15‐2311‐cv Scarola v. McCarthy, Burgess & Wolff
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 COURTʹS 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 ʺSUMMARY ORDERʺ). 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 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 11th day of February, two thousand sixteen.
PRESENT: BARRINGTON D. PARKER, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
SCAROLA MALONE & ZUBATOV LLP, Plaintiff,
RICHARD J.J. SCAROLA, Plaintiff‐Appellant,
v. 15‐2311‐cv
MCCARTHY, BURGESS & WOLFF, Defendant‐Appellee,
VERIZON COMMUNICATIONS, INC., Defendant.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x FOR PLAINTIFF‐APPELLANT: RICHARD J.J. SCAROLA, Alexander Zubatov, Scarola Malone & Zubatov LLP, New York, New York.
FOR DEFENDANT‐APPELLEE: CONCEPCION A. MONTOYA, Kyle M. Medley, Hinshaw & Culbertson LLP, New York, New York.
Appeal from the United States District Court for the Southern District of
New York (Castel, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the memorandum and order of the district court is
AFFIRMED.
Plaintiff‐appellant Richard J.J. Scarola (ʺScarolaʺ) appeals a June 24, 2015
memorandum and order of the United States District Court for the Southern District of
New York dismissing his claims. The district court granted the motion of defendant‐
appellee McCarthy, Burgess & Wolff (ʺMBWʺ) pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure to dismiss Scarolaʹs Fair Debt Collection Practices Act
(ʺFDCPAʺ) claim, 15 U.S.C. § 1692 et seq., on the ground that the alleged debt was not
covered by the FDCPA because it arose from a commercial and not a consumer
transaction.1 The district court then declined to exercise supplemental jurisdiction over
1 The district court did not enter a separate judgment dismissing the action as required by Fed. R. Civ. P. 58(a). When a judgment is required to be set out in a separate document but is not, judgment is deemed entered 150 days after the entry of the dispositive order. Fed. R. Civ. P. 58(c)(2)(B). Despite the lack of a judgment, this Court has jurisdiction to hear the appeal of the order, which was a ʺfinal decisionʺ within the meaning of 2 the state law claims. We assume the partiesʹ familiarity with the underlying facts, the
procedural history of the case, and the issues on appeal.
We review the grant of a motion to dismiss under Rule 12(b)(6) de novo,
ʺaccepting as true the factual allegations in the complaint and drawing all inferences in
the plaintiffʹs favor.ʺ Biro v. Condé Nast, 807 F.3d 541, 544 (2d Cir. 2015). ʺ[N]aked
assertion[s]ʺ or ʺ[t]hreadbare recitals of the elements of a cause of action, supported by
mere conclusory statements,ʺ however, are not entitled to a presumption of truth.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
While the FDCPA protects consumers from ʺabusive debt collection
practices,ʺ 15 U.S.C. § 1692(e), it ʺapplies only in instances where a debt collector
attempts to collect a ʹdebtʹ within the meaning of the Act,ʺ Degrosiellier v. Solomon &
Solomon, P.C., No. 00‐CV‐1065, 2001 WL 1217181, at *3 (N.D.N.Y. Sept. 27, 2001) (citing
15 U.S.C. § 1692c‐j). Under the statute, ʺdebtʺ is defined as ʺany obligation or alleged
obligation of a consumer to pay money arising out of a transaction in which the money,
property, insurance, or services which are the subject of the transaction are primarily for
personal, family, or household purposes.ʺ 15 U.S.C. § 1692a(5) (emphases added). ʺWhat
matters in the context of an FDCPA claim is the asserted basis for the obligation to pay.ʺ
Beauvoir v. Israel, 794 F.3d 244, 248 (2d Cir. 2015) (internal quotation marks omitted).
28 U.S.C. § 1291. See Leftridge v. Conn. State Trooper Officer No. 1283, 640 F.3d 62, 66‐67 (2d Cir. 2011) (finding this Court has jurisdiction to review a ʺfinal decisionʺ—ʺone which ends the litigation on the merits and leaves nothing for the court to do but execute the judgmentʺ (quoting Catlin v. United States, 324 U.S. 229, 233 (1945))). 3 The FDCPA does not cover ʺactions arising out of commercial debts.ʺ Goldman v. Cohen,
445 F.3d 152, 154 n.1 (2d Cir. 2006).
Here, as alleged in the second amended complaint (designated by
plaintiffs as the ʺFurther Amended Complaintʺ) (hereinafter, the ʺComplaintʺ), the
alleged debt arose from purported transactions related to a business telephone account
of the law firm Scarola Malone & Zubatov LLP (ʺSMZʺ). Clearly, this was not an
account used ʺprimarily for personal, family, or household purposes.ʺ Accordingly, to
the extent that the alleged debt, whether actually owed or mistakenly assessed, stems
from telecommunications services provided by Verizon to SMZ, the claim arises out of a
commercial transaction and is not covered by the FDCPA. Goldman, 445 F.3d at 154 n.1;
see also Goldsmith v. HSW Financial Recovery, Inc., 757 F. Supp. 2d 95, 98‐99 (D.N.H. 2010)
(attempt to collect from individual on a non‐existent debt obligation alleged to have
arisen from a commercial lease was not for personal, family, or household purposes,
and therefore not covered under the FDCPA).
In an effort to bring these claims under the FDCPA, Scarola alleges in the
Complaint that MBW attempted to collect alleged debts for payment of bills ʺof no
conceivable origin or basisʺ that must have arisen from a transaction that was ʺprimarily
for personal, family or household purposes.ʺ Complaint ¶¶ 1, 16, 49‐50. These
allegations, however, are mere conclusory statements not supported by facts from
which the inference could be reasonably drawn that collection efforts arose from a
4 consumer transaction.
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15‐2311‐cv Scarola v. McCarthy, Burgess & Wolff
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 COURTʹS 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 ʺSUMMARY ORDERʺ). 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 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 11th day of February, two thousand sixteen.
PRESENT: BARRINGTON D. PARKER, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
SCAROLA MALONE & ZUBATOV LLP, Plaintiff,
RICHARD J.J. SCAROLA, Plaintiff‐Appellant,
v. 15‐2311‐cv
MCCARTHY, BURGESS & WOLFF, Defendant‐Appellee,
VERIZON COMMUNICATIONS, INC., Defendant.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x FOR PLAINTIFF‐APPELLANT: RICHARD J.J. SCAROLA, Alexander Zubatov, Scarola Malone & Zubatov LLP, New York, New York.
FOR DEFENDANT‐APPELLEE: CONCEPCION A. MONTOYA, Kyle M. Medley, Hinshaw & Culbertson LLP, New York, New York.
Appeal from the United States District Court for the Southern District of
New York (Castel, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the memorandum and order of the district court is
AFFIRMED.
Plaintiff‐appellant Richard J.J. Scarola (ʺScarolaʺ) appeals a June 24, 2015
memorandum and order of the United States District Court for the Southern District of
New York dismissing his claims. The district court granted the motion of defendant‐
appellee McCarthy, Burgess & Wolff (ʺMBWʺ) pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure to dismiss Scarolaʹs Fair Debt Collection Practices Act
(ʺFDCPAʺ) claim, 15 U.S.C. § 1692 et seq., on the ground that the alleged debt was not
covered by the FDCPA because it arose from a commercial and not a consumer
transaction.1 The district court then declined to exercise supplemental jurisdiction over
1 The district court did not enter a separate judgment dismissing the action as required by Fed. R. Civ. P. 58(a). When a judgment is required to be set out in a separate document but is not, judgment is deemed entered 150 days after the entry of the dispositive order. Fed. R. Civ. P. 58(c)(2)(B). Despite the lack of a judgment, this Court has jurisdiction to hear the appeal of the order, which was a ʺfinal decisionʺ within the meaning of 2 the state law claims. We assume the partiesʹ familiarity with the underlying facts, the
procedural history of the case, and the issues on appeal.
We review the grant of a motion to dismiss under Rule 12(b)(6) de novo,
ʺaccepting as true the factual allegations in the complaint and drawing all inferences in
the plaintiffʹs favor.ʺ Biro v. Condé Nast, 807 F.3d 541, 544 (2d Cir. 2015). ʺ[N]aked
assertion[s]ʺ or ʺ[t]hreadbare recitals of the elements of a cause of action, supported by
mere conclusory statements,ʺ however, are not entitled to a presumption of truth.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
While the FDCPA protects consumers from ʺabusive debt collection
practices,ʺ 15 U.S.C. § 1692(e), it ʺapplies only in instances where a debt collector
attempts to collect a ʹdebtʹ within the meaning of the Act,ʺ Degrosiellier v. Solomon &
Solomon, P.C., No. 00‐CV‐1065, 2001 WL 1217181, at *3 (N.D.N.Y. Sept. 27, 2001) (citing
15 U.S.C. § 1692c‐j). Under the statute, ʺdebtʺ is defined as ʺany obligation or alleged
obligation of a consumer to pay money arising out of a transaction in which the money,
property, insurance, or services which are the subject of the transaction are primarily for
personal, family, or household purposes.ʺ 15 U.S.C. § 1692a(5) (emphases added). ʺWhat
matters in the context of an FDCPA claim is the asserted basis for the obligation to pay.ʺ
Beauvoir v. Israel, 794 F.3d 244, 248 (2d Cir. 2015) (internal quotation marks omitted).
28 U.S.C. § 1291. See Leftridge v. Conn. State Trooper Officer No. 1283, 640 F.3d 62, 66‐67 (2d Cir. 2011) (finding this Court has jurisdiction to review a ʺfinal decisionʺ—ʺone which ends the litigation on the merits and leaves nothing for the court to do but execute the judgmentʺ (quoting Catlin v. United States, 324 U.S. 229, 233 (1945))). 3 The FDCPA does not cover ʺactions arising out of commercial debts.ʺ Goldman v. Cohen,
445 F.3d 152, 154 n.1 (2d Cir. 2006).
Here, as alleged in the second amended complaint (designated by
plaintiffs as the ʺFurther Amended Complaintʺ) (hereinafter, the ʺComplaintʺ), the
alleged debt arose from purported transactions related to a business telephone account
of the law firm Scarola Malone & Zubatov LLP (ʺSMZʺ). Clearly, this was not an
account used ʺprimarily for personal, family, or household purposes.ʺ Accordingly, to
the extent that the alleged debt, whether actually owed or mistakenly assessed, stems
from telecommunications services provided by Verizon to SMZ, the claim arises out of a
commercial transaction and is not covered by the FDCPA. Goldman, 445 F.3d at 154 n.1;
see also Goldsmith v. HSW Financial Recovery, Inc., 757 F. Supp. 2d 95, 98‐99 (D.N.H. 2010)
(attempt to collect from individual on a non‐existent debt obligation alleged to have
arisen from a commercial lease was not for personal, family, or household purposes,
and therefore not covered under the FDCPA).
In an effort to bring these claims under the FDCPA, Scarola alleges in the
Complaint that MBW attempted to collect alleged debts for payment of bills ʺof no
conceivable origin or basisʺ that must have arisen from a transaction that was ʺprimarily
for personal, family or household purposes.ʺ Complaint ¶¶ 1, 16, 49‐50. These
allegations, however, are mere conclusory statements not supported by facts from
which the inference could be reasonably drawn that collection efforts arose from a
4 consumer transaction. Accordingly, they are not entitled to a presumption of truth.
Iqbal, 556 U.S. at 678.
On appeal, Scarola argues that the Complaint could not be dismissed at
the pleadings stage because the origin of the false debt ʺpresents a question as to the
true ʹcharacterʹ of the underlying events.ʺ Appellantʹs Br. at 25‐27. This argument is
without merit. Scarola did not include any factual allegations in his Complaint to
support the inference that the amount in dispute arose from a consumer transaction,
and, accordingly, he failed to state a claim upon which relief could be granted. Cf. Davis
v. Hollins Law, 968 F. Supp. 2d 1072, 1080 (E.D. Cal. 2013) (material issue of fact existed
where plaintiff alleged debt arising from personal charges on a business credit card).
Again, he does not allege any transaction that was ʺprimarily for personal, family, or
household purposes.ʺ 15 U.S.C. § 1692a(5).
Scarola also argues that in the circumstance where a disputed debt never
actually existed and collection efforts were targeted at an individual, the alleged non‐
existent debt should be deemed to arise from a personal transaction. We reject this
argument because it contradicts the plain language of the statute by attempting to
define ʺconsumer debt in accordance with the actions of the debt collector, rather than
the true nature of the debt.ʺ Slenk v. Transworld Sys., Inc., 236 F.3d 1072, 1076 (9th Cir.
2001) (citing 15 U.S.C. § 1692a(5)); see also Holman v. W. Valley Collection Servs., Inc., 60 F.
Supp. 2d 935, 937 (D. Minn. 1999) (ʺ[I]f a communication to the debtorʹs home converted
5 any commercial debt into an obligation under the FDCPA, it would be tantamount to an
amendment of the clear intent of Congress.ʺ).
We have reviewed Scarolaʹs remaining arguments and conclude they are
without merit. Accordingly, we AFFIRM the memorandum and order of the district
court dismissing Scarolaʹs Complaint under Rule 12(b)(6).
FOR THE COURT: Catherine OʹHagan Wolfe, Clerk