a $1,219.61 default judgment issued by the New York State District Court for the County of Suffolk on September 16, 2005. ECF 21, Ex. B. The Plaintiff alleges that this judgment is invalid, because the Defendants obtained it without serving her. Id. ¶¶ 14–17. According to the Plaintiff, the Defendants employed the law firm of Mel S. Harris and Associates, who, through a process server company called SamServe, obtained the default judgment pursuant to a false affidavit of service signed by a SamServ employee. Id. ¶¶ 17–22. The Plaintiff also claims that no attorney meaningfully reviewed the Income Execution prior to serving it, and that the Defendants knew or should have known that the service obtained by SamServe was invalid. Id. ¶ 24.

On May 24, 2016, the United States District Court for the Southern District of New York approved a class action settlement vacating more than 200,000 default judgments obtained by the Mel Harris Firm and SamServe. Sykes v. Mel Harris & Assocs., LLC , 2016 WL 3030156, 2016 U.S. Dist. LEXIS 74566 (S.D.N.Y. May 24, 2016). The Plaintiff alleges that the Defendants were aware of the Sykes case, but chose to actively pursue a default judgment emanating from the Mel Harris/SamServ operation. ECF 14-2 ¶ 19.

B. THE PROCEDURAL BACKGROUND

On December 27, 2017, the Plaintiff commenced this action against the Defendants alleging violations of FDCPA Sections 1692e, 1692e(3), 1692e(10), 1692e(11), 1692f(1), 1692f(6)(A), 1692g(a). ECF 1. The Plaintiff seeks to bring the action on behalf of herself and a class consisting of all consumers residing in the State of New York who, according to the Defendants' records received an income execution materially identical or substantially similar to the one she received. ECF 14-2 ¶ 26.

On March 26, 2018, the Defendants moved to dismiss the Complaint for failure to state a claim upon which relief may be granted. ECF 10.

On April 19, 2018, the Plaintiff filed a motion to vacate the September 16, 2005 default judgment against her in the New York State District Court of the County of Suffolk. ECF 21, Ex. B.

On April 20, 2018, the Plaintiff opposed the motion to dismiss and filed a motion seeking leave to amend the Complaint. ECF 14; ECF 15. The proposed Amended Complaint withdrew the Plaintiff's claims under GBL § 349.

On May 4, 2018, the Defendants filed a reply in support of their motion to dismiss. ECF 20. The Defendants limited their opposition to the Plaintiff's motion to amend to the argument that any such amendment would be futile. Id. at 1.

On May 30, 2018, the Plaintiff submitted a letter motion informing the Court that the New York State District Court of the County of Suffolk vacated the default judgment against her. ECF 21.

II. DISCUSSION

A. THE LEGAL STANDARD

It is well-established that a complaint should be dismissed under Fed.R.Civ.P. 12(b)(6) only if it does not contain enough allegations of fact to state a claim for relief that is "plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). Indeed, the issue on a motion to dismiss is "not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Todd v. Exxon Corp. , 275 F.3d 191, 198 (2d Cir.2001) (quoting Scheuer v. Rhodes , 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ). " ‘Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.’ " Harris v. Mills , 572 F.3d 66, 72 (2d Cir.2009) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 1949–50, 173 L.Ed.2d 868 (2009) ).

In deciding a motion to dismiss, the Court must accept the material facts alleged in the complaint as true and draw all reasonable inferences in the Plaintiff's favor. Ashcroft , 129 S.Ct. 1937 at 1949–50 ; Zinermon v. Burch , 494 U.S. 113, 118, 110 S.Ct. 975, 979, 108 L.Ed.2d 100 (1990) ; In re NYSE Specialists Secs. Litig. , 503 F.3d 89, 91 (2d Cir.2007). However, "that ‘tenet’ ‘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 , 572 F.3d at 72 (quoting Iqbal , 129 S.Ct. at 1949 ). As such, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and ... determine whether they plausibly give rise to an entitlement of relief." Iqbal , 129 S.Ct. at 1950. Only if this Court is satisfied that "the complaint cannot state any set of facts that would entitle the plaintiff to relief will it grant dismissal pursuant to Rule 12(b)(6)." Hertz Corp. v. City of N.Y. , 1 F.3d 121, 125 (2d Cir.1993).

B. AS TO THE PLAINTIFF'S ARTICLE III STANDING.

The Defendants argue that the Plaintiff lacks the requisite Article III standing to pursue a claim, because the Amended Complaint contains no allegations of injury of fact beyond a mere violation of the FDCPA. The Defendants rely on Spokeo, Inc. v. Robins , in which the Supreme Court held that "plaintiffs cannot satisfy the demands of Article III by alleging a bare procedural violation" of a statute absent an allegation of some concrete harm. ––– U.S. ––––, 136 S.Ct. 1540, 1550, 194 L.Ed.2d 635 (2016). The Court has previously addressed and rejected this exact argument. See Balke v. All....