Levy v. Law Offices Of J. Henry Nierman

Background

Shaul Levy sued the Law Offices of J. Henry Nierman (LOHN), J. Henry Nierman, and Recovery of Judgment, LLC (ROJ). He alleged violations of the Fair Debt Collection Practices Act (FDCPA), a federal law regulating debt collection, and New York General Business Law § 349, which prohibits materially deceptive consumer-oriented conduct.

Levy received a letter and purported post-judgment subpoena concerning a $13,990.98 judgment from a New York City Civil Court case. The documents were mailed to Levy’s Florida address. The subpoena ordered him to appear for a deposition before ROJ in New York City on December 26, 2016, a federal holiday, and to bring broad financial records, including bank statements and tax returns. It stated that failure to comply could be punished as contempt of court and displayed “FINAL Notice” on each page.

The defendants conceded that the subpoena was unenforceable, including because of service defects and the defective deposition date, but argued that those problems did not establish FDCPA violations. They also argued that ROJ was not a debt collector and that Nierman and LOHN were not responsible for the documents. The court rejected those arguments. It found that ROJ’s principal business was debt collection and that Nierman and LOHN also qualified as debt collectors because Nierman operated LOHN as counsel for ROJ. The court further found that Nierman and LOHN authorized ROJ employees to use LOHN’s letterhead and Nierman’s signature without review, making them potentially liable for the communications.

Rulings on the FDCPA claims

The court granted summary judgment in Levy’s favor on his FDCPA claims under Sections 1692e(5) and 1692e(13). Section 1692e(5) prohibits threats to take action that cannot legally be taken or is not intended to be taken. The court found that the subpoena threatened imminent legal action because it commanded Levy to appear and produce documents on short notice while warning that noncompliance could result in contempt. The subpoena was unenforceable, and the record did not show that the defendants corrected the impression that Levy had to comply.

Section 1692e(13) prohibits falsely representing or implying that documents are legal process. The court found that the subpoena’s formal court-document appearance, commands, and contempt warning would lead the least sophisticated consumer to believe that it was genuine legal process.

The court dismissed Levy’s Section 1692e(10) claim. That provision prohibits false representations or deceptive means used to collect a debt. The court held that Levy had not identified language in the subpoena that was actually false or deceptive and that the subpoena’s legal defects were adequately addressed by the Sections 1692e(5) and 1692e(13) violations.

The court also dismissed Levy’s Section 1692f(1) claim. That provision concerns attempts to collect amounts not authorized by the agreement creating the debt or permitted by law. The court found that Levy did not meaningfully support this claim and did not show conduct that was “shockingly unjust or unfair.” The court noted that Levy was not forced to attend the deposition or respond to the subpoena, and the defendants did not attempt to enforce it.

Bona fide error defense

The defendants argued that the subpoena resulted from a clerical mistake and that they should therefore receive the FDCPA’s bona fide error defense. That defense can protect a debt collector from liability only when the violation was unintentional, resulted from a genuine error, and occurred despite procedures reasonably designed to prevent that specific error.

The court held that the defendants had not established the defense. The record showed that the documents used LOHN’s letterhead and Nierman’s signature, but neither Nierman nor LOHN reviewed them. The defendants also had no procedures requiring attorney review of collection correspondence or checking whether a subpoena was authorized for an out-of-state recipient. The court additionally stated that a mistake of law cannot support the bona fide error defense.

New York consumer-protection claim

The court dismissed Levy’s New York General Business Law § 349 claim. Such a claim requires proof of a consumer-oriented practice, materially deceptive conduct, and injury. The court held that Levy had not shown that the conduct affected consumers generally. The record instead characterized the mailing of an out-of-state subpoena as a one-time error that was not part of ROJ’s normal process.

Damages and disposition

The court awarded Levy $500 in statutory damages under the FDCPA. It stated that the amount reflected the single incident and the defendants’ purportedly unintentional violation. The court referred Levy’s claims for emotional damages and attorney fees and costs to Magistrate Judge Judith C. McCarthy for an inquest.

The court granted in part and denied in part the defendants’ motion for summary judgment and granted in part and denied in part Levy’s cross-motion for summary judgment. It dismissed Levy’s NYGBL § 349 claim and FDCPA Sections 1692e(10) and 1692f(1) claims, while granting summary judgment in Levy’s favor on his FDCPA Sections 1692e(5) and 1692e(13) claims.