Elizabeth K. Atwood v. Cohen & Slamowitz LLP
17-702-cv
| 2d Cir. | Dec 15, 2017Background
- Atwood defaulted on a consumer debt; Portfolio Recovery Associates (PRA) purchased the account and retained Cohen & Slamowitz (C&S) to collect. C&S obtained a 2005 default judgment in state court that was later vacated in 2007. The state action remained technically open because no renewed default judgment was sought.
- PRA later recalled the file and retained Foster & Garbus (F&G), which served subpoenas and restraining notices based on the vacated 2005 judgment; banks placed holds on Atwood’s accounts.
- Atwood filed an order to show cause in state court to vacate the restraints, served C&S, and C&S responded stating the judgment had been vacated and prior restraints had been released (and offered to release any remaining restraints if mistaken).
- The state court proceedings were discontinued by consent after the mistake was identified. Atwood then sued in federal court under the FDCPA alleging multiple violations (claims pleaded as second, third, and fourth causes of action).
- The district court dismissed most claims on 12(b)(6) and later granted summary judgment for defendants on the remaining claims; Atwood appealed and the Second Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether C&S’s response to Atwood’s order to show cause violated FDCPA §§1692e/1692f | Atwood: C&S’s response and appearance in state court were misleading and an attempt to collect a debt | C&S: Response conceded judgment vacated, stated restraints released; not an attempt to collect | Court: Dismissal affirmed — response was not an attempt to collect; no plausible FDCPA claim |
| Whether C&S had an FDCPA duty to inform PRA/F&G about failing to seek an inquest or that the action would be deemed abandoned under CPLR §3215(c) | Atwood: C&S should have told PRA/F&G that the case was effectively closed and a new suit would be time‑barred | C&S: It notified PRA the judgment was vacated and that restraints were released; no FDCPA obligation to disclose internal procedural failures | Court: No authority or basis imposing such duty; summary judgment for defendants affirmed |
| Whether the state action was dismissed by operation of law such that C&S’s later actions violated FDCPA (statute of limitations issue) | Atwood: Case was dismissed by operation of law, so further actions were time‑barred and misleading | C&S: The case remained pending when it responded; not time‑barred and it had notified PRA of vacation of the judgment | Court: Case had not been dismissed when C&S responded; statute‑of‑limitations/collection claims fail |
| Whether summary judgment was inappropriate given disputed facts about communications and restraints | Atwood: Facts show continuing misleading communications and harms (entitling her to summary judgment) | C&S: Uncontroverted evidence shows it informed PRA of vacation and releases; Atwood stipulated to these facts | Court: No genuine dispute on material facts that would support FDCPA violations; summary judgment for defendants proper |
Key Cases Cited
- Biro v. Condé‑Nast, 807 F.3d 541 (2d Cir.) (standards for pleading reviewed on appeal)
- Hart v. FCI Lender Servs., Inc., 797 F.3d 219 (2d Cir.) (definition of a communication "in connection with the collection of a debt")
- Eades v. Kennedy, PC Law Offices, 799 F.3d 161 (2d Cir.) (objective least‑sophisticated consumer standard)
- Easterling v. Collecto, Inc., 692 F.3d 229 (2d Cir.) (use of least‑sophisticated consumer benchmark)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S.) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S.) (legal conclusions not entitled to pleading deference)
- In re Bank of N.Y. Derivative Litig., 320 F.3d 291 (2d Cir.) (standard of review for summary judgment on appeal)
- Alibrandi v. Fin. Outsourcing Servs., Inc., 333 F.3d 82 (2d Cir.) (summary judgment standard)
- Phillips v. Asset Acceptance, LLC, 736 F.3d 1076 (7th Cir.) (filing suit after limitations can violate §1692e)
- Carlin v. Davidson Fink LLP, 852 F.3d 207 (2d Cir.) (discussion of communications within lawsuits under the FDCPA)
- Ellis v. Solomon & Solomon, P.C., 591 F.3d 130 (2d Cir.) (FDCPA considerations when suit filed during validation period)