Wiig v. Debt Management Partners, LLC et al

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
_________________________________
CHRISTINE CREACY,
Plaintiff,
v. 22-CV-47MAV(Sr)
DEBT MANAGEMENT PARTNERS, LLC,
CAPITAL MANAGEMENT HOLDINGS, LLC,
DRESSLER & ASSOCIATES, LLC,
ELITE DEBT BROKERS, LLC, and
JOHN DOE CORPORATION,
Defendants.
_________________________________
SANDRA WIIG,
Plaintiff,
v. 22-CV-48MAV(Sr)
DEBT MANAGEMENT PARTNERS, LLC,
CAPITAL MANAGEMENT HOLDINGS, LLC,
DRESSLER & ASSOCIATES, LLC,
ELITE DEBT BROKERS, LLC, and
JOHN DOE CORPORATION,
Defendants.
_________________________________
REPORT, RECOMMENDATION AND ORDER
These matters were referred to the undersigned by the Hon. William M.
Skretny, in accordance with 28 U.S.C. § 636(b), for all pretrial matters and to hear and
report upon dispositive motions. 22-CV-47 at Dkt. #31 & 22-CV-48 at Dkt. #30. They
were subsequently reassigned to the Hon. Meredith A. Vacca. 22-CV-47 at Dkt. #59 &
22-CV-48 at Dkt. #57.
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Plaintiffs commenced these actions against defendants Debt
Management Partners, LLC (“DMP”), Capital Management Holdings, LLC (“CMH”),1 and
Dressler & Associates, LLC (“Dressler”), pursuant to the Fair Debt Collection Practices
Act (“FDCPA”). Dkt. #1. Plaintiffs amended their complaints as of right, adding Elite
Debt Brokers, LLC (“Elite”), and John Doe Corporation (“Doe Corp.”), as def endants.
22-CV-47 at Dkt. #14 & 22-CV-48 at Dkt. #12.
Plaintiff Creacy’s amended complaint alleges that after she defaulted on a
personal loan from MoneyKey, Inc., DMP purchased the debt and sold or leased it to
Elite, CMH, Dressler and/or Doe Corp. 22-CV-47 at Dkt. #14. Plaintiff Wiig’s amended
complaint alleges that after she defaulted on a personal loan from Payday Mobility,
DMP purchased the debt and sold or leased it to Elite, CMH, Dressler and/or Doe Corp.
22-CV-48 at Dkt. #12.
Plaintiffs allege that DMP retained the right to control the collection
activities of Elite, CMH, Dressler and Doe Corp., and was aware that they regularly
violated the FDCPA. 22-CV-47 at Dkt. #14 & 22-CV-48 at Dkt. #12. Plaintif fs allege that
DMP’s sole purpose is to purchase portfolios of defaulted consumer debts for
1 Capital Management Holdings, LLC filed a Suggestion of Bankruptcy indicating that it
filed a petition for relief under Chapter 7 of the United States Bankruptcy Code for the Eastern
District of New York on September 2, 2022, resulting in an automatic stay as provided by 11
U.S.C. § 362. 22-CV-47 at Dkt. #50 & 22-CV-48 at Dkt. #49. On April 16, 2025, plaintiff moved
to lift the stay because the bankruptcy case was closed on February 15, 2023. 22-CV-47 at Dkt.
#57 & 22-CV-48 at Dkt. #55. The stay was lifted by Text Order entered April 17, 2025. 22-CV-
47 at Dkt. #58 & 22-CV-48 at Dkt. #56.
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collection. Plaintiffs also allege that the principal purpose of Elite, CMH, Dressler and
Doe Corp. is the collection of debts and that they regularly collect or attempt to collect
debts owed or due to others. Non-parties Daniel D’Elia and Richard Fiel are alleged to
be the owners and only two members of Elite, CMH, and Dressler. Plaintiffs allege that
all employees of the Elia and Fiel entities are paid through Dressler and that debtor
information is regularly transferred among the entities without consideration. Doe Corp.
is the unknown business entity allegedly created by D’Elia and Fiel to replace Dressler
and collect debts on their behalf.
Plaintiff Creacy alleges that beginning in March of 2021, employees of
Elite, CMH, Dressler and/or Doe Corp. placed an average of four or five calls per day to
plaintiff, including before 8:00 am and after 9:00 pm, without identifying the name of the
company calling. 22-CV-47 at Dkt. #14, ¶¶ 42-48. Early in April of 2021, plaintiff Creacy
alleges that she received a voicemail message informing her that she would be subject
to service of process unless she addressed the matter by calling (888) 644-1035.
Dkt. #14, ¶ 49. On April 26, 2021, plaintiff Creacy alleges that she received twelve calls,
including 8 within minutes. Dkt. #14, ¶ 50. Plaintiff Creacy also alleges that Elite, CMH,
Dressler and/or Doe Corp. contacted her two daughters and attempted to convince
them to pay the debt. Dkt. #14, ¶ 51. Despite the issuance of a cease and desist
request directed to counsel for DMP, Elite, CMH, and Dressler, plaintiff Creacy alleges
that she received text messages from Elite, CMH, Dressler and/or Doe Corp. on April
13th and April 16th. Dkt. #14, ¶¶ 53-54.
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Plaintiff Wiig alleges that between November 28 and December 1, 2021,
she answered at least two calls from employees of Elite, CMH, Dressler and/or Doe
Corp. attempting to collect the Payday Mobility debt. 22-CV-48 at Dkt. #12, ¶¶ 43, 46-
47. Plaintiff Wiig told the initial caller to stop calling her, but received numerous
additional calls that she did not answer. Dkt. #12, ¶ 48. Elite, CMH, Dressler and/or Doe
Corp. also left voice mail messages on plaintiff Wiig’s phone, as well as the phones of
her husband, son, and daughter-in-law. Dkt. #12, ¶ 49. One of the messages informed
plaintiff Wiig that they would speak with her supervisor unless she called (844) 411-
9605. Dkt. #12, ¶ 51. On December 1, 2021, plaintiff Wiig called the number and
informed the person who answered that she wanted them to stop calling her relatives
but the individual responded that he could call anyone he wanted to and threatened to
call plaintiff Wiig’s employer. Dkt. #12, ¶¶ 57-59 & 61. W hen plaintiff Wiig inquired who
employed the individual she was talking with, the individual responded: “Assurance.”
Dkt. #12, ¶ 62. Elite, CMH, Dressler and/or Doe Corp. called plaintif f Wiig’s relatives at
least once more after this conversation. Dkt. #12, ¶ 64.
The parties engaged in mediation on June 1, 2022 and July 15, 2022, with
the mediator advising the Court that the cases had settled in part and that the parties
would address their attorney fee dispute with the Court. 22-CV-47 at Dkt. #41; 22-CV-
48 at Dkt. #44.
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Sanctions2
Defendants CMH, Dressler and Elite renew their motion for sanctions
against plaintiffs’ attorneys at Hilton Parker LLC, as well as Derek De Petrillo at
Consumer Rights Law Firm, PLLC, pursuant to Rule 11 of the Federal Rules of Civil
Procedure and 28 U.S.C. § 1927 on the ground that plaintiffs commenced these actions
without confirming ownership of the telephone number from which the calls were made
and without regard for defendants’ assertion that defendants did not make the calls. 22-
CV-47 at Dkt. #42 & 22-CV-48 at Dkt. #38. Defendants allege that plaintiffs’ attorneys
threatened to file suit unless defendants identified the “real violator” and submit an
email from plaintiff in support of that allegation. 22-CV-47 at Dkt. #18, ¶¶ 3-4 and p.8 &
22-CV-48 at Dkt. #16, ¶¶ 3-4 and p.8. Defendants further complain that instead of
issuing subpoenas for information pertaining to ownership of the telephone numbers,
plaintiffs’ attorneys seek expensive and irrelevant discovery of the defendants’ business
dealings for use in other or future lawsuits. 22-CV-47 at Dkt. #18, p.5 & 22-CV-48 at
Dkt. #16, p.5. Defendants seek attorneys’ fees, as well as: (1) an order directing
plaintiffs’ attorneys to immediately dismiss this case and all other pending FDCPA
cases they have filed to date for failure to perform pre-suit investigation; (2) enjoining
plaintiffs’ attorneys from filing any future FDCPA lawsuits without first identifying the
“real violator,” and (3) ordering plaintiffs’ attorneys to certify their efforts and pre-suit
evidence in every future FDCPA complaint they file. 22-CV-47 at Dkt. #18, p.6 & 22-CV-
48 at Dkt. #16, p.6.
2 A Report, Recommendation and Order is issued because the question of whether a
magistrate judge has authority to impose sanctions under Rule 11remains unresolved in the
Second Circuit. See Johnson v. Town of Greece, 23-CV-6441, 2025 WL 1953258, at *7
(W.D.N.Y. May 5, 2025).
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In support of their motions, defendants submit part of an email exchange
with plaintiffs’ counsel which is highlighted in italics below; the longer portion of the
email exchange was submitted by plaintiffs’ counsel and starts with plaintiffs’ counsel
advising defendants’ counsel as follows:
You represented to Mr. Hilton on December 3, 2021 that
CMH and Elite have had “nothing to do” with any Payday
Mobility loans since 2017, and that they specifically never
had anything to do with Ms. Wiig’s account. The latter piece
of information i[s] contradicted by information provided to
M[s] Wiig directly by DMP[.] Specifically, DMP [s]tate[s] that
it transferred her Payday Mobility debt to Elite Debt Brokers,
LLC. Is it Elite’s position that DMP’s statement is untruthful?
Assuming that is not Elite’s position, please state whether
Elite still controls the debt (through purchase, lease, or any
other arrangement giving Elite an owner[s]hip intere[s]t
and/or a beneficial inter[es]t in amount collected), and, if not,
plea[se] provide the full legal name of the entity to which
Elite transferred the debt and/or its right to the debt.
Should Elite persist in claiming that it has never controlled
Ms. Wiig’s debt or refuse to divulge the identity of the entity
to which it tran[s]ferred the debt, we will be filing the claim
again[s]t Elite and DMP [s]hortly.
22-CV-47 at Dkt. #24-1, p.8 & 22-CV-48 at Dkt. #22-1, p.8. Later that af ternoon,
plaintiffs’ counsel wrote:
First, I wanted to follow up on this, and to let you know that
I’ll be filing Ms. Wiig’s case against DMP & Elite on Monday
afternoon unless Elite decides to identify the real violator or
otherwise demonstrates the folly of filing against then [sic]
using documents [sic]
Second, I wanted to bring up another case we’re about to
file: Christine Creacy v. Debt Management Partners, et
al. That case concerns a debt that DMP states it transferred
to CMH, and that has been the subject of the same sort of
process-server-scam calls that CMH and its agents engage
in as a matter of policy. If you have anything you want to
show me that would demonstrate that CMH no longer has
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control over Ms. Creacy’s debt, and thus cannot control
whoever is calling her, I’m happy to hold off on filing it. If not,
we’ll be filing that case on Monday afternoon as w ell. Ms.
Creacy’s phone number at which she received the offending
calls in March & April of this year is: . . . .
22-CV-47 at Dkt. #24-1, p.8 & 22-CV-48 at Dkt. #22-1, p.8. Def ense counsel
responded:
A[s] you already know, each of DMP, Elite and CMH are
engaged in the buying and [s]elling of portfolio[s] of debt -
not the collection of individual accounts.
I don’t think I have ever heard of the alleged Creacy case
before.
You threaten to sue DMP and Elite and CMH even though
you admit none of those entities are what you call the “real
violator.” If you do that, I will have no choice but to serve you
with another motion for Rule 11 sanctions. At some point
you have to learn that you do not sue one party in the hope
your victim will identify a proper party.
Further, as I have told you before, you have your facts mixed
up regarding Ms. Wiig’s alleged case and I stand by my
earlier statements in that regard. You say you have contrary
information from DMP. I doubt that. You fail to disclose it. . . .
If you want one or another of my clients to pay you money,
you need to bring me coherent claims rather than threats.
22-CV-47 at Dkt. #24-1, p.9 & 22-CV-48 at Dkt. #22-1, p.9. Def endants’ counsel
subsequently informed plaintiffs’ counsel that:
I have been authorized to offer you a lump sum of $3,000 to
settle both threatened lawsuits (Wiig and Creacy) on behalf
of DMP, Elite, CMH and every other entity, known or
unknown, up or down the chain of title or in any other way
involved without any admi[ss]ion of liability
If you do not accept, then thi[s] offer will be [s]tated in any
initial di[s]clo[s]ure I will have to file in any law[s]uit you file
a[s] threatened along with a statement that you have
knowingly sued the wrong entity/entities.
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22-CV-47 at Dkt. #24-1, p.9 & 22-CV-48 at Dkt. #22-1, p.9. Plaintif fs’ counsel
responded:
The $3,000 settlement offer is rejected. I’ve filed both
complaints and will be sending settlement demands on each
case under separate cover.
Additionally, your accusation of misconduct is baseless. Not
only has CMH previously stated in litigation that it does
directly collect debts, it has also (incompatibly) previously
stated in litigation that it has no assets other than debt
spreadsheets and no separate employees, managers,
payroll, etc. . . . It is therefore either its own debt collector or
an alter ego of whatever nominally separate entity collects
“on its behalf.” CMH’s word cannot be trusted, and even if it
could be, our theory of these cases is consistent with either
version of CMH’s own self-description to a greater degree
than our Rule 11 duty could possibly require.
If you contend that CMH and/or Elite is not responsible for
one or both of the campaigns of harassment detailed in the
complaints, please identify the entity or entities to which
CMH and/or Elite transferred the relevant debt(s). If you
cannot or will not do so - or if the entity in question turns out
to be, say, Dressler & Associates LLC or another of Fiel and
D’Elia’s alter ego companies - I fail to see how anything
we’ve done could possibly be sanctionable.
22-CV-47 at Dkt. #24-1, p.11 & 22-CV-48 at Dkt. #22-1, p.11.
Plaintiffs’ counsel also submits a screen shot of the Account Lookup page
from the website of DMP indicating that plaintiffs’ accounts were transferred to Elite and
notes that defendants refuse to state to whom Elite subsequently sold their debt. 22-
CV-47 at Dkt. #24, p.10 & 24-1 pp.17 & 19. Plaintif fs’ counsel argue that even if
defendants did not place the calls themselves, they have a reasonable basis to believe
that their agents, alter egos, or co-conspirators did, given evidence from other cases
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supporting their allegation that Mr. D’Elia and Mr. Fiel “treat their businesses as a single
undifferentiated enterprise.” 22-CV-47 at Dkt. #24, pp.2 &. In Fabec v. DMP, for
example, plaintiffs’ counsel alleges Mr. D’Elia provided contradictory affidavits affirming
that “CMH buys and sells rights to portfolios of delinquent, charged-off accounts
receivable,” but “does not itself, collect debts” (22-CV-47 at Dkt. #25-1, p.2), and later
affirming that CMH directly collects debts it purchases using collection agents that it
trains in-house to follow CMH’s own script. 22-CV-47 at Dkt. #25-2. Plaintiff argues that
the script Mr. D’Elia attached to his affirmation in that case bears a striking
resemblance to the calls at issue in this action. 22-CV-47 at Dkt. #24, p.5 & 25-3. Mr.
D’Elia subsequently explained in a deposition that CMH is a passive buyer and seller of
debt, with no employees and no assets and that the collection agents were employees
of Dressler. 22-CV-47 at Dkt. #24, p.6 & Dkt. #25-4. Mr. D’Elia further explained that
CMH obtained the debt in that case from DMP, but Dressler collected on the debt
without any written agreement to do so. 22-CV-47 at Dkt. #24, pp.6-7 & Dkt. #25-4.
While counsel concede that they cannot know exactly how defendants have acted to
hide relationships, they argue that they have enough information to make good faith
arguments for defendants’ liability. 22-CV-47 at Dkt. #24, p.12.
Defendants argue that plaintiff’s information from other cases is
insufficient and that plaintiffs’ counsel was obligated to ascertain the owner of the
telephone number that placed the allegedly improper calls to plaintiff before filing suit.
22-CV-47 at Dkt. #26 & 22-CV-48 at Dkt. #24.
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Rule 11(b) of the Federal Rules of civil Procedure provides that:
By presenting to the court a pleading . . . an attorney . . .
certifies that to the best of the person’s knowledge,
information, and belief, formed after an inquiry reasonable
under the circumstances:
(1) it is not being presented for any improper purpose, such
as to harass, cause unnecessary delay, or needlessly
increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are
warranted by existing law or by a nonfriviolous argument for
extending, modifying, or reversing existing law or for
establishing new law;
(3) the factual contentions have evidentiary support or, if
specifically so identified, will likely have evidentiary support
after a reasonable opportunity for further investigation or
discovery; and
(4) the denials of factual contentions are warranted on the
evidence or, is specifically so identified, are reasonably
based on belief of a lack of information.
“If, after notice and a reasonable opportunity to respond, the court determines that Rule
11(b) has been violated, the court may impose an appropriate sanction on any attorney,
law firm, or party that violated the rule or is responsible for the violation.” Fed. R. Civ. P.
11(c)(1). If warranted, the Court may award to the prevailing party the reasonable
expenses, including attorney’s fees, incurred for the motion.” Fed. R. Civ. P. 11(c)(2).
The central purpose of Rule 11 is to deter baseless filings in district court.
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). The standard for triggering
such a sanction is “objective unreasonableness.” Margo v. Weiss, 213 F.3d 55, 65 (2d
Cir. 2000). Thus, Rule 11 “is violated only when it is patently clear that a claim has
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absolutely no chance of success.” Cole v. Stephen Einstein & Assocs., P.C., 365 F.
Supp.3d 319, 339 (W.D.N.Y. 2019). Alternatively, “[a] statement of fact can give rise to
the imposition of sanctions only when the particular allegation is utterly lacking in
support.” Kiobel v. Millson, 592 F.3d 78, 81 (2d Cir. 2010) (internal quotation omitted).
28 U.S.C. § 1927 provides that “[a]ny attorney . . . who so multiplies the
proceedings in any case unreasonably and vexatiously may be required by the court to
satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred
because of such conduct.” To impose sanctions under this statute, the court m ust find
clear evidence that the offending party’s claims were entirely without color and that the
claims were brought in bad faith. Eisemann v. Greene, 204 F.3d 393, 396 (2d Cir.
2000). “[A] claim is colorable when it has some legal and factual support, considered in
light of the reasonable beliefs of the individual making the claim.” Schlaifer Nance & Co.
v. Estate of Warhol, 194 F.3d 323, 337 (2d Cir. 1999) (internal quotation omitted). In
assessing whether a claim is colorable, “[t]he question is whether a reasonable attorney
. . . could have concluded that facts supporting the claim might be established, not
whether such facts actually had been established.” Id. (internal quotation omitted). As to
the second element, “[b]ad faith can be inferred when the actions taken are so
completely without merit as to require the conclusion that they must have been taken
for some improper purpose.” Id. at 338 (internal quotation omitted). While the decision
to impose sanctions is uniquely within the province of the district court, it must be made
with restraint and discretion. Id. at 334.
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The FDCPA defines “debt collector” as any person who: (1) uses any
instrumentality of interstate commerce or the mails in any business the principal
purpose of which is the collection of debts; or (2) regularly attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another. 15 U.S.C.
§ 1692a(6). “Debt collectors . . . are vicariously liable for FDCPA violations committed
by agents acting on their behalf, whether or not they exercised direct control over
them.” Ruffin v. Kirschenbaum & Phillips P.C., 20-CV-5422, 2022 WL 704943, at *9
(S.D.N.Y. March 9, 2022), quoting Gomez v. Resurgent Capital Servs., LP, 129 F.
Supp.3d 147, 156 (S.D.N.Y. 2015) (“the fact that Congress defined ‘debt collector’ to
include any person ‘who regularly collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due another,” 15 U.S.C. § 1692a(6),
indicates an intent to apply liability to all entities involved in the debt collection process,
regardless of whether they face the consumer directly.”).
Upon consideration of the allegations in the amended complaint, as well
as the complete email exchange between counsel and plaintiffs’ proffer of information
regarding the interrelationship of the defendants, the Court finds no basis for sanctions
against plaintiffs’ counsel. More specifically, the Court finds it was not objectively
unreasonable for plaintiffs to commence this action against any of the defendants and
that plaintiffs’ claims against defendants are supported by both a colorable legal theory
and sufficient factual allegations to preclude any inference of bad faith. Accordingly, it is
recommended that defendants’ motion for sanctions pursuant to Rule 11 and 28 U.S.C.
§ 1927 be denied.
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Attorneys’ Fees3
Plaintiff Creacy moves for an award of $17,795.00 and plaintiff Wiig
moves for an award of $17,502.00 in attorneys’ fees and costs pursuant to 15 U.S.C.
§ 1692k(a)(3). 22-CV-47 at Dkt. #43 & 22-CV-48 at Dkt. #39. Plaintif fs argue that they
satisfy the requirements for an award of attorneys’ fees because they have obtained
cancellation of the disputed debt as well as monetary payments in a settlement
agreement which does not terminate the case until the Court resolves the application
for attorneys’ fees and orders dismissal.
Defendants argue that plaintiffs are not entitled to attorneys’ fees because
the private settlement agreement resolves the case with a voluntary dismissal and that
they should be awarded attorneys’ fees because plaintiffs’ counsel deliberately sued
the wrong parties in an attempt to extort the identity of the “real violator.” 22-CV-47 at
Dkt. #45 & 22-CV-48 at Dkt. #41.
Plaintiffs respond that the Court has authority to award them attorneys’
fees because the actions can only be dismissed by Order of the Court after the Court
has interpreted the settlement agreement with respect to the parties’ motions for
attorneys’ fees. 22-CV-47 at Dkt. #46.
3 A Report, Recommendation and Order is issued because motions for attorneys’ fees
are treated as dispositive motions. M.H. v. New York City Dep’t of Educ., 23 Civ. 6714, 2025
WL 2959348, at * n.1 (S.D.N.Y. Oct. 20, 2025), citing Fed. R. Civ. P. 54(d)(2)(D) (The district
judge “may refer a motion for attorney’s fees to a magistrate judge pursuant to Rule 72(b) as if
it were a dispositive pretrial matter.”)
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15 U.S.C. § 1692k(a)(3) provides that in the case of a successful action to
enforce liability under the FDCPA, the debt collector shall be liable to the debtor f or the
costs of the action, together with a reasonable attorney’s fee as determined by the court.
In Buckhannon Board and Care Home Inc. v. West Virginia Department of Health
and Human Resources, the United States Supreme Court considered the terms
“prevailing party” and “successful party” as legal terms of art denoting “[a] party in whose
favor a judgment is rendered, regardless of the amount of damages awarded.” 532 U.S.
598, 603 (2002), quoting Black’s Law dictionary 1145 (7th ed. 1999); See Wannamaker
v. Jacobs Marsh, LLC, 10-CV-946, 2012 WL 41928, at *3 (W.D.N.Y. Jan. 9, 2012)
(recognizing that the phrase “successful action to enforce . . . liability” is analogous to
the phrase “prevailing party” used in other statutes that authorize awards of attorney
fees). The Supreme Court further noted that “[r]espect for ordinary language requires
that a plaintiff receive at least some relief on the merits of his claim before he can be
said to prevail.” Id. at 603-604, quoting Hewitt v. Helms, 482 U.S. 755, 760 (1987).
According to Hewitt, a plaintiff can be deemed to have prevailed when a
lawsuit produces a monetary settlement or other voluntary action by the defendant that
affords the plaintiff all or some of the relief he sought through a judgment. 482 U.S. at
760-761. Thus, the fact that a party prevails “through a settlement rather than through
litigation does not weaken her claim to fees.” Maher v. Gagne, 448 U.S. 122, 128
(1980). While an admission of liability by the defendant is not always required, there
must be a material alteration of the legal relationship of the parties before an award of
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attorneys’ fees will be permitted. Buckhannon, 532 U.S. at 604. In addition to judgments
on the merits, the Supreme Court has recognized settlement agreements enforced
through consent decrees as meeting this standard. Id. Orders of dismissal in which the
district court retains jurisdiction to enforce the underlying settlement agreement are
considered indistinguishable from consent decrees. Perez v. Westchester Cty. Dep’t of
Corrs., 587 F.3d 143, 152 (2d Cir. 2009); See Roberson v. Guiliani, 346 F.3d 75, 82 (2d
Cir. 2003) (“district court’s retention of jurisdiction . . . not significantly different from a
consent decree and entails a level of judicial sanction sufficient to support an award of
attorney’s fees.”). In contrast, private settlements “do not entail the judicial approval
and oversight involved in consent decrees” and, unless the terms of the agreement are
incorporated in to the order of dismissal, will often fail to afford the Court jurisdiction to
enforce the settlement agreement. Id.; See also Tejero v. Portfolio Recovery Assocs.,
LLC, 993 F.3d 393, 397 (5th Cir. 2021) (“Private settlements without judicial
endorsement don’t count.”).
In the instant case, the parties negotiated a Settlement Agreement and
Mutual Release of Claims (“Agreement”), “to avoid the expense and uncertainty of
litigation, and resolve all disputes between and among them without any Party admitting
liability or the validity of any claims that have been or could be asserted by Plaintiff in a
lawsuit or any other claims that could have been or could be asserted by Plaintiff
against Defendants.” 22-CV-47 at Dkt. #60-2 & 22-CV-48 at Dkt. #58, p.14. T he
Agreement provides a release of the outstanding debt as well as a payment to each
plaintiff “in full satisfaction of all Plaintiff’s claims, except for attorneys’ fees pursuant to
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the FDCPA.” The payment was to be made within three business days after receipt by
defendants’ counsel of a signed copy of the Agreement. With respect to the issue of
attorneys’ fees, the Agreement provides that:
Nothing herein contained shall be construed to prevent any
party from making an application for legal fees. Counsel to
Plaintiff and Defendants shall file all applications for
attorneys’ fees in this action, including application by plaintiff
pursuant to 15 U.S.C. § 1692l[sic](a)(3), if any, no later than
fourteen (14) days following receipt of the Settlement
Payment by Plaintiff’s counsel. Plaintiff and Defendant’s [sic]
and their counsel reserve all rights, remedies, claims and
defenses with respect to said fee applications.
The Agreement requires that plaintiffs “file all documents necessary to dismiss the
Action against Defendants with prejudice within seven (7) business days of entry of an
order determining all attorneys’ fees applications by the Parties.” Any proceeding
relating to the performance or interpretation of the Agreement is required to be brought
in any court of competent jurisdiction within Erie County, New York.
As the Agreement does not require the Court to interpret, approve or
oversee the Agreement itself nor does it afford the Court jurisdiction over any
disagreement over the performance or interpretation of the Agreement, the Court
cannot conclude that plaintiffs have obtained judicially sanctioned relief so as to satisfy
the requirement of a successful action to enforce liability under the FDCPA. See, e.g.,
Harris, 2016 WL 1584018, at *3 (confidential settlement agreement permitting plaintiff
to apply for reasonable attorneys’ fees insufficient to transform underlying lawsuit into a
successful action to enforce liability where Court did not find defendant liable to plaintiff
and had no involvement in approving the parties’ settlement and did not incorporate the
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settlement into an Order of the Court, and there was no suggestion of continuing
jurisdiction to enforce the settlement); Wannamaker, 2012 WL 41928, at *3 (voluntary
settlement at mediation absolving the debt in exchange for discontinuation of litigation
and reserving plaintiff’s right to seek reasonable attorneys’ fees insufficient to
demonstrate a successful action to enforce FDCPA liability); Cf. Perez, 587 F.3d at 148
(awarding attorneys’ fees where settlement agreement required Court approval and
afforded Court jurisdiction to enforce compliance); Roberson, 356 F.3d at 82 (retention
of jurisdiction over enforcement of settlement agreement “entails a level of judicial
sanction sufficient to support an award of attorney’s fees.”). Accordingly, it is
recommended that plaintiffs’ motions for attorneys’ fees be denied.
15 U.S.C. § 1692k(a)(3) permits an award of a reasonable attorney’s fee
and costs to the defendant if the Court finds that the action was brought in bad faith and
for the purpose of harassment. Given that the FDCPA is a consumer protection statute,
such an award constitutes “drastic relief” which should only be granted in the Court’s
discretion based upon evidence that plaintiff both knew the claim was meritless and
pursued it with the purpose of harassing the defendant. Kurzdorfer v. Constar Fin.
Servs., LLC, 490 F. Supp.3d 663, 671 (W .D.N.Y. 2020). Because the statute “runs only
against a party,” such an award “requires proof of the plaintiff’s bad faith, not just . . .
counsel’s.” Eisner v. Enhanced Recovery Co., LLC, 407 F. Supp.3d 132, 138 (E.D.N.Y.
2019) (collecting cases). As there is no evidence to suggest bad faith by plaintiffs
themselves, it is recommended that defendants’ request for attorneys’ fees be denied.
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CONCLUSION
For the foregoing reasons, it is recommended that defendants’ motions for
sanctions (22-CV-47 at Dkt. #42 & Dkt. #22-CV-48 at Dkt. #38), be DENIED; and that
plaintiffs’ motions for attorneys’ fees (22-CV-47 at Dkt. #43 & 22-CV-48 at Dkt. #39), be
DENIED.
Therefore, it is hereby ORDERED pursuant to 28 U.S.C. § 636(b)(1) that:
This Report, Recommendation and Order be filed with the Clerk of the Court.
ANY OBJECTIONS to this Report, Recommendation and Order must be
filed with the Clerk of this Court within fourteen (14) days after receipt of a copy of this
Report, Recommendation and Order in accordance with the above statute, Fed.R.Civ.P.
72(b) and Local Rule 72(b).
The district judge will ordinarily refuse to consider de novo arguments, case
law and/or evidentiary material which could have been, but were not presented to the
magistrate judge in the first instance. See, e.g., Patterson-Leitch Co. v. Massachusetts
Mun. Wholesale Electric Co., 840 F.2d 985 (1st Cir. 1988).
Failure to file objections within the specified time or to request an extension
of such time waives the right to appeal the District Court's Order. Thomas v. Arn, 474 U.S.
140 (1985); Wesolek v. Canadair Ltd., 838 F.2d 55 (2d Cir. 1988).
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The parties are reminded that, pursuant to Rule 72(b) of the Local Rules for
the Western District of New York, "written objections shall specifically identify the portions
of the proposed findings and recommendations to which objection is made and the basis
for such objection and shall be supported by legal authority." Failure to comply with the
provisions of Rule 72(b) may result in the District Judge's refusal to consider the objection.
SO ORDERED.
DATED: Buffalo, New York
November 10, 2025
s/ H. Kenneth Schroeder, Jr.
H. KENNETH SCHROEDER, JR.
United States Magistrate Judge
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