Today we report on a biting decision from the City Court of Mount Vernon (New York), captioned LVNV Funding v Guest
. In this case, LVNV Funding, LLC (LVNV), represented by Rubin & Rothman, LLC (Rubin & Rothman), had sued a consumer, Ms. Guest, to collect on a credit card debt allegedly purchased by debt buyer LVNV.
At a pre-trial conference, the court ordered LVNV and Rubin & Rothman to serve on the defendant, and file with the court, proof of the entire chain of assignments of the alleged debt (that is, proof that LVNV owned the debt, and therefore had standing to sue), the original agreement, and other documentary evidence necessary to prove its prima facie case. LVNV and Rubin & Rothman appeared before the court three times without having obtained the documents, and on the third time, requested to discontinue the case.
The court denied the request, and instead dismissed the case with prejudice and set a hearing to determine whether Rubin & Rothman should be held in contempt for failing to provide the documents as directed, and whether sanctions should be imposed on LVNV and Rubin & Rothman under 22 NYCRR § 130-1.1 for frivolous conduct in bringing suit without having requisite proof.
The hearing was held, and in support of their contention that they had a valid case against the consumer, Rubin & Rothman and LVNV provided the court what they claimed were documents evidencing the chain of assignments, several affidavits and additional documents. Here are the problems the court found with their evidence:
- The account originated at Monogram Credit Card Bank, but plaintiff's assignment documents were for an account originating at GE Money Bank. Plaintiff's counsel explained that the two banks merged, but produced no evidence of the relationship between the two banks or how the account got from Monagram to GE.
- Because the documents were insufficient, any statements that GE owned the debt are hearsay.
- The assignment documents also contradicted each other in terms of which entity received the accounts when.
- The affidavit made by Mr. Torres, an employee of Resurgent Capital, the servicing agent for plaintiff, was found to be "inconsequential." Torres had no personal knowledge concerning the assignments and his testimony was hearsay because it relied on documents provided after the assignment took place.
- Two additional affidavits were created after the litigation was commenced and for the purposes of the litigation. Neither was admissible because they were photocopies and because they were made outside New York and not accompanied by certificates of conformity.
Based on these evidentiary shortcomings, the court concluded plaintiff had offered no admissible proof of an assignment, and no admissible proof that the defendant's alleged account was among those assigned.
The court further concluded that testimony from two Rubin & Rothman attorneys made clear that they had relied solely on information from the servicing agent when deciding to commence this action. Accordingly they did not and could not have properly have certified the complaint they filed. "Under NYCRR § 130-1.1-a," stated the court, "a proper certification of a complaint can only be made after an inquiry reasonable under the circumstances establishes that the claim asserted in the complaint has merit in law and asserts truthful factual allegations." Plaintiff's failure to obtain the documents they knew were necessary to prove their case meant that they did not make the "inquiry reasonable under the circumstances" required by NYCRR § 130-1.1-a, and certifying the complaint by signing it was "disingenuous, misleading and false."
The court went on to state that, given Rubin & Rothman's many cases before this court, counsel well knew what documentary proof was required for a meritorious lawsuit, and knew they did not have it when they filed this case. Further, said the court, even though they well knew that they were routinely filing actions on behalf of assignee creditors when they could not prove a prima facie case, they continued to do so.
The court also took issue with LVNV's and Rubin & Rothman's contentions that they have no obligation to independently verify information regarding the account, and that there is no rule requiring evidentiary proof of the chain of title prior to commencing a lawsuit. The court cited to the well-known New York case Citibank v Martin, 11 Misc3d 219 (Civ Court, New York County 2005) which sets forth the requirements of a prima
facie case, and clearly states that an assignee's proof of standing is essential to its
prima facie case.
The court noted that consumer debt cases are not like, for instance, negligence actions, which may require extensive discovery in order to assemble all the documents and data needed to prove a prima facie case. In a consumer debt case, said the court, "a plaintiff should be able to establish its case without any discovery whatsoever." The court indicated that, here, plaintiff began its case knowing full well not only that it lacked sufficient evidence but most significantly, that it likely would
never be able to obtain such evidence. Such conduct "not only denied the defendant due process of law but is egregious, dishonest and unprofessional, and holds the courts and the entire legal profession up for public scorn and ridicule. Such conduct shall not be countenanced by the Court."
The court concluded that Rubin & Rothman's failure to obtain the necessary documentary proof prior to commencing suit constituted frivolous conduct, and fined the firm $10,000. The court declined to hold plaintiff's counsel in contempt, but directed LVNV and Rubin & Rothman not to appear before the court again without prima facie proof of their cases.
 2012 NY Slip Op 50974(U) May 29, 2012, City Court of Mount Vernon, Gross, J.
 Very simply stated, a plaintiff is generally required to show the court it has sufficient evidence to prove each element of its claim(s), or show it has a
prima facie case against the defendant, in order to avoid dismissal.