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Gordon v. Cavalry SPV I, LLC

United States District Court, E.D. Michigan, Southern Division

July 24, 2018

Jil Gordon et al., Plaintiffs,
Cavalry SPV I, LLC et al., Defendant.



         In late 2017, Defendant Cavalry SPV I, LLC sued three individuals in state-court, seeking to collect on debts they allegedly owed to Citibank that Cavalry had purchased in bulk. In turn, those individuals have now sued Cavalry, its servicing arm, and its attorneys, alleging that the debt-collection suits were false and deceptive, in violation of the Fair Debt Collection Practices Act, the Regulation of Michigan Collection Practices Act, and the Michigan Occupational Code. Defendants have moved for judgment on the pleadings.

         For the reasons below, the Court shall grant Defendants' motions. Although Plaintiffs' complaint contends that the state-court debt-collection suits were the product of falsehoods and misrepresentations, they have failed to offer any well-pleaded factual allegations, rather than conclusory allegations and legal conclusions, to allow the Court to reasonably infer that Defendants violated the FDCPA.


         This is a debt-collection dispute between several parties. Plaintiffs-Jil Gordon, Marcy Goyette, and Wendell Schuemann-are all Michigan residents. Complaint, ¶ 11. They have sued four Defendants-Cavalry SPV I, LLC, its servicing arm Cavalry Portfolio Services, LLC, law firm collection agency Roosen, Varchetti & Olivier, PLLC, and one of the firm's partners, Richard Roosen. Id. at ¶¶ 12-15. Plaintiffs generally allege that Defendants are mutually engaged in the filing of false collection lawsuits for false amounts against Michigan debtors. Id. at ¶ 2.

         More specifically, Plaintiffs allege that Calvary's principal business is the collection of debts. Id. at ¶ 47. To this end, it purchased a large portfolio of defaulted debt from Citibank. Id. When Calvary makes a purchase such as this one, it receives a computerized summary of the debts included in the portfolio, although the purchase agreements disavow responsibility for the accuracy of the included data. Id. at ¶ 51. Plaintiffs allege that this information that Cavalry receives is insufficient to establish the validity of the debts Plaintiffs purportedly owe, the calculation of the claimed balance, or that they, as the consumers, even owe the debt. Id. at ¶ 53.

         Despite this deficiency, when Cavalry receives the debt portfolio, it then provides the information to Michigan attorneys, such as the Roosen firm, to file lawsuits to collect on the debts. Id. at ¶ 49, 53. The full and complete purchase/sale agreements from the debt-portfolio purchase are never attached to those suits. Id. at ¶ 51. Nor do the suits include proof that Cavalry is the owner of the sued-upon debt. Id. at ¶ 54, 64. In fact, the suits are merely “computer template” collection suits that lack meaningful attorney review by the attorneys (Roosen and the Roosen law firm here) that sign them. Id. Plaintiffs allege that Cavalry's only intent in filing these suits is to obtain a default. Id. at ¶ 53.

         All three Plaintiffs are parties to debt-collection suits filed by the Roosen firm on behalf of Cavalry SPV I, LLC. Complaint, Ex. 1-3. The complaints in those suits were nearly identical, differing only in the listed account numbers and the amounts owed. Id. They stated:

1. Defendant(s) entered into a Contract with Plaintiff or Plaintiff's Assignor, the account/loan number of which is: [account number], and pursuant to MCR 2.113(F)(1)(b) Plaintiff's claim is based on a written instrument which is not attached as it is in the possession of the adverse party.
2. Defendant(s) defaulted under the terms and conditions of the Contract.
3. Plaintiff and/or its assignor(s) completed performance under the terms and conditions of the Contract.
4. That statements were sent to the Defendant(s) detailing the amount owed on the account and Defendant(s) has failed to object to said statements.
5. The account has been stated and/or is open between the parties.
6. As a result of Defendant's default Plaintiff claims breach of contract, open account, account stated, and/or unjust enrichment.
7. The current claim amount due and owing by Defendant(s) to Plaintiff is [debt amount] plus interest, costs and attorney fees.

Id. The complaints all requested judgment in the amount of the debt owed plus allowable costs, attorney fees, and interest. Id.

         Each complaint was accompanied by several exhibits. First, a bill of sale of assignment, identical across complaints except for the listed dates, that stated:

         THIS BILL OF SALE AND ASSIGNMENT dated [date], is by Citibank, N.A., a national banking association organized under the laws of the United States, located at 701 East 60th Street North, Sioux Falls, S.D. 57117 (the “Bank”) to Cavalry SPV I, LLC, organized under the laws of the State of Delaware, with its headquarters/principal place of business at 500 Summit Lake Drive, Suite 400, Valhalla, NY 10595 (“Buyer”).

         For value received and subject to the terms and conditions of the Purchase and Sale Agreement dated June 22, 2016, between Buyer and the Bank (the “Agreement”), the Bank does hereby transfer, sell, assign, convey, grant, bargain, set over and deliver to Buyer, and to Buyer's ...

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