Keswani v. Athwal

Background

Poonam Keswani, proceeding without a lawyer, sued Harjit Singh Athwal, Andrew Kravis, Matthew A. Wurgaft, Kravis & Wurgaft, P.C., and Treasures London Limited under the Fair Debt Collection Practices Act (FDCPA). She alleged that the defendants used false representations and unfair methods while pursuing two lawsuits to collect an alleged $2 million debt. She sought a declaration and $20 million in damages.

The first lawsuit was filed in the United States District Court for the District of New Jersey by Athwal and Treasures London Limited. It asserted claims including fraud and breach of contract concerning loans made between Treasures London Limited and Treasures of Prince, LLC, for a diamond-related business opportunity. Keswani allegedly personally guaranteed the loans. That case was dismissed for lack of subject-matter jurisdiction on February 8, 2019.

Athwal and Treasures London Limited later filed another action in New York State Supreme Court to recover the alleged debt. Keswani claimed that the defendants falsely represented the amount owed, pursued a debt barred by the statute of limitations, and published false information that harmed her finances and business dealings.

Motions and legal standard

The defendants filed motions under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. Athwal, Kravis, Kravis & Wurgaft, P.C., and Treasures London Limited also moved under Rule 12(b)(5), which concerns improper service. The court considered the two motions together.

To survive a Rule 12(b)(6) motion, a complaint must include enough factual allegations to make the claimed violation plausible, rather than merely stating legal conclusions. Because Keswani was representing herself, the court read her complaint liberally, but it still had to contain a plausible claim.

FDCPA claim

The FDCPA prohibits debt collectors from using false, deceptive, or misleading methods, or unfair or unconscionable methods, to collect a debt. The statute covers an obligation arising from a transaction involving money, property, insurance, or services primarily for personal, family, or household purposes. The court explained that debts arising from commercial transactions are outside the FDCPA.

The court concluded that Keswani had not plausibly alleged that the defendants were trying to collect a consumer debt. Her complaint referred generally to an “alleged debt,” denied owing $2 million, and asserted that the debt was unenforceable because of the statute of limitations. It did not explain what transaction caused the alleged debt or why the defendants believed Keswani owed the money.

The court also noted that the materials it could consider raised doubts about whether the transaction was consumer-related. The New Jersey complaint referred to loans between two companies for the purchase of diamonds. Keswani’s description of herself as a jeweler and the business-related allegations appeared inconsistent with a transaction primarily for personal, family, or household purposes. The court did not rely on a separate personal guarantee attached to the defendants’ motions as a basis for dismissal.

Disposition

The court granted the defendants’ motion to dismiss under Rule 12(b)(6), without prejudice to amendment. It therefore did not reach the improper-service issue raised by some defendants. The court allowed Keswani to file an amended complaint alleging additional facts by October 5, 2021, if she had a good-faith basis to do so. The court stated that failure to amend by that date would result in dismissal of the case with prejudice. The clerk was directed to terminate the motions at docket numbers 4 and 5.