12‐4422‐cv  

Boyd v. J.E. Robert Co.

In the 

United States Court of Appeals 

For the Second Circuit ________

AUGUST TERM 2014

No. 12‐4422‐cv

JOAN GRANT BOYD, SYBIL TAYLOR, RANDA JONES, TONYA

WARTERS, on behalf of themselves and all others similarly  

situated,

Plaintiffs‐Appellants,

v.

J.E. ROBERT CO., INC., JER REVENUE SERVICES, LLC, NYCTL 1996‐1

TRUST, NYCTL 1997‐1 TRUST, NYCTL 1997‐2 TRUST, NYCTL 1998‐1

TRUST, NYCTL 1999‐1 TRUST,

Defendants‐Appellees.

________

Appeal from the United States District Court

for the Eastern District of New York.

No. 05‐2455 (KAM) ― Kiyo Matsumoto, Judge.

________

ARGUED: AUGUST 19, 2014

DECIDED: AUGUST 27, 2014

________
2                             No. 12‐4422‐cv

Before: CABRANES, STRAUB and LIVINGSTON, Circuit Judges.

________

Plaintiffs‐Appellants commenced this putative class action

against defendants J.E Robert Co., Inc., JER Revenue Services, LLC,

NYCTL 1996‐1 Trust, NYCTL 1997‐1 Trust, NYCTL 1998‐1 Trust,

and NYCTL 1999‐1 Trust alleging violations of the Fair Debt

Collection Practices Act, 15 U.S.C § 1692, et seq. (“FDCPA”) and New

York statutory and common law. Plaintiffs allege that defendants

obtained unauthorized attorneys’ fees and costs in connection with

actions to foreclose liens on plaintiffs’ properties arising out of

unpaid municipal property taxes and water and sewer charges. The

United States District Court for the Eastern District of New York

(Kiyo A. Matsumoto, Judge) granted summary judgment for

defendants on the FDCPA claims on the basis, inter alia, that the

liens did not involve a “debt” as defined by the FDCPA. The Court

then declined to exercise supplemental jurisdiction over the state

law claims.   

We hold that liens for mandatory water and sewer charges

imposed by New York City as an incident to property ownership,

which are treated as akin to property tax liens, are not subject to the

FDCPA because they do not involve a “debt” as that term is defined

in the statute. We also hold that the District Court properly declined

to exercise supplemental jurisdiction over the state law claims.

Accordingly, we AFFIRM the October 2, 2012 and September

27, 2013 orders of the District Court.  

________

PAUL STUART GROBMAN (Curtis V. Trinko, Law

Offices of Curtis V. Trinko, LLP, New York, NY,
3                             No. 12‐4422‐cv

on the brief) Law Office of Paul Stuart Grobman,

New York, NY, for Plaintiffs‐Appellants.

JONATHAN DAVID ELLIOT, Zeldes, Needle &

Cooper, P.C., Bridgeport, CT, for Appellees J.E.

Robert Co., Inc. and JER Revenue Services, LLC.

       

DONNA B. MORRIS (Pamela S. Dolgow, Stephen

Kitzinger, on the brief), on behalf of Zachary W.

Carter, Corporation Counsel of the City of New

York, New York, NY, for Appellees NYCTL Trusts.

________

PER CURIAM:

Plaintiffs‐Appellants Joan Grant Boyd and Randa Jones

commenced this putative class action against J.E Robert Co., Inc. and

JER Revenue Services, LLC (jointly, “JER”), and NYCTL 1996‐1

Trust, NYCTL 1997‐1 Trust, NYCTL 1998‐1 Trust, and NYCTL 1999‐

1 Trust (jointly, the “Trust defendants” and, together with JER,

“defendants”) alleging that defendants violated the Fair Debt

Collection Practices Act, 15 U.S.C § 1692, et seq. (“FDCPA”) and New

York statutory and common law. Plaintiffs allege that defendants

obtained unauthorized attorneys’ fees and costs in connection with

actions to foreclose liens on plaintiffs’ properties arising out of

unpaid municipal property taxes and water and sewer charges. The

District Court granted summary judgment for defendants on the

FDCPA claims on the basis, inter alia, that the liens did not involve a

“debt” as defined by the FDCPA. The Court then declined to

exercise supplemental jurisdiction over the state law claims.   
4                             No. 12‐4422‐cv

We hold that liens for mandatory water and sewer charges

imposed by New York City as an incident to property ownership,

which are treated as akin to property tax liens, are not subject to the

FDCPA because they do not involve a “debt” as that term is defined

in the statute. We also hold that the District Court properly declined

to exercise supplemental jurisdiction over the state law claims.

Accordingly, we AFFIRM the September 27, 2013 and October

2, 2012 orders of the District Court.  

BACKGROUND

The claims on appeal relate to the foreclosure of liens on two

real properties in the City of New York (the “City”): 480 Quincy

Street, Brooklyn, New York, owned by Joan Grant Boyd (the “Boyd

Property”); and 1459 Carroll Street, Brooklyn, New York, owned by

Randa Jones (the “Jones Property” and, jointly with the Boyd

Property, the “Properties”). Under New York law, the Properties are

subject to property taxes, as well as mandatory water and sewer

charges. See N.Y. Admin. Code § 27‐2024; N.Y. Pub. Auth. L. § 1045‐

j(1). At the Jones Property, the water and sewer charges are based

exclusively on the physical characteristics of the property. At the

Boyd Property, water and sewer charges are also mandatory and

automatic, but they vary with usage, at rates set by law.  

In both cases, failure to pay property taxes, water and sewer

charges, and other municipal charges gave rise to liens on the

Properties securing the unpaid charges.1 The City sold lien

certificates evidencing the liens to the Trust defendants, which are

financing vehicles for the City’s collection of the amounts

 

1 Although only the owner of the property at the time the charges accrue may be

held personally liable for water and sewer charges, any lien arising out of such charges

follows (or “runs with”) the property until it is redeemed.  App’x 163.  
5                             No. 12‐4422‐cv

underlying the liens. The Trust defendants, in turn, entered into

Servicing Agreements with JER to collect upon the liens. JER

retained outside counsel to pursue foreclosure of the liens against

the Properties on behalf of the Trust defendants.2   

Plaintiffs’ FDCPA claims relate to the attorneys’ fees and costs

assessed in connection with the foreclosure actions. The authority

for the attorneys’ fees and costs sought was N.Y. Admin. Code § 11‐

335, which provides, in relevant part: “A plaintiff in an action to

foreclose a tax lien shall recover reasonable attorney’s fees for

maintaining such action.”  

In an October 2, 2012 order, the District Court granted

summary judgment for defendants on the basis that the FDCPA did

not govern the foreclosure actions. Specifically, it held that: (1) the

liens in question did not constitute “debt” within the meaning of the

FDCPA; and (2) the FDCPA does not apply to the enforcement of

security interests against property only.3 See Special App’x (“SPA”)

100, 116. In a September 27, 2013 order, the District Court denied

plaintiffs’ motion for reconsideration of its October 2 decision on

summary judgment. Id. at 41.

This timely appeal followed.

 

2 Boyd and Jones each entered into Forbearance Agreements with defendants

providing for the payoff of the amounts purportedly due, along with attorneys’ fees and

costs.  In both cases, payoff was completed, and the foreclosure actions were

discontinued with no judgment ever issued.  

3 Because we resolve this appeal on the first ground―that the liens in question

did not constitute debt―we do not address the District Court’s conclusion that the

FDCPA does not apply to enforcement of security interests against property.   
6                             No. 12‐4422‐cv

DISCUSSION

We review an order of a district court granting summary

judgment de novo. Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292,

300 (2d Cir. 2003). Summary judgment is appropriate where “the

moving party shows that there are no genuine issues of material fact

and that the moving party is entitled to judgment as a matter of

law.” Id.

In order to maintain an FDCPA action, the allegedly unlawful

behavior must occur in connection with collection of a “debt.” The

FDCPA defines “debt” as “any obligation or alleged 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, whether or not such obligation has been reduced to

judgment.” 15 U.S.C. § 1692a(5) (emphasis supplied).  

We have not addressed the question of whether New York

City’s mandatory water and sewer charges involve “debt” within

the meaning of the FDCPA. In Beggs v. Rossi, we held that municipal

taxes levied automatically in connection with ownership of personal

property do not involve a “transaction” as that term is understood

under the FDCPA and, accordingly, are not “debt” for purposes of

the FDCPA. 145 F.3d 511, 512 (2d Cir. 1998). We now conclude that

the New York City water and sewer charges also do not involve

“debt” under the FDCPA. Rather, the relationship between plaintiffs

and the City with respect to such charges is akin to “taxpayer and

taxing authority,” and “does not encompass that type of pro tanto
7                             No. 12‐4422‐cv

exchange which the statutory definition envisages.” Beggs, 145 F.3d

at 512.4

Like property taxes, New York City water and sewer charges

are levied, in some amount, as an incident to property ownership in

New York. In addition, the actions to foreclose the liens in question

were instituted pursuant to New York law governing “tax liens.”

Further, the city ordinance governing foreclosure of water and

sewer liens requires that they be conducted “in the same manner as

a lien for [ ] taxes.” N.Y. Pub. Auth. L. § 1045‐j(5). In light of the

foregoing, the charges at issue are best treated as akin to the

municipal property taxes discussed in Beggs and, accordingly,

outside the scope of the FDCPA.

We also conclude that, after properly granting summary

judgment on the FDCPA claims, the District Court had discretion

not to exercise supplemental jurisdiction over the state law claims.

See Motorola Credit Corp. v. Uzan, 388 F.3d 39, 56 (2d Cir. 2004)

(decision whether to exercise supplemental jurisdiction over state

law claims is reviewed for “abuse of discretion”).   

 

4 The Third Circuit reached a different conclusion with respect to municipal

water and sewer services in Pennsylvania. See Piper v. Portnoff Law Assoc., Ltd., 396 F.3d

227 (3d Cir. 2005). It concluded that “a homeowner’s consumption of municipal

water/sewer services gave rise to an ‘obligation to pay money which arose out of a

transaction (requesting water and services) . . . .’” Id. at 232‐33 (quoting Pollice v. Natʹl Tax

Funding, L.P., 225 F.3d 379, 400 (3d Cir. 2000), internal quotation marks and alterations

omitted). Even if we were bound by this authority, the character of the water and sewer

charges in Pennsylvania―which was essential to the analysis―differed from the

character of the charges levied on plaintiffs in this case. Specifically, nothing in the record

here suggests that plaintiffs must “request” water and sewer services in order to be

charged by the City. Rather, the charges are levied automatically in connection with the

property ownership. Accordingly, the Third Circuit cases are distinguishable from the

instant case.
8                             No. 12‐4422‐cv

CONCLUSION

To summarize:

(1) Liens for mandatory water and sewer charges

imposed by New York City as an incident to

property ownership are not “debt” under the

FDCPA because the relationship between plaintiffs

and the City with respect to such charges is akin to

taxpayer and taxing authority and does not entail

the type of consumer “transaction” anticipated by

the statute.   

(2) After dismissing the FDCPA claims, the District

Court properly declined to exercise supplemental

jurisdiction over the remaining state law claims.

Accordingly, we AFFIRM the October 2, 2012 and September

27, 2013 orders of the District Court.