On November 29, 2011, Schlanger & Schlanger filed suit in United States District Court, Southern District of New York on behalf of a New York consumer, claiming that debt collection law firm, Goldman & Warshaw served legal papers regarding a consumer debt at an address that it knew or should have known was incorrect and not current, in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692, et seq. (FDCPA).  Specifically, the lawsuit alleges that Goldman & Warshaw’s client, Bank of America, had a current address for Ms. Batista at the time that Goldman & Warshaw “served” the Summons & Complaint at an address that was five years old. 

The lawsuit also alleges violation of the Fair Debt Collection Practices Act’s “venue” provision, which requires that collection lawsuits be brought in the jurisdiction in which the consumer resides or where the contract was entered into. 

The suit, Batista v. Goldman & Washaw, P.C, is pending.  Check back here for future updates.

If you’ve been the victim of similar fraudulent or deceptive practices, give us a call at at 1-800-685-2580 or contact us by filling out our consumer questionnaire.

Schlanger & Schlanger, LLP files class action on behalf of New York consumers, claiming that debt collection giants, Midland Funding LLC and Midland Credit Management, Inc., charge interest in excess of New York’s legal limit. 

On November 10, 2011, Schlanger & Schlanger and co-counsel Horwitz, Horwitz & Associates filed a class action lawsuit against Midland Funding, LLC and Midland Credit Management, Inc. claiming that the interest rates these companies charge consumers on purchased debts exceed New York’s usury rate. 

Specifically, the lawsuit claims that debt buyer Midland Funding and its servicing arm, Midland Credit Management – both subsidiaries of Encore Capital are not entitled to the same exemption from state usury laws enjoyed by the national banks from whom Midland purchases many of the accounts upon which it collects.  

The lawsuit, titled Madden v. Midland Funding, LLC, et al, is brought under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA),  New York General Business Law § 349 (which prohibits deceptive acts and practices), and New York’s usury laws was filed in the United States District Court for the Southern District of New York, and is currently pending.

Check back here for updates as the case progresses, and if you fear that you’ve been the victim of fraudulent or deceptive collection practices, give us a call at 1-800-685-2580 or fill out our consumer questionnaire.

Court Rejects Defendants’ Motion To Dismiss, Finds Equitable Tolling Applies, Claims Within FDCPA’s Statute of Limitations. 

Click here to read the Decision.

Click here for more information about the case.

Virtually every day, over a 9 month period, Navy Federal Credit Union called consumer Carolee Dempsey approximately 6-12 times on her work phone, and another 6-12 times on her home phone regarding an overdrawn credit card account.  NFCU conduct was particularly unjustified in light of the fact that Dempsey was making payments in order to get caught up. 

Not only was the volume of calls (estimated in the thousands) abusive, but the content when she did pick up was outrageous.  NFCU unlawfully threatened to terminate her child support payments and her son’s social security checks.  

Cases such as those pose a practical difficulty, as the consumer protection attorney’s primary tool with regard to collection harassment, the Fair Debt Collection Practices Act (FDCPA), is not available.  15 U.S.C. § 1601 et seq.  (See our recent Consumer Law Update on lack of liability for primary creditors under FDCPA). 

Specifically, because Navy Federal Credit Union was an original creditor (i.e. it was the original lender of the funds in question, rather than a third party collecting on behalf of the creditor or a debt buyer that purchased the account after default), its conduct is not regulated by the FDCPA.  Undeterred, Schlanger & Schlanger, LLP filed an action in federal court, Eastern District of New York, under the Fair Credit Billing Act, an underutilized subsection of the Truth in Lending Act addressing credit card payment disputes, and included state law claims for violations of N.Y. General Business Law § 349, which prohibits unfair and deceptive business practices, and for nuisance and intentional infliction of emotional distress. 

NFCU quickly settled, paying Plaintiff $15,000.00.  As part of the settlement, Navy Federal Credit Union also significantly reduced and restructured her credit card debt, removing all previous interest and charges, and reducing the interest rate to zero going forward and.

[What follows is a comment I recently posted on a general listserve used by a wide variety of attorneys, including both “creditor’s rights” attorneys and attorneys that, like me, represent debtors and victims of debt collection abuse.  My contribution was prompted by several posts by others that cast lawyers that bring claims under the Fair Debt Collection Practices Act (FDCPA) as unethical or otherwise taking advantage of “hypertechnical” rules on behalf of “deadbeat” clients. – Daniel A. Schlanger, Esq., Schlanger & Schlanger, LLP]

Here goes to stepping into the lion’s den. . . .

There have been some extremely negative comments about consumer lawyers on this listserve recently.  My practice focuses on FDCPA litigation, as well as auto fraud cases and collection defense, and I wanted to take a few moments and share my perspective:

1. Although the FDCPA is, for the most part, a strict liability statute, and although I think this is completely appropriate, the cases my firm files, and that most of the consumer lawyers I know file,  are not about “hypertechnical” violations.  We file cases in which either the person is being pursued for money they do not owe (in whole or in part), or in which there is some real sense in which they have been treated unfairly, lied to, or the law hasn’t been followed.  An example of the latter might be cases in which the collection action against the consumer was initiated after the statute of limitations had expired combined with bad service, such that the person learns of the lawsuit that never should have been brought for the first time when his or her bank account is restrained.
2. Any good lawyer leverages his or her client’s legitimate counterclaims in settlement.  This is a basic part of advocacy and it would be malpractice not to do so.  Sometimes this will lead to the other side paying your client.  Sometimes to a walk away.  Sometimes to a reduction in what your client pays the creditor.  How it plays out depends on the facts of the case, the value of the claim and counterclaim, etc. 
3. Both in terms of FDCPA work and in terms of state court collection defense, the vast majority of cases in which the debt buyer/debt collector runs into trouble stem from systemic problems in the debt collection industry.  Specifically, Debt collection has become a sloppy, automated, robo-filing, greedy mess of an industry.  There are roughly 300,000 collection cases brought in NYC civil courts alone each year.  The majority are brought by a handful of debt buyers and debt collection law firms.  This sort of volume on debts for small amounts has led to a variety of problems.  For example, I did discovery with one firm in which we learned that a firm with 12-14 attorneys had filed 80,000 lawsuits (eighty thousand lawsuits, this wasn’t a typo) in a single year.  The system may not be designed to treat consumers unfairly, but it is certain to do so.
4. To put it differently, if debt buyers and debt collection law firms (and increasingly, there is shared ownership of the two amongst the big players), took the time and money to have a human being meaningfully review the accounts upon which they collected and sued, including reviewing the payment history, the affidavits of merit, the attorney affirmations, any disputes by the consumer, making an effort to get a consumer’s current address, etc.  the vast majority of violations would be avoided.  The industry’s refusal to do so is an economic decision based on its calculation that the collateral damage caused by the current system, and the FDCPA lawsuits generated by same, is preferable to changing how it does business.  I think this reality is a particularly troubling with regard to the high volume collection attorneys who are, after all, attorneys, and have an independent obligation to review pleadings prior to signing, etc. 
5. The same issues are in play with regard to the systemic sewer service that generates so many personal jurisdiction defenses in collection actions (as well as some FDCPA litigation).  The decision to pay a process server $5-10 per summons,– regardless of the number of attempts, and only if service is “effectuated” – has predictable consequences.  One process server after another realized that, at a minimum, they would fudge information about “prior attempts”, speaking with a neighbor, etc and would never come back without having “served” the papers (even if it meant serving them on a vacant lot or post boxes, etc. store, both of which I’ve encountered recently).  There have, as some of you know, been changes in the NYC process service requirements designed to fix some of this, but my point here is that the problems (and the FDCPA lawsuits, motions to dismiss collection actions, etc. generated by the problems) are a result of the industry’s cost benefit analysis. 
6. Even when the NY collection firms are notified of problems regarding sewer service, lack of indebtedness, etc. by the consumer, they very often press ahead, knowing that it is difficult for pro se litigants to navigate the system.  These are my favorite cases as an FDCPA attorney.  If the industry took meaningful steps when a consumer said “I have never had a _____ card in my life, and haven’t lived at that address since I was 12”, a lot of litigation would be avoided.  Again, I assume that the typical collection firm’s refusal to back down under almost any fact pattern so long as the defendant is pro se, is a measured business decision.  If my efforts change that calculus even a little bit, I have done a good thing. 
7. Finally, there are of course a few bad apples in every barrel.  There are debtors who simply wish to find any means to shirk an obligation.  I try not to represent them (not least because they tend not to appreciate their obligations to me, either!).  There are also a small number of lawyers filing FDCPA litigation that do a lousy job, file boilerplate pleadings, make absurd “hypertechnical” arguments, and create bad case law that I then have to deal with.  I am not a fan of them either, and wish they would improve or go away, as they make my job much more difficult.

Used car dealers, in particular, are especially “creative” when it comes to taking advantage of customers, bringing new meaning to the old adage, “buyer beware”!

Take for instance the case of John and Jenise Mastrobuono.  After seeing an advertisement on eBay for a 2000 BMW 323i that looked promising, John Mastrobuono started doing his homework.  He called the company that placed the ad, BMW of the Hudson Valley, and spoke with the general manager on multiple occasions.  He reviewed the vehicle’s CarFax that the general manager of BMW of the Hudson Valley sent to him.  Mrs. Mastrobuono called as well and likewise spoke to the general manager.  They both asked questions about potential issues they had identified on the CarFax and were assured that the car was in tip-top shape.

But when it arrived at their house, problems were evident within seconds.  Rust spots and dents were evident on the exterior.  The rear windows wouldn’t roll all the way up.  The horn and hazard lights weren’t working.  The interior smelled strongly of burning oil.  And after driving it for 20 miles, the odometer hadn’t moved at all.  Obviously concerned, they took the car to a BMW dealer near their house the very next day and learned that the car was not what they were promised.

First off, the CarFax that they were sent was for a different car, and the one they got suffered from a laundry list of problems.  After sinking thousands into the car in repairs within their first weeks of ownership, the Mastrobuonos finally drove it home.  After the fifteen mile drive, their odometer finally moved…4,000 miles!

Shocked and angry, the Mastrobuonos came to Schlanger & Schlanger.  We filed a suit on their behalf in the Southern District of New York, John and Jenise Mastrobuono v. Luxury Vehicles of the Hudson Valley, Inc. d/b/a BMW of the Hudson Valley and Ronald J. Walton, 11-cv-4868. 

The suit alleges that BMW of the Hudson Valley defrauded the Mastrobuonos, forged John Mastrobuono’s signature on various contract documents, and that in the process, BMW of the Hudson Valley violated various laws, including the Motor Vehicle Information and Cost Savings Act, which prohibits odometer fraud; N.Y. General Business Law § 349, which prohibits deceptive business acts and practices; state and federal warranty laws; and the common law prohibiting fraud.  Click here to read the complaint.

If you have experienced a situation like the Mastrobuonos’ or if you are the victim of auto fraud, odometer fraud, or any type of scam involving a new or used auto dealer, give us a call or fill out our online questionnaire.  You may be able to unwind your fraudulent auto sale or get monetary compensation.  Click here to review recent results we have obtained for victims of auto fraud.

Sometimes, attorneys forget their own best advice.  This seems to have been the case with regard to opposing counsel in Douyon v. NY Medical Health Care, PC, et al., 10-cv-3983, currently pending in United States District Court, Eastern District of New York, a case in which Schlanger & Schlanger, LLP represents consumer Gabrielle Douyon. 

Ms. Douyon came to Schlanger & Schlanger last year after having been harassed at her work by men claiming to be peace officers there to collect an allegedly deficient medical debt.  We filed suit on Ms. Douyon’s behalf against the debt collectors and the fake cops under the Fair Debt Collection Practices Act (FDCPA), and awaited a response.

When it finally came, the rambling, disorganized Answer and Counterclaim wasn’t even signed by an attorney, a glaring deficiency that Defendants’ counsel did not correct even when brought to his attention.

The judge struck both the Answer and the Counterclaim as improper under the Federal Rules of Civil Procedure.  As Magistrate Judge A. Kathleen Tomlinson put it, “[t]he Counterclaim fails to articulate a legal cause of action and fails to state which of Defendants are purported to be asserting the claim.  As such the Counterclaim is insufficient to put Plaintiff on notice of the claim asserted and makes it nearly impossible for Plaintiff to articulate a response….Furthermore, because Plaintiff will now have to respond to a second pleading, I respectfully recommend to Judge Feuerstein that Plaintiff be awarded the reasonable costs and attorney’s fees associated with responding to Defendants’ amended counterclaims.”  Click here for full decision.

The decision serves as a strong reminder that the sloppy practices that New York’s state courts sometimes leave unchecked are not countenanced in Federal Court, where District Courts routinely enforce procedural and pleadings-related rules.

Earlier today, Schlanger & Schlanger filed a lawsuit against debt collection law firm Houslanger & Associates on behalf of consumer Eddy Voltaire in United States District Court, Eastern District of New York.  The federal lawsuit, which alleges violation of the Fair Debt Collection Practices Act, concerns Houslanger’s attempt to collect an alleged debt originally owed to AT&T. 

After becoming aware of the claims regarding the AT&T “debt” when his bank account was frozen on the basis of a default judgment entered by Houslanger on behalf of debt buyer Palisades Collection, LLC, Mr. Voltaire repeatedly informed Houslanger that the debt was not his.  On no fewer than three occasions, Mr. Voltaire arranged for three way telephone conferences between himself, the debt collector and representatives from AT&T, with AT&T confirming on each call that Mr. Voltaire did not owe any money on the account and had never been an AT&T customer. 

Houslanger continued to pursue Mr. Voltaire, who eventually succeeded – representing himself – to have the state court collection lawsuit Houslanger had filed against him thrown out. 

The federal lawsuit filed by Schlanger & Schlanger alleges that Houslanger’s conduct in Mr. Voltaire’s case, is part of a larger pattern in which Houslanger “routinely fails to perform due diligence on the facts underlying its Palisades Collection, LLC cases prior to taking collection action, even when informed by the consumer that the debt is not valid and that the consumer never had an account with the original creditor.” 

The lawsuit also alleges that Hauslanger’s policy is to press forward with the cases against self represented consumers, “knowing that many consumers will lack the ability to mount a meaningful and effective challenge even when service was improper, there is no substantive basis for the lawsuit [.]”

A victim of improper service, Letty Batista came to Schlanger & Schlanger looking to fight a judgment that had been illegally obtained against her. 

In February 2009, Letty lived in Orange County, New York.  Goldman, Warshaw & Parella, however, sued her in Westchester County Supreme Court, and the firm’s process server filed papers claiming to have to served her with the summons and complaint at a years-out-of-date address, in Bronxville. 

Peter Lane from Schlanger & Schlanger met with Letty, quickly assessed the situation, and moved to have the judgment vacated because of the failure by Goldman, Warshaw & Parella to establish the Court’s personal jurisdiction over the defendant.  In short order, Judge Mary Smith of Westchester Supreme Court issued an order finding that “the unrefuted documentary evidence submitted by defendant establishes that she did not reside [in Bronxville] at the time of purported nail and mail service purportedly effected in February 2009.  Accordingly, the Court finds that proper personal jurisdiction over defendant had not been obtained and consequently that the entered default judgment must be and is hereby vacated.”  The court also ordered the debt collector’s income execution lifted.  Click here for decision.

If you find yourself the victim of sewer service, please give us a call at 914-946-1981, or fill out our online questionnaire.  Default judgments obtained by means of bad service can often be vacated and dismissed.

Hardly a day goes by at Schlanger & Schlanger that we don’t hear from someone who was not properly served with papers at the time they were sued.  Sadly, submission of false documents related to service in consumer debt cases is an endemic feature of the debt collection industry.

The case of Elizabeth Coble, et al. v. Cohen & Slamowitz, LLP, et al., 11-cv-1037, recently filed by Schlanger & Schlanger and co-counsel Roddy, Klein & Ryan in the Southern District of New York details how false affidavits were submitted in thousands of collection cases and how one law firm, Cohen & Slamowitz, has continued its collection actions on these cases even to this day, despite its knowledge of the problem.  In 2005, Elizabeth Coble was sued by Cohen & Slamowitz in New York Civil Court over a Discover Card debt.  She was never served papers, however, and Cohen & Slamowitz entered a default judgment against her.  She didn’t even become aware of the lawsuit until almost four years later when she was contacted by a Florida debt collector who was trying to collect based on a fictitious judgment in Florida.  At this point, Ms. Coble went to court in New York to fight the judgment, and subsequently retained Schlanger & Schlanger to help in her fight.

After reviewing her documents, it became clear to us that something was not right, and not just in Ms. Coble’s case.  Back in 2006, a process server who worked for Midlantic Process admitted under oath that his former employer, a process server named Midlantic Process, that worked extensively for Cohen & Slamowitz, systematically filed thousands of false affidavits with New York courts.  If you’ve read or heard anything about robo-signing in foreclosures, it’s a very similar scenario.

The Midlantic Process server, Kenneth Vega, admitted under oath that the activities of his company were entirely directed by the owners of Midlantic Process, Robert and Vivian Schusteritsch and that they engaged in this misconduct in order to keep Cohen & Slamowitz as a customer.  What’s more, Cohen & Slamowitz was aware of Mr. Vega’s affidavit, having been involved in the case in which it came out, and did nothing about it.  They neither notified the impacted consumers, nor the Courts, that the Midlantic affidavits of service were false, nor that the law firm’s previous sworn statements regarding the affidavits were in need of revision.  To the contrary, when confronted with a consumer who claimed she hadn’t been served, Cohen & Slamowitz pointed to the Midlantic affidavits as definitive proof that service had been made. 

Schlanger & Schlanger, along with co-counsel Roddy, Klein & Ryan brought a class action lawsuit against Cohen & Slamowitz and several of its attorneys for violation of the Fair Debt Collection Practices Act (FDCPA).  The case is now pending.

If you were sued by Cohen & Slamowitz in a consumer collection action in New York State, and your affidavit of service was signed and/or notarized by someone from Midlantic Process, please fill out our online questionairre, as you may be part of this class of plaintiffs victimized by Cohen & Slamowitz.  Check in here for updates as the case progresses.