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Barbato v. Greystone Alliance, LLC

United States District Court, M.D. Pennsylvania

October 19, 2017

MARY BARBATO, Plaintiff,
GREYSTONE ALLIANCE, LLC, et al., Defendants



         Before the court is remaining defendant Crown Asset Management, LLC's (“Crown”) motion for reconsideration, (Doc. 107), of Judge Nealon's decision, (Doc. 100), finding that Crown is a “debt collector” as defined in §1692a(6) of the Fair Debt Collection Practices Act, 15 U.S.C. §1692, et seq. (“FDCPA”), and denying its motion for summary judgment. Crown's motion is based on the recent decision by the Supreme Court in Henson v. Santander USA, Inc., __ U.S.__, 137 S.Ct. 1718 (June 12, 2017), issued after Judge Nealon's decision. After a thorough review of the record, the court will DENY defendant Crown's motion for reconsideration.[1]

         I. BACKGROUND

         This court will not repeat the full procedural and factual background of this case since they are detailed extensively in the March 30, 2017 Memorandum. (Doc. 100, pp. 1-14). See also 2017 WL 1193731 (M.D.Pa. March 30, 3017). Rather, the court incorporates by reference the background as stated in the March 30, 2017 Memorandum.

         Suffice it to say that on June 23, 2017, Crown filed a motion for reconsideration of the court's March 30, 2017 Order denying the cross-summary judgment motions of plaintiff and Crown. (Doc. 107). Crown simultaneously filed its brief in support. (Doc. 108). After being granted an extension of time, plaintiff filed a motion under seal on July 12, 2017, (Doc. 110), seeking the court's permission to file, either under seal or not, her attached brief in opposition to Crown's motion for reconsideration, (Doc. 110-2), and exhibit, namely, two excerpts (three sentences in total) from Crown's Consolidated Financial Statement for years 2012-2014 which Crown provided to plaintiff in discovery under a protective order.

         On August 4, 2017, Crown filed its reply brief in support of its reconsideration motion. (Doc. 113). Also, on August 4, 2017, Crown filed a brief in opposition to plaintiff's Doc. 110 motion and requests the court to strike the protected information from plaintiff's brief under Fed.R.Civ.P. 12(f). (Doc. 114). On August 18, 2017, plaintiff filed a motion to file her reply brief in support of her (Doc. 110) motion, either under seal or not, (Doc. 116), as well as a brief in support with an attached exhibit, (Doc. 117).

         As discussed below, the court will not consider Crown's Financial Statement which plaintiff has submitted with her opposition brief and will strike the portions of her brief regarding this document. As such, the court will grant plaintiff's motion to file her opposition brief, (Doc. 110-2), as well as her reply brief, (Doc. 117-1), under seal and it will grant Crown's motion to strike, (Doc. 114), the attached exhibit, (Doc. 110-3), to plaintiff's opposition brief and any reference to the exhibit in both of her briefs, (Doc. 110-2) and (Doc. 117-1).


         “The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence.” Harsco v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985). “Accordingly, a judgment may be altered or amended if the party seeking reconsideration shows at least one of the following grounds: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court granted the motion for summary judgment; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice.” Howard Hess Dental Labs. Inc. v. Dentsply Intern., Inc., 602 F.3d 237, 251 (3d Cir. 2010) (quoting Max's Seafood Café ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999)); Chesapeake Appalachia, L.L.C. v. Scott Petroleum, LLC, 73 F.Supp.3d 488, 491 (M.D. Pa. 2014) (Generally, reconsideration motions should be granted sparingly.); Cont'l Cas. Co. v. Diversified Indus., Inc., 884 F.Supp. 937, 943 (E.D. Pa. 1995). “The standard for granting a motion for reconsideration is a stringent one . . . . [A] mere disagreement with the court does not translate into a clear error of law.” Chesapeake Appalachia, L.L.C., 73 F.Supp.3d at 491 (quoting Mpala v. Smith, Civ. No. 3:CV-06-841, 2007 WL 136750, at *2 (M.D. Pa. Jan. 16, 2007), aff'd, 241 F. App'x 3 (3d Cir. 2007)) (alteration in original). Additionally, “‘new evidence, ' for reconsideration purposes, does not refer to evidence that a party obtains or submits to the court after an adverse ruling. Rather, new evidence in this context means evidence that a party could not earlier submit to the court because that evidence was not previously available.” Howard Hess Dental Labs., 602 F.3d at 251 (citation omitted). “Evidence that is not newly discovered, as so defined, cannot provide the basis for a successful motion for reconsideration.” Blystone v. Horn, 664 F.3d 397, 416 (3d Cir. 2011) (citing Harsco, 779 F.2d 906, 909 (3d Cir.1985)).


         Initially, the court will address plaintiff's (Doc. 110) motion and request to submit a portion of Crown's Financial Statement.[2] Plaintiff states that the exhibit to her opposition brief contains information which Crown designated as “Confidential” and “Attorney Eyes Only” and, thus is protected under the protective order entered by the court, (Doc. 47). However, plaintiff requests that the court allow her to file her brief not under seal and that the court consider this “very limited unredacted information” since it is directly relevant to the issue presented in Crown's motion for reconsideration, i.e., whether Crown is a “debt collector” subject to the FDCPA. Plaintiff states that under the factors of Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994), her need for the information outweighs any injury to Crown that may result if the court allows its disclosure because the information shows that the principal purpose of Crown's business is the collection of debts. Alternatively, plaintiff requests the court to allow her to file her opposition brief with the attached information as well as her reply brief under seal if it determines that Crown can establish good cause by showing disclosure would cause it harm. Crown opposes plaintiff's motion to file the exhibit either under seal or not and requests the court to strike this information under Fed.R.Civ.P. 12(f). (Doc. 114). In Tennis v. Ford Motor Co., 730 F.Supp.2d 437, 443 (W.D.Pa. 2010), the court explained as follows regarding a Rule 12(f) motion:

Under Fed.R.Civ.P. 12(f) “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Rule 12(f) “permits the court, on its own motion, or on the timely motion of a party, to order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Adams v. Cnty. of Erie, Pa., 2009 WL 4016636 at *1 (W.D.Pa. Nov. 19, 2009) (quoting Fed.R.Civ.P. 12(f)). “The purpose of a motion to strike is to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters.” Natale v. Winthrop Resources Corp., 2008 WL 2758238 at *14 (E.D.Pa. July 9, 2008) (quoting McInerney v. Moyer Lumber & Hardware, Inc., 244 F.Supp.2d 393, 402 (E.D.Pa. 2002)).

         Crown contends that plaintiff's motion should be denied for the following reasons:

First, the [Financial Statement] Document is immaterial since it was prepared by Crown's auditor and contains non-binding, non-sworn, non-legal statements. Second, the Document should not be considered because the Plaintiff failed to follow the specific procedure set forth in the Confidentiality and Discovery Protective Order. Third, the Document is irrelevant for the principal business purpose that the Plaintiff seeks to use it because, post- Henson, Crown is a creditor, not a debt collector, under the [FDCPA].

(Doc. 114-1).

         Crown states that on September 8, 2015, its counsel emailed plaintiff's counsel several pages of bates-stamped information, including the subject Financial Statement, i.e., “CAM 303 through CAM 320”, which was designated as “ATTORNEYS' EYES ONLY-SUBJECT TO DISCOVERY CONFIDENTIALITY ORDER.”

         The court finds that the information plaintiff now seeks to introduce was not part of the record before Judge Nealon when he rendered his March 30, 2017 decision. Nor did the court rely on this information when it issued its prior decision. Rather, the court based its decision on the record before it, including the statement of material facts of Crown, portions of which it found undisputed. As in Howard Hess Dental Labs., 602 F.3d at 252, “[n]othing in the record suggests that the evidence the Plaintiff[] [seeks] to present post-summary judgment was unavailable to [it] when [it] filed [its] summary judgment motion.” In fact, Crown sent plaintiff the information in September 2015. The Third Circuit has held that “[t]he scope of a motion for reconsideration, ..., is extremely limited” and that “[s]uch motions are not to be used as an opportunity to relitigate the case.” Blystone, 664 F.3d at 416.

         Further, Crown's motion for reconsideration is based only on Henson, a change in controlling law, and the legal issue of whether Henson effects this court's decision finding that Crown was a “debt collector” based on the Check Investors case. As mentioned, Crown argues that “post-Henson, Crown is a creditor, not a debt collector, under the [FDCPA].” The issues considered by the court in its March 30, 2017 decision, (Doc. 100, p. 15), were whether Crown was a “debt collector” under the FDCPA at the time of the violations alleged by plaintiff, Turning Point's status as a “debt collector” under the FDCPA, and whether Crown is liable for the alleged FDCPA violations committed by Turning Point. The court found that Crown acquired plaintiff's account while in default and that Crown was a “debt collector” under the principal purpose definition of the FDCPA. As such, the court found that Crown could be vicariously liable for the alleged violations committed by Turning Point based on the Pollice case.

         Thus, the court in its discretion will not consider Crown's Consolidated Financial Statement for years 2012-2014, which plaintiff is attempting to submit after the summary judgment motions were ruled upon, since this information was available to her prior to the filing of the summary judgment motions. See Howard Hess Dental Labs., 602 F.3d at 252 (citing Harsco, 779 F.2d at 909 (“district court correctly did not consider affidavit filed after summary judgment was granted because it ‘was available prior to the summary judgment'”)). As such, the court will strike Crown's Consolidated Financial Statement under Rule 12(f), (Doc. 110-3), as well as plaintiff's references to it in her opposition brief and her reply brief, and will not consider this information in deciding Crown's motion for reconsideration.

         The court will now address the heart of the matter, namely, whether the court's prior decision that Crown qualifies as a “debt collector” under FDCPA, still holds water in light of Henson.

         In its motion for reconsideration, Crown requests this court to enter an Order “(a) reconsidering this court's March 30, 2017 Order that found Crown to be a debt collector, (b) concluding Crown to be a creditor, [and] (c) entering summary judgment in favor of Crown and against the Plaintiff upon Counts I and II of the First Amended Complaint.” Crown's instant motion for reconsideration is based on a change in controlling law, namely, Henson. However, the parties dispute as to whether Henson is controlling with respect to this case. “In Henson, the Court held that individuals and entities who regularly purchase debts originated by someone else and then seek to collect on those debts do not qualify as debt collectors under the second prong of 15 U.S.C. §1692a(6) because they are not attempting to collect the debt of another.” Deal v. Trinity Hope Associates, LLC, 2017 WL 3026401, *3 n. 2 (W.D. N.C. July 17, 2017) (citing Henson, 137 S.Ct. at 1721-25); Schweer v. HOVG, LLC, 2017 WL 2906504, *2 (M.D.Pa. July 7, 2017) (In Henson, “[t]he Court ruled that Congress did not intend for debt buyers to be considered debt collectors for the purposes of the [FDCPA], where the debt buyers attempted to collect debts for which the debt buyer now owned.”) (citing Henson, 137 S.Ct. at 1724).

         Crown states that “Henson involves an identical issue of substantial importance before this Honorable Court, namely, whether Crown qualifies as a debt collector under the [FDCPA] where it does not regularly collect or attempt to collect on debts owed or due another even when the debts were in default when acquired.” (Doc. 102, p. 2). In the March 30, 2017 Memorandum, Judge Nealon found that Crown qualified as a “debt collector” under the first definition of “debt collector” contained in the FDCPA which was not at issue in Henson. His decision was based upon, inter alia, an interpretation of the Third Circuit case of Fed. Trade Commission v. Check Investors, Inc., 502 F.3d 159 (3d Cir. 2007), finding that Crown was acting as a “debt collector” and subject to the FDCPA. (Doc. 100, pp. 24-26.); Check Investors, 502 F.3d at 173 (“[o]ne attempting to collect a debt is a ‘debt collector' under the FDCPA if the debt in question was in default when acquired.”). Other circuits, namely, the Fourth (i.e., Henson v. Santander Consumer USA, Inc., 817 F.3d 131, 135 (4th Cir. 2016)) and Eleventh Circuits, held that under the FDCPA, a purchaser of charged-off receivables is not a debt collector simply because it acquired the defaulted debts.

         In opposition to Crown's motion, plaintiff essentially argues that Henson has no bearing on the present case since it dealt with the distinction between a “debt collector” and a “creditor” with respect to the second definition of debt collector under §1692a(6), as opposed to the first definition, namely, a “principal purpose” debt collector, which is the issue herein. In fact, as plaintiff points out, the Henson Court specifically stated that the “principal purpose” definition of debt collector was not at issue in that case. Henson, 137 S.Ct. at 1721-25. As such, plaintiff basically asserts that while Henson may be persuasive authority, it is not a change in controlling law.

         In order to discuss whether Henson has any effect on the present case and the court's finding that Crown does not fit the definition of a “debt collector” in light of Henson, the facts will be briefly repeated.

         In 2007, plaintiff obtained a credit card from GE[3] for personal use. She was unable to pay off her outstanding balance. Between 2011 and 2013, plaintiff's delinquent account with GE in the amount of $2, 483.83, was basically transferred as a charged-off receivable ...

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