12-985-cv
Gabriele v. Law Office of Martha Croog, LLC
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY
PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on
the 27th day of November two thousand twelve.
PRESENT: JOHN M. WALKER, JR.,
DEBRA ANN LIVINGSTON,
CHRISTOPHER F. DRONEY,
Circuit Judges.
MICHAEL V. GABRIELE,
Plaintiff-Appellant,
-v.- No. 12-985-cv
AMERICAN HOME MORTGAGE
SERVICING, INC., and LAW OFFICE
OF MARTHA CROOG, LLC,
Defendant-Appellees.
For Plaintiff-Appellant: J. HANSON GUEST, Hartford, Connecticut
For Defendant-Appellee: MARISSA I. DELINKS, Boston, Massachusetts, for
Defendant-Appellee American Home Mortgage Servicing,
Inc.
MARTHA CROOG, Hartford, Connecticut, for Law office of
Martha Croog, LLC.
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court be AFFIRMED.
Plaintiff-Appellant Michael V. Gabriele (“Gabriele”) appeals from the February 9, 2012
judgment of the United States District Court for the District of Connecticut (Eginton, J.), dismissing
Gabriele’s claims against Defendant-Appellees American Home Mortgage Servicing Inc.
(“American”) and the Law Office of Martha Croog, LLC (“Croog”) under the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Connecticut Unfair Trade Practices Act
(“CUTPA”), Conn. Gen. Stat. § 42-110a et seq., and his claim of intentional misrepresentation
against American. We assume the parties’ familiarity with the underlying facts and procedural
history of this case, which we reference only as necessary to explain our decision to affirm.
I. Background
This action arises from an underlying Connecticut Superior Court suit in which law firm
Croog, representing Deutsche Bank National Trust (“Deutche Bank”), sought foreclosure of
Gabriele’s residence. Neither Croog nor American, a loan servicing corporation, was a party to the
state court foreclosure action. During the proceedings, Gabriele moved for sanctions against
Deutsche Bank, complaining that Deutsche Bank had prematurely filed two motions for default
judgment and had failed to forward an exhibit attached to the complaint. The state court summarily
denied the motion.
After the state court entered a judgment of strict foreclosure on October 4, 2010, Gabriele
filed the instant federal suit, claiming that Croog’s and American’s conduct during the course of the
state foreclosure action violated the FDCPA, CUTPA, and Connecticut common law. The operative
version of the complaint describes several state court filings that Gabriele alleges were false,
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deceptive, unfair, or harassing. These include: Croog’s affirmation in the state complaint that it
would serve copies of exhibits on Gabriele, and the filing of a notice of compliance with that
requirement, when, according to Gabriele, Croog never forwarded an exhibit; Croog’s filing of two
motions for default when Gabriele was allegedly not in default; Croog’s premature filing of a motion
for judgment of strict foreclosure in violation of a procedural rule; and Croog’s filing of three
allegedly false affidavits, two of which were signed by employees of American. The district court
granted the defendants’ motion to dismiss on the grounds that it lacked subject matter jurisdiction
to hear Gabriele’s claims against Croog and that Gabriele had failed to state a claim against either
defendant. This appeal followed.
II. Discussion
A. Subject Matter Jurisdiction
The district court held that the Rooker-Feldman doctrine barred it from hearing Gabriele’s
claims against Croog. “Because Rooker-Feldman goes to subject-matter jurisdiction, we review de
novo the district court’s application of the doctrine.” Hoblock v. Albany Cnty. Bd. of Elections, 422
F.3d 77, 83 (2d Cir. 2005). “Rooker-Feldman directs federal courts to abstain from considering
claims when four requirements are met: (1) the plaintiff lost in state court, (2) the plaintiff complains
of injuries caused by the state court judgment, (3) the plaintiff invites district court review of that
judgment, and (4) the state court judgment was entered before the plaintiff’s federal suit
commenced.” McKithen v. Brown, 626 F.3d 143, 154 (2d Cir. 2010) (quoting Hoblock, 422 F.3d
at 85).
Gabriele lost in state court, and, for purposes of this appeal, we assume without deciding that
Rooker-Feldman applies when a state trial court renders its judgment prior to the plaintiff filing suit
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in federal court—irrespective of the status of the plaintiff’s appeals in the state court system.
Nonetheless, the Rooker-Feldman doctrine still does not bar Gabriele’s claims against Croog
because Gabriele does not complain of injuries caused by the state court judgment. See McKithen
v. Brown, 481 F.3d 89, 97-98 (2d Cir. 2007) (“[T]he Rooker-Feldman doctrine turns not on the
similarity between a party’s state-court and federal-court claims . . . but rather on the causal
relationship between the state-court judgment and the injury of which the party complains in federal
court.”). The alleged litigation misconduct was not the product of the state court’s denial of
sanctions, its judgment of strict foreclosure, or any other decision rendered, but rather, was “simply
ratified, acquiesced in, or left unpunished by [the state court judgment].” Hoblock, 422 F.3d at 88.
Thus, since Gabriele does not seek to undo the state court judgment through this federal action, the
Rooker-Feldman doctrine does not apply. See Exxon-Mobil Corp. v. Saudi Basic Indus. Corp., 544
U.S. 280, 293-94 (2005).
Ordinary claim and issue preclusion do not prevent federal review in this case either, since
the same claims and issues were not decided in the state court. See EDP Med. Computer Sys., Inc.
v. United States, 480 F.3d 621, 624 (2d Cir. 2007) (“[Res judicata] bars later litigation if [an] earlier
decision was (1) a final judgment on the merits, (2) by a court of competent jurisdiction, (3) in a case
involving the same parties or their privies, and (4) involving the same cause of action.” (internal
quotation marks omitted)); Bear, Stearns & Co. v. 1109580 Ontario, Inc., 409 F.3d 87, 91 (2d Cir.
2005) (“Collateral estoppel is permissible as to a given issue if (1) the identical issue was raised in
a previous proceeding; (2) the issue was actually litigated and decided in the previous proceeding;
(3) the party had a full and fair opportunity to litigate the issue; and (4) the resolution of the issue
was necessary to support a valid and final judgment on the merits.” (internal quotation marks
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omitted)). Even assuming Gabriele’s motion for sanctions in the state court complained of all the
same misconduct as alleged in its federal complaint—which it did not—determining whether that
misconduct amounted to substantive bad faith sufficient to warrant sanctions requires a substantially
different analysis than determining whether it violated the FDCPA or CUTPA. Compare Fattibene
v. Kealey, 558 A.2d 677, 685 (Conn. App. 1989) (holding that in deciding whether to award
sanctions, “the court must assess whether there has been substantive bad faith as exhibited by, for
example, a party’s use of oppressive tactics or its wilful violations of court orders”), with Easterling
v. Collecto, Inc., 692 F.3d 229, 233-34 (2d Cir. 2012) (per curiam) (evaluating FDCPA claim under
the objective “least sophisticated consumer” standard and noting that under the FDCPA “a consumer
need not show intentional conduct by the debt collector to be entitled to damages” (internal
quotation marks omitted)). In theory, Croog’s alleged misconduct could have violated the statutes,
but not risen to the level of substantive bad faith necessary for sanctions. Thus, this Court is not
precluded from reviewing the same misconduct pursuant to Gabriele’s FDCPA and CUTPA claims.
B. Failure to State a Claim
We review de novo a district court judgment granting a motion to dismiss a complaint,
accepting all factual allegations in the complaint as true and drawing all reasonable inferences in
favor of the plaintiff. See, e.g., Schlessinger v. Valspar Corp., 686 F.3d 81, 85 (2d Cir. 2012). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(internal quotation marks omitted).
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1. FDCPA Claim Against Croog
Congress enacted the FDCPA “to protect consumers from deceptive or harassing actions
taken by debt collectors[,]” Kropelnicki v. Siegel, 290 F.3d 118, 127 (2d Cir. 2002), with the purpose
of “limiting the suffering and anguish often inflicted by independent debt collectors.” Russell v.
Equifax A.R.S., 74 F.3d 30, 34 (2d Cir. 1996) (internal quotation marks omitted). Section 1692e of
the FDCPA proscribes debt collectors from using “any false, deceptive, or misleading representation
or means in connection with the collection of any debt[,]” and provides a non-exhaustive list of
example violations. 15 U.S.C. § 1692e. In particular, Gabriele alleges that Croog violated sections
1692e(2)(A), which proscribes “[t]he false representation of the character, amount, or legal status
of any debt,” 1692e(9), which proscribes “[t]he use or distribution of any written communication
which simulates or is falsely represented to be a document authorized, issued, or approved by any
court . . . or which creates a false impression as to its source, authorization, or approval,” and
1692e(10), which proscribes “[t]he use of any false representation or deceptive means” to collect
a debt. Gabriele also claims that Croog violated section 1692f, which makes illegal the use of
“unfair or unconscionable means” to collect a debt. 15 U.S.C. § 1692f.
Although “[i]t is clear that Congress painted with a broad brush in the FDCPA[,]” Pipiles
v. Credit Bureau of Lockport, Inc., 886 F.2d 22, 27 (2d Cir. 1989), not every technically false
representation by a debt collector amounts to a violation of the FDCPA. Courts in this Circuit
evaluate claims under the FDCPA according to how the “least sophisticated consumer” would
understand the communication. See Ellis v. Solomon & Solomon, P.C., 591 F.3d 130, 135 (2d Cir.
2010). As a result, “FDCPA protection ‘does not extend to every bizarre or idiosyncratic
interpretation of a collection notice’ and courts should apply the standard ‘in a manner that protects
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debt collectors against liability for unreasonable misinterpretations . . . .’” Easterling, 692 F.3d at
233-34 (quoting Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993)). Additionally, several
other circuit courts, as well as a number of district courts in this Circuit, read a materiality
requirement into the FDCPA’s prohibition of false, deceptive, or misleading practices in the
collection of a debt. See, e.g., Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 374 (4th Cir. 2012)
(recognizing that “courts have generally held that violations grounded in ‘false representations’ must
rest on material misrepresentations”); Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1034 (9th Cir.
2010) (finding that mislabeling in state complaint of interest owed on debt was not a material
misrepresentation under the FDCPA); Miller v. Javitch, Block & Rathbone, 561 F.3d 588, 596 (6th
Cir. 2009) (finding that state court complaint which mischaracterized debtor’s credit-card debt as
a loan was not a materially false or misleading statement under the FDCPA); Hahn v. Triumph
P’ships LLC, 557 F.3d 755, 758 (7th Cir. 2009) (Easterbrook, C.J.) (holding that “a false but non-
material statement is not actionable” under the FDCPA because “[a] statement cannot mislead unless
it is material”); Lane v. Fein, Such & Crane LLP, 767 F. Supp. 2d 382, 389-90 (E.D.N.Y. 2011)
(finding that misstatement in state complaint was not materially false or misleading under FDCPA);
Walsh v. Law Offices of Howard Lee Schiff, P.C., No. 11 Civ. 1111, 2012 WL 4372251, at *3-6 (D.
Conn. Sept. 24, 2012) (adopting materiality requirement and dismissing § 1692e claims based on
discovery disputes and alleged procedural misconduct in state court action).
Our case law demonstrates that communications and practices that could mislead a putative-
debtor as to the nature and legal status of the underlying debt, or that could impede a consumer’s
ability to respond to or dispute collection, violate the FDCPA. For example, we have held that a
debt collector could be liable under the FDCPA for a false statement that a borrower’s debt was
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ineligible for bankruptcy, see Easterling, 692 F.3d at 235 (“[N]ot only is the Collection Letter’s
representation [that consumer’s student debt was ineligible for bankruptcy] literally false, it is also
fundamentally misleading . . . .”); and for falsely representing that the collector had the authority to
initiate legal proceedings against the debtor, see Bentley v. Great Lakes Collection Bureau, 6 F.3d
60, 62 (2d Cir. 1993). See also Sykes v. Mel Harris & Assocs., LLC, 757 F. Supp. 2d 413, 424
(S.D.N.Y. 2010) (denying motion to dismiss FDCPA claim alleging that defendant law firm engaged
in scheme to default debtors through the filing of affidavits falsely attesting that debtors had been
served with complaints in debt collection suits). We have also held that communications from debt
collectors that are misleading or deceptive as to the identity or involvement of the debt collector
violate the FDCPA. See Maguire v. Citicorp Retail Servs., Inc., 147 F.3d 232, 237-38 (2d Cir.
1998); Clomon, 988 F.2d at 1321-22 (finding that mass-produced collection letters bearing the
facsimile signature and letterhead of an attorney who never actually reviewed the letters or read the
consumer’s files violated the FDCPA). And debt collection practices that are contradictory, vague,
or threatening create FDCPA liability as well. See, e.g., Russell, 74 F.3d at 35; Pipiles, 886 F.2d
at 25-26.
Although statements made and actions taken in furtherance of a legal action are not, in and
of themselves, exempt from liability under the FDCPA, see Goldman v. Cohen, 445 F.3d 152, 157
(2d Cir. 2006), the false statements of which Gabriele complains do not amount to the kind of
misleading and deceptive practices that fall within the ambit of the FDCPA, and therefore fail to
state a plausible claim. Gabriele alleges that Croog prematurely filed two motions for default and
a motion for judgment of strict foreclosure, in violation of procedural rules and deadlines set by the
court, thereby forcing Gabriele to “expend unnecessary resources” defending against those motions.
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Second Amend. Compl. ¶ 36. But the FDCPA does not guarantee consumers an efficient or thrifty
resolution of their putative debt, nor would the filing of three untimely motions interfere with a
consumer’s ability to answer and defend himself. See Walsh, 2012 WL 4372251, at *5 (“[T]he fact
that Walsh was compelled to retain counsel to defend against the debt does not transform
defendants’ procedural misconduct into material misrepresentations within the ambit of section
1692e.”).
Gabriele also alleges that Croog falsely stated that it had forwarded both exhibits to the
complaint; submitted an affidavit incorrectly representing that there were no set-offs or
counterclaims; filed an unsigned affidavit; and misrepresented that Gabriele was ineligible for a
federal loss mitigation program when in fact he was under consideration for such a program in
mediation. However, “[t]he hypothetical least sophisticated consumer . . . is neither irrational nor
a dolt.” Ellis, 591 F.3d at 135 (internal quotation marks omitted). These filings, even if false, would
not mislead the least sophisticated consumer, particularly represented by counsel, as here, into
believing that he had already received an exhibit he had not received, that he had not filed
counterclaims that he had filed three months before, or that he was not under consideration for a
program he was in mediation to address. “Where an attorney is interposed as an intermediary
between a debt collector and a consumer, we assume the attorney, rather than the FDCPA, will
protect the consumer from a debt collector’s fraudulent or harassing behavior.” Kropelnicki, 290
F.3d at 128.
Ultimately, Gabriele’s allegations are more akin to those in cases such as Donohue, 592 F.3d
1027, Miller, 561 F.3d 588, and Walsh, 2012 WL 4372251, in which the courts determined that the
alleged misstatements in court filings amounted to “mere technical falsehoods that misle[d] no one.”
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Donohue, 592 F.3d at 1034. Croog’s affidavits and motions were not misleading or deceptive as to
the nature or legal status of Gabriele’s debt, nor would they have prevented the least sophisticated
consumer from responding to or disputing the action. Within the context of an adversary proceeding
in state court between two represented parties, these allegations simply do not state plausible claims
under the FDCPA.1
2. CUTPA Claim Against Croog
Gabriele’s complaint also fails to state a claim against Croog under the CUTPA.
“[A]lthough all lawyers are subject to CUTPA, most of the practice of law is not.” Suffield Dev.
Assocs. Ltd. P’ship v. Nat’l Loan Investors, L.P., 802 A.2d 44, 53 (Conn. 2002). The Connecticut
Supreme Court has held that “[t]he noncommercial aspects of lawyering—that is, the representation
of a client in a legal capacity—should be excluded [from liability under the CUTPA] for public
policy reasons.” Haynes v. Yale-New Haven Hosp., 699 A.2d 964, 973 (Conn. 1997). Croog’s
alleged misconduct, consisting of the filing of court documents, was performed as part of its legal
representation of Deutsche Bank in the state debt collection action, and did not consist of
entrepreneurial work such as advertising and bill collection. Therefore, it is immune from liability
under the CUTPA. See Suffield, 802 A.2d at 53 (“The ‘entrepreneurial’ exception [to the CUTPA]
is just that, a specific exception from CUTPA immunity for a well-defined set of
activities—advertising and bill collection, for example.”).
1
As we have recognized in past decisions, the protective purposes of the FDCPA typically are not
implicated “when a debtor is instead protected by the court system and its officers.” Simmons v.
Roundup Funding, LLC, 622 F.3d 93, 96 (2d Cir. 2010) (holding that inflated proof of claim in
bankruptcy court cannot form basis of FDCPA action). In Connecticut, “the state foreclosure
process is highly regulated and court controlled.” Derisme v. Hunt Leibert Jacobson P.C., No. 10
Civ. 23, 2012 WL 3000386, at *16 (D. Conn. July 23, 2012). When that is the case, the state court’s
authority to discipline will usually be sufficient to protect putative-debtors like Gabriele from
legitimately abusive or harassing litigation conduct. But see Sykes, 757 F. Supp. 2d at 423-24.
10
The cases Gabriele cites are not to the contrary, since they involve FDCPA claims. See
Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 130 S. Ct. 1605, 1608 (2010) (holding
that FDCPA bona fide error defense does not apply to lawyer’s incorrect interpretation of the
statute’s requirements); Allen ex rel. Martin v. LaSalle Bank N.A., 629 F.3d 364, 369 (3d Cir. 2011)
(vacating dismissal and remanding FDCPA class action brought against law firm). Although they
are sometimes pled together, the CUTPA and the FDCPA are distinct statutory regimes enacted by
separate sovereigns for different purposes, and they need not advance the same public policy
regarding the susceptibility of lawyers to suit.
3. Claims Against American
The complaint includes only two factual allegations specific to American—that its
employees signed two allegedly false affidavits filed in state court. As the district court held, the
complaint does not allege that American acquired Gabriele’s debt before it was in default and so
fails plausibly to allege that American qualifies as a debt collector under the FDCPA. See 15 U.S.C.
§ 1692a(6)(F)(iii) (“The term [debt collector] does not include . . . any person collecting or
attempting to collect any debt owed or due or asserted to be owed or due to the extent such activity
. . . concerns a debt which was not in default at the time it was obtained by such person.”).
Moreover, even if the complaint did adequately allege that American qualified as a debt collector,
the allegations regarding the affidavits fail to state an FDCPA claim against American for the same
reasons that they fail to state a claim against Croog.
Relying on the same factual allegations, Gabriele claims that American committed
intentional or reckless misrepresentation. He further alleges, generally, that American advised him
to apply for a mortgage modification program that it knew or should have known was detrimental
11
to his interests, and misrepresented the amounts due on the debt. These allegations do not give rise
to a “strong inference of fraudulent intent . . . . by (1) alleging facts to show that defendants had both
motive and opportunity to commit fraud, or by (2) alleging facts that constitute strong circumstantial
evidence of conscious misbehavior or recklessness.” S.Q.K.F.C., Inc. v. Bell Atl. TriCon Leasing
Corp., 84 F.3d 629, 634 (2d Cir. 1996) (applying Federal Rule of Civil Procedure 9(b) to common
law fraud claim) (internal citations omitted). As the district court observed, the allegation that
American employees signed two false affidavits—one regarding the federal loss mitigation program,
and the other regarding known counterclaims—is not evidence of a motive; nor does it comprise
strong circumstantial evidence of conscious misbehavior or recklessness, since it is just as plausible
that the affiants made an honest mistake. Therefore, Gabriele’s intentional misrepresentation claim
must fail.
Gabriele’s CUTPA claim against American likewise fails because it is derivative of the
FDCPA and intentional misrepresentation claims. See Lindbergh v. Transworld Sys., Inc., 846 F.
Supp. 175, 181 (D. Conn. 1994); Walsh, 2012 WL 4372251, at *7; Derisme 2012 WL 3000386, at
*25.
Finally, the district court did not abuse its discretion in denying Gabriele leave to amend his
complaint. See Starr v. Sony BMG Music Entm’t, 592 F.3d 314, 321 (2d Cir. 2011) (reviewing
motions for leave to amend for abuse of discretion). Gabriele has already amended his complaint
three times, and the district court did not err in concluding that, in these circumstances, further
amendment would be futile. See Jones v. N.Y. State Div. of Military & Naval Affairs, 166 F.3d 45,
50 (2d Cir. 1999) (“[A] district court may properly deny leave when amendment would be futile.”).
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We have considered Gabriele’s remaining arguments and find them to be without merit. For
the foregoing reasons, the judgment of the district court is hereby AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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