DECISION AND ORDER
CHARLES J. SIRAGUSA, District Judge.
This is an action purporting to assert claims under the Fair Debt Collection Practices Act ("FDCPA"), the Racketeer Influenced and Corrupt Organizations Act ("RICO"), New York General Business Law § 349, and New York Judiciary Law § 487. The action also purports to assert a New York common-law claim for malicious prosecution. Now before the Court is Defendants' motion to dismiss. The application is granted.
Unless otherwise noted, the following facts are taken from the Complaint in this action and from documents in the underlying state-court litigation,
More specifically, on or about September 4, 2003, Plaintiff received a dunning letter from defendant attorney Linda Strumpf, Esq. ("Strumpf"), sent on behalf of her client, defendant U.S. Equities Corp. ("U.S. Equities"), which is a debt collection agency. Plaintiff maintains that U.S. Equities is owned by Strumpf's husband, defendant Hal Siegal ("Siegal"), who uses the alias Ron West ("West"), and that defendant Wing Lam ("Lam") is the CEO of U.S. Equities. In connection with Strumpf's representation of U.S. Equities, she employed various process servers, including defendant Alex Shafran ("Shafran"). The dunning letter indicated that Strumpf and U.S. Equities were attempting to collect a debt that Plaintiff had incurred to Citifinancial. Plaintiff informed U.S. Equities that she did not owe such a debt.
Subsequently, unbeknownst to Plaintiff, Strumpf commenced a collection action on behalf of U.S. Equities against Plaintiff in New York State Supreme Court, Wayne County. In June 2004, Strumpf obtained a default judgment against Plaintiff, based in part on an affidavit from Shafran, in which he falsely swore that he had served Plaintiff with process. Strumpf also filed an affidavit from Lam, in which he falsely indicated that Plaintiff owed the aforementioned debt.
However, Shafran never actually served Plaintiff, and Plaintiff had no notice of the lawsuit or judgment until January 21, 2011, when she received an information subpoena in connection with Strumpf's and U.S. Equity's attempt to collect on the judgment. The information subpoena, dated January 11, 2011, bore the caption and index number of the state court action, and indicated, in pertinent part, that on June 22, 2004, a judgment had been entered against Plaintiff, in favor of U.S. Equities, in the amount of $13,768.30. Scher Aff. [#11], Ex. 3. Upon receiving the information subpoena, Plaintiff telephoned Strumpf's office, spoke with Ron West, and "insisted that she did not owe the alleged debt." Complaint [#1] at ¶ 45. During the conversation, West admitted to Plaintiff that he did not have "any documentation" concerning the alleged debt. Id. Subsequently, Plaintiff retained an attorney, who made various inquiries concerning the alleged debt. As a result of his efforts, U.S. Equities agreed that the judgment should be vacated. On or about March 28, 2011, Strumpf applied to New York State Supreme Court, Wayne County, to vacate the judgment and discontinue the action against Plaintiff.
Around this same time, the New York State Attorney General and the New York State Unified Court System conducted an investigation into the fraudulent activities of a process-serving firm known as "Serves You Right" ("SYR") during the period January 1, 2007 to September 30, 2009. Strumpf had used SYR's services during that period, and on April 29, 2011, Strumpf entered into an "Assurance of Discontinuance" ("AOD") with the New York State Attorney General. See, Scher Affidavit [#11], Ex. 5. The AOD indicated that on a "persistent and repeated basis" during the relevant period, SYR had prepared false affidavits of service, and that Strumpf had used SYR's services on approximately 4,020 occasions, and had obtained default judgments based on those false affidavits. The AOD did not indicate, however, that Strumpf was aware that SYR's affidavits were false. Nevertheless, in light of the fact that judgments had been obtained using false affidavits, Strumpf agreed to cooperate in identifying defendants in those cases, to give them an opportunity to have the judgments vacated.
As mentioned earlier, Strumpf had filed a motion to vacate the judgment against Plaintiff and dismiss the action. However, Plaintiff opposed Strumpf's attempt to merely discontinue the action, and instead sought to assert her own legal claims against Strumpf, U.S. Equities and Shafran. In that regard, on or about July 6, 2011, Plaintiff filed an application to set aside the judgment based on fraud, and for permission to file an answer and counterclaims seeking sanctions against Strumpf and U.S. Equities. Specifically, Plaintiff sought sanctions, including costs and attorney's fees, pursuant to 22 N.Y.C.R.R. § 130-1.1, as well as the opportunity "to assert counterclaims arising from the fraudulent commencement and prosecution of [the] action, and the unlawful enforcement of a void judgment." Scher Aff. [#11], Ex. 3, Hartett Aff. ¶ 38. In connection with her application, Plaintiff submitted evidence indicating both that Shafran's affidavit of service was fraudulent and that the alleged amount owed was false. Beyond that, Plaintiff alleged that Strumpf and Shafran regularly used fraudulent affidavits of service to obtain default judgments in other actions:
Scher Affidavit [#11], Ex. 3, Hartnett Supporting Declaration. Plaintiff further maintained that Strumpf and Shafran should be required to show cause why the court should not impose monetary sanctions, "based on their fraud on the court, misrepresentation, and/or misconduct." Id.
In response to that application, Strumpf admitted that Shafran had not served Plaintiff, and that U.S. Equities had been mistaken about the amount of the debt owed, though she claimed that such error was due to a transcription error. However, Strumpf maintained that she had only recently become aware of those facts.
On January 3, 2012, New York State Supreme Court, Wayne County, denied Plaintiff's motion for leave to assert counterclaims against Strumpf, U.S. Equities and Shafran in that action, vacated the judgment against Plaintiff and dismissed the action. Additionally, Supreme Court directed U.S. Equities to pay attorney's fees and costs to Plaintiff.
On February 23, 2012, Snyder commenced this action. The Complaint purports to assert five causes of action: 1) a claim under the FDCPA, based Defendants' use of false and fraudulent means to collect debts; 2) a civil RICO claim, based on a conspiracy between the Defendants to obtain money through fraudulent means involving, inter alia, acts of mail and wire fraud; 3) a claim under New York General Business Law § 349, based on Defendants' use of deceptive acts against consumers; 4) a claim for malicious prosecution, based on Defendants' commencement of legal actions that had no probable chance of success; and 5) a claim for attorney misconduct against Strumpf pursuant to New York Judiciary Law § 487, based on Strumpf's alleged misconduct in obtaining fraudulent judgments. The unsworn Complaint, which purports to assert class-action claims, alleges that any applicable statute of limitations should be deemed to have been tolled by Defendants' concealment of the fraud being committed. See, Complaint [#1] at ¶ ¶ 165-170. In that regard, Snyder maintains that Defendants concealed the fact that Shafran was falsifying affidavits of service, until such fact was revealed by the Attorney General's investigation.
On May 2, 2012, Defendants filed the subject Motion to Dismiss (Docket No. [#10]). The motion makes the following assertions regarding Plaintiff's claims: 1) the FDCPA claims are time-barred under the relevant one-year statute of limitations; 2) the RICO claims must be dismissed due to Plaintiff's failure to file a RICO statement, and because they fail to state an actionable claim; 3) the claims are barred by the Rooker-Feldman doctrine; 4) the claims are barred by collateral estoppel; and 5) assuming that the federal claims are dismissed, the Court should decline to exercise supplemental jurisdiction over the state-law claims.
Defendants' motion is unopposed, due to a procedural default by Plaintiff.
The FDCPA Claims
Plaintiff maintains that Defendants violated the FDCPA by, inter alia, by using false and fraudulent affidavits to obtain a default judgment against her, and by later attempting to use the fraudulently-obtained judgment to extract money from her. Complaint [#1] at ¶ 124. The activities which resulted in the fraudulent default judgment occurred in 2003 and 2004. Complaint [#1] at ¶ ¶ 16-36, 74-75. The activity in which Defendants attempted to use the fraudulently-obtained judgment against Plaintiff occurred on or about January 21, 2011, when Defendants served an information subpoena on Plaintiff. Complaint [#1] at ¶ 37.
The general legal principles concerning motions under FRCP 12(b)(6) are well settled:
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007); see also, ATSI Communications, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) ("To survive dismissal, the plaintiff must provide the grounds upon which his claim rests through factual allegations sufficient `to raise a right to relief above the speculative level.'") (quoting Bell Atl. Corp. v. Twombly) (footnote omitted).
When applying this "plausibility standard," the Court is guided by "two working principles":
Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (citations and internal quotation marks omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not shown—that the pleader is entitled to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 1950 (2009) (citation omitted). "The application of this `plausibility' standard to particular cases is `context-specific,' and requires assessing the allegations of the complaint as a whole." Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Medical Centers Retirement Plan v. Morgan Stanley Inv. Management Inc., 712 F.3d 705, 719 (2d Cir. 2013) (citation and internal quotation marks omitted).
A defendant may bring a 12(b)(6) motion to dismiss a claim on statute-of-limitations grounds where, as here, the facts pertinent to that affirmative defense are pleaded in the complaint. See, Staehr v. Hartford Financial Services Group, Inc., 547 F.3d 406, 425 (2d Cir. 2008) ("The lapse of a limitations period is an affirmative defense that a defendant must plead and prove. Fed.R.Civ.P. 8(c)(1). However, a defendant may raise an affirmative defense in a pre-answer Rule 12(b)(6) motion if the defense appears on the face of the complaint.") (citations omitted).
Claims under the FDCPA must be commenced "within one year from the date on which the violation occurs." 15 U.S.C.A. § 1692k(d) (West 2014). As the statute indicates, the one-year period runs from the date the defendant committed the violation, not the date of discovery. See, Thompson v. Ocwen Fin. Corp., Civil Action No. 3:13-CV-386 (JCH), 2013 WL 4522504 at *4 (D.Conn. Aug. 27, 2013) ("[T]he FDCPA [is an] "occurrence" statute[ ]. In other words, Thompson's FDCPA . . . claims accrued on May 11, 2010, at the time of the alleged violations rather than at the time Thompson claims to have discovered them, in December 2012.") (citations omitted). Plaintiff did not commence this action within one year of the aforementioned occurrences.
As mentioned earlier, though, Plaintiff's Complaint contends that the statute of limitations should be deemed tolled, due to Defendants' fraud. However, even assuming arguendo that such alleged fraud could toll the FDCPA's statute of limitations, Plaintiff became aware of her claim in January 2011, more than one year before she commenced this action on February 23, 2012. Specifically, Defendants served Plaintiff with the information subpoena on January 21, 2011, at which time she learned that Defendants had obtained a judgment against her for a debt that she did not owe. Plaintiff then retained an attorney who, on February 4, 2011, still more than a year before this action was commenced, contacted Strumpf about the "collection efforts." Complaint [#1] at ¶ 46. Moreover, Plaintiff's attorney's time records, filed in the state court action, indicate that as early as February 4, 2011, he was investigating Defendants' apparent use of fraudulent affidavits of service to obtain the judgment. See, Scher Aff. [#11], Ex. 7 (time entries dated 2/4/11 and 2/9/11). To the extent that Plaintiff might argue that she did not discover "all" of the details of the alleged fraud until some time later,
The Civil RICO Claim
Plaintiff maintains that Defendants violated the Civil RICO statute by participating in an enterprise whose purpose was "to secure default judgments through fraudulent means and to use those judgments to extract money from the Plaintiffs." Complaint [#1] at ¶ 130. However, Defendants contend that the Civil RICO claims must be dismissed because Plaintiff failed to file a RICO Case Statement, as required by Rule 9 of the Local Rules of Civil Procedure. Additionally, Defendants assert that the Complaint fails to plead a plausible RICO claim.
At the outset, it is undisputed that Plaintiff did not comply with Local Rule 9, which states, in pertinent part:
Any party asserting a claim, cross-claim, or counterclaim under the Racketeer Influenced & Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., shall file and serve a "RICO Case Statement" under separate cover. This statement shall be filed contemporaneously with the papers first asserting the party's RICO claim, cross-claim or counterclaim, unless the Court grants an extension of time for filing. A party's failure to file a RICO Case Statement may result in dismissal of the party's RICO claim, cross-claim, or counterclaim. The RICO Case Statement must include those facts upon which the party is relying and which were obtained as a result of the reasonable inquiry required by Federal Rule of Civil Procedure 11. In particular, the statement shall conform to the format and numbering that the Court has adopted by Standing Order No. 22.
Local Rule of Civil Procedure 9. Even if the Court were to consider Plaintiff's untimely papers submitted in opposition to Defendants' motion to dismiss, they do not contain any discussion or explanation concerning such failure. Consequently, the RICO claims are dismissed based on Plaintiff's failure to comply with Local Rule 9.
Defendants also maintain that the RICO claims fail on their merits, and the Court agrees. In that regard, Plaintiff maintains that Defendants engaged in a racketeering enterprise and conspiracy, in violation of 18 U.S.C. § 1962(c) & (d). See, Complaint [#1] at ¶ ¶ 133, 144. Those sections of law state:
18 U.S.C.A. § 1962(c) & (d) (West 2014). "`Racketeering activity' is in turn defined to include a litany of so-called predicate acts, including `any act which is indictable' under the mail and wire fraud statutes." In re U.S. Foodservice, Inc. Pricing Litigation, 729 F.3d 108, 117 n. 5 (2d Cir. 2013) (citing 18 U.S.C. § 1961(1)(B)). "To satisfy the `pattern of racketeering activity' requirement, the statute requires `at least two acts of racketeering activity . . . the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity.'" U.S. v. Cain, 671 F.3d 271, 284 (2d Cir. 2012) (citing 18 U.S.C. § 1961(5)).
In this case, Plaintiff alleges that Defendants engaged in acts of mail fraud and wire fraud. More specifically, the Complaint states, in pertinent part:
Complaint [#1] at ¶ ¶ 136-139.
Defendants contend that the foregoing acts, of using the mail to file and serve litigation documents, cannot, as a matter of law, constitute predicate acts under the RICO statute. There are, in fact, a significant number of decisions, in this Circuit and in other Circuits, which hold, in the context of Civil RICO claims based on fraudulent litigation, that a defendant's use of mail and wire to conduct allegedly fraudulent "litigation activities" is insufficient to establish predicate acts of racketeering. See, Daddona v. Gaudio, 156 F.Supp.2d 153, 161-162 (D.Conn. 2000) ("In his amended RICO Case Statement, Daddona characterizes the pattern of racketeering as follows: `The pattern of racketeering activity carried on by the defendants is to engage in extensive litigation filing of false documents and affidavits which is a pattern . . . defendants have engaged in similar conduct in other litigation[.]' These allegations at best amount to a vague abuse of process or malicious prosecution claim. Courts have found that allegations of malicious prosecution or abuse of process do not, on their own, suffice as predicate acts for a RICO violation.") (collecting cases; citation and internal quotation marks omitted); I.S. Joseph Co., Inc. v. J. Lauritzen A/S, 751 F.2d 265, 267-268 (8
The Court sees no great difference between the cases cited above and the present case. Of course, the instant case alleges that defendants conducted fraudulent litigation on a much grander scale, in terms of number of lawsuits, than was present in the cases cited above. Additionally, the litigation activities at issue in this case were allegedly conducted behind Plaintiff's back for the most part, although the filings were all a matter of public record.
The Court has examined the case of U.S. v. Eisen, 974 F.2d 246 (2d Cir. 1992), in which the Second Circuit reviewed a group of defendants' convictions under the RICO criminal statue. The defendants' scheme involved the prosecution of a significant number of fraudulent personal injury claims, in which, in addition to filing fraudulent lawsuits, they pressured witnesses to change their testimony, bribed witnesses to either testify falsely or not testify, and fabricated physical evidence. On appeal, the defendants argued that the mail fraud charges against them, which involved perjury, should not have been allowed to establish RICO predicate acts, since Congress did not included perjury as one of the enumerated RICO predicate offenses. However, the Circuit Court disagreed, and stated, in pertinent part:
Id. at 254 (emphasis added). The Court, though, finds that Eisen is inapplicable here, for the same reasons articulated in Nakahara v. Bal, No. 97 Civ. 2027 (DLC), 1998 WL 35123 at *9 (S.D.N.Y. Jan. 30, 1998). More specifically, Plaintiff's claim arises from the fact of the bogus lawsuit against her, and from Defendants' alleged use of perjured documents to obtain a default judgment against her. The alleged racketeering activity is the fraudulent lawsuit. See, Daddona, 156 F.Supp.2d at 164 ("Here, as in Nakahara, Daddona asserts no claims of extortion or any other racketeering activity apart from mail and wire fraud. Unlike Eisen, there is no claim here that the underlying litigation . . . is part of any larger scheme to deprive Daddona of his property."). The fact that Plaintiff has captioned this action as a proposed class action, and has alleged that Defendants acted in identical fashion toward many other persons, does not, in the Court's view, permit the denial of Defendants' motion.
On this same point, the Court is also aware of the decision in Sykes v. Mel Harris and Associates, LLC, 757 F.Supp.2d 413 (S.D.N.Y. 2010), which, on facts strikingly similar to those presented here, found that the plaintiff's complaint stated a claim under the Civil RICO statute. There is no indication, however, that the particular issue being discussed here was raised in Sykes. In that regard, the Sykes decision contains no discussion as to whether the defendants' fraudulent litigation activities qualified as predicate acts under RICO, in light of the line of cases represented by Daddona and the other cases cited above, nor does the decision mention Eisen. Therefore, while the Sykes decision reaches the result that Plaintiff wants, it does not explain how or why this Court could reach the same result, in light of established authority.
Accordingly, the Court finds that the Complaint fails to adequately plead that Defendants engaged in a pattern of racketeering activity, and the RICO claims are dismissed.
The State Law Claims
Federal subject-matter jurisdiction in this action was based on the FDCPA and RICO claims, which the Court is dismissing. The Court declines to exercise supplemental jurisdiction over the remaining supplemental state-law claims, pursuant to 28 U.S.C. § 1367(c). Plaintiff is advised that the statute of limitations governing her state-law claims will be tolled for a period of thirty days, pursuant to 28 U.S.C. § 1367(d). See, Seabrook v. Jacobson, 153 F.3d 70, 72 (2d Cir.1998) ("Section 1367(d) ensures that the plaintiff whose supplemental state claim is dismissed has at least thirty days after dismissal to refile in state court.").
Defendants' motion [# 10] to dismiss the Complaint is granted, and this action is dismissed. The Clerk of the Court is directed to close this action. Dated: Rochester, New York