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Fallas v. Cavalry Spv I, LLC

United States District Court, Third Circuit

April 29, 2013

DARYL FALLAS, Plaintiff,


PETER G. SHERIDAN, District Judge.

Pro se plaintiff Daryl Fallas ("Plaintiff") filed a Complaint in the Superior Court of New Jersey, Law Division, Mercer County, asserting violations of the Fair Debt Collection Practices Act ("FDCPA") and the Fair Credit Reporting Act ("FCRA") as well as a common law claim for intentional infliction of emotional distress. Defendant Cavalry SPV I, LLC ("SPV") removed to this Court, and SPV and defendant Schachter Portnoy, LLC ("Schachter") (collectively, "Defendants") each filed a motion to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff has also filed a motion to remand.[1] For the reasons set forth below, Plaintiff's motion to remand is denied, and Defendants' motions to dismiss are granted. In addition, Plaintiff has thirty days from the date set forth in this Order to file an amended complaint that cures the deficiencies identified in this opinion.


Plaintiff alleges he received a letter from Schachter dated November 14, 2011, which stated, among other things, that Schachter was retained to collect a debt on behalf of SPV. ( See Complaint, Ex. A.) Three days later, Plaintiff sent a letter to Schachter disputing the validity of the debt and requesting that Schachter either provide proof of the alleged debt or cease and desist all communications.

Plaintiff alleges that he never received proof of the debt from Schachter or any other party, and that several months later, in April and June 2012, he received two new debt collection letters from an entity calling itself Cavalry Portfolio Services. ( See Complaint, Exs. C, D.) These letters attempted to collect the same debt that Schachter had previously attempted to collect and that Plaintiff had disputed.[2] Later, SPV allegedly reported plaintiff's account as delinquent to the credit reporting agencies known as Experian and Equifax.

On the foregoing facts, Plaintiff is seeking statutory and punitive damages for violations of the FDCPA, 15 U.S.C. §1692 et seq., violations of the FCRA, 15 U.S.C. § 1681 et seq., and for intentional infliction of emotional distress. On September 12, 2012 SPV removed this action with Schachter's consent pursuant to 28 U.S.C. §1441(a).


As noted above, Plaintiff originally filed the Complaint in the Superior Court of New Jersey. SPV removed to this Court. Plaintiff now challenges the removal and asks the Court to remand the case to state court. For the reasons that follow, the motion to remand is denied.

A suit filed in state court may be removed to federal court if the federal court would have had original subject matter jurisdiction over that suit. 28 U.S.C. § 1441(a). The Court has "federal question" jurisdiction under 28 U.S.C. § 1331, based upon the FDCPA and FCRA claims. Indeed, the FDCPA explicitly authorizes jurisdiction in United States district courts. See 15 U.S.C. § 1692k(d). The Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a) over Plaintiff's state law action for intentional infliction of emotional distress.

Plaintiff's challenge to SPVs removal, however, is based on timing. A notice of removal must be filed by a defendant within thirty-days from when the defendant is properly served with the summons and complaint. See 28 U.S.C. § 1446(b)(2)(B). The parties do not dispute that Schachter was properly served on July 25, 2012, which initiated the running of the thirty-day period within which Schachter could file a notice of removal. The question here is whether the attempted service on SPV on that same date was proper such that SPV's thirty-day period to file the notice of removal also began to run at that time.[3] If SPV's clock began to run with the attempted service on July 25, 2012, SPV's notice of removal was untimely and the case should be remanded.

As evidence that SPV was properly served, Plaintiff offers several "Sheriff's Return of Service" forms from the Mercer County Office of the Sheriff. Each of the forms name Cavalry SPV I LLC as the "Defendant". None, however, purport to have effectuated service on Cavalry SPV I LLC. One indicates that "Schachter Portnoy" was served on July 25, 2012, by way of service on Darrin Portnoy, presumably a managing agent or person authorized to accept service at the firm Schacter Portnoy, LLC. (Plaintiff's Response to Defendant Cavalry SPV I, LLC's Opposition to Plaintiff's Motion to Remand, D.I. 14, Ex. C.). Another form indicates that an entity named "Cavalry Portfolio Services" was served on July 25, 2012, also by way of service on Darrin Portnoy.

The question of whether service has been properly effectuated is one of state law. Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 353 (1999). In New Jersey, proper service on a corporate defendant is by:

... serving a copy of the summons and complaint in the manner prescribed by paragraph (a)(1) of this rule on any officer, director, trustee or managing or general agent, or any person authorized by appointment or by law to receive service of process on behalf of the corporation, or on a person at the registered office of the corporation in charge thereof, or, if service cannot be made on any of those persons, then on a person at the principal place of business of the corporation in this State in charge thereof, or if there is no place of business in this State, then on any employee of the corporation within this State acting in the discharge of his or her duties, provided, however, that a foreign corporation may be served only as herein prescribed subject to due process of law.

New Jersey Court Rule 4:4-4(a)(6). According to this Rule then, personal service upon SPV, a corporate defendant, must be made either upon its registered agent or a person authorized to accept service. In addition, Rule 4:4-6 provides that "an acceptance of the service of a summons, signed by the defendant's attorney... shall have the same effect as if the defendant had been properly served." The question, then, is whether, at the time Plaintiff attempted to serve SPV, Mr. Portnoy (or the Schachter firm) was either SPV's registered agent or a person authorized to accept service as contemplated by Rule 4:4-4(a)(6), or alternatively whether Mr. Portnoy signed an "acceptance of the service" and was "defendant's attorney" as contemplated by Rule 4:4-6. If Mr. Portnory (or the Schachter firm) was not a registered agent or a person authorized to accept service, and Mr. Portnoy did not sign an "acceptance of service" as defendant's attorney, then service was not effected on SPV on July 25, 2012.

New Jersey courts have adopted the position of the federal courts that the plaintiff has the burden of showing that an alleged agent has specific authority, ...

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