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Amos Financial LLC v. Law Office of Charles P. Kazarian, P.C.

United States District Court, D. Massachusetts

June 2, 2016

AMOS FINANCIAL LLC Plaintiff,
v.
LAW OFFICE OF CHARLES P. KAZARIAN, P.C. and CHARLES KAZARIAN, ESQ., d/b/a KAZARIAN LAW Defendants.

          MEMORANDUM & ORDER

          INDIRA TALWANI UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Plaintiff Amos Financial LLC ("Amos") filed this action in Massachusetts state court for enforcement of a judgment against Defendant Law Office of Charles P. Kazarian, P.C. ("Kazarian P.C.") for failing to make payment under a promissory note and against Defendant Charles Kazarian, Esq., d/b/a Kazarian Law ("Kazarian") via claims of successor liability, de facto merger, and mere continuation. Compl. [#1-1 Ex. A]. Defendant Kazarian filed a counterclaim, alleging violations of the federal Fair Debt Collection Practices Acts and its Massachusetts equivalent. Defs’ Answer Countercl. [#22 ¶¶ 25-32]. Currently pending before the court is Plaintiff’s Motion to Dismiss Counterclaim of Defendant, Charles Kazarian. [#23].

         II. Discussion

         A. Standard

         To survive a motion to dismiss under Rule 12(b)(6), a complaint must state a "claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). The complaint must contain sufficient factual material "to ‘state a claim to relief that is plausible on its face.’" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007)).

         B. Alleged Facts[1]

         Kazarian alleges that he is a member of the Massachusetts Bar, and that he practiced law in the form of a professional corporation known as Charles P. Kazarian, P.C. until June 2010. Answer Countercl. [#22 ¶¶ 1-3]. Kazarian P.C. had a $100, 000 revolving line of credit with Bank of New England. Id. ¶ 5. The loan was memorialized in a promissory note executed between Bank of New England and Kazarian P.C. Id. The promissory note stated that the loan was payable interest only, had a call provision, and had a provision that the principle balance be paid to zero once per year. Id. Despite the condition in the promissory note, Bank of New England never enforced the zero balance provision. Id at ¶ 6.

         Bank of New England dissolved, and Shawmut Bank became its successor. Id. When it became the successor, Shawmut Bank requested that Kazarian supplement the promissory note with his personal guarantee. After Kazarian declined to provide the personal guarantee, Shawmut accepted the terms of the promissory note anyway, and continued to accept Kazarian P.C.’s monthly interest payments, and declined to enforce the zero balance provision. Id. ¶ 7.

         Shawmut Bank also dissolved, and was taken over by Sovereign Bank. Id. at ¶ 7. Sovereign Bank requested Kazarian to personally guarantee the promissory note, but Kazarian refused. Sovereign Bank thereafter accepted Kazarian P.C.’s monthly interest payments, and also declined to enforce the zero balance provision. Id. at ¶ 8. Kazarian P.C. borrowed approximately $90, 000 against the note, and while paying substantial interest payments, had not paid back any of the principal. Id. at 8.

         In 2009, Sovereign Bank was taken over by Santander. Santander demanded a personal guarantee from Kazarian, and Kazarian refused. Santander thereafter turned the matter over to their in-house collection people. Id. at ¶ 10. After discussions began between Kazarian P.C. and Santander, Kazarian P.C. paid $1, 000 toward the principal along with the interest payment that was currently due. Id. at ¶ 10. Kazarian P.C. and Santander continued to negotiate, but failed to formalize a new agreement, and in June of 2010, Santander swept all of the cash in Kazarian P.C.’s operating account. Id. at ¶ 13. Kazarian thereafter abandoned Kazarian P.C., and began practicing law under the name Kazarian Law.

         In December of 2010, Plaintiff sent Kazarian a letter claiming that Plaintiff owned the promissory note and that Kazarian was personally responsible for the borrowing. Id. at ¶ 16. Plaintiff’s employees began dunning Kazarian over the phone, calling him a deadbeat, and insisting that he personally guaranteed the promissory note. Id. at ¶ 17. Plaintiff also began a civil action against Kazarian P.C. in Suffolk Superior Civil Court. Id. at ¶ 18. On October 11, 2011, that suit was dismissed without prejudice. In April 2012, Plaintiff filed another action against Kazarian P.C. in Suffolk Superior Court. Plaintiff failed to obtain proper service on Kazarian P.C., and instead tried to serve Kazarian personally. Id. at ¶ 23. Despite faulty service, in July 2013, Plaintiff filed a default judgment against Kazarian P.C. Id. at ¶ 24.

         C. Analysis

         Plaintiff argues that Kazarian’s counterclaims should be dismissed under Fed.R.Civ.P. 12(b)(6) because they fail to state a claim for relief. Specifically Plaintiff argues that Kazarian’s counterclaims, which are based on violations of the federal Fair Debt Collection Practices Act 15 U.S.C. § 1692, and its Massachusetts equivalent, Mass. Gen. Laws. ch. 93 § 49, do not apply to business loans. Per Plaintiff, the underlying debt that Plaintiff seeks to recover was a business loan, and as such the protections under the consumer protection statutes do not apply. Kazarian argues that while Plaintiff’s complaint alleged that the original loan was a business loan, the complaint alleges further that the loan was used for personal, family, or household purposes. Kazarian’s Opp’n ...


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