Berkowitz v. CCS Credit Collection Services
2:19-cv-01421
| E.D.N.Y | Jun 30, 2021Background
- Plaintiff Stacy Berkowitz received a March 8, 2018 debt-collection letter from an entity using the name “Credit Collection Services” with a Norwood, MA address; she alleges counsel notified the collector and that later direct contact violated the FDCPA.
- Berkowitz sued on March 12, 2019 naming “CCS Credit Collection Services,” but the Civil Cover Sheet and some filings identified the defendant as “Credit Control Services, Inc. d/b/a Credit Collection Services” and listed a different (Newton) address.
- Summons was served on CT Corporation (registered agent) on March 22, 2019; CT replied that CCS was not on its records and could not forward process.
- Clerk entered default June 13, 2019 and a default judgment was entered September 9, 2019 against CCS; Credit Control later claimed it was never served and its bank accounts were levied in December 2019.
- Berkowitz moved to vacate the default/default judgment and for leave to amend to substitute Credit Control under Fed. R. Civ. P. 15(c)(1)(C); Credit Control moved to intervene, to vacate, to dismiss, and for fees/sanctions.
- The court vacated the default and judgment, granted leave to amend to substitute Credit Control and ordered service within 21 days, granted Credit Control leave to intervene, and denied Credit Control’s requests for fees and sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Vacatur of default and default judgment | Move to set aside under Fed. R. Civ. P. 55(c) and/or 60(b) because defendant lacked notice and there was a mistake in naming | Credit Control contended it was not served and challenged the vacatur process; also asserted prejudice from levy | Default and default judgment vacated; doubts resolved in favor of relief where parties sought vacatur (New York v. Green principle) |
| Amendment / relation back to substitute proper defendant under Rule 15(c)(1)(C) | Amendment should relate back because the registered agent was served within Rule 4(m) period and the correct entity had notice | Argued plaintiff/counsel knew or should have known the correct defendant and that amendment is futile | Leave to amend granted; Krupski controls: focus on what prospective defendant knew during Rule 4(m) period, not plaintiff’s knowledge; relation back satisfied; 21 days to serve |
| Intervention by Credit Control | N/A (Credit Control sought to intervene to defend and correct judgment) | Intervention justified because it is the proper party affected by the judgment | Intervention granted under Fed. R. Civ. P. 21 |
| Fees and sanctions (reimbursement of $125 levy fee and Rule 11 sanctions) | Berkowitz: mistake was reasonable; no sanctionable conduct | Credit Control: sought reimbursement and sanctions for counsel’s conduct and for levying Credit Control’s accounts | Requests denied; court declined sanctions because mistake was not objectively unreasonable and refused fee reimbursement |
Key Cases Cited
- Krupski v. Costa Crociere S.p.A., 560 U.S. 538 (relation-back rule focuses on what prospective defendant knew during Rule 4(m) period)
- New York v. Green, 420 F.3d 99 (2d Cir.) (vacatur decisions should be resolved in favor of party seeking relief to decide cases on merits)
- Martin v. Giordano, 185 F. Supp. 3d 339 (E.D.N.Y.) (Rule 11 sanctions standard is objective unreasonableness)
- Margo v. Weiss, 213 F.3d 55 (2d Cir.) (discussion of Rule 11 and sanctions standard)