Consumer collection law firm, Druckman & Sinel, LLP, attempted to add $35,409 in "fees and late charges" to a foreclosure judgment in a collection demand letter. After being sued for it under the Fair Debt Collection Practices Act ("FDCPA"), it attempted to immunize itself from liability by asserting the Rooker-Feldman doctrine, a preclusionary rule that prohibits challenging state court judgments in federal court. The case is Schuh v. Druckman out of the Southern District of New York.
The Plaintiffs in Schuh did not challenge the validity of the underlying state court judgment. Rather, they were challenging Druckman's attempt to tack on unauthorized amounts to that judgment. In other words, the conduct complained of occurred after the judgment was entered.
The Rooker-Feldman doctrine, as defined in Hoblock v. Albany County Bd. of Elections[1] bars a federal court from exercising subject matter jurisdiction if: (1) the plaintiff lost in state court; (2) the injuries complained of in federal court are the same injuries caused by state-court judgment; (3) the plaintiff asks the federal court to review and reject the state court judgment; and (4) the state-court judgment was rendered before federal court proceedings began.
The court relied on Todd v. Weltman, Weinberg & Reis Co. L.P.A.[2] and cited to Wyles v. Excalibur I, LLC[3] to conclude that the FDCPA indeed holds collectors responsible for debt collection misbehavior related to the prosecution of the lawsuit and collection of the judgment itself.
Aside from the Rooker-Feldman doctrine, Druckman unsuccessfully raised res judicata and collateral estoppel, cousins of the Rooker-Feldman Doctrine, that also bar matters previously litigated and decided between the parties.
Druckman misapplied the FDCPA elsewhere. Druckman inartfully pleaded litigation immunity, which doesn't exist in this context. Druckman speciously argued that the case was time-barred claiming that the accrual date related back to the initial proceeding. That argument failed because the violative letter independently violated the FDCPA and did not amount to a "continuing violation."
[1] 422 F.3d 77, 84 (2d Cir.2005).
[2] 434 F.3d 432, 437 (6th Cir.2006) (FDCPA claim brought in federal court based on affidavit submitted in prior state court debt default proceedings not barred by Rooker-Feldman doctrine).
[3] 2006 WL 2583200, (D.Minn. Sept. 7, 2006) (Debt collection practices that led to the judgment is actionable).