Diaz v. Portfolio Recovery Assocs., LLC

Full title: MICHAEL DIAZ, Plaintiff, v. PORTFOLIO RECOVERY ASSOCIATES, LLC, et al.…

Court: UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

Date published: Feb 28, 2012

10 CV 3920 (ERK) (E.D.N.Y. Feb. 28, 2012)

Opinion

10 CV 3920 (ERK)

02-28-2012

MICHAEL DIAZ, Plaintiff, v. PORTFOLIO RECOVERY ASSOCIATES, LLC, et al., Defendants.

Cheryl L. Pollak United States Magistrate Judge Eastern District of New York

REPORT AND RECOMMENDATION

On August 25, 2010, plaintiff Michael Diaz commenced this action under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), the New York General Business Law § 349, and the New York Judiciary Law § 487, alleging that defendants Malen & Associates (the "Malen Firm") and Portfolio Recovery Associates, LLC ("PRA") intentionally brought a time-barred action to recover a debt in Kings County Civil Court (the "State Action"). (Am. Compl.¹ ¶ 22). Plaintiff alleges that the filing of this State Action was part of a policy and practice to intentionally file time-barred claims, "knowing that the vast majority of claims filed will result in default judgments or will be contested by unsophisticated pro-se consumers." (Id.)

1 Citations to "Am. Compl." refer to the plaintiff's First Amended Complaint, filed September 17, 2010.

By Notice of Motion dated November 24, 2010, the Malen Firm moves to dismiss the Complaint on the grounds that the plaintiff's limitations argument relies on a decision issued by the New York Court of Appeals that was decided six months after the State Action was filed. Defendant argues that the decision dramatically changed the state of the law and therefore should not be retroactively applied. On September 27, 2011, the district court referred the Malen Firm's motion to dismiss to the undersigned to prepare a Report and Recommendation.

FACTUAL BACKGROUND

According to the Complaint, plaintiff Diaz is a resident of Brooklyn, N.Y., and a consumer as defined by the FDCPA, 15 U.S.C. § 1692a(3). (Am. Compl. ¶¶ 6-7). Defendant, the Malen Firm, is a law firm located in Westbury, N.Y., engaged in the debt collection business, as defined by the FDCPA, 15 U.S.C. § 1692a(6). (Id. ¶¶ 8, 10). Defendant PRA is a New Hampshire corporation, with its principal place of business in Norfolk, Va. (Id. ¶ 12). Plaintiff alleges that PRA buys purportedly past due or defaulted-upon consumer debts from banks, credit card companies, and other debt buyers and then attempts to collect those debts itself or through an agent. (Id. ¶ 11). Plaintiff alleges that PRA is a debt collector as defined by the FDCPA. (Id. ¶ 14).

On November 27, 2009, PRA, represented by the Malen Firm, filed an action in Kings County Civil Court, seeking to recover from plaintiff a debt owed on a Providian credit card account in the amount of $5,394.42, including pre-judgment interest. See Portfolio Recovery Assocs. LLC v. Diaz, Index No. 124815-CV-09. (Am. Compl. ¶¶ 15, 16). In the State Action, defendants asserted that the Providian account had been assigned to PRA for collection, that a default had occurred, and statutory interest of 9% had begun to accrue "on or about 12/30/05." (Id. ¶ 17).

In the State Action, plaintiff, appearing pro se, filed an Answer on May 11, 2010, even though he had not been properly served. (Id. ¶ 32). Thereafter, he obtained counsel, who amended the Answer, seeking to dismiss the complaint on the grounds that: (1) PRA had failed to obtain jurisdiction over Diaz; (2) Diaz did not owe any money to PRA; and (3) pursuant to New York's Civil Practice Law & Rules ("CPLR") § 202, the complaint was time-barred on its face. (Id. ¶ 34). On January 17, 2010, the State Action was dismissed with prejudice pursuant to a Stipulation of Discontinuance. (Id. ¶ 35).

Plaintiff then filed this action, asserting claims under the FDCPA, including: (1) violations of Sections 1692e, 1692e(2), 1692e(5), 1692e(10), 1692f, and 1692f(1), for attempting to collect a time barred debt; (2) violations of Sections 1692e, 1692e(5), 1692e(10), and 1692f, by filing a deceptive and misleading complaint in that it was signed by an attorney who had not conducted a meaningful review; (3) violations of Sections 1692e, 1692e(8), 1692e(10), 1692f, for reporting incorrect information to Experian, TransUnion and others regarding Mr. Diaz's account; and (4) violations of Sections 1692e, 1692e(2), 1692e(5), 1692e(10), 1692f, and 1692f(1), for taking legal action against Mr. Diaz when it knew or should have known that there was no factual basis for its action. (Id. ¶ 42). Plaintiff also alleges violations of the New York General Business Law § 349, for deceptive acts and practices (id. ¶¶ 48-53), and claims against the Malen Firm under Judiciary Law § 487, for perpetrating a deceit and making false representations before the court in the State Action. (Id. ¶¶ 54-62).

The essence of plaintiff's federal case is that defendants have a policy and practice of intentionally filing time-barred claims because they know that "the vast majority" of these claims will result in default judgments or will be contested by unsophisticated pro se consumers who are unaware of CPLR § 202 and its impact on the statute of limitations. (Id. ¶ 22). Plaintiff alleges that defendants intentionally filed the State Action knowing that it was time-barred. (Id.) Specifically, plaintiff claims that the statute of limitations that applied to an action to recoup based on his debt was that of New Hampshire where the original creditor - Providian - is incorporated and headquartered. (Id. ¶ 19). Since New Hampshire has a three-year statute of limitations for breach of contract and account stated claims, PRA's complaint against Mr. Diaz would have to have been filed on or before December 30, 2008 in order for it to be timely in accordance with CPLR § 202. (Id. ¶¶ 20, 21). Since the State Action was not filed until November 17, 2009, plaintiff argues that the State Action was "clearly and unambiguously" time-barred as of the date it was filed. (Id. ¶¶ 15, 18).

According to plaintiff's Complaint, the Malen Firm commenced approximately 10,904 consumer collection actions in New York City's Civil Courts in 2009 alone. (Id. ¶ 24). Plaintiff alleges that Jeffrey Walstein, Esq., of the Malen Firm, who signed all of the pleadings in the State Action, signed more than one-third (1/3) of the 10,904 complaints filed by the Malen Firm in 2009. (Id. ¶ 26). Plaintiff further alleges that the Malen Firm has filed approximately 2,000 additional such complaints in courts throughout New York State and that Mr. Walstein is responsible for signing more than one-third of those complaints as well. (Id. ¶¶ 27, 28).

Plaintiff alleges that Mr. Walstein did not conduct a meaningful review of the complaint and its factual allegations in the State Action prior to its filing, and that this failure to review is "part of the business plan developed by Defendants, who have found that meaningful pre-filing review is not as profitable as submissions of pleadings without review, in light of the fact that the overwhelming majority of consumer collection actions are won on default or against unsophisticated pro se litigants who are, as a practical matter, incapable of meaningfully challenging even the most deficient, boilerplate consumer collection pleading." (Id. ¶ 31).²

2 The Complaint alleges that in addition to failing to properly review the pleadings, one or both of the defendants provided false information to TransUnion and Experian regarding the debt. (Id. ¶¶ 36, 37). However, it appears that plaintiff has withdrawn this credit reporting claim and therefore, the Court has not addressed it herein. (Pl.'s Mem. at 16 n.9).

The Malen Firm moves to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, on the grounds that plaintiff has failed to adequately allege specific facts necessary to state a plausible claim. (Def.'s Mem.³ at 3-4).

3 Citations to "Def.'s Mem." refer to defendant's Memorandum of Law in Support of the Defendant's Motion to Dismiss the Complaint, filed on November 24, 2010.

DISCUSSION

A. Legal Standard; Motion to Dismiss For Failure to State a Claim

When deciding a motion to dismiss a complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), the Second Circuit has stated that a court must "accept as true the factual allegations of the complaint, and draw all inferences in favor of the pleader." Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993); see also Gorman v. Consol. Edison Corp., 488 F.3d 586, 591-92 (2d Cir. 2007). In addition, the court must give plaintiff's claims "a liberal construction." Johnson v. New York City Transit Auth., 639 F. Supp. 887, 891 (E.D.N.Y. 1986) (citing Haines v. Kerner, 404 U.S. 519, 520-21 (1972)), aff'd in part and vacated in part on other grounds, 823 F.2d 31 (2d Cir. 1987). However, the court is not required to accept the truth of legal conclusions couched as factual allegations. See Papasan v. Aliain, 478 U.S. 265, 286 (1986).

In Bell Atlantic Corporation v. Twombly and Ashcroft v. Iqbal, the Supreme Court clarified the pleading standards under which courts are to evaluate a motion to dismiss, "arguably shift[ing] pleading standards from 'simple notice pleading' to a 'more heightened form of pleading.'" Barbosa v. Continuum Health Partners, Inc., 716 F. Supp. 2d 210, 214 (S.D.N.Y. 2010) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)).

Now, when deciding a Rule 12(b)(6) motion to dismiss, the court should consider whether the complaint "contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. at 1940 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. at 1949; see also Hayden v. Paterson, 594 F.3d 150, 160-61 (2d Cir. 2010). Under this heightened pleading standard, labels, conclusions, and mere recitation of the elements of a cause of action will not suffice. Ashcroft v. Iqbal, 129 S. Ct. at 1950; see also Bell Atl. Corp. v. Twombly, 550 U.S. at 545. Instead, a plaintiff must provide enough factual support that, if true, would "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. at 555. However, "plausibility" does not rise to the level of probability but requires "'more than a sheer possibility that a defendant has acted unlawfully.'" Barbosa v. Continuum Health Partners, Inc., 716 F. Supp. 2d at 215 (quoting Ashcroft v. Iqbal, 129 S. Ct. at 1949). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see also Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995), cert. denied, 519 U.S. 808 (1996). Ultimately, when the well-pleaded facts allow no more than an inference of a "mere possibility of misconduct" and plaintiff has only alleged, rather than shown, an entitlement to relief, the federal pleading standard of Rule 8(a)(2) has not been satisfied. Ashcroft v. Iqbal, 129 S. Ct. at 1950. B. Portfolio Recovery Associates, LLC v. King

In moving to dismiss plaintiff's action, defendant argues that all of plaintiff's claims depend on one question⁴ - namely, whether Section 202 of the CPLR applied to the collection of a consumer debt from a New York resident prior to the decision of the Court of Appeals in Portfolio Recovery Assocs., LLC v. King, 14 N.Y.3d 410, 927 N.E.2d 1059, 901 N.Y.S.2d 575 (2010). In King, the Court of Appeals held that CPLR § 202 required creditors or third-party debt collectors to comply with the statute of limitations of the state where the cause of action accrued and the economic injury occurred. Id. at 417, 927 N.E.2d at 1062, 901 N.Y.S.2d at 578. Defendant argues that prior to this decision in King, New York courts "universally" held that credit card collection matters were subject to New York's six-year statute of limitations. (Def.'s Mem. at 5 (citing Mfrs. & Traders Trust Co. v. Lindauer, 135 Misc. 2d 132, 144-45, 513 N.Y.S.2d 629 (Sup. Ct. Mar. 13, 1987); First National City Bank v. Cervera, 43 Misc. 2d 843, 845-46, 252 N.Y.S.2d 537 (Sup. Ct. Aug. 28, 1964))); see also Portfolio Recovery Servs., LLC v. Fiori, Index No. C60427 (N.Y. City Ct. Nov. 7, 2005) (attached as Ex. B to Def.'s Mem.); Portfolio Recovery Servs., LLC v. Tabin, Index No. 05-1028 (N.Y. Sup. Ct. July 14, 2006) (attached as Ex. C to Def.'s Mem.); Portfolio Recovery Servs., LLC v. Avalone, Index No. 5334/06 (N.Y. Sup. Ct. Oct. 18, 2006) (attached as Ex. D to Def.'s Mem.).

4 In the first section of its brief, defendant argues that plaintiff's claim under the FDCPA should be dismissed because defendant complied with the requirements of 15 U.S.C. § 1692i in properly bringing the action in the jurisdiction where "such consumer resides at the commencement of the action." 15 U.S.C. § 1692i(a)(2)(B). (See Def.'s Mem. at 4-5). As plaintiff points out, his claim here is not based on defendant's decision to file the action in New York; it is based on the fact that the action was time barred under CPLR § 202. (Pl.'s Mem. at 5). Accordingly, the Court sees no need to address this argument further.

Defendant argues that King "changed the applicability of" the law when it held that Section 202 applies to actions brought by creditors or debt buyers where the original creditor's state has a shorter limitations period than New York's six-year statute of limitations. (Def.'s Mem. at 7). Although defendant concedes that the "Court of Appeals stated that it was not changing the law" (id.), defendant nonetheless urges this Court to decline to apply the King holding retroactively. (Id. at 8). Defendant argues that "taking into account that there were 241,195 debt collection lawsuits filed in New York in 2009, approximately 66% of those cases resulted in default and 99% of the [debtors] were not represented by counsel, . . . it is easy to see that the effect [of applying King] would be catastrophic to the industry, in particular to collection law firms similar to the defendant" who "relied on the state of the law at the time the State Action was filed. . . ." (Id. at 10).

In response, plaintiff raises a number of arguments: (1) the court's analysis in King relies on existing precedent; (2) there is no ambiguity in the statute nor any basis for finding a "debt buyer" exemption; (3) there is no authority for concluding that Section 202 was ever limited to commercial transactions as defendant argues; and (4) the Committees who subsequently addressed the King decision, contrary to defendant's arguments, did not conclude that King had varied from existing precedent. C. Analysis

1. Statutory Language

In analyzing the issues, the Court looks first to the statutory language of CPLR § 202. Section 202, New York's "borrowing statute" provides:

An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.

CPLR § 202, As plaintiff notes, the text of Section 202 has not changed since 1963, and nothing in the statutory language suggests that this provision was intended to be limited to "commercial transactions," or not apply to actions such as this one where an attempt is made to collect a debt. (See Pl.'s Mem.⁵ at 8, 11). Indeed, cases prior to King have applied this provision in suits that have not involved commercial transactions. See, e.g., Antone v. General Motors Corp., Buick Motor Div., 64 N.Y.2d 20, 27-28, 473 N.E.2d 742, 484 N.Y.S.2d 514 (1984) (applying CPLR § 202 in a products liability case involving a defective vehicle). Similarly, to the extent that defendant premises its argument that "matters of procedure are governed by the laws of the state of New York" on cases involving contractual choice of law clauses (Def.'s Mem. at 6 (citing Sears , Roebuck & Co. v. Enco Assoc., 43 N.Y.2d 389, 372 N.E.2d 555, 401 N.Y.S.2d 767 (1977), and Seghers v. Olympia Capital, 2009 N.Y. Slip. Op. 3257OU, 2009 Misc. LEXIS 5051 (Sup. Ct. Nov. 4, 2009))), there is nothing in the statute that mentions contractual choice of law provisions. Nor does defendant cite any case authority for the proposition that Section 202 was intended to be specific to contract claims. See Antone v. General Motors Corp. v. Buick Motor Div., 64 N.Y.2d at 28, 473 N.E.2d at 743, 484 N.Y.S.2d at 517 (applying and analyzing Section 202 in products liability action); see also Prefabco, Inc. v. Olin Corp., 71 A.D.2d 587, 588, 418 N.Y.S.2d 432, 433 (1st Dep't 1979) (applying Section 202 in action for fraud); Naftalis v. Cooper, No. 101776/05, 2006 WL 684383, at *2 (Sup. Ct. Jan. 10, 2006) (applying Section 202 to defendant's legal malpractice counterclaim); Lerman v. Lerman, 106 Misc. 2d 198, 203, 431 N.Y.S.2d 253, 256 (Sup. Ct. 1980) (analyzing Section 202 in conversion case).

5 Citations to "Pl.'s Mem." refer to the Memorandum of Law in Opposition to Defendant Malen & Associates, P.C.'s Motion to Dismiss, filed January 7, 2011.

Apart from the straightforward language of Section 202, the Court of Appeals' analysis in King makes it clear that the Court was not stating a new rule of law or clarifying any ambiguity in the statute. In analyzing the statute of limitations question, the Court began by reviewing the language of Section 202 and stating: "Therefore, '[w]hen a nonresident sues on a cause of action accruing outside New York, CPLR § 202 requires the cause of action to be timely under the limitations periods of both New York and the jurisdiction where the cause of action accrued'. . . . If the claimed injury is an economic one, the cause of action accrues 'where the plaintiff resides and sustains the economic impact of the loss.'" Portfolio Recovery Assocs., LLC v. King, 14 N.Y.3d at 416, 927 N.E.2d at 1061, 901 N.Y.S.2d at 577 (quoting Global Fin. Corp. v. Triarc Corp., 93 N.Y.2d 525, 528, 529 (1999)). The Court then ascertained that the contract causes of action in King accrued in Delaware where the original creditor - Discover, which was incorporated in Delaware and is not a resident of New York - had sustained economic injury. Noting that "Portfolio, as the assignee of Discover, is not entitled to stand in a better position than that of its assignor," the Court held that "the borrowing statute applies and the Delaware three-years statute of limitations governs." King, 14 N.Y.3d at 416, 927 N.E.2d at 1061, 901 N.Y.S.2d at 577.

The Court then examined Delaware's tolling statute to see if, under Delaware law, Portfolio would have been allowed additional time to bring the claims. Id. at 416, 927 N.E.2d at 1061, 901 N.Y.S.2d at 577. Holding that under Delaware law, Delaware's tolling provision would only apply when the defendant debtor had a prior connection with Delaware, the Court in King concluded that Delaware's tolling provision did not extend the three-year statute of limitations and therefore, the case should have been commenced within that three-year period. Id. at 417, 927 N.E.2d at 1062, 901 N.Y.S.2d at 578. The Court concluded: "[b]ecause the contract claims were not brought until 2005, they are time-barred in Delaware, where the causes of action accrued, and therefore they are likewise time-barred in New York upon application of the borrowing statute." Id. The Court explicitly stated that its holding was "consistent with one of the key policies underlying CPLR 202, namely, to prevent forum shopping by nonresidents attempting to take advantage of a more favorable statute of limitations in this state." Id. at 418, 927 N.E.2d at 1062, 901 N.Y.S.2d at 578 (emphasis added) (citing Antone v. General Motors Corp. Buick Motor Div., 64 N.Y.2d at 27-28, 473 N.E.2d at 745, 484 N.Y.S.2d at 517). Notably absent from the Court's discussion is any mention of contrary precedent that the Court was overturning or any ambiguity or conflicting interpretations for which the Court was announcing a new principle of law.⁶

6 Defendant argues that because matters of procedure are governed by the law of the forum and since statutes of limitation are generally considered matters of procedure, see Tanges v. Heidelberg No. Am. Inc., 93 N.Y.2d 48, 54, 710 N.E.2d 250, 687 N.Y.S.2d 604 (1999); Sanchex v. DeHemandez v. Bank of Nova Scotia, No. 601518/06, 2008 N.Y. Slip. Op. 32689U, 2008 N.Y. Misc. LEXIS 10263 (Sup. Ct. Sept. 8, 2008), defendant cannot be faulted for relying on New York's six-year limitations period as the appropriate law of the forum. (Def.'s Mem. at 6, 8). However, since CPLR § 202 is also the law of the forum and deals directly with the applicable statute of limitations in cases such as this, it is unclear to the Court why defendant felt justified in following one provision while ignoring the other.

2. Retroactivity of King

Defendant argues that the King decision changed the applicability of Section 202 and that this interpretation was not the state of the law in 2009 when the State Action was filed. (Def.'s Mem. at 7). Defendant argues that because the universally-accepted understanding of the law in New York at the time of the State Action applied the six-year statute of limitations, this Court should not retroactively apply King to permit plaintiff to pursue his claims against the defendant, (Id. at 5, 9-10). In urging this position on the Court, defendant relies on case law interpreting the retroactive effects of changes in procedural statutes. (See id. at 8-9 (citing cases)). Arguing that the Court should analyze the King decision under the principles of Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), defendant contends that the King decision "changed the way procedural questions involving how the statute of limitations in New York for consumer transactions versus a foreign jurisdiction is decided;" and that a balancing of the remedial and deterrent purposes of the rule leads to the conclusion that the effect of retroactive application would "be catastrophic in the industry, in particular, to collection law firms similar to the defendant." (Def.'s Mem. at 9- 10).

Here, defendant fails not only to meet the threshold requirement set forth in Chevron - namely, that King enunciated a new principle of law - but defendant also fails to satisfy the balancing test of Chevron. In Grossman v. Texas Commerce Bancshares Inc., No. 87 Civ. 6295, 1993 U.S. Dist LEXIS 18073 (S.D.N.Y. Dec. 22, 1993), the court analyzed Chevron, explaining that "'first the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution is not clearly foreshadowed.'" Id. at *13 (quoting Chevron Oil Co. v. Huson, 404 U.S. at 106). As noted, the statutory language of Section 202 does not support defendant's claim of a "debt buyer exemption" to the borrowing statute. Further, the Court of Appeals in King cited its own precedent in holding that the Appellate Division should have applied Section 202 to plaintiff's claims. See Portfolio Recovery Assocs., LLC v. King, 14 N.Y.3d at 416, 927 N.E.2d at 1061, 901 N.Y.S.2d at 577 (citing Global Fin. Corp. v. Triarc Corp., 93 N.Y.2d 525, 528 (1999)). In King, the Court of Appeals also cited to another case in which it previously applied Section 202 to a products liability case - a non-commercial dispute. See id. at 418, 927 N.E.2d at 1062, 901 N.Y.S.2d at 578 (emphasis added) (citing Antone v. General Motors Corp. Buick Motor Div., 64 N.Y.2d 20, 27-28 (1984)). The Court of Appeals did not suggest that it was in any way overruling established precedent or enunciating a new interpretation of the law.

The New York Court of Appeals has made it clear that in determining whether a judicial holding should be considered a "new" rule, "retroactivity should not be in question when a court's ruling merely applies previously established principles in a new factual setting or settles a question in a manner that was clearly foreshadowed." People v. Favor, 82 N.Y.2d 254, 263 (1993). "[A] judicial holding overruling established precedent should, in most instances, be considered a 'new' rule." Id. at 263. "Similarly, a 'new' rule may be created when there has been such a sharp break in the continuity of law that its impact will 'wreak more havoc in society than society's interest in stability will tolerate.'" Id. However, "[a] judicial decision construing the words of a statute [for the first time] does not constitute the creation of a new legal principle." Id.; see also Ramirez v. Mansions Catering, Inc., 74 A.D.3d 490, 905 N.Y.S.2d 148 (1st Dep't 2010); Americorp Sec., Inc. v. Sager, 239 A.D.2d 115, 656 N.Y.S.2d 762 (1st Dep't 1993).

Defendant cites a number of cases in support of its assertion that, prior to King, courts "universally" held that New York's six-year statute of limitations applied in collection actions brought in New York courts. In reviewing the cases cited by defendant, the Court notes that three of these opinions are unpublished and two involve pro se defendants, who do not appear to have raised the applicability of Section 202. (See Def.'s Mem. at 5-6 (citing Portfolio Recovery Serv's. Inc. v. Fiori, No. C60427 (City Ct. Nov. 7, 2005) (in case involving pro se defendant, the court, without any mention of CPLR Section 202, simply states that the statute of limitations is six years); Portfolio Recovery Assocs., LLC v. Tabin, No. 05-1028 (Sup. Ct. July 27, 2006) (in case involving pro se defendant, the court, without mention of CPLR Section 202, assumes that the statute of limitations was six years under CPLR § 213)); see also Portfolio Recovery Assocs. v. Avalone, No. 5334/06, (Sup. Ct. Westchester Cty Oct. 13, 2006) (stating that the six-year statute applied, without discussion of Section 202) (attached as Exs. B, C, D to Def.'s Mem.)).

Even the published decisions relied upon by defendant for the proposition that the six-year statute of limitations was "universally" followed in credit card collection cases fail to analyze or even consider the applicability of Section 202. See, e.g., Manufacturers & Traders Trust Co. v. Lindauer, 135 Misc. 2d 132, 144-45, 513 N.Y.S.2d 629 (Sup. Ct. Mar. 13, 1987); First Nat'l City Bank v. Cervera, 43 Misc. 2d 843, 845-46, 252 N.Y.S.2d 537 (Sup. Ct. Aug, 28, 1964), Indeed, none of the cases cited by defendant in support of its position make any reference to Section 202; they simply recite the six-year statute for breach of contract cases in New York. Thus, rather than being "clear past precedent," all these cases demonstrate is that the debt collectors, in the absence of vigorous advocacy, urged application of the New York statute of limitations applicable to contract claims without reference to the borrowing statute at all. Until the issue was raised before the lower court in King, it does not appear that the cases relied upon by defendants even considered Section 202.⁷

7 The Court is not persuaded by defendant's reliance on a comment by the Consumer Affairs and Civil Court Committees of the New York City Bar, to the effect that "as a result" of King, the limitations period in certain cases is three years, not six, particularly in light of the fact that the two Committees filed amicus briefs in King, noting the failure of the Third Department and the defendant to consider CPLR Section 202.

In determining whether a new rule should be applied retroactively, "[i]f the advocate of non-retroactivity clears the first obstacle, the court must proceed to the balancing test called for by the second and third factors." Grossman v. Texas Commerce Bancshares Inc., 1993 U.S. Dist. LEXIS 18073, at *14. The second factor requires the Court to "weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation." Chevron Oil Co. v. Huson, 404 U.S. at 106-107 (internal citations omitted). The third factor weighs "the inequity imposed by retroactive application, for '[w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the 'injustice or hardship' by a holding of nonretroactivity.'" Id. at 107 (internal citations omitted).

Even if the Court were persuaded that the Court of Appeals in King stated a new principle of law, the defendant has not demonstrated that application of the Chevron balancing test weighs in favor of nonretroactivity. Defendant argues that "[t]here can be no estimate to the damage that the retroactive nature of the King decision could have on the consumer credit industry." (Def.'s Mem. at 10). Citing a May 2010 Report on Legislation by the Consumer Affairs and Civil Court Committees of the New York City Bar Association (the "Committees"), defendant notes that there were 241,195 debt collection lawsuits filed in New York in 2009, where 99% of the debtors were not represented by counsel, and where 66% of these cases resulted in defaults. (Def.'s Mem. at 10 (citing Ex. E)). Defendant contends that if King's interpretation of Section 202 were applied retroactively, "it is easy to see that the effect would be catastrophic to the industry, in particular to collection law firms similar to the defendant." (Id.) Not surprisingly, defendant makes no mention of the portion of the Committees' Report which noted that:

[t]hese cases are overwhelmingly brought against low- and moderate-income New York debtors, many of whom are elderly or disabled. . . . The consequences of these judgments can be devastating, resulting in frozen bank accounts and garnished wages that prevent New Yorkers from being able to support their families, and destroy their credit, affecting their ability to secure housing

and obtain employment.

(Def.'s Mem., Ex. E at 1). The Committees' Report decries the "standard practice" in these cases involving consumer credit actions where the evidence shows that defendants routinely engage in "sewer service" so that many debtors do not even receive notice of the collection action. (Id.) The Committees also comment on the fact that these unrepresented debtors "routinely waive important defenses such as . . . the statute of limitations," while the debt buyers, such as defendants here, "manipulate the complicated rules of civil procedure and lax pleading requirements to their advantage." (Id. at 2). Thus, even if the Court were to find that King stated a new rule, the Chevron balancing factors command a different result - the Court of Appeals' interpretation of CPLR Section 202 is not only obvious and correct, but the fact that debt collectors have ignored its applicability in these cases is a testament to the inequality that results where parties are not represented by counsel and unaware of the procedural technicalities that are in place to protect them.

Having considered the defendant's arguments, the Court concludes that the Court of Appeals in King was not stating a new principle of law and therefore there is no issue of retroactivity and no reason not to apply the principle in this case.

3. Lack of Personal Jurisdiction

Defendant appears to make two related arguments with respect to the lack of personal jurisdiction over Diaz in New Hampshire, although it somewhat conflates these two issues in its papers. First, defendant contends that CPLR Section 202 does not apply when the state where the action accrued did not have personal jurisdiction over the defendant. Second, defendant argues that even if the borrowing statute did apply in the State Action, the tolling provision of New Hampshire's statute of limitations rendered the State Action timely. The Court addresses these arguments in turn.

In arguing that CPLR Section 202 "is not applicable when the state where the action accrued did not have personal jurisdiction over defendants," defendant relies on two cases. (See Def.'s Mem. at 11 (citing Rescildo v. R.H. Macy's, 187 A.D.2d 112, 113, 594 N.Y.S.2d 139, 140 (1st Dep't 1993), and Chan v. Mui, No. 92 Civ. 8258, 1993 U.S. Dist. LEXIS 14693 (S.D.N.Y. Oct. 20, 1993)). In Rescildo, the First Department held that New York's borrowing statute did not apply in a personal injury action that accrued in Connecticut where in personam jurisdiction in Connecticut was lacking over two of the defendants. See Rescildo v. R.H. Macy's, 187 A.D.2d at 113, 594 N.Y.S.2d at 140. Similarly, in Chan, the federal district court also declined to apply New York's borrowing statute, instead holding that New York's longer statute of limitations governed, rather than Oklahoma's shorter statute of limitations, with respect to "the defendants over whom Oklahoma had no personal jurisdiction" and "regardless of where the cause of action accrued." Chan v. Mui, 1993 U.S. Dist. LEXIS 14693, at *14; see also Stafford v. International Harvester Co., 668 F.2d 142, 151 (2d Cir. 1981) (construing the "accrual" language in New York's borrowing statute and determining that a cause of action cannot accrue for borrowing purposes in a jurisdiction where the defendant is not amendable to suit).

Both of the cases cited by defendant were decided prior to the decision of the New York Court of Appeals in Insurance Company of North America v. ABB Power Generation, 91 N.Y.2d 180, 690 N.E.2d 1249, 668 N.Y.S.2d 143 (1997). In responding to a certified question from the Second Circuit, the New York Court of Appeals spoke definitively on the question of whether Section 202 applies where the cause of action accrues in a state that does not have personal jurisdiction over the defendant, specifically holding that the Second Circuit in Stafford "misconstrue[d] CPLR 202" and effectively overruling the decisions in Rescildo and Chan. Id. at 185, 690 N.E.2d at 1252-53, 668 N.Y.S.2d at 147. In Insurance Co. of North America, the Court of Appeals construed CPLR Section 202, holding that: "CPLR 202 requires that a court, when presented with a cause of action accruing outside New York, should apply the limitation period of the foreign jurisdiction if it bars the claim. . . . It matters not that jurisdiction is unobtainable over a defendant in the foreign jurisdiction or that the parties have contracted to be venued in this State." Id. at 187-88, 690 NE.2d at 1251, 668 N.Y.S.2d at 145; see also GML, Inc. v. Cinque & Cinque, P.C., 9 N.Y.3d 949, 951, 877 N.E.2d 649, 846 N.Y.S.2d 599 (2007) (holding that "[i]t is irrelevant whether defendants are . . . subject to suit in Tennessee and unnecessary to determine whether defendants were subject to personal jurisdiction in Tennessee. A conclusion to the contrary would cause the statute of limitations to be tolled indefinitely against these defendants. We do not believe that the Legislature intended this result in enacting CPLR 202").

Accordingly, this Court is not persuaded by defendant's argument that Section 202 did not apply in the State Action because New Hampshire did not have personal jurisdiction over Diaz. The New York Court of Appeals rejected the approach taken in Rescildo and Chan in Insurance Co. of North America and given that the decision was issued in 1997, defendant was clearly on notice of this 1997 case when it brought the State Action in 2009.

Defendant also argues that even if New Hampshire's statute of limitations did apply in the State Action, New Hampshire's tolling provision rendered the action timely. (See Def.'s Mem. at 12). Defendant relies on the Ninth's Circuit's interpretation of the New Hampshire tolling provision in Avery v. First Resolution Management Corp., 568 F.3d 1018 (9th Cir.), cert. denied, 130 S. Ct. 554 (2009), in arguing that Diaz's absence from New Hampshire tolled the statute of limitations. In Avery, as in the instant case, the plaintiff brought suit against collection attorneys claiming that they had violated the FDCPA by pursuing a claim in Oregon where there was a six-year period of limitations, rather than in New Hampshire, with its three-year statute. Id. at 1022. The original collection case against the plaintiff had been dismissed by the collection attorneys when they determined that it was not in their interest to pursue the claim. Id. at 1021. Avery, who was an Oregon resident, then brought suit under the FDCPA, alleging that defendants knew the claim was time-barred by New Hampshire's statute of limitations. Id. Construing the New Hampshire case law, the district court concluded that the statute's "intent and purpose is to toll New Hampshire's statute of limitations when the defendant is not available to be served by a plaintiff in the stale of New Hampshire." Id. at 1022 (citing Bolduc v. Richards, 101 N.H. 303, 142 A.2d 156, 158 (N.H. 1958)).

Relying on the district court's analysis, defendant here argues that the New Hampshire tolling provisions should apply here as well. (Def.'s Mem. at 13-14), What defendant ignores is the fact that the Ninth Circuit on appeal in Avery was concerned with a narrow issue in construing Oregon's borrowing statute, specifically holding that the New Hampshire tolling statute's provision for tolling while a party is "outside the state" referred to the party being outside New Hampshire, not Oregon. 568 F.3d at 1022. The Circuit Court explicitly limited its holding, stating: "We do not purport to construe definitively the scope of New Hampshire's tolling provision or to determine conclusively its effect when lawsuits are filed outside New Hampshire courts. Rather, we address only the narrow statutory argument Avery has made: that under Oregon's choice of law regime, 'the state' referred to in N.H. REV. STAT. Ann. § 508:9 is Oregon when a lawsuit is filed in Oregon but New Hampshire law otherwise governs." Id. at 1022, n.1. The Court further stated:

We express no opinion on arguments Avery did not raise, including, without limitation: (1) whether New Hampshire courts would construe N.H. Rev. Stat. Ann. § 508:9 to allow perpetual tolling against an out-of-state defendant on a cause of action that could not, as a matter of law, be brought in New Hampshire courts, see 15 U.S.C. § 1692i (requiring debt collectors to bring action on debt against a consumer in the judicial district where the consumer signed a contract or where the consumer resides); or (2) whether a credit card agreement would be unconscionable under New Hampshire law if it led to perpetual tolling when the debt collector was free to sue the card holder at any time in the card holder's home jurisdiction.

Id.

Other courts examining the New Hampshire caselaw have concluded that New Hampshire's tolling statute, N.H. Rev. Stat. § 508:9, does not apply where the consumer never resided in New Hampshire. See Gaisser v. Portfolio Recovery Assocs., 571 F. Supp. 2d 1273, 1278 (S.D. Fla. 2008) (rejecting as "an absurd result" the argument that New Hampshire's tolling provision would apply to indefinitely loll the statute of limitations where the debtor had never resided in New Hampshire); see also Resurgence Financial, LLC v. Chambers, 92 Cal. Rptr. 3d 844 (Cal. App. Super. Ct. 2009) (interpreting Delaware's analogous tolling provision in the context of an FDCPA case, and concluding that the tolling provision "can be most reasonably read to apply to actions that are actually filed in a Delaware court or actions that could have been filed in a Delaware court"). In the absence of support for defendant's contention that the New Hampshire statute of limitations was indefinitely tolled by Diaz's absence from that state, the Court is more inclined to interpret New Hampshire's tolling provision as inapplicable where the debtor had never resided in New Hampshire.

Accordingly, the Court is not persuaded by defendant's contention that Section 202 is inapplicable because New Hampshire lacked personal jurisdiction over Diaz in the State Action nor by defendant's argument that the New Hampshire statute of limitations was tolled because Diaz never resided in New Hampshire. Defendants may not use their own faulty interpretation of New York and New Hampshire law to defeat plaintiff's claims in the instant action. Therefore, plaintiff's allegations that defendants pursued time-barred claims in New York courts could provide a sufficient factual basis for his claims against the Malen Firm under the FDCPA, the NYGBL, and the Judiciary Law. The Court now addresses the sufficiency of each of plaintiff's claims in turn.

4. Plaintiff's FDCPA Claim

The Fair Debt Collection Practices Act, 15 U.S.C. § 1692e, prohibits the use of a "false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. Plaintiff alleges that defendants engaged in the following prohibited practices: (1) "[t]he false representation of . . . the character, amount, or legal status of any debt," 15 U.S.C. § 1692e(2); (2) the "false representation or implication that any individual is an attorney or that any communication is from an attorney," 15 U.S.C. § 1692e(3); (3) "[t]he threat to take any action that cannot legally be taken or that is not intended to be taken," 15 U.S.C. §1692e(5); (4) "[c]ommunicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed, 15 U.S.C. §1692e(8); (5) "[t]he use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer," 15 U.S.C. §1692e(10); and (6) the use of "unfair or unconscionable means to collect or attempt to collect any debt," 15 U.S.C. § 1692f. (See Am. Compl. ¶ 42). Plaintiff contends that defendants violated the FDCPA by collecting or threatening or attempting to collect a time-barred debt, filing a complaint that had not been meaningfully reviewed by an attorney, and taking legal action against plaintiff when defendant knew or should have known there was no factual basis for the action. (Pl.'s Mem. at 16).

Defendant does not challenge the sufficiency of each of these claims individually. Rather, defendant addresses only the underlying question of whether Section 202 applied to the State Action and raises specific objections with respect to plaintiff's claim under FDCPA Section 1692e(3). Accordingly, and based on the Court's analysis of the statute of limitations issues presented in this case, the Court finds that plaintiff's allegations that defendant threatened and attempted to collect a time-barred debt and misstated the amount, character, and/or legal status of plaintiff's debt are sufficient to overcome defendant's motion to dismiss for failure to state a claim on plaintiff's claims under Sections 1692e(2), 1692e(5), 1692e(8), 1692e(10), and 1692f. (See Am. Compl. ¶ 42).

Apart from the statute of limitations issues, defendant challenges the sufficiency of plaintiff's claim under Section 1692e(3). Defendant argues that the "bare, boilerplate allegation" that defendant violated the FDCPA by failing to conduct a meaningful review of the complaint filed in the State Action fails to state a plausible claim. (Def.'s Mem. at 14). Even if the claim is construed to relate to Attorney Wolstein's review of the State Action complaint in light of the statute of limitations period, defendant argues that Wolstein was simply following the legal precedent that had been in existence prior to the King decision. (Id.) In response, plaintiff argues that the success of his claim does not hinge solely on whether the defendant's claim was time-barred; it is based on the defendant's failure to conduct any meaningful review of the State Action complaint before filing it. (Pl.'s Mem. at 17 (quoting Miller v. Upton, Cohen & Slamowitz, 687 F. Supp. 2d 86, 102 ("Miller III") (E.D.N.Y. 2009))).

Section 1692e(3) of the FDCPA prohibits the "false representation or implication that any individual is an attorney or that any communication is from an attorney." 15 U.S.C. § 1692e(3). "[T]he Second Circuit requires 'some degree of attorney involvement . . . before a [communication] will be considered 'from an attorney' within the meaning of the FDCPA.'" Miller III, 687 F. Supp. 2d at 94-95 (quoting Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 ("Miller I") (2d Cir. 2003)). "[T]o the least sophisticated consumers, for whom the FDCPA was enacted, an attorney's signature implies that an attorney directly controlled or supervised the process through which the letter was sent, and that the signing attorney has personally considered, and formed a specific opinion about, the individual debtor's case. . . . Where no such review is undertaken, the failure of an attorney's letter to expressly disclaim that fact runs afoul of the FDCPA." Id. at 95 (internal citations omitted).

In Miller III, the court examined the volume of accounts handled by the collection firm in that case and whether there were procedures in place to allow for meaningful attorney review prior to the issuance of the state case. Id. at 90-95. The court held that the firm could be liable under the FDCPA "if the evidence demonstrated that [the firm] 'reviewed the collection files with such speed that no independent judgment could be found to have been exercised, and then issued form collection letters with the push of a button.'" Id. at 95-96 (quoting Miller I, 321 F.3d at 306).

Plaintiff contends that here, even though there has been no discovery in this case, he has collected enough data to suggest that defendant engaged in "precisely the sort of mass robo-filing of thousands of boilerplate collection complaints by a law firm with a small number of lawyers" that the Miller III court "found problematic." (Pl.'s Mem. at 17). Specifically, plaintiff claims that the Malen firm, which is comprised of no more than three attorneys, filed over 13,000 complaints in 2009 and that Wolstein signed more than one-third (1/3) of the 10,904 complaints the firm filed in New York City Civil Courts in 2009, not including the 2,000 or more complaints filed outside of New York City.⁸ (Id. at 18).

8 If correct, plaintiff's figures suggest that Mr. Wolstein reviewed and filed 12 complaints a day, assuming he worked 356 days a year. If so, it is difficult to understand how he then was able to undertake the work necessary to pursue these claims in court, file motions and collect on the numerous default judgments that were awarded.

Given that the parties have not at this time engaged in any discovery whatsoever, the Court respectfully recommends that plaintiff's FDCPA claims not be dismissed for failure to state a claim.

5. Plaintiff's New York General Business Law Claim

Section 349(a) of the New York General Business Law ("NYGBL") prohibits "[d]eceptive acts or practices in the conduct of any business" in New York. The statute creates a private cause of action for any person injured by a violation of the law. See NYGBL § 349(h). Defendant seeks to dismiss plaintiff's claim under NYGBL § 349, arguing that the conclusory factual allegations in plaintiff's Complaint fail to allege any specific act by defendant that was misleading. (Def.'s Mem. at 19).

In alleging a claim under NYGBL § 349, plaintiff must allege that: "1) the act or practice was consumer-oriented; 2) the act or practice was misleading in a material respect; and 3) the plaintiff was injured as a result." Spagnola v. Chubb Corp., 574 F.3d 64, 74 (2d Cir. 2009). The test under the NYGBL is an objective one (see Pl.'s Mem. at 19), "under which the alleged act must be 'likely to mislead a reasonable consumer acting reasonably under the circumstances.'" Cohen v. JP Morgan Chase & Co., 498 F.3d 111, 126 (2d Cir. 2007) (internal citations omitted). "NYBGL § 349 'contemplates actionable conduct that does not necessarily rise to the level of fraud.'" Rodriguez v. It's Just Lunch, Int'l, No. 07 Civ. 9227, 2010 WL 685009, at *8 (S.D.N.Y. Feb. 23, 2010) (citing Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 343, 704 N.Y.S.2d 177, 182, 725 N.E.2d 598 (1999)). In addition, plaintiff need not demonstrate reliance on defendant's deceptive actions. Phifer v. Home Savers Cons, Corp., No. 06 CV 3841, 2007 WL 295605, at *5 (E.D.N.Y. Jan. 30, 2007).

Defendant does not challenge plaintiff's claim that defendant's practice was "consumer-oriented." (See Def.'s Mem. at 16). However, defendant argues that it was relying on "the state law . . . at the time that it filed the State Action," and therefore there was no violation of either state or federal law. (Id.) Defendant further argues that plaintiff, a New York resident, "would not reasonably believe that he would [not] be subjected to suit . . . under the New York six year statute of limitations." (Id. at 16-17). Defendant's arguments do not address the heart of plaintiff's NYGBL claim.

Plaintiff alleges that defendant's deceptive acts, including collecting, threatening and/or attempting to collect on a time-barred debt, filing a complaint in the State Action that lacked meaningful attorney review, misreporting information regarding plaintiff's account to credit reporting agencies, and misstating the amount, character, and/or legal status of plaintiff's debt, constitute unlawful deceptive acts under NYGBL § 349. (Am. Compl. ¶¶ 42, 49-51). The issue here is whether defendant's filing of the complaint in the State Action to collect a time-barred debt without meaningful attorney review is "likely to mislead a reasonable consumer."

"New York courts have held that collecting fees in violation of other federal or state laws may satisfy the misleading element of § 349." Cohen v. JP Morgan Chase & Co., 498 F.3d at 126 (citing cases). In Cohen, the Second Circuit vacated the district court's dismissal of plaintiff's claim that JP Morgan Chase & Co. violated Section 349 by charging a fee that may have violated Section 8(b) of the Real Estate Settlement Procedures Act of 1974 ("RESPA"). Id. at 126-27. The Circuit Court reasoned that a reasonably consumer is entitled to assume that "all fees charged by a respected financial institution such as Chase were legal." Id. at 127. Despite the fact that the fee had been disclosed, the Circuit Court declined to hold that imposition of the fee could not as a matter of law constitute a deceptive practice in violation of Section 349 because the fee possibly violated RESPA.

Similarly, here, defendants' alleged attempt to collect on a time-barred debt without meaningfully reviewing the complaint in the State Action may have violated the FDCPA. Having been served with a complaint relating to his debt in the State Action, plaintiff may have reasonably assumed that an attorney had conducted a meaningful review of the complaint and was representing that the claims in the complaint were actionable. A consumer could reasonably conclude that the suit was not time-barred and that the debt was actually due. However, under Section 202, defendant's claims against plaintiff were in fact time-barred. Accordingly, consistent with the Court's recommendations regarding plaintiff's FDCPA claims, the Court respectfully recommends that plaintiff's NYGBL claim not be dismissed for failure to state a claim.

6. Plaintiff's Claim under Judiciary Law § 487

Section 487 of the Judiciary Law creates a cause of action against an attorney for deceit or collusion engaged in "with intent to deceive the court or a party." N.Y. Judiciary Law § 487 (2005). Defendant argues that this provision is generally limited to "'intentional egregious misconduct'" (Def.'s Mem. at 17 (citing O'Callaghan v. Sifre, 537 F. Supp. 2d 594, 596 (S.D.N.Y. 2008))), and that any claim that an attorney made a "'meritless or unfounded allegation[] in slate court proceedings would not be sufficient to make out a violation of § 487.'" (Id.) Defendant contends that plaintiff's allegation that Mr. Wolstein knowingly made a false representation that he conducted a meaningful review and made reasonable inquiry into the Diaz complaint "does not demonstrate a sufficient intent to deceive the court or a party, nor do they demonstrate a sufficiently chronic and extreme pattern of legal delinquency." (Id. at 18).

However, as plaintiff notes, unlike the allegations in the cases cited by defendant, which relate to isolated instances of misconduct, plaintiff's claim is based on an alleged broad pattern of deceptive filings that plaintiff claims were "'robosigned'" without meaningful review and which were time-barred on their face. (See Am. Compl. ¶¶ 22, 31, 50). In Sykes v. Mel Harris & Assocs., LLC, No. 09 Civ. 8486, 2010 WL 5395712 (S.D.N.Y. Dec. 29, 2010), the court denied a motion to dismiss where the plaintiff had raised a claim that a collections law firm had submitted thousands of "affidavits of merit" purporting to have personal knowledge of consumers' accounts, which affidavits were false. The court held that "Judiciary Law § 487 provides that any attorney who has engaged in 'any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party' is guilty of a misdemeanor and liable for damages. . . . Plaintiffs' allegations regarding the fraudulent affidavits and other filings provide adequate support for this claim against the Mel Harris defendants." Id. at *10.

Here, plaintiff has raised similar allegations regarding the Malen Firm's practice in filing collection actions. The Court respectfully recommends that the motion to dismiss this claim be denied pending discovery.

CONCLUSION

Accordingly, it is respectfully recommended that defendant's motion to dismiss be denied in its entirety. Any objections to this Report and Recommendation must be filed with the Clerk of the Court, with a copy to the undersigned, within fourteen (14) days of receipt of this Report. Failure to file objections within the specified time waives the right to appeal the District Court's order. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 72(b); Small v. Sec'y of Health and Human Servs., 892 F.2d 15, 16 (2d Cir. 1989).

The Clerk is directed to send copies of this Report and Recommendation to the parties either electronically through the Electronic Case Filing (ECF) system or by mail.

SO ORDERED. Dated: Brooklyn, New York

February 28, 2012

/s/_________

Cheryl L. Pollak

United States Magistrate Judge

Eastern District of New York