United States District Court, D. Connecticut
RULING ON PLAINTIFF'S SECOND MOTION IN LIMINE CONSTRUED AS A MOTION FOR RECONSIDERATION IN LIGHT OF NEW EVIDENCE
JOAN GLAZER MARGOLIS, Magistrate Judge.
On October 7, 2015, this Magistrate Judge filed her Ruling on Plaintiff's Motions In Limine (Dkt. #80)["October 2015 Ruling"], familiarity with which is presumed. As set forth in that ruling, on January 14, 2013, plaintiff Philip Pape filed this lawsuit under the Fair Debt Collection Practices Act ["FDCPA"], 15 U.S.C. § 1692, the Connecticut Creditor's Collection Practices Act, CONN. GEN. STAT. § 36a-648, and the Connecticut Unfair Trade Practices Act, CONN. GEN. STAT. § 42-110g, with respect to a home improvement loan purchased by defendant Amos Financial LLC ["defendant Amos"], for which defendant Law Offices of Frank N. Peluso, P.C. ["defendant Peluso Law Offices"] sent a collection letter on defendant Amos' behalf on July 31, 2012 ["July 2012 Letter"]. (Dkt. #1). Defendants filed their Answer and Special Defenses on March 20 and 25, 2013. (Dkts. ##7-8, 11).
On September 5, 2013, plaintiff filed his Motion for Summary Judgment (Dkt. #33), followed by defendants' Motion for Summary Judgment, filed November 27, 2013. (Dkt. #48). On March 4, 2014, Senior U.S. District Judge Alfred V. Covello filed his Ruling on the Parties' Cross-Motions for Summary Judgment (Dkt. #51)["March 2014 Ruling"], denying both motions. After a review of the undisputed facts (at 2-4) as well as summarizing the legal arguments presented by both parties (at 6-9), Judge Covello held as follows
[T]he court concludes that there exists a genuine issue of material fact as to the nature of the loan. Real estate investors are entitled to personal homes, and if the loan is a consumer loan in nature, ... plaintiff may be entitled to relief. However, if the loan is commercial in nature, ... plaintiff's 27 Alden loan is not afforded the FDCPA's protection to personal borrowers. The same issue of material fact exists with the Connecticut statute causes of action.
(At 10)(emphasis added)(footnote omitted). On July 30, 2014, a Stipulation of Dismissal was entered with respect to defendant Amos only. (Dkts. ##53-55). On August 21, 2014, the parties consented to trial before a U.S. Magistrate Judge (Dkt. #62), and on July 2, 2015, the case was referred to this Magistrate Judge. (Dkt. #68).
Plaintiff filed two motions in limine. First, on July 20, 2015, plaintiff filed his Pretrial Motion re Initial Disclosures. (Dkt. #70). Second, on July 31, 2015, plaintiff filed his Motion In Limine to Limit Trial to Statutory Damages or for Other Relief, with brief in support (Dkt. #73),  as to which defendant Peluso Law Offices filed its brief in opposition on August 20, 2015. (Dkt. #75). In this second motion, plaintiff requested that the Court find defendant Peluso Law Offices liable for statutory damages, so that the trial would be restricted to the amount of statutory damages up to $1, 000, or alternatively, the Court award the $1, 000 statutory damages "based on the egregious nature of [d]efendant's collection letter, leaving only fees and costs to be determined." (Dkt. #73, at 2 & Brief at 11-12). In the October 2015 Ruling, plaintiff's Pretrial Motion re Initial Disclosures was granted in part, without prejudice to renewal at a later time regarding appropriate sanctions. (Id. at 2, 3-6, 9). The October 2015 Ruling further construed plaintiff's Motion In Limine to Limit Trial to Statutory Damages or for Other Relief as a Motion for Reconsideration in light of new evidence and ordered supplemental briefing. (Id. at 2, 6-9). Defendant Peluso Law Offices filed its supplemental brief in opposition on November 6, 2015 (Dkt. #83; see also Dkts ##81-82); plaintiff filed his reply brief three days later. (Dkt. #84).
For the reasons stated below, plaintiff's Second Motion In Limine construed as a Motion for Reconsideration (Dkt. #73) is granted in large part such that the Court finds that the underlying loan improvement loan was not commercial in nature but rather a consumer debt, and further finds that the July 2012 letter violated the FDCPA, thereby entitling plaintiff to judgment in his favor in the amount of $1, 000 statutory damages, with further court proceedings restricted to determining the amount of fees and costs due to plaintiff.
As observed in the October 2015 Ruling (at 6-8), insofar as the parties' summary judgment briefs, and particularly those of defendant Peluso Law Offices (see Dkts. ##41, 48), focused solely upon the issue of whether the loan at issue was a consumer loan in nature, the March 2014 Ruling addressed none of the two other elements of plaintiff's claim, other than to identify them. (At 6). As summarized in the October 2015 Ruling, in his second motion, plaintiff argued that after discovery was closed in this federal lawsuit and while the Cross-Motions for Summary Judgment were pending, plaintiff was deposed on December 6, 2013 in a related state matter, the testimony from which "mak[es] it indisputable that the home improvement loan was on [plaintiff's] own residence[, ]" so that this judicial officer should reconsider the March 2014 Ruling in light of the new evidence and/or to correct a "clear error" in the prior ruling. (Id. at 6-7)(internal citations omitted). Again, as previously indicated, the October 2015 Ruling construed plaintiff's motion as a Motion for Reconsideration in light of new evidence, and ordered supplemental briefs on the underlying legal issues. (Id. at 7-9).
A party is entitled to judgment as a matter of law when the party demonstrates, through citations to pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). "The burden is on the moving party to demonstrate the absence of any material factual issue genuinely in dispute.'" Am. Int'l Group, Inc. v. London Am. Int'l Corp., 644 F.2d 348, 351 (2d Cir. 1981), quoting Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir. 1975). A court must view all inferences and ambiguities in the light most favorable to the nonmoving party and "[o]nly when reasonable minds could not differ as to the import of the evidence is summary judgment proper." See Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.)(citation omitted), cert. denied, 502 U.S. 849 (1991).
A. WHETHER LOAN IN QUESTION IS CONSUMER IN NATURE
In light of the new evidence, the Court finds no genuine issue of material fact with respect to the consumer nature of the loan. As Judge Covello observed in the March 2014 Ruling, the FDCPA defines "debt" as "any obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes." (At 7, citing Goldman v. Cohen, 445 F.3d 152, 154, n.1 (2d Cir. 2006), citing 15 U.S.C. § 1692a(5)). Judge Covello continued "The FDCPA [only] regulates debt collection tactics employed against personal borrowers on the theory that they are likely to be unsophisticated about debt collection and thus prey to unscrupulous collection methods.'" (Id. at 7-8, citing, inter alia, Miller v. McCalla, Raymer, Patrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872, 875 (7th Cir. 2000)(other citations omitted)(emphasis in original)(Posner, C.J.)). Judge Covello further held that debt collection practices related to commercial debts, alternatively, are not subject to FDCPA regulation. (Id. at 8, citing, inter alia, Goldman, 445 F.3d at 154, n.1 (additional citations omitted)).
The question of whether a debt is commercial or consumer in nature is settled at the moment of its inception. Miller, 214 F.3d at 874-75 (agreeing with the plaintiff that "the relevant time for determining the nature of the debt is when the debt first arises[.]")(citation omitted). Due to a relative lack of evidence at the time, Judge Covello found that a genuine issue of material fact existed with respect to the nature of the loan. (March 2014 Ruling at 10). The record before Judge Covello indicated the following facts plaintiff had taken out a home improvement loan from Key Bank, N.A., for $25, 555.50 in 2005 to replace "rotting asphalt siding with new vinyl siding[;]" the loan listed Pape's current address as 27 Alden Street,  Enfield, CT, which he had purchased and begun to use as his home in July 2004; both before and after taking out the loan, Pape was in the business of purchasing investment properties from which he received rental income; and finally, "a week after the loan was executed, Pape declared a home located at 287 Union Street, Springfield, Massachusetts as his principal address' in a Massachusetts Declaration of Homestead document." (At 2-3)(multiple internal citations omitted).
Plaintiff's deposition in the state court case provides greater detail into his residency during this time period, which confirms the consumer nature of the loan in light of the rule provided in Miller. Plaintiff testified that he purchased the Alden Avenue property in May 2004 and was living there when he took out the loan in July 2005. (Plaintiff's Depo. Tr. at 27, 35-36). Plaintiff further testified that he and his wife had planned to move in together at that location, but she then refused to live in that location, so he planned to sell the property and move. (Id. at 28, 66). Plaintiff additionally testified that his purpose for replacing the home's siding, and taking out the loan to finance the project, was to improve the home's marketability upon the advice of a realtor. (Id.)("If I was going to have decent value selling it, I had to replace the siding."). (See also id. at 25-28, 34-35). Plaintiff acknowledged that at some point in 2004 he began renting the unoccupied portion of the property, which was a duplex. (Id. at 28-30). Plaintiff swore that he did not have a lawyer review the loan documents and that he did not read all of the documents himself. (Id. at 31, 33). Plaintiff admitted that about a week after taking out the home improvement loan with Key Bank, he signed a Massachusetts Declaration of Homestead document, in which he identified his residence as 387 Union Street, Springfield, MA. (Id. at 38-39; see also id. at 36-37). Plaintiff explained that he actually lived in the Alden Avenue property at that time and continued to live there until October 2005. (Tr. at 39). Plaintiff testified that the Massachusetts Declaration of Homestead was merely one in a series of documents he signed without reviewing in detail in order to close his purchase of the Union Street property, which he described as an "investment property" in which he never lived. (Id. at 39-41)("There were hundreds of things I had to sign and it was just another document.").
What was murky at the time of the Cross-Motions for Summary Judgment is now clear from plaintiff's deposition testimony in the state court matter - that the home improvement loan plaintiff took out in July 2005 was consumer in nature. When plaintiff took out the loan, it was for the purpose of improving the home in which he resided at that time. While it is true that plaintiff had been in the property investment business before and after taking out the loan, that fact does not change the character of the loan. This additional information satisfies the FDCPA's requirement that consumers "present evidence showing they incurred a debt primarily for personal, family, or household purposes.'" 15 U.S.C. § 1692a(5). As stated above, to determine the nature of a loan, the Court must look to its nature at the time of its inception. Miller, 214 F.3d at 874-75. Here, plaintiff took out the loan for a typical consumer purpose - to increase his home's resale value so that he could afford to move elsewhere. The fact that he attempted to sell the home and did move is entirely consistent with the consumer nature of the loan. It is typical for homeowners to attempt to increase the value of their homes prior to putting them on the market. Doing so does not render the loan commercial in nature. As Judge Covello observed in the March 2014 Ruling, it is immaterial that plaintiff received income from his real estate investments around this time - "[r]eal estate investors are entitled to personal homes, and if the loan is a consumer loan in nature, the plaintiff may be entitled to relief." (At 10).
Plaintiff's status as a consumer with respect to this loan is reinforced by his failure to review the loan documents himself or through an attorney and his apparent ignorance of the Massachusetts Declaration of Homestead document he signed shortly thereafter. As plaintiff testified, he was unaware of the import of this document when he signed the declaration - "I was brand new at [purchasing real estate]. I had no idea. I signed what they said I needed to sign." (Plaintiff's Depo. Tr. at 40). The fact that plaintiff did not review the loan agreement or have an attorney do so (id. at 31) demonstrates plaintiff status as precisely the "unsophisticated" consumer which the FDCPA seeks to protect from "unscrupulous collection methods." Miller, 214 F.3d at 875.
In light of the plaintiff's deposition testimony, the Court finds the loan was a consumer loan ...