In a major victory for consumers, Judge Chin denied a motion to dismiss, setting the stage for a case that alleges a massive scheme to fraudulently obtain default judgments to proceed in the Southern District of New York. A putative class of eight plaintiffs has challenged law firm Mel Harris and Associates, Leucadia National Corp. (parent corporation of debt buyers LR Credit), and Samserv, Inc., a process serving company, as well as multiple individual defendants.
The case is Sykes v. Mel Harris, et al., 09 Civ. 8486 (DC). Judge Chin’s decision can be found at __ F. Supp.2d __, 2010 WL 5395712 (S.D.N.Y.).
Plaintiffs allege that defendants Mel Harris and the LR Credit companies formed a joint venture to purchase debt portfolios and began debt collection on a huge scale, filing well over 100,000 cases between 2006 and 2008. They hired Samserv to serve process.
Of the suits filed, as many as 90% of the defendants were never actually served, enabling Mel Harris and LR Credit to obtain default judgments against them by presenting the court with what plaintiffs claimed were fraudulent affidavits of service (prepared by Samserv) and affidavits of merit (prepared by Mel Harris).
Among the stunning facts alleged by the plaintiffs: the vast majority of affidavits of merit submitted by the Mel Harris firm were signed by Todd Fabacher, who alleged personal knowledge of each of the files. Judge Chin found that Fabacher would have had to issue an average of 20 affidavits of merit per hour, or one every three minutes per eight-hour work day.
The judge allowed FDCPA claims to proceed against Mel Harris and LR Credit, and also found that the Samserve defendants did not fall within the process server exemption to the FDCPA because a “process server who goes beyond being merely a messenger… and engages in prohibited abusive or harassing activities to force an individual to pay a debt cannot claim the exemption’s protections.”
Judge Chin also allowed to stand substantive RICO claims and pendant state claims under NY GBL § 349 against the three entities, and a claim under state Judiciary Law § 487 for deceit or collusion against Mel Harris.
Call us immediately at 646-290-5600 if you have been sued by Mel Harris or LR Credit. We have also achieved successful results against Malen & Associates, P.C.; Cohen & Slamowitz; Pressler & Pressler, LLP; Mullooley, Jeffrey, Rooney & Flynn, LLP and Walpoff & Abramson, LLP.
-Sheril Stanford