PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________ No. 20-1726 ____________ DESMOND CONBOY; BRENDAN GILSENAN, Appellants v. UNITED STATES SMALL BUSINESS ADMINISTRATION; CBE GROUP; FIRST NATIONAL BANK, d/b/a Metro Bank; SEDA COG ____________ On Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. No. 3-18-cv-00224) District Judge: Honorable Malachy E. Mannion ____________ Submitted on January 21, 2021 Before: HARDIMAN, ROTH, Circuit Judges, and PRATTER, District Judge. (Filed: March 19, 2021) Joshua L. Thomas 225 Wilmington-West Chester Pike Suite 200 Chadds Ford, PA 19317 Counsel for Appellants David J. Freed Samuel S. Dalke Office of United States Attorney Middle District of Pennsylvania 228 Walnut Street, P.O. Box 11754 220 Federal Building and Courthouse Harrisburg, PA 17108 Counsel for Appellee United States Small Business Administration Robbie Malone Eugene X. Martin, IV Malone Frost Martin The Honorable Gene E.K. Pratter, United States District Judge for the Eastern District of Pennsylvania, sitting by designation. 2 8750 North Central Expressway NorthPark Central, Suite 1850 Dallas, TX 75231 Justin M. Tuskan Metz Lewis Brodman Must O’Keefe 535 Smithfield Street Suite 800 Pittsburgh, PA 15222 Counsel for Appellee CBE Group Jeffrey E. Havran Margolis Edelstein 220 Penn Avenue Suite 305 Scranton, PA 18503 Counsel for Appellee Seda Cog ___________ OPINION OF THE COURT ____________ HARDIMAN, Circuit Judge. Almost two decades ago, this Court declared that “[a]n appeal is not just the procedural next step in every lawsuit,” and the decision to challenge “an order of the District Court is not a matter to be taken lightly.” Beam v. Bauer, 383 F.3d 106, 108 (3d Cir. 2004). Today we reemphasize these truths. In this appeal, counsel for Appellants Desmond Conboy and Brendan 3 Gilsenan filed a brief that was essentially a copy of the one he filed in the District Court. Because the substance of this appeal is as frivolous as its form, we will affirm the District Court’s summary judgment and grant Appellee CBE Group’s motion for damages under Rule 38 of the Federal Rules of Appellate Procedure. I The case arises out of an unpaid debt. Appellants Conboy and Gilsenan, with help from a $594,000 loan from the United States Small Business Administration, bought and renovated a commercial property in Harrisburg, Pennsylvania that became Ceoltas Irish Pub. Conboy and Gilsenan executed a note, mortgage, and unconditional guarantees that they would repay the loan. The guarantees provided that federal law would control the enforcement of the note and guarantees and that Conboy and Gilsenan may not invoke any state or local law to deny their obligation to the SBA. Conboy and Gilsenan defaulted on the loan and sold the property. The SBA allowed the sale to proceed but declined to release Appellants from their loan obligations. After repeated attempts to collect the debt failed, the SBA assigned the debt to CBE Group for collection. Rather than pay the debt, Conboy and Gilsenan sued the SBA, the United States Treasury Department, First National Bank, Seda Cog (an agency that facilitated the original loan transaction), and CBE in the Court of Common Pleas of Monroe County, Pennsylvania. The SBA removed the case to the United States District Court for the Middle District of Pennsylvania. The Treasury Department and First National Bank were dismissed from the litigation with Conboy and Gilsenan’s consent. 4 In an amended complaint, Conboy and Gilsenan alleged federal claims for violating the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692, et seq., and the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681, et seq. They also alleged state law claims for violating the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 PA. CONS. STAT. §§ 201-1, et seq., breach of contract, unjust enrichment, and defamation. After discovery, Defendants moved for summary judgment, and CBE sought sanctions under Rules 11 and 37 of the Federal Rules of Civil Procedure. CBE argued that Conboy and Gilsenan brought frivolous claims and disobeyed discovery orders. Conboy and Gilsenan filed an untimely brief opposing both sanctions and summary judgment, which did not include the separate responsive statement of material facts required by Local Rule 56.1. Under the Local Rule, that failure to provide a responsive statement conceded the material facts set forth in the moving parties’ statements. The District Court granted summary judgment and denied the sanctions motions. It held, among other things: (1) that the FDCPA and UTPCPL claims failed because neither statute applies to commercial debts; (2) Conboy and Gilsenan identified no material facts in the record supporting their claims against Seda Cog, their unjust enrichment claim against CBE, or their FCRA claim against the SBA; (3) the contract claim against the SBA failed because Conboy and Gilsenan “admitted”—by not filing a counterstatement of material facts—that the unconditional loan guarantees foreclosed bringing a state law claim to deny their loan obligations; (4) they admitted they had no contract with CBE; and (5) sovereign immunity barred the unjust enrichment and defamation claims against the SBA. The District Court also 5 held that “no extraordinary circumstances” justified Rule 11 sanctions, and that Rule 37 sanctions were unnecessary because Conboy and Gilsenan’s conduct during discovery did not “significantly prejudice[] CBE.” Conboy v. U.S. Small Bus. Admin., 2020 WL 1244352, at *7 (M.D. Pa. Mar. 16, 2020). Conboy and Gilsenan appealed the summary judgment. II1 Conboy and Gilsenan’s opening brief begins with a proper introductory sentence arguing that the District Court should not have granted summary judgment. Opening Br. at 1. But it quickly goes awry in the next paragraph: “The district court has subject-matter jurisdiction over this case . . . .” Id. One could readily assume that the sentence included a typographical error, using “has” instead of “had.” But just two sentences later, the brief declares: “Venue is appropriately laid in the District Court of New Jersey . . . .” Id. This second use of the present tense, denoting the wrong trial court, presages what comes after, which belies the notion of an honest mistake. In the first sentence of his legal argument, counsel describes the summary judgment standard. Id. at 6. Two pages later, he argues that “summary judgment should be denied . . . .” Id. at 8. In the next section of his argument, counsel again writes as if the case remains in the District Court, claiming “there is no reason to grant summary judgment based on jurisdictional reasons for either party.” Id. at 13. Apart from 1 The District Court had jurisdiction under 28 U.S.C. §§ 1331, 1367, and 15 U.S.C. § 1692k(d). We have jurisdiction under 28 U.S.C. § 1291. We review the District Court’s summary judgment de novo. Faush v. Tuesday Morning, Inc., 808 F.3d 208, 215 (3d Cir. 2015). 6 these unusual (and inappropriate) references to the case pending in the District Court, counsel’s fifteen pages of “argument” do not mention how the District Court erred. This left us with the suspicion that something was amiss with counsel’s brief. Unfortunately, our suspicions were confirmed. Counsel for Conboy and Gilsenan simply took the summary judgment section of his District Court brief and copied and pasted it into his appellate brief, with minor changes such as swapping “Defendant” for “Appellee.” Compare Appendix A hereto, with Appendix B. This is not proper appellate advocacy. Unsurprisingly, the lack of appellate argument reflects the correctness of the District Court’s summary judgment. The Court properly granted judgment on the UTPCPL and FDCPA claims because those statutes apply to consumer debts, not commercial ones like the debt at issue. In re Smith, 866 F.2d 576, 583 (3d Cir. 1989) (73 PA. CONS. STAT. § 201-9.2, the UTPCPL section on private actions, applies “only [to] those persons who purchase or lease goods or services primarily for consumer use rather than for commercial use”); Staub v. Harris, 626 F.2d 275, 278 (3d Cir. 1980) (the FDCPA “was intended to apply only to debts contracted by consumers for personal, family or household purposes” (citation and internal quotation marks omitted)). Conboy and Gilsenan did not identify evidence supporting their claims against Seda Cog, their unjust enrichment claim against CBE, or their FCRA claim against the SBA. Nor did they point to evidence of any contract with CBE. In addition, the unconditional loan guarantees preempted the contract claim against the SBA, and the defamation claim against the SBA failed because of sovereign immunity. See Brumfield v. Sanders, 232 F.3d 376, 382 (3d Cir. 2000) (“[D]efamation suits against the United 7 States are prohibited.”). Finally, although we have not explicitly addressed whether the United States has waived sovereign immunity as to unjust enrichment claims, we need not resolve that issue here because Conboy and Gilsenan cited no record evidence creating a factual dispute material to their unjust enrichment claim against the SBA. See Kabakjian v. United States, 267 F.3d 208, 213 (3d Cir. 2001) (“We may affirm a judgment on any ground apparent from the record.”). Regrettably, counsel’s response to CBE’s motion for damages under Rule 38 of the Federal Rules of Appellate Procedure is yet another copy-and-paste job. Counsel copied Conboy and Gilsenan’s previous opposition to sanctions in the District Court under Civil Rules 11 and 37—with only insignificant alterations and additions. Compare Appendix C hereto, with Appendix A at 10–12. Contrary to counsel’s assertion, the Rule 38 motion did not duplicate the sanctions motions, and we will grant it even though the District Court’s denial of sanctions was well within its discretion. Rule 38 authorizes compensatory damages—not sanctions or punishment—to reimburse appellees who must defend judgments against frivolous appeals, “and to preserve the appellate court calendar for cases worthy of consideration.” Kerchner v. Obama, 612 F.3d 204, 209 (3d Cir. 2010) (quoting Huck v. Dawson, 106 F.3d 45, 52 (3d Cir. 1997)); Beam, 383 F.3d at 108. We “employ[] an objective standard to determine whether or not an appeal is frivolous” on the merits, without considering appellants’ “good or bad faith.” Kerchner, 612 F.3d at 209 (quoting Hilmon Co. (V.I.) v. Hyatt Int’l, 899 F.2d 250, 253 (3d Cir. 1990)). “Here, despite many cues from . . . the District Court that [their] cause was wholly meritless,” see Beam, 383 F.3d at 109, Conboy and Gilsenan’s counsel filed a copy-and-paste appeal without bothering to explain what the 8 District Court did wrong. It is hard to imagine a clearer case for Rule 38 damages. We may impose these damages on clients, but here we will place responsibility for payment on the lawyer. See id. “[A]ttorneys have an affirmative obligation to research the law and to determine if a claim on appeal is utterly without merit and may be deemed frivolous.” Hilmon, 899 F.2d at 254. “[B]ecause it would be unfair to charge a damage award against [parties who have] relied upon [their] counsel’s expertise in deciding whether to appeal, we have routinely imposed Rule 38 damages upon counsel when a frivolous appeal stems from counsel’s professional error.” Beam, 383 F.3d at 109. In this case, Conboy and Gilsenan’s attorney is to blame for recycling meritless arguments without engaging the District Court’s analysis. * * * It’s not easy to become a lawyer. The practice of law is challenging, and even the best lawyers make mistakes from time to time. So we err on the side of leniency toward the bar in close cases. But the copy-and-paste jobs before us reflect a dereliction of duty, not an honest mistake. We will therefore affirm the District Court’s summary judgment and grant CBE’s motion for Rule 38 sanctions after counsel for CBE files an appropriate fee petition and counsel for Appellants has a chance to respond. 9 Case: 20-1726 Document: 003113816284 Page: 1 Date Filed: 03/19/2021 APPENDIX A An unaltered copy of Appellants’ District Court brief opposing summary judgment and sanctions Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 2 Date Page Filed 11/10/19 Filed: 103/19/2021 of 12 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA DESMOND CONBOY and BRENDAN GILSENAN, CIVIL ACTION NO.: 3:18-CV-00224 Plaintiffs, Civil Action v. CBE Group, Seda Cog, First National Bank s/b/m Metro Bank and U.S. Small Business Administration Defendant. PLAINTIFF’S OPPOSITION TO DEFENDANTS U.S. SMALL BUSINESS ADMINISTRATION’S, CBE GROUP AND SEDA COG MOTIONS FOR SUMMARY JUDGMENT AND SANCTIONS STATEMENT OF FACTS Plaintiffs sold the property, known as 310 North Second Street, Harrisburg PA 18360 by on February 17, 2016. (See Exhibit A – HUD1)1. As part of that sale, there were two loans paid off to First National Bank S/B/M Metro Bank, the first mortgage of $432,113.49 and the second mortgage for $45,340.43. Defendant SBA was responsible for backing the second mortgage that was paid off the $45,340.43. Defendant SBA signed off and agreed to permit this sale to take place. As such, there was an alleged deficiency to the SBA of $276,315.61. This information was, in fact, sent for the first time to Plaintiffs on September 3, 2016, which was 6 months and 18 days after the sale. (See Exhibit B). This was beyond the 6 month cutoff for a deficiency judgment on a mortgage to be pursued. After that time, Defendant SBA transferred the debt 1 All exhibits incorporated by reference from prior pleading and complaint for sake of brevity. Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 3 Date Page Filed 11/10/19 Filed: 203/19/2021 of 12 improperly to Defendant CBE Group. As of October 19, 2017, Defendant CBE has not only made many collection attempts in writing, but added on interested and fees so the current debt balance is now allegedly at $374,258.64. (see Exhibit C). At no time was a lawsuit brought or a judgment received during the 6 month period after the sale of the property took place. Defendant CBE has been informed that their collection efforts are not legal, yet they have continued to pursue those efforts despite this knowledge. Further, on or around February 9, 2018, Defendant SBA reported an outstanding balance to the Credit Bureaus for Mr. Conboy. This report stated that the account was allegedly opened on April 15, 2005, the “high balance” was for $594,000, there was a balance of 271,799 and the last time Mr. Conboy allegedly made a payment was October 11, 2017. Further, it had a status of “charged off”. This report was done solely to damage Mr. Conboy’s credit and in retaliation for the filing of this suit, as there had never been a report previously. There was no reasonable or legal reason for this report, and it was done for completely improper purposes, with the express intent to damage Mr. Conboy, his ability to receive credit and to defame him for anyone else who would potentially attempt to lend him money and see such a derogatory report. Further, there is no question that Seda Cog had an interest in this matter. (See Exhibit D – modification). Additionally, they were communicating with Plaintiff as late as 2015. Some of the people who communicated with Plaintiff from Seda Cog were X and B. There is no question they still had an interest in this matter and were actively attempting to collect on this debt. As such, they belong as a party to this matter as well. LEGAL ARGUMENT I. BOTH DEFENDANTS’ MOTIONS FAIL TO SHOW THEY ARE ENTITLED TO SUMMARY JUDGMENT 2 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 4 Date Page Filed 11/10/19 Filed: 303/19/2021 of 12 Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The “mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986). A fact is only “material” for purposes of a summary judgment motion if a dispute over that fact “might affect the outcome of the suit under the governing law.” Id. at 248. A dispute about a material fact is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. The dispute is not genuine if it merely involves “some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). Once the moving party meets its initial burden, the burden then shifts to the nonmovant who must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations, speculations, unsupported assertions or denials of its pleadings. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001). “In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.’” Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255). Furthermore, in deciding the merits of a party's motion for summary judgment, the court's 3 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 5 Date Page Filed 11/10/19 Filed: 403/19/2021 of 12 role is not to evaluate the evidence and decide the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. In this case, summary judgment should be denied because Defendants not only rely on insufficient evidence, but outdated case law, inapplicable arguments and their evidence is so contradictory, that Defendants essentially defeat themselves with their own evidence. To further these proofs though, Defendants now present their own evidence as well, to show substantial material facts now in issue. As stated in the relatively recent case, Tepper v Amos, No. 17-2851 3rd Cir., Aug. 7, 2018, The Court discussed the “default” test and ultimately choose to say that, based on the Supreme court case of Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (2017), it would no longer apply. Instead, the court chose to follow the plain text of the statute: “an entity whose principal purpose of business is the collection of any debts is a debt collector regardless whether the entity owns the debts it collects. Id. Further, the FDCPA is a “remedial legislation” aimed, as already noted, “to eliminate abusive debt collection practices by debt collectors.” Kaymark v. Bank of Am., N.A., 783 F.3d 168, 174 (3d Cir. 2015) (quoting § 1692(e); Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 148 (3d Cir. 2013)). Importantly, it applies only to “debt collectors,” Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000), defined as any person: (1) “who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts” (the “principal purpose” definition); or (2) “who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another” (the “regularly collects for another,” or “regularly collects,” definition).1 § 1692a(6). Further, and most importantly, “The FDCPA is a strict liability statute to the extent 4 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 6 Date Page Filed 11/10/19 Filed: 503/19/2021 of 12 that it imposes liability without proof of an intentional violation.” Allen ex. rel, Martin v. LaSalle Bank, N.A., 629 F.3d 364, 368 (3d Cir. 2011). As stated previously, the Supreme Court, in Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (2017), has recently repealed the “default” test. Debtors claimed that Santander Bank, which had purchased their loans already in default and attempted to collect on them, met the second definition of “debt collector,” i.e., one who “regularly collects or attempts to collect . . . debts owed or due . . . another.” Id. at 1721 (quoting § 1692a(6)). They asserted as well that the Bank met the “principal purpose” definition, but the Court did not review that claim because it was not litigated in the District Court. Id. The Supreme Court began “with a careful examination of the statutory text,” in particular the definition’s limitation to debts “owed . . . another.” Id. It reasoned that “by its plain terms this language seems to focus our attention on third party collection agents working for a debt owner—not on a debt owner seeking to collect debts for itself.” Id. This language does not suggest that “whether the owner originated the debt or came by it only through later purchase” determines if it is a debt collector. Id. “All that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for ‘another.’” Id. Hence the Bank, which collected debts for its own account, did not meet the “regularly collects for another” definition. Id. at 1721–22. The Court also addressed the suggestion that everyone who attempts to collect debt is either a “debt collector” or a “creditor” with respect to a particular debt, but cannot be both. Id. “[S]potting (without granting) th[at] premise,” it stated that a company such as the Bank, which collects on debt it purchased for its own account, “would hardly seem to be barred from qualifying as a creditor under the statute’s plain terms.” Id. But excluded from the definition of “creditor” are those who acquire a debt after 5 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 7 Date Page Filed 11/10/19 Filed: 603/19/2021 of 12 default when the debt is assigned or transferred “solely for the purpose of facilitating collection of such debt for another.” Id. (quoting § 1692a(4)). II. DEFENDANT SBA’s MOTION FOR SUMMARY JUDGMENT MUST BE DENIED This Court has subject matter jurisdiction under 28 U.S.C. § 1331 because this action arises in part out of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et. seq. and Fair Credit Reporting Act (the “FCRA”), 15 U.S.C. § 1681, et seq. See Alfaro V. Wells Fargo N.A., d/b/a America's Servicing Company, Civil Action No. 16-7950 (DNJ 2017). While it is accurate that these are not the only claims, they are the Federal claims in this matter and, it is bad faith for Defendant to only remove the action and the turn around and claim the court lacks jurisdiction and also to move for summary judgment on similar grounds. See Generally Rivas v. Bowling Green Associates, L.P. No. 13-cv-7812, , at *4-5 (S.D.N.Y. July 24, 2014)). As such, for Defendant to remove to Federal Court, for the sole purpose of attempting dismissal or procuring improper summary judgment, would be tantamount to bad faith. Further, there is no question that this court can hear the related state claims as well based on Supplemental jurisdiction. Supplemental jurisdiction is the authority of United States federal courts to hear additional claims substantially related to the original claim even though the court would lack the subject- matter jurisdiction to hear the additional claims independently. 28 U.S.C. § 1367. As such, there is no reason to grant summary judgment based on jurisdictional reasons for either party. As stated by Defendant, it is axiomatic that the United States and its agencies and officers are immune from suit unless they have consented to be sued. FDIC v. Meyer, 510 U.S. 471, 475 (1994); United States v. Mitchell, 445 U.S. 535, 538 (1980). In re Epps, 110 B.R. 691 (E.D. Pa. 1990) (sovereign immunity waived under National Housing Act authorizing HUD to "sue and be 6 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 8 Date Page Filed 11/10/19 Filed: 703/19/2021 of 12 sued" in carrying out certain provisions of the Act). Such "sue and be sued" statutes waive sovereign immunity only of particular agencies, not the United States generally. See Lomas & Nettleton Co. v. Pierce, 636 F.2d 971, 972-73 (5th Cir. 1981); Indus. Indem., Inc. v. Landrieu, 615 F.2d 644, 646 (5th Cir. 1980). If the judgment sought by the plaintiff would "expend itself on the public Treasury," the suit is in reality against the United States regardless of whether the complaint names only Federal agencies or officials. Dugan v. Rank, 372 U.S. 609, 620 (1963) (quoting Land v. Dollar, 330 U.S. 731, 738 (1947)); see also FHA V. Burr, 309 U.S. 242, 250-51 (1940) (garnishment action against Federal agency permitted only to the extent it had funds outside the Treasury); Presidential Gardens Assocs. v. United States ex rel. Sec'y of HUD, 175 F.3d 132, 141 (2d Cir. 1999) (waiver of HUD's immunity limited to funds under control of HUD, does not reach general Treasury funds). Finally, in the case of "sue-and-be-sued" agencies, one can argue that, although such governmental units may have independent litigating authority, the Bankruptcy Code, § 106, places limits upon the jurisdiction of the bankruptcy courts over any governmental unit. Cf. Aetna Cas. & Sur. Co. v. United States, 655 F.2d 1047 (Ct. Cl. 1981) (although HUD might be suable in other courts upon certain causes of action, Tucker Act places limits upon Court of Claims' jurisdiction over them). In this case, by transferring the interest in the underlying debt for the sole purpose of attempting to collect on that debt, that was an affirmative action that effectively waived sovereign immunity. Even though it is admitted that the SBA transferred the debt, they were still responsible for the apparent “deficiency” and the initiation of the transfer. As such, even the SBA was not the primary party to begin the debt collection process, it was still their actions that permitted it to proceed. As such, they can be sued for their actions that left to the collection 7 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 9 Date Page Filed 11/10/19 Filed: 803/19/2021 of 12 action, even if they were not directly the party doing so. Specifically, the SBA can be held accountable for their actions under the FCRA. In Kent v. TransUnion, plaintiff Rowdy Kent sued multiple consumer reporting agencies and the United States Defense Finance and Accounting Services for alleged violations of the Fair Credit Reporting Act. See Kent v. Trans Union, LLC, docket number 16-322 (2017) DFAS moved to dismiss Kent’s claims, arguing that it possesses sovereign immunity from claims under the FCRA. On August 25, 2017 the District Court for the Northern District of Texas rejected DFAS’s contention, finding that Congress had waived sovereign immunity for claims under the FCRA. As such, because the actions taken by the SBA led to damage to Plaintiff Conboy’s credit, that is enough to keep them in the case for the FCRA violation and related stated claims as well as not granting summary judgment. Further, there is a relevant exception to the sovereign immunity waiver. If the plaintiff seeks less than $10,000 in damages, the federal district courts have concurrent jurisdiction with the United States Court of Federal Claims based on 28 U.S.C. § 1346, also known as the “Little Tucker Act”. The current version gives concurrent jurisdiction to the Court of Federal Claims and the District Courts "for the recovery of … any sum alleged to have been excessive or in any manner wrongfully collected … and for claims below $10,000" See 28 U.S.C. § 1346(a)(2). For this case, Plaintiffs are willing to limit their claim against the SBA to below $10,000.00 for the damage they caused through the transfer they effectuated as well as the damage to credit, particularly if the SBA agrees to repair said damage. As such, even if the FDCPA cannot be brought against Defendant SBA, it can still proceed against the other Defendants and as such, summary judgment should be granted to the claim fully. As such, the SBA essentially admitted and agreed that the other claims, as long as they are each limited to $10,000.00 can proceed. The 8 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: Filed 10 DatePage 11/10/19 Filed:903/19/2021 of 12 only other “argument” is a failure to exhaust “administrative remedies” but in none of the pleadings is it stated what remedies should have been pursued before filing this suit. As such, this argument should be considered a red herring at most, and can be denied. III. DEFENDANT SED COGA AND CBE GROUP’S MOTION FOR SUMMARY JUDGMENT MUST BE DENIED Seda Cog and CBE Group rely primarily on the assertion they “transferred their rights away” in 2006. This simply is not accurate, as a modification was signed with them in 2013 (see Exhibit D) and they were contacting Plaintiff as late as 2015. As such, their implicit statute of limitations argument against the claims against them must be denied. Several of the above arguments can be applied to Seda Cog as well and are incorporated by reference. As in the Alfaro case, the Plaintiffs are “not inviting the district court to review and reject any state judgment under this cause of action.” Alfaro V. Wells Fargo N.A., d/b/a America's Servicing Company, Civil Action No. 16-7950 (DNJ 2017). The reason for this is because the actionable offenses that the statute would have applied occurred, as Defendants admitted well within the two years statute. The actions that occurred by Defendant previously clearly show the scheme at issue here. Even though they try to claim they had no interest since 2006, that is simply not accurate. As such, they must remain as Defendants in this action for all of the damages caused to Plaintiffs, As to the breach of contract, unjust enrichment and the other state claims, the statute that applies is the a four year statute, rather than a two year statue, as per either 42 Pa. Consol. Stat. § 5525(7), (8); 42 Pa. Consol. Stat. § 5529 for written contracts or 42 Pa. Consol. Stat. § 5525(3) for oral contracts. These relate to the modification that was offered and which payments were made on it. 9 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 11 DatePage Filed 11/10/19 Filed:1003/19/2021 of 12 Additionally, there should be no question that Defendant Seda Cog can be considered a Debt Collector. Defendant squarely falls into the definition of a “debt collector” because they certainly qualify as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692(a)(6). Further, a party is also a “debt collector” if the obligation is already in default when it is assigned. Evankavitch v. Green Tree Servicing, LLC, 793 F.3d 355, 358, fn. 2 (3d Cir. 2015). In this case, by either standard, Defendant would be considered a debt collector, as through their actions there is now an attempt to collect the underlying debt in question. Finally whether or not a party was a “debt collector” is a material fact for a fact finder to decide. A mere allegation a part was not is insufficient and since Defendants attached no actual evidence to this matter, the argument should be deemed moot. IV. THE MOTIONS FOR SANCTIONS SHOULD BE DENIED Defendants’ motions utterly lacks merit and was filed for an improper purpose, and its denial should be compounded by a corresponding levy of sanctions and costs against Defendants. Defendants have used both the threat and the filing of the motion, not as a means to filter a frivolous claim but as a bullying tactic intended to intimidate Plaintiffs into withdrawing legitimate claims This misuse of Rule 11 is in and of itself sanctionable. Indeed, the Advisory Committee notes point out that Rule 11 should not be used “to emphasize the merits of a party’s position, to exact an unjust settlement, [or] to intimidate an adversary into withdrawing contentions that are fairly debatable.” See Laborers Local 938 Joint Health & Welfare Trust Fund v. B.R. Starnes Co. of Florida, 827 F.2d 1454, 1458 (11th Cir. 1987) (affirming the denial 10 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 12 DatePage Filed 11/10/19 Filed:1103/19/2021 of 12 of sanctions where the issues were fairly debatable and not easily resolved, and there was no clear binding precedent). The standard under Rule 11 is “stringent” because sanctions “1) are in derogation of the general American policy of encouraging resort to the courts for peaceful resolution of disputes, 2) tend to spawn satellite litigation counter-productive to efficient disposition of cases, and 3) increase tensions among the litigating bar and between [the] bench and [the] bar.” Doering v. Union Cty. Bd. of Chosen Freeholders, 857 F.2d 191, 194 (3d Cir. 1988). While the focus of Rule 11 is on whether a claim is wholly without merit, and is not dictated by whether resources will be expended in deciding the motion, Rule 11 motions should conserve rather than misuse judicial resources. See Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90, 99 (3d Cir. 1988) (“Rather than misusing scarce resources, [the] timely filing and disposition of Rule 11 motions should conserve judicial energies.”). Defendants’ motions fail not only for its lack of merit, but it also violates the ethical underpinnings of Rule 11. Rule 11 imposes a duty on the party seeking sanctions to be circumspect in pursuing such a drastic remedy and to not to use the device for an improper purpose lest it may discourage expansion of the law through creative legal theories. See Ario v. Underwriting Members of Syndicate 53 at Lloyds, 618 F.3d 277, 297 (3d Cir. 2010) (Rule 11 “should not be applied to adventuresome, though responsible, lawyering which advocates creative legal theories.”)(citations omitted). Sanctions are a drastic remedy reserved for only the most extraordinary circumstances. See, Park v. Seoul Broad. Sys. Co., 2008 U.S. Dist. LEXIS 17277, at *1 (S.D.N.Y. Mar. 6, 2008). Whether a claim can survive on the merits is wholly distinct from whether that claim is frivolous. See Abdelhamid v. Altria Group, Inc., 515 F. Supp. 2d 384, 392 (S.D.N.Y. 2007)(“‘When divining the point at which an argument turns from merely 11 Case:Case 20-1726 Document: 003113816284 3:18-cv-00224-MEM Document 55 Page: 13 DatePage Filed 11/10/19 Filed:1203/19/2021 of 12 losing to losing and sanctionable’ courts must ‘resolve all doubts in favor of the signer of the pleading.’”) V. CONCLUSION For the foregoing reasons, Defendants respectfully request that this Court deny Defendants’ motions in full. _/s/ Joshua Thomas, Esq._ Joshua Thomas, Esq. Attorneys for Plaintiffs Dated: September 30, 2019 12 Case: 20-1726 Document: 003113816284 Page: 14 Date Filed: 03/19/2021 APPENDIX B A redline copy of Appellants’ opening appellate brief compared to their District Court brief Case: 20-1726 Document: 003113816284 Page: 15 Date Filed: 03/19/2021 No. 20-1726 IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT DESMOND CONBOY and BRENDAN GILSENAN v. CBE GROUP, SEDA COG, FIRST NATIONAL BANK S/B/M METRO BANK AND U.S. SMALL BUSINESS ADMINISTRATION DESMOND CONBOY and BRENDAN GILSENAN, Appellant On Appeal from the U.S. District Court for the MIDDLE DISTRICT OF PENNSYLVANIA Civil Action No. 3:18-CV-00224 APPELLANT’S OPENING BRIEF AND APPENDIX Attorney for Appellants Joshua L. Thomas & Associates Joshua Thomas Esq. Supreme Court ID No. 312476 225 Wilmington-West Chester Pike Suite 200 Chadds Ford, PA 19317 Phone: (215) 806-1733 Fax: (888) 314-8910 Email: JoshuaLThomas@gmail.com Case: 20-1726 Document: 003113816284 Page: 16 Date Filed: 03/19/2021 TABLE OF CONTENTS TABLE OF CONTENTS ....................................... i TABLE OF AUTHORITIES .................................. iiii I. INTRODUCTION ....................................... 1 II. STATEMENT OF JURISDICTION ............................ 1 III. STATEMENT OF ISSUES ................................. 2 IV. STATEMENT OF THE RELATED CASES ........................ 2 V. STATEMENT OF THE CASE AND FACTS ....................... 2 VI. STANDARD OF REVIEW .................................. 5 VII. LEGAL ARGUMENT ...................................... 6 1.Both Appellees’ Motions Failed To Show They Were Entitled To Summary Judgment………………………………………………… 6 2.Appellee Sba’s Motion For Summary Judgment Should Have Been Be Denied………..........................12 3.Appellee Sed Coga And Cbe Group’s Motion For Summary Judgment Should Have Been Denied ……....18 VIII. CONCLUSION ....................................... 21 IX. CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS, AND TYPE STYLE REQUIREMENTS .......... 22 X. CERTIFICATE OF IDENTICAL COMPLIANCE OF BRIEFS AND CERTIFICATE OF PERFORMANCE OF VIRUS CHECK .................. 23 XI. CERTIFICATE OF SERVICE .............................. 24 ii Case: 20-1726 Document: 003113816284 Page: 17 Date Filed: 03/19/2021 TABLE OF AUTHORITIES Federal and State Codes 15 U.S.C. § 1681 .................................... 10 15 U.S.C. § 1692(e) .................................. 8 15 U.S.C. § 1692a ............................. 8, 9, 14 28 U.S.C. § 1331 ................................... 10 28 U.S.C. § 1367 ...................................10 42 Pa. Consol. Stat. § 5525 . ........................ 13 42 Pa. Consol. Stat. § 5529 . ........................ 13 Fed. R. Civ. P. 56(a). ................................ 6 Court Cases Alfaro V. Wells Fargo N.A., d/b/a America's Servicing Company, Civil Action No. 16-7950 (DNJ 2017) ................................... 8, 13 Allen ex. rel, Martin v. LaSalle Bank, N.A., 629 F.3d 364, 368 (3d Cir. 2011) .... 8 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986). .............. 6 Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 148 (3d Cir. 2013) ........................................... 8 Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986) .................. 7 Cf. Aetna Cas. & Sur. Co. v. United States, 655 F.2d 1047 (Ct. Cl. 1981) .......... 11 Dugan v. Rank, 372 U.S. 609, 620 (1963) ......................... 11 Evankavitch v. Green Tree Servicing, LLC, 793 F.3d 355, 358, fn. 2 (3d Cir. 2015). .......................... 14 FDIC v. Meyer, 510 U.S. 471, 475 (1994) ......................... 10 FHA V. Burr, 309 U.S. 242, 250-51 (1940) ............................ 11 Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (2017) ....... 7, 9 In re Epps, 110 B.R. 691 (E.D. Pa. 1990) ......................... 10 Indus. Indem., Inc. v. Landrieu, 615 F.2d 644, 646 (5th Cir. 1980) ......... 11 iii Case: 20-1726 Document: 003113816284 Page: 18 Date Filed: 03/19/2021 Lomas & Nettleton Co. v. Pierce, 636 F.2d 971, 972-73 (5th Cir. 1981) .. 10, 11 Kaymark v. Bank of Am., N.A., 783 F.3d 168, 174 (3d Cir. 2015) ........... 8 Kent v. Trans Union, LLC, docket number 16-322 (2017) .................... 12 Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) ............ 7 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) ... 7 Presidential Gardens Assocs. v. United States ex rel. Sec'y of HUD, 175 F.3d 132, 141 (2d Cir. 1999) ....................................... 11 Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000) .......... 8 Rivas v. Bowling Green Associates, L.P. No. 13-cv-7812, , at *4-5 (S.D.N.Y. July 24, 2014)) .............................................. 10 Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001) ................... 7 Tepper v Amos, No. 17-2851 3rd Cir., Aug. 7, 2018 ..................... 7 United States v. Mitchell, 445 U.S. 535, 538 (1980) ................... 10 >$SSHOODWHEULHI VIURQWPDWWHUUHSODFHG'LVWULFW&RXUWEULHI VFDSWLRQ@ iv Case: 20-1726 Document: 003113816284 Page: 19 Date Filed: 03/19/2021 I. INTRODUCTION The primary issue at the heart of this case is, that summary judgment was improperly granted, and the parties should have been permitted to have this heard on the merits, as it should have been. II. STATEMENT OF JURISDICTION The district court has subject-matter jurisdiction over this case pursuant to 28 U.S.C. § 1331, and 28 U.S.C. § 1332. This Court has supplemental jurisdiction over Appellees and the state law based claims pursuant to 28 U.S. Code § 1367. Venue is appropriately laid in the District Court of New Jersey pursuant to 28 USC §1391(b)(2) as the events giving rise to the claim occurred substantially within the State of New Jersey. This Court has jurisdiction over this appeal under 28 U.S. Code §᩿1291 (Final decisions of district courts). III. STATEMENT OF ISSUES 1.Whether Appellees’ Motions Failed To Show They Were Entitled To Summary Judgment? 1 Case: 20-1726 Document: 003113816284 Page: 20 Date Filed: 03/19/2021 'E553CD32J >CG3BJ - ' J +63D63BJ AA39933J '/.CJ $?D7?>J ?BJ 'E==.BIJ "E25=3>D '6?E:2J .F3J 33>J 3J 3>732 'E553CD32J >CG3BJ - ' +63D63BJ AA39;33J '31J ?5.J >2J /3J B?EACJ $?D7?>J ?B 'E==.BIJ #E25=3>DJ '6?E92J .F3J 33>J 3>732 'E553CD32J >CG3BJ - ' - 2, (63B3J .B3J >?J ?D63BJ B39.D32J 0.C3CJ .DJ D67CJ D7=3 J AA3:9.>DCJ C?92J D63J AB?A3BDIJ 8>?G>J .CJ J %@BD6J &9.7>D744CJ '30@>2J 'DB33DJ .BB7C/EB5J &J J /IJ @>J 3/BE.BIJ J J '33J && %!,J CJ A.72J ?44J D?J 7BCDJ %.D7?>.9J .>8J ' $J $3DB@J .>8J D63J 47BCDJ =@BD5.53J @4J J .>2J D63J C30?>2J =?BD5.53J 4?BJ J AA39933J 'J G.CJ 343>2.>DJ B3CA?>C7/93J 4?BJ /.087>5J D63J C30?>2J =?BD5.53J D6.DJ G.CJ A.72J ?44J D63J J AA39933J 'J C75>32J ?44J .>2J 343>2.>DJ .5B332J D?J A3B=7DJ D67CJ C.93J D?J D.83J A9.03 J CJ CE06J D63B3J G.CJ .>J .993532J 2347073>0IJ D?J D63J 'J ?4J JJ99J3H67/7DCJ7>0@BA@B.D32J/IJB343B3>03J4B@=JAB7@BJA93.27>5J.>2J0@=A9.7>DJ4@BJC.83J@4J/B3F7DI Case: 20-1726 Document: 003113816284 Page: 21 Date Filed: 03/19/2021 $276,315.61. This information was, in fact, sent for the first time to Appellants on September 3, 2016, which was 3ODLQWLIIV 6 months and 18 days after the sale. (See APPENDIX A1). ([KLELW% This was beyond the 6 month cutoff for a deficiency judgment on a mortgage to be pursued. After that time, Appellee SBA transferred the debt improperly to Appellee 'HIHQGDQW 'HIHQGDQW CBE Group. As of October 19, 2017, Appellee CBE has not 'HIHQGDQW only made many collection attempts in writing, but added on interested and fees so the current debt balance is now allegedly at $374,258.64. (see APPENDIX A1). At no ([KLELW& time was a lawsuit brought or a judgment received during the 6 month period after the sale of the property took place. Appellee CBE has been informed that their 'HIHQGDQW collection efforts are not legal, yet they have continued to pursue those efforts despite this knowledge. Further, on or around February 9, 2018, Appellee SBA reported an outstanding balance to the 'HIHQGDQW Credit Bureaus for Mr. Conboy. This report stated that the account was allegedly opened on April 15, 2005, the “high balance” was for $594,000, there was a balance of 3 Case: 20-1726 Document: 003113816284 Page: 22 Date Filed: 03/19/2021 271,799 and the last time Mr. Conboy allegedly made a payment was October 11, 2017. Further, it had a status of “charged off”. This report was done solely to damage Mr. Conboy’s credit and in retaliation for the filing of this suit, as there had never been a report previously. There was no reasonable or legal reason for this report, and it was done for completely improper purposes, with the express intent to damage Mr. Conboy, his ability to receive credit and to defame him for anyone else who would potentially attempt to lend him money and see such a derogatory report. Further, there is no question that Seda Cog had an interest in this matter. (See APPENDIX A1 – ([KLELW' modification). Additionally, they were communicating with Appellant as late as 2015. Some of the people who 3ODLQWLII communicated with Appellant from Seda Cog were X and B. 3ODLQWLII There is no question they still had an interest in this matter and were actively attempting to collect on this debt. As such, they belong as a party to this matter as well. 4 Case: 20-1726 Document: 003113816284 Page: 23 Date Filed: 03/19/2021 VI. STANDARD OF REVIEW This Court reviews de novo a district court’s ruling on an order to dismiss for failure to state a claim. McTernan v. City of York, 577 F.3d 521, 526, 530-31 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “Factual allegations must be enough to raise a right to relief above the speculative level,” Twombly, 550 U.S. at 555, and a complaint must plead specific facts that raise “more than a sheer possibility that a Appellee has acted unlawfully,” Iqbal, 556 U.S. at 678. A court need not, and may not, accept legal conclusions packaged as factual allegations. See, e.g., Iqbal, 556 U.S. at 678-79; Twombly, 550 U.S. at 555-56. 5 Case: 20-1726 Document: 003113816284 Page: 24 Date Filed: 03/19/2021 Case: 20-1726 Document: 003113816284 Page: 25 Date Filed: 03/19/2021 The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). Once the moving party meets its initial burden, the burden then shifts to the nonmovant who must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations, speculations, unsupported assertions or denials of its pleadings. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001). “In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.’” Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255). Furthermore, in deciding the merits of a party's motion for summary judgment, the court's role is not to evaluate the 7 Case: 20-1726 Document: 003113816284 Page: 26 Date Filed: 03/19/2021 Case: 20-1726 Document: 003113816284 Page: 27 Date Filed: 03/19/2021 debt collector regardless whether the entity owns the debts it collects. Id. Further, the FDCPA is a “remedial legislation” aimed, as already noted, “to eliminate abusive debt collection practices by debt collectors.” Kaymark v. Bank of Am., N.A., 783 F.3d 168, 174 (3d Cir. 2015) (quoting § 1692(e); Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 148 (3d Cir. 2013)). Importantly, it applies only to “debt collectors,” Pollice v. Nat’l Tax Funding, L.P., 225 F.3d 379, 403 (3d Cir. 2000), defined as any person: (1) “who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts” (the “principal purpose” definition); or (2) “who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another” (the “regularly collects for another,” or “regularly collects,” definition).1 § 1692a(6). Further, and most importantly, “The FDCPA is a strict liability statute to the extent 9 Case: 20-1726 Document: 003113816284 Page: 28 Date Filed: 03/19/2021 that it imposes liability without proof of an intentional violation.” Allen ex. rel, Martin v. LaSalle Bank, N.A., 629 F.3d 364, 368 (3d Cir. 2011). As stated previously, the Supreme Court, in Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (2017), has recently repealed the “default” test. Debtors claimed that Santander Bank, which had purchased their loans already in default and attempted to collect on them, met the second definition of “debt collector,” i.e., one who “regularly collects or attempts to collect . . . debts owed or due . . . another.” Id. at 1721 (quoting § 1692a(6)). They asserted as well that the Bank met the “principal purpose” definition, but the Court did not review that claim because it was not litigated in the District Court. Id. The Supreme Court began “with a careful examination of the statutory text,” in particular the definition’s limitation to debts “owed . . . another.” Id. It reasoned that “by its plain terms this language seems to focus our attention on third party collection agents working for a debt 10 Case: 20-1726 Document: 003113816284 Page: 29 Date Filed: 03/19/2021 owner—not on a debt owner seeking to collect debts for itself.” Id. This language does not suggest that “whether the owner originated the debt or came by it only through later purchase” determines if it is a debt collector. Id. “All that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for ‘another.’” Id. Hence the Bank, which collected debts for its own account, did not meet the “regularly collects for another” definition. Id. at 1721–22. The Court also addressed the suggestion that everyone who attempts to collect debt is either a “debt collector” or a “creditor” with respect to a particular debt, but cannot be both. Id. “[S]potting (without granting) th[at] premise,” it stated that a company such as the Bank, which collects on debt it purchased for its own account, “would hardly seem to be barred from qualifying as a creditor under the statute’s plain terms.” Id. But excluded from the definition of “creditor” are those who acquire a debt after default when the debt is assigned or transferred “solely for the 11 Case: 20-1726 Document: 003113816284 Page: 30 Date Filed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ase: 20-1726 Document: 003113816284 Page: 31 Date Filed: 03/19/2021 be tantamount to bad faith. Further, there is no question that this court can hear the related state claims as well based on Supplemental jurisdiction. Supplemental jurisdiction is the authority of United States federal courts to hear additional claims substantially related to the original claim even though the court would lack the subject-matter jurisdiction to hear the additional claims independently. 28 U.S.C. § 1367. As such, there is no reason to grant summary judgment based on jurisdictional reasons for either party. As stated by Appellee, it is axiomatic that the 'HIHQGDQW United States and its agencies and officers are immune from suit unless they have consented to be sued. FDIC v. Meyer, 510 U.S. 471, 475 (1994); United States v. Mitchell, 445 U.S. 535, 538 (1980). In re Epps, 110 B.R. 691 (E.D. Pa. 1990) (sovereign immunity waived under National Housing Act authorizing HUD to "sue and be sued" in carrying out certain provisions of the Act). Such "sue and be sued" statutes waive sovereign immunity only of particular 13 Case: 20-1726 Document: 003113816284 Page: 32 Date Filed: 03/19/2021 agencies, not the United States generally. See Lomas & Nettleton Co. v. Pierce, 636 F.2d 971, 972-73 (5th Cir. 1981); Indus. Indem., Inc. v. Landrieu, 615 F.2d 644, 646 (5th Cir. 1980). If the judgment sought by the Appellant would "expend itself on the public Treasury," SODLQWLII the suit is in reality against the United States regardless of whether the complaint names only Federal agencies or officials. Dugan v. Rank, 372 U.S. 609, 620 (1963) (quoting Land v. Dollar, 330 U.S. 731, 738 (1947)); see also FHA V. Burr, 309 U.S. 242, 250-51 (1940) (garnishment action against Federal agency permitted only to the extent it had funds outside the Treasury); Presidential Gardens Assocs. v. United States ex rel. Sec'y of HUD, 175 F.3d 132, 141 (2d Cir. 1999) (waiver of HUD's immunity limited to funds under control of HUD, does not reach general Treasury funds). Finally, in the case of "sue-and-be-sued" agencies, one can argue that, although such governmental units may have independent litigating authority, the Bankruptcy Code, § 106, places limits upon the jurisdiction of the 14 Case: 20-1726 Document: 003113816284 Page: 33 Date Filed: 03/19/2021 bankruptcy courts over any governmental unit. Cf. Aetna Cas. & Sur. Co. v. United States, 655 F.2d 1047 (Ct. Cl. 1981) (although HUD might be suable in other courts upon certain causes of action, Tucker Act places limits upon Court of Claims' jurisdiction over them). In this case, by transferring the interest in the underlying debt for the sole purpose of attempting to collect on that debt, that was an affirmative action that effectively waived sovereign immunity. Even though it is admitted that the SBA transferred the debt, they were still responsible for the apparent “deficiency” and the initiation of the transfer. As such, even the SBA was not the primary party to begin the debt collection process, it was still their actions that permitted it to proceed. As such, they can be sued for their actions that left to the collection action, even if they were not directly the party doing so. Specifically, the SBA can be held accountable for their actions under the FCRA. 15 Case: 20-1726 Document: 003113816284 Page: 34 Date Filed: 03/19/2021 Case: 20-1726 Document: 003113816284 Page: 35 Date Filed: 03/19/2021 Case: 20-1726 Document: 003113816284 Page: 36 Date Filed: 03/19/2021 !/1 : !$($.": 3#$2: 24$3: 2: 24 #: 3#$2: 1"4, .3: 2#/4) : : /.2$ 1 : : 1 : # 11$.": 3: ,/23: . : .: : .$ : ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! : /": . : : 1/40: 1 *9: 01$, 1$(9: /.: 3# : 22 13$/.: 3# 9: 31 .2! 11 : 3# $1: 1$"#32: 7 9: $.: : #$2: 2$,0(9: %2: ./3: 41 3 : 2: : ,/ $!$ 3$/.: 7 2: 2$". : 7$3#: 3# ,: &.: : 2 : 8#$ $3: : . 3# 9: 7 1 : /.3 3$.": 00 +( .3: 2: ( 3 : 2: : 2: 24 #: 3# $1: 0) $.3$!! $,0($ $3: 23 343 : /!: ($,$3 3$/.2: 1"4- .3: " $.23: 3# : ( $,2: " $.23: 2#/4) : # 6 : .: .$ : 3# ,: ,423: : 6 1 (: /!: 3# : /6 : 1"4, .32: .: : 00*$ : 3/: : /": 2: 7 ((: . : 1 : $. /10/1 3 : 9: 1 ! 1 . : 2:: $.::3# : & 2 : 3# : 00 (( .32: 1 : !& #! & !& 0) $.3$!!2 ! !& " !& ! #$& & !& %& !!& " !& " & ! & " & & ! & & & & & & & & # & %& $6$(: 3$/.: /: : : : : : # : 1 2/.: !/1: 3#$2: %2: 42 : 3# : 3$/. 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Ƥȷ Ś8ȷ ½2¾úȮȷ cȷ û IJ¿<ǽȷ ȢŊ`ȷ ȷ śmȷ BTTJHOFEȷ §ȜÁţȝ ȷ ŋȷ w ȷ ¬Ďďaȷ ³*O ȷ ±Đǐw\ Żŀ-ȷ ®¯ȷ ȷ ¨@üȷ ȷ @² Yaȷ ȷ { ȷ 6>ȷ |ȷ żȷ ǾŌ +ȷ HǦ!ȷ Dȯȷ :ōđjȷ ǧÂŽ à ýȷ ƿǀĒē3ȷ ȣ7ȑ&þȷ Ĕȷ é(+\ !ÿȷ ȷȷ£ĕijĖžĀÄſȷ Åȷ ā4ßqȷ HP"êƦȷ ÆǨȷ ŎǑ(ȒŁ#ȷ ŏP ǒȷ ë]7mȷ s$Ǔėȷ %ǩȷ ƀƧȤȷ /bȷ /tu"Ůǁȷ ;Pȷ Gf&ìȷ ;Ő4ȷ ȓĂȰ łȷ ăQEuȷ ]Ɓȷ ǍȔĘ+ ƨƂ ȷ ª ƃÇ&ŧȱȷ ȥő9Œ ȷ Pǔȷ Ƅƪ9ȷ .ȷ QÈȲȷ Ȧnȷ Éȷ =K2àȷ íƫŨũRîik,ȷ Ǫȷ Aȷ ůtęŝÊȷ Zïȷ Ĵ7ȷ Ëȷ ĵÌ ǿȷ Z[cĄS)ȷ :iȷ 1Ě 5 Q>ȷ ȷ _Skȷ Í ŃAŞƬƅȷ Îȷ ǃÏȷ ȧÐ8ȷ Ɔgȷ +ȷ ƇoȕXY05dȷ /ƈLȷ oƉð"ȷ DŽDžěŪĜTǫȷ Ñvñœĝąȷ ƭȷ FȖÒūȷ Ȟ%J Ɗ0"ȷ vPȷ ȀŔ Ǭȷ ŰÓ ȷ %ĞĶğƋBdȁpȷ ;$4ȷ Ôńȗűbȷ ǭ#'Ș1ȷ EĠȷ KRġŲ ȷ ųPƯ ȷ - (/ ) $/ #/ %* &/ % +/ / >7KLVVHFWLRQIURPWKH'LVWULFW&RXUWEULHIGRHVQRWDSSHDULQWKHDSSHOODWHEULHI@ . !,'" 9 «ưǕȷ ȂŕĢȷ ķƱUŅƲ6ƌHȷ VÕǮPƍǯ ȷ džQģBƎȃȷ ǖĤpLjĥòȄĸșŬȳȷ 'HIHQGDQWV VǎĪǴȈǵȷ ȉŖȊȷ ȋ#Ƕȷ ¡ƶǙ ȷ NŵCƓ ȷ ŗ6Ƿȷ _ÙȌȍUȷ Pȷ :Řīȷ GHQ\'HIHQGDQWV PRWLRQVLQ %ǹȎǛôȏȷ ¢ƻȷ Ûƕȷ ƼǜćWǝȷ Üȷ TļÝȷ ŢHŷ3Ɩ ȷ áįȷ İƗ3ǞWĈȷ IXOO Case: 20-1726 Document: 003113816284 Page: 39 Date Filed: 03/19/2021 >2ULJLQDOVLJQDWXUHEORFNDQGGDWHRPLWWHG@ Respectfully submitted, Dated: August 17, 2020 ___/s/ Joshua Thomas________ Joshua L. Thomas and Assoc. Joshua Thomas Esq. Supreme Court ID No. 312476 225 Wilmington-West Chester Pike Suite 200 Chadds Ford, PA 19317 Phone: (215) 806-1733 Email: JoshuaLThomas@gmail.com 21 Case: 20-1726 Document: 003113816284 Page: 40 Date Filed: 03/19/2021 CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION, TYPEFACE REQUIREMENTS, AND TYPE STYLE REQUIREMENTS This brief complies with the type-volume limitation of Fed. R. App. P. 32(a) (7) (B) because the brief contains 4612 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word 2010, in 14-point Courier New. August 17, 2020 /s/ Joshua Thomas Joshua Thomas, Esq. 22 Case: 20-1726 Document: 003113816284 Page: 41 Date Filed: 03/19/2021 CERTIFICATE I, Joshua L. Thomas, Esquire, hereby certify that to the best of my knowledge, the hard copy brief and the electronic version submitted in this matter are identical. I certify that I have checked these filings and have been scanned for viruses by virus protection program, AVG Anti- Virus, and they are free from any viruses. /s/ Joshua Thomas Joshua Thomas, Esq. 23 Case: 20-1726 Document: 003113816284 Page: 42 Date Filed: 03/19/2021 CERTIFICATE OF SERVICE IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT I, Joshua L. Thomas, Esquire, hereby certify that a true and correct copy of Appellant’s Brief was served via ECF and/or regular mail upon all parties. /s/ Joshua Thomas Joshua Thomas, Esq. 24 Case: 20-1726 Document: 003113816284 Page: 43 Date Filed: 03/19/2021 APPENDIX C A redline copy of Appellants’ opposition to Rule 38 damages compared to their District Court brief Case: 20-1726 Document: 003113816284 Page: 44 Date Filed: 03/19/2021 No. 20-1726 IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT '(6021'&21%2<DQG %5(1'$1*,/6(1$1 Y &%(*52836('$&2*),5671$7,21$/%$1.6%00(752%$1. $1'8660$//%86,1(66$'0,1,675$7,21 '(6021'&21%2<DQG %5(1'$1*,/6(1$1 Appellant On Appeal from the U.S. District Court for the MIDDLE DISTRICT OF PENNSYLVANIA Civil Action No. 3:18-CV-00224 APPELLANT’S OPPOSITION TO DEFENDANTS’ MOTION FOR SANCTIONS $WWRUQH\IRU$SSHOODQWV -RVKXD/7KRPDV $VVRFLDWHV -RVKXD7KRPDV(VT 6XSUHPH&RXUW,'1R :LOPLQJWRQ:HVW&KHVWHU3LNH6XLWH &KDGGV)RUG3$ 3KRQH )D[ (PDLO -RVKXD/7KRPDV#JPDLOFRP Case: 20-1726 Document: 003113816284 Page: 45 Date Filed: 03/19/2021 >)URQWPDWWHUUHSODFHG'LVWULFW&RXUWEULHI VFDSWLRQ@ STATEMENT OF FACTS $SSHOODQWVVROGWKH SURSHUW\NQRZQDV1RUWK6HFRQG6WUHHW+DUULVEXUJ3$ 3ODLQWLIIV E\ RQ )HEUXDU\ $V SDUW RI WKDW VDOH WKHUH ZHUH WZR ORDQV SDLG RII WR )LUVW 1DWLRQDO 6HH([KLELW$±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³KLJK EDODQFH´ ZDV IRU WKHUH ZDV D EDODQFH RI DQG WKH ODVW WLPH 0U &RQER\ DOOHJHGO\PDGHDSD\PHQWZDV2FWREHU)XUWKHULWKDGDVWDWXVRI³FKDUJHGRII´7KLV UHSRUWZDVGRQHVROHO\WRGDPDJH0U&RQER\¶VFUHGLWDQGLQUHWDOLDWLRQIRUWKHILOLQJRIWKLVVXLW DV WKHUH KDG QHYHU EHHQ D UHSRUW SUHYLRXVO\ 7KHUH ZDV QR UHDVRQDEOH RU OHJDO UHDVRQ IRU WKLV UHSRUWDQGLWZDVGRQHIRUFRPSOHWHO\LPSURSHUSXUSRVHVZLWKWKHH[SUHVVLQWHQWWRGDPDJH0U $OOH[KLELWVLQFRUSRUDWHGE\UHIHUHQFHIURPSULRUSOHDGLQJDQGFRPSODLQWIRUVDNHRIEUHYLW\ Case: 20-1726 Document: 003113816284 Page: 46 Date Filed: 03/19/2021 &RQER\KLVDELOLW\WRUHFHLYHFUHGLWDQGWRGHIDPHKLPIRUDQ\RQHHOVHZKRZRXOGSRWHQWLDOO\ DWWHPSWWROHQGKLPPRQH\DQGVHHVXFKDGHURJDWRU\UHSRUW )XUWKHUWKHUHLVQRTXHVWLRQWKDW6HGD&RJKDGDQLQWHUHVWLQWKLVPDWWHU $GGLWLRQDOO\ 6HH([KLELW'±PRGLILFDWLRQ WKH\ZHUHFRPPXQLFDWLQJZLWK$SSHOODQWDVODWHDV7KHUHLVQRTXHVWLRQWKH\VWLOOKDGDQ 3ODLQWLII Some of the people who communicated with Plaintiff from Seda Cog were X and B. 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