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).




                                                   5
               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


                                                  6
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.



                                                   8
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.”



                                                  9
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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