In Louis c. DeshmukhCivil Action No. 21-19902 (DNJ July 27, 2022), the District of New Jersey dismissed a motion to dismiss a putative class action, asserting claims under the Fair Debt Collections Practices Act (FDCPA) over the based on statements made in the pleadings in prior litigation in state court.
Plaintiff Cathelene Louis incurred a debt to a dentist, which was referred for collection to Defendant Amit Deshmukh, doing business as Desh Law LLC (Desh Law). Desh Law filed a lawsuit in New Jersey state court, seeking to collect the outstanding balance, along with costs and attorneys’ fees.
Following the settlement of the collection action, the plaintiff filed a federal lawsuit, alleging that the Desh Law state court summons and complaint contained false, misleading, and misleading language in violation of Sections 1692e and 1692f of the FDCPA. Specifically, she claims that the balance Desh Law was seeking to collect included collection charges that were neither authorized by her agreement with the dentist’s office nor authorized by law.
Desh Law moved to dismiss the claims, saying that (1) Plaintiff’s claims are barred by a mutual release that Plaintiff and the dentist executed in settlement of the state’s lawsuit; (2) plaintiff’s claims are barred by all New Jersey controversy doctrine; (3) plaintiff’s claims are asserted against an inappropriate party; (4) the plaintiff does not sufficiently plead for damages; and (5) the state court summons and complaint are not communications subject to the FDCPA.
The court declined to dismiss the claim on the grounds of mutual release, finding that the plaintiff’s claims are not based on the agreement and that her claim does not refer to the mutual release or any of its terms. . He further held that, even taking into account the argument that plaintiff’s claims are statute-barred, a determination regarding the scope of mutual release would require further investigation.
With respect to the entire controversy doctrine—a New Jersey rule that prohibits later-filed claims that a party might have asserted in a prior case—the court held that plaintiff’s FDCPA claims arose out of a set of facts different from those in issue in the previous case. collection action.
Further, the court rejected Desh Law’s argument that he was not a proper party and the plaintiff should have sued the dentist to whom she owed the underlying debt. Specifically, the court found that (1) the complaint adequately alleges that Desh Law is a debt collector under the FDCPA; and (2) the plaintiff’s claims could not have been enforced against the dentist because the law does not apply to a creditor. Similarly, the court declined to dismiss the claim based on Desh Law’s assertion that the plaintiff had pleaded no ascertainable damages resulting from the debt collection activity. In rejecting this argument, he held that a demonstration of actual damages is not necessary to state a claim under Section 1692e or Section 1692f of the FDCPA. The court further held that the plaintiff’s allegation that she “suffered informational harm” and “risk of economic harm” as a result of Desh Law’s actions is sufficient to support her FDCPA claims.
Finally, the court rejected the argument that the state court summons and complaint did not constitute communications to which the FDCPA applies. He noted that formal pleadings are communications governed by law, except to the limited extent that Congress has exempted them from the requirements of Section 1692e(11) and Section 1692g(d) of the FDCPA. Since the plaintiff does not assert its claims under these sections, its complaint sets out an actionable claim under the FDCPA.