NY Judge Sanctions Plaintiff Attorney for Making Mountain Out Of Molehill

A federal judge in New York has issued an order sanctioning a plaintiff and his attorneys in a Fair Debt Collection Practices Act (FDCPA) case for “making a mountain out of a mole hill” over a $131 debt.

The case is Huebner v. Midland Credit Management, Inc. Case No. 14-cv-6046 (BMC), United States District Court, Eastern District of New York. On November 11, 2016, in a Memorandum Decision and Order in response to Defendant’s motion for sanctions, the Honorable Brian M. Cogan wrote:

“If there was ever a mountain made out of a mole hill, it is this case. Plaintiff, an attorney experienced with the Fair Debt Collections Practice Ac (“FDCPA”), 15 U.S.C. § 1692, sought to parlay his $131 debt into a technical violation so that he could serve as a class representative in a case where there was no FDCPA violation, for a class that could never have been ascertained, and where he would have been the most atypical of representatives if a class could have been ascertained. My preliminary rulings and the facts uncovered in discovery made these problems clear, but he did not give up, doubling down on his efforts to make something out of next to nothing.”

insideARM has written about this case on 2 prior occasions, first on February 27, 2015, then again on June 13, 2016 when Judge Cogan granted summary judgment in favor of the Defendants and dismissed the lawsuit.

Our June 13th article outlined the facts:

In 2010, plaintiff switched his phone service to Verizon. He previously had Verizon service but had changed to another carrier. As a result of his reversion to Verizon, the provider performed some work on plaintiff’s phone line to ensure he had adequate service. Verizon billed him a $131 fee for that work. Plaintiff advised Verizon that he should not have been charged this fee and he never paid the bill.

Midland Credit Management (MCM) and Midland Funding, LLC (Midland) acquired the debt from Verizon in July 2013. Midland purchased the debt and placed it with MCM for servicing. The account reflected that plaintiff owed Verizon $131.21.

Plaintiff is an attorney experienced with the Fair Debt Collections Practice Act. On October 17, 2013, plaintiff called MCM. He had set up a tape recorder before making the call and recorded the entire call. During that call plaintiff asked what he had to do to dispute the debt; the agent asked him what the dispute was, and plaintiff repeatedly refused to describe it. However, plaintiff’s refusals were sufficiently indirect and oblique that each one caused the collection agent to ask another question in an effort to find out what the problem was with the debt. Plaintiff consistently evaded the questions.

Defendant’s records of plaintiff’s account contain the agent’s notes of the call, and show that she marked the account as “deleted” following the call. Defendant’s records also establish that on the same day, following the call, it sent plaintiff a letter advising him that it had ceased collection efforts and had instructed the Credit Reporting Agencies (CRAs) to delete the information MCM had reported regarding the account.

On October 15, 2014 Plaintiff filed suit against the defendants alleging a number of FDCPA violations. Plaintiff subsequently filed both a second and third amended complaint and brought a motion for class certification.

Further, per Judge Cogan’s Order:

“Throughout the case, Poltorak (Plaintiff’s attorneys) engaged in other misconduct that unnecessarily multiplied the proceedings. It filed a baseless motion for recusal; it repeatedly filed pre-motion conference letters that were well beyond the three-page limit in my Individual Practices (on one occasion, for example, a 22-page letter, and on another, a 14-page letter), thus defeating the efficiency purpose behind a premotion conference; and it filed a frivolous motion to remove certain confidentiality designations.”

Plaintiff had already been nominally sanctioned twice for his conduct prior to Judge Cogan’s June, 2016 decision granting Defendant’s motion for summary judgment. After that Order the Defendants brought their motion for sanctions which is the subject of this latest decision from Judge Cogan.

Per the latest Order:

“Poltorak had an obligation to review plaintiff’s claim and evaluate whether there was any merit to it. Poltorak clearly did not take this obligation seriously, even after receiving repeated warnings and sanctions from this Court and defendant. In continuing to prosecute the case, it harassed defendant and caused it to spend a substantial sum to defend the case.

For the same reasons that Poltarak engaged in sanctionable conduct, plaintiff, who the record shows is an attorney and worked hand-in-hand with his lawyers throughout the case, will also be sanctioned pursuant to the fee-shifting provision contained in § 1692k(a)(3), as well as my inherent power to sanction. Plaintiff’s claim was without legal support and was prosecuted in bad faith. He acted in a manner designed to harass defendant and to try to force it into settling his claim.  Plaintiff pursued his FDCPA claim against defendant long after it was clear that he did not have a viable claim.

Although a sanction on plaintiff and Poltorak, jointly and severally, is appropriate, the sanction will be limited to the attorneys’ fees and costs incurred in connection with the motion for sanctions and some portion of the attorneys’ fees and costs incurred in connection with opposing the class certification motion, as of the various baseless proceedings in this case, that was the one with the least basis in law or fact. Defendant is ordered to submit proof of its fees and costs related to both its motion for sanctions and its opposition to class certification within 14 days. Alternatively, the parties can have a discussion about this case and resolve this issue themselves.”

insideARM Perspective

In our June 13, 2016 insideARM perspective we asked “Whether this is really the end of the line for this case?” The answer was “NO.”  Judge Cogan suggests the parties have a discussion to resolve the issue of the amount of fees and costs incurred by the Defendants. Based upon how this case has proceeded, one would doubt the likelihood of the parties coming to agreement.  It is possible the court will need to hold another hearing to resolve the amount of the sanctions. This case may never end -  all over a $131 account!

By Tim Bauer