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Dazza v. Kirschenbaum, Phillips & Levy, P.C.

United States District Court, D. Maryland

April 10, 2017

MARIO DAZZA, Plaintiff
v.
KIRSCHENBAUM, PHILLIPS & LEVY, P.C., et al ., Defendants.

          MEMORANDUM OPINION

          RICHARD D. BENNETT, UNITED STATES DISTRICT JUDGE

         Plaintiff Mario Dazza (“Plaintiff” or “Dazza”) has brought this putative class action against Defendants Kirschenbaum, Phillips & Levy, P.C. (“Kirschenbaum”) and Levy & Associates, LLC (“Levy & Associates”) (collectively “Defendants”), alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. (Count II), and the Maryland Consumer Debt Collection Act (“MCDCA”), Md. Code Ann., Com. Law § 14-201, et seq. (Count III), in connection with Defendants' efforts to collect on void judgments obtained against Dazza and members of the putative class by LVNV Funding, LLC (“LVNV”), an unlicensed collection agency.[1] Compl., ¶¶ 1-32, ECF No. 1. Currently pending before this Court is Defendants' Motion to Dismiss Plaintiff's Complaint, or alternatively, Motion for Stay of Proceedings (ECF No. 9), pursuant to the “Colorado River” abstention doctrine articulated by the United States Supreme Court in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). This Court has recently denied a similar Motion to Dismiss, or alternatively, Stay Proceedings in Doyle v. Frontline Asset Strategies, LLC, No. RDB-16-3501, 2017 WL 1230819, at *6 (D. Md. Apr. 4, 2017), a related action against two separate debt collectors, also alleging violations of the Fair Debt Collection Practices Act and Maryland Consumer Debt Collection Act with respect to their efforts to collect on void judgments obtained by LVNV. The parties' submissions have been reviewed, and no hearing is necessary. See Local Rule 105.6 (D. Md. 2016). The Defendants have failed to satisfy the criteria for abstention set forth in Colorado River, and recently confirmed in vonRosenberg v. Lawrence, 849 F.3d 163, 168 (4th Cir. 2017). Accordingly, for the reasons stated herein, Defendants' Motion to Dismiss Plaintiff's Complaint, or alternatively, Motion for Stay of Proceedings (ECF No. 9) is DENIED.

         BACKGROUND

         I. LVNV Funding, LLC's Maryland State Court Judgment Against Mario Dazza

         Plaintiff Mario Dazza (“Plaintiff” or “Dazza”) is a resident of Baltimore County, Maryland. Compl., ¶ 5, ECF No. 1. On March 18, 2008, LVNV Funding, LLC (“LVNV”), a collection agency, sued Dazza in the District Court of Maryland for Baltimore County, Case No. 080400091682008, “based upon a consumer claim that it acquired in default from another for pennies on the dollar.” Id., ¶ 23. LVNV subsequently “obtained an affidavit judgment of $1, 255.04 plus pre-judgment interest and costs against [Dazza] on June 10, 2008 ([the] “Dazza Judgment”).” Id.

         II. Finch v, LVNV Funding, LLC Class Action Filed in the Circuit Court for Baltimore City, Maryland

         On November 11, 2009, Larry Finch (“Finch”) and Kurt A. Dorsey (“Dorsey”), two debtors against whom LVNV had also obtained judgments, filed a putative class action against LVNV in the Circuit Court for Baltimore City, Maryland (the “Finch Action”) on behalf of the class of “persons sued by LVNV in Maryland state courts from October 30, 2007 through February 17, 2010 against whom LVNV obtained a judgment for an alleged debt, interest or costs, including attorneys['] fees in its favor in an attempt to collect a consumer debt” (the “Finch Class”). See Finch v. LVNV Funding, LLC, 71 A.3d 193, 195 (Md. Ct. Spec. App. 2013). The facts of that action, and its current procedural posture, have been thoroughly summarized by this Court in the related case of Doyle v. Frontline Asset Strategies, LLC, No. RDB-16-3501, 2017 WL 1230819, at *2 (D. Md. Apr. 4, 2017).

         In summary, Finch and Dorsey (collectively the “Finch Plaintiffs”) alleged “that LVNV engaged in illegal collection of debts because LVNV was not licensed as a collection agency in Maryland, as required by the Maryland Collection Agency Licensing Act (“MCALA”), Md. Code Ann., Bus. Reg. § 7-301.” Id. Upon motion of LVNV, the Circuit Court dismissed the Finch Action, reasoning that all “claims [we]re barred as an impermissible attempt to mount a collateral attack on the judgments entered by the District Court of Maryland.” Id. at 195-96. However, on appeal, the Court of Special Appeals of Maryland reversed the Circuit Court Judgment and remanded the Finch Action for further proceedings in an opinion dated June 28, 2013, holding that “LVNV was not licensed when it obtained judgments against [the Finch Plaintiffs] in the [D]istrict [C]ourt, ” that “the underlying [D]istrict [C]ourt judgments [we]re void, ” and that the “parties may collaterally attack a void judgment in another court.” Id. at 196, 205. LVNV subsequently appealed the Judgment of the Court of Special Appeals of Maryland to the Court of Appeals of Maryland, but the Court of Appeals denied certiorari on October 8, 2013. See LVNV Funding v. Finch & Dorsey, 77 A.3d 1084 (Md. 2013).

         On remand, the Circuit Court for Baltimore City, Maryland certified the Finch Class and declared the judgments entered against the Finch Class members in the District Court of Maryland void and unenforceable. Compl., ¶ 9, ECF No. 1; see Finch Action Docket, p. 21, ECF No. 9-3. The Circuit Court entered a final judgment against LVNV. Id., ¶¶ 9-10. LVNV has now filed a second appeal in the Finch Action, which is currently pending before the Court of Special Appeals of Maryland. On appeal, LVNV challenges, inter alia, the Circuit Court's declaring the judgments obtained by LVNV to be void. Finch Action Not. of Appeal, ECF No. 9-7. As a member of the putative Finch Class, Dazza was sent notice of the pendency of the Finch Action and was given an opportunity to opt-out of the Finch Class. See Admin. Order & Notice, ECF No. 9-4. The Circuit Court docket confirms that Dazza did not opt-out of the Class Action. See Finch Action Docket, ECF No. 9-3.

         III. Defendants Kirschenbaum, Phillips & Levy, P.C. and Levy & Associates, LLC Collect on LVNV's 2008 Judgment Against Plaintiff Dazza

         On July 12, 2012, during the pendency of the Finch Action, but prior to the Court of Special Appeals' Judgment declaring the LVNV judgments void and unenforceable, “the District Court of Maryland for Baltimore County entered as satisfied the pre-judgment interest portion of the Dazza Judgment pursuant to a Settlement Agreement between the Maryland State Collection Agency Licensing Board in the Office of the Commissioner of Financial Regulation and LVNV.” Compl., ¶ 24, ECF No. 1. “LVNV then moved on January 17, 2013 to vacate the Dazza Judgment and dismiss the case.” Id., ¶ 25. That Motion was granted, ” but “the Dazza Judgment was [subsequently] reinstated on May 17, 2013, pursuant to LVNV's motion [to] reinstate the judgment in which LVNV stated the Motion to Vacate was mistakenly filed and the judgment was not satisfied.” Id., ¶¶ 25-26. “Dazza paid LVNV a lump sum payment of $1, 400.00 on or about May 26, 2015 in order to satisfy the Dazza Judgment by sending the payment to LVNV's collector, [Defendant] Kirschenbaum, Phillips & Levy, P.C. (“Kirschenbaum”).” Id., ¶ 27. Dazza alleges that Kirschenabum and Defendant Levy & Associates, LLC (“Levy & Associates”), also a collection agency, “are the same or a similar entity and are acting in concert in collecting invalid judgments given that they share the same principal place of business and the resident agent for Kirschenbaum is listed as the ‘incorporator' for Levy & Associates according to filings with the Ohio Secretary of State.” Id., ¶ 17.

         “Dazza was told that he could not purchase a home until the Judgment was satisfied.” Id., ¶ 27. “Kirschenbaum confirmed receipt of [Dazza's] payment on June 2, 2015 in writing.” Id., ¶ 28. “At no time did Kirschenbaum tell [Dazza] that the Dazza Judgment was void as a matter of law, was unenforceable, and that he owed no sum of money based upon the judgment.” Id., ¶ 28. As discussed supra, the Court of Special Appeals of Maryland held on June 28, 2013 in Finch v. LVNV Funding, LLC, 71 A.3d 193, 195 (Md. Ct. Spec. App. 2013) that judgments obtained by LVNV between 2007 and 2010 were void. Dazza alleges that he “did not become aware that the [Dazza Judgment] was void until he received a notice from the Circuit Court for Baltimore City, Maryland on or about December 10, 2015 informing him for the first time that the judgment was illegal and void.” Id., ¶ 29. “Dazza has not had use of the funds which he paid to Defendants that he could have used for other household purposes.” Id., ¶ 30. “Defendant Levy & Associates filed an ‘Order of Satisfaction' on behalf of LVNV on July 16, 2015 based on the void judgment.” Id., ¶ 31. “As a result of Defendants' concealment of the true facts, ” Dazza alleges that he “did not know that the Dazza Judgment was void and Defendants' collection of his assets was not proper and legal.” Id., ¶ 32. “Had [Kirschenbaum and Levy & Associates] disclosed these facts and not elected to conceal them from [ ] Dazza, he could have acted upon his rights to stop [their] illegal activity sooner, and not paid the unenforceable judgment.” Id.

         IV. The Instant Putative Class Action Against Kirschenbaum and Levy & Associates

         On December 9, 2016, Dazza brought the instant putative class action against Defendants Kirschenbaum and Levy & Associates, alleging “predatory and deceptive debt collection practices” on behalf of “[t]hose persons in the State of Maryland from who Kirschenbaum, Phillips & Levy, P.C. or Levy & Associates, LLC have communicated with directly or indirectly for the purpose of collecting a judgment entered in favor of an unlicensed collection agency that filed suit when it was unlicensed.” Id., ¶¶ 1, 43. Specifically, Dazza alleges that both Kirschenbaum and Levy & Associates have violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. (Count II), and the Maryland Consumer Debt Collection Act (“MCDCA”), Md. Code Ann., Com. Law § 14-201, et seq. (Count III). Id., ¶¶ 62-74. Dazza requests a Declaration of this Court that neither Kirschenbaum nor Levy & Associates are “entitled, directly or indirectly, as a matter of law to collect against any member of the Class based upon a void judgment” and that they “may not, directly or indirectly threaten or actually utilize the assistance of any Maryland court to collect or attempt to collect upon any void judgment acquired by an unlicensed collection agency upon a consumer claim” (Count I). Id., ¶ 60. Dazza further requests that both Kirschenbaum and Levy & Associates “be enjoined from attempting to collect any sums from [Dazza] and Class members, directly or indirectly, based upon a void judgment” (also Count I). Id., ΒΆ 61. Now pending before this Court is ...


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