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Schendzielos v. Silverman

United States District Court, D. Colorado

October 14, 2015

DAVID SILVERMAN; IRVIN BORESTEIN; LESLIE ANN FREIBERG; and BORENSTEIN & ASSOCIATES, LLC, a Colorado limited liability corporation, Defendants

          For Charles Schendzielos, Plaintiff: Nancy Clarice Johnson, Nancy C. Johnson, Attorney at Law, Lakewood, CO.

         For David Silverman, Defendant: David Silverman, David Silverman Attorney & Counselor At Law, LLC, Englewood, CO.

         For Irvin Borenstein, Leslie Ann Freiberg, Borenstein & Associates, LLC, a Colorado Limited Liability Corporation, Defendants: Irvin Allen Borenstein, Borenstein & Associates LLC, Centennial, CO.


         R. Brooke Jackson, United States District Judge.

         This matter is before the Court on the motion to dismiss [ECF No. 11] from defendants, Irvin Borenstein, Leslie Ann Freiberg, and Borenstein & Associates, LLC (collectively BAA), and on defendant David Silverman's motion to dismiss [ECF No. 12]. For the reasons stated below, BAA's motion to dismiss is denied, and Mr. Silverman's motion to dismiss is granted.


         This case involves an alleged violation of the Fair Debt Collection Practices Act (FDCPA). ECF No. 11 at 1. The plaintiff, Mr. Charles Schendzielos, is a resident of Denver, CO. ECF No. 9 at ¶ 1. BAA is a law firm in Centennial, CO with a debt collection practice. Id. at ¶ 5. It was formerly known as Silverman & Borenstein, PLLC. Id. at ¶ 5. At the time of filing, Mr. Borenstein was a managing member at BAA. Id. at ¶ 13. Ms. Freiberg was an associate attorney at BAA. Id. Mr. Silverman practices law as David Silverman Attorney & Counselor at Law, LLC in Englewood, CO. Id. at ¶ 2.

         This case began because Mr. Schendzielos owed $6,854.68 to Barclays Bank Delaware for an unpaid credit card debt. ECF No. 11 at 2. The bank hired BAA (then operating as Silverman & Borenstein, PLLC) to collect the debt. ECF No. 9 at ¶ 7. BAA began legal proceedings against Mr. Schendzielos in Denver County Court. ECF No. 11 at 2. Mr. Schendzielos answered the civil complaint, and the matter was set for trial. ECF No. 9 at ¶ 7. Before trial, the parties settled the case and entered into a stipulation. ECF No. 11 at 2. The stipulation was filed on March 28, 2013. ECF No. 9 at ¶ 7.

         Under the terms of the stipulation, Mr. Schendzielos agreed to pay the bank $4,500 in installments and to dismiss his counterclaim with prejudice. ECF No. 11 at 2. If Mr. Schendzielos failed to make a payment on time, the bank could seek judgment for the " entire amount claimed in the complaint less any payments received." ECF No. 11 at 2-3. The stipulation also provided that the bank must notify Mr. Schendzielos in writing ten days before seeking full judgment. Id. at 3.

         After Mr. Schendzielos allegedly failed to make a timely payment, BAA filed " a Motion For Entry Of Default Judgment On Broken Stipulation" in Denver County Court on September 19, 2014. ECF No. 9 at ¶ 8. The motion claimed that the defendants were entitled to judgment. Id. Mr. Schendzielos alleges that BAA's motion misrepresented the legal status of his debt. Id. at ¶ 8. He describes four false representations contained in the motion: (1) it indicated that Mr. Schendzielos had not made a timely answer to the complaint; (2) the motion did not mention that the bank had failed to give notice of the alleged default as required by the stipulation; (3) the motion did not acknowledge that Mr. Schendzielos had given the bank a timely cure payment for the alleged default; and (4) the motion " falsely conveyed" to the Denver County Court that Mr. Schendzielos " was in default with the court." Id.

         After the motion was filed, Mr. Schendzielos' counsel of record, Mr. Daniel Schendzielos, contacted Ms. Freiberg at BAA. Id. at ¶ 9. Ms. Freiberg acknowledged that the bank had failed to comply with the stipulation by not sending notice to Mr. Schendzielos. Id. According to Mr. Schendzielos, neither Ms. Freiberg nor anyone else at BAA took action to correct the " fraud they had committed upon the Denver County Court." [1] Id. Based on the representations in the motion, and without awaiting a response from Mr. Schendzielos, the court entered judgment on September 23, 2014. Id.

         Mr. Schendzielos brought a motion to vacate judgment on September 29, 2014. Id. at ¶ 11. The parties resolved their dispute without further court involvement. ECF No. 11 at 3. On January 26, 2015, BAA filed a motion to dismiss with prejudice that was granted by the state court judge. Id. Mr. Schendzielos claims that he is entitled to attorney fees and costs in connection with this case. ECF No. 9 at ¶ 16; 15 U.S.C. § 1692k(a)(1). He also argues that the defendants are liable for his damages for his emotional distress associated with their unlawful conduct. Id.


          I. Standard of Review

         In reviewing a motion to dismiss, the Court must accept the well-pleaded allegations of the complaint as true and construe them in the plaintiff's favor. However, the facts alleged must be enough to state a claim for relief that is plausible, not merely speculative. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A plausible claim is a claim that " allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Allegations that are purely conclusory are not entitled to an assumption of truth. Id. at 681. However, so long as the plaintiff offers sufficient factual allegations such that the right to relief is raised above the speculative level, he has met the threshold pleading standard. See e.g., Twombly, 550 U.S. at 556; Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).

         II. Borenstein & Associates' Motion to Dismiss

         BAA contends that Mr. Schendzielos has failed to state a claim upon which relief can be granted. ECF No. 11 at 5. Accordingly, BAA has moved to dismiss on the theory that a false statement violates the FDCPA only if it is made to the consumer or to a third party with a special relationship to the consumer. Id. at 2. BAA alleges that a false statement made to a state court judge is not actionable. Id. at 5.

         Congress enacted the FDCPA in 1977 " to eliminate abusive debt collection practices by debt collectors." 15 U.S.C. § 1692. The FDCPA regulates interactions between consumer debtors and " debt collectors." Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir. 2002). Therefore, a defendant can be held liable only if she is a debt collector within the meaning of the FDCPA.[2] James v. Wadas, 724 F.3d 1312, 1315-16 (10th Cir. 2013).

         The FDCPA contains a number of broad prohibitions: for example, the act proscribes harassment or abuse; false or misleading representations; and numerous delineated " unfair practices" during the collection of debts. Johnson, 305 F.3d at 1117; § 1692d-f. Under the section covering civil liability, the FDCPA allows a plaintiff to recover actual and statutory damages. § 1692k. The plaintiff need not show any actual damage to be entitled to damages up to $1,000 and costs and attorney's fees." Id. See Miranda v. Praxis Fin. Solutions, Inc., No. 13-CV-0931-WJM-MWJ, 2014 WL 5504745, at *2 (D. Colo. Oct. 31, 2014).

         At issue in this case is § 1692e, which prohibits a debt collector from using " any false, deceptive, or misleading representation or means in connection with the collection of any debt." § 1692e. In addition to this general ban, § 1692e lists a number of actions that are per se violations. In interpreting this section, courts have disagreed about whether § 1692e covers a debt collector's representations to a state court judge. SeeHemmingsen v. Messerli & Kramer, PA, 674 F.3d 814, 818 (8th Cir. 2012) (" [T]he circuit courts have struggled to define the extent to which a debt ...

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