17-01061-jlg doc 1 filed 05/12/17 entered 05/12/17 21:38...

Douglas N. Gottron, Esq.Morris Palerm, LLC2 Barrister’s Place751 Rockville PikeRockville, MD 20852P: (301) 424-6290F: (301) [email protected] Counsel for Curtis Johnson and Jolie Johnson

UNITED STATES BANKRUPTCY COURTFOR THE SOUTHERN DISTRICT OF NEW YORK

In Re: ) )

SQUARE TWO FINANCIAL ) Case No: 17-10659 (JLG)SERVICES, ET AL. ) Chapter 11

) (Jointly Administered)Debtors )

__________________________________________))

CURTIS JOHNSON AND JOLIE JOHNSON )AND ALL SIMILARLY SITUATED PERSONS )

)Plaintiffs )

)vs. )

)CACH, LLC )

) Adv. Case No: and )

)MERRIMAN INVESTMENTS, LLC )

)and )

)SQUARETWO FINANCIAL SERVICES CORP. )

)Defendants )

__________________________________________)

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT PURSUANT TOBANKRUPTCY CODE, §§ 523(a)(2)(A) AND 523(a)(6) AND FOR OTHER RELIEF

AND JURY DEMAND

of 21Complaint to Determine Dischargeability of Debt and for Other Relief

17-01061-jlg Doc 1 Filed 05/12/17 Entered 05/12/17 21:38:13 Main Document Pg 1 of 21

Come now the Plaintiffs, Curtis Johnson and Jolie Johnson (the “Johnsons”), individually

and on behalf of all similarly situated persons, by and through their counsel, Douglas N. Gottron

and Morris Palerm, LLC, and in support of their Complaint to Determine Dischargeability of

Debt Pursuant to Bankruptcy Code, §§ 523(a)(2(A) and 523(a)(6) against Co-Defendant

Merriman Investments, LLC (“Merriman”), and Co-Defendants, Debtors and Debtors-in-

Possession in this jointly administered proceeding, CACH, LLC (“CACH”) and SquareTwo

Financial Services Corporation (“SquareTwo”) (Merriman, CACH and SquareTwo being

collectively referred to hereinafter as the “Defendants”), state and aver as follows:

PRELIMINARY STATEMENT

1. This is a class action brought under the Bankruptcy Code, 11 U.S.C. §§ 101-1330,

seeking declaratory and other relief and to determine the dischargeability of debt, collectively as

set forth herein. This class action addresses the planned, prolonged, illegal, and systematic abuse

of hundreds of Maryland residents and consumers by the Defendants. The Defendants acquire

defaulted consumer debt for pennies on the dollar and service defaulted consumer debt. From

January 1, 2005 through February 18, 2008, the Defendants communicated with and sued

Maryland consumers and obtained money judgments, while at the same time said Defendants,

and each of them, were non-compliant with Maryland law by failing and refusing to register as a

foreign business and failing and refusing to obtain a license to operate as collection agencies.

Plaintiffs and the putative class members seek to void all judgments unlawfully obtained during

this time period. For the foregoing reasons, the substantive law of the State of Maryland is

pertinent and applicable.



PROCEDURAL HISTORY

2. On July 30, 2007, CACH filed a collection action against Curtis Johnson and

Jolie Johnson in the District Court of Maryland for Prince Georges' County with the following

case number: 0502-00222582007. On December 4, 2008, CACH obtained judgment in said

Court against the Johnsons in the amount of $14,533.32 along with attorney's fees of $2,107.09.

3. On November 20, 2014, the Johnsons filed a class action lawsuit in the Circuit

Court for Prince George’s County, Maryland, against the Defendants for declaratory relief

seeking to void his judgment and similar judgments obtained against Maryland residents. More

specifically, the Johnsons alleged in their complaint that CACH obtained hundreds of judgments

while operating without a license during the period from January 1, 2005 through February 18,

2008, and that said judgments are void as a matter of Maryland law pursuant to Finch v. LVNV

Funding, LLC, 212 Md.App. 748, 71 A.3d 193 (2013).

4. On January 20, 2015, CACH filed a motion to dismiss Plaintiffs' lawsuit on the

grounds that CACH, as a foreign debt collector, was not required to register as a foreign limited

liability company with the state of Maryland. CACH also argued that at the time of filing suit

against the Johnsons it was not required to obtain a debt collector's license and, in the alternative,

that CACH obtained its license before judgment was entered against the Johnsons, thus the

judgment is valid. CACH's final argument was that Plaintiffs' claims are barred by the statute of

limitations as the subject judgment was entered in 2008 and Plaintiffs should have filed suit in

year 2011 instead of 2014.

5. On May 26, 2015, Plaintiffs filed their response in opposition to CACH’s motion

to dismiss arguing that prior to suing the Johnsons, that CACH, as a foreign-debt collecting

limited liability company, had filed over five hundred lawsuits against Maryland residents.



Furthermore, the filing of lawsuits is a core business practice of debt collectors and CACH, as a

result of filing over five hundred lawsuits, had engaged in substantial debt collection business in

the State of Maryland. Thus, Plaintiffs argued, CACH was required to register as a foreign

limited liability company before filing suit against the Johnsons. Plaintiffs also argued:

(A) That CACH on October 1, 2007 was required to apply for a debt collector's

license before October 31, 2007;

(B) That CACH did not apply for a license until November 20, 2007; and,

(C) That CACH received notice from the State of Maryland on October 3, 2007, that

CACH was required to possess a debt collectors license pursuant to new law

enacted on October 1, 2007.

6. On May 8, 2015, the parties by way of counsel made oral argument to the Circuit

Court for Prince George's County. At the conclusion of the hearing, the Honorable Leo Green

ordered the parties to file supplemental briefs regarding the aforementioned issues stated

previously. Judge Green indicated that after receiving the supplemental briefs he would set the

matter in for an oral ruling from the bench.

7. On June 18, 2015, Plaintiffs filed a supplemental response with attached exhibits.

Plaintiffs' arguments were essentially the same, however, Plaintiffs provided evidence in the

form a certified record from the Maryland Department of Labor, Licensing and Regulation

indicating that CACH did not apply for its debt collection license until November 20, 2007.

8. On July 8, 2007, CACH filed its supplemental response making the same

arguments as the set forth in their motion to dismiss.

9. On December 4, 2015, the Circuit Court for Prince George’s County held a

hearing whereby Judge Green made an oral ruling from the bench effectively dismissing



Plaintiffs' complaint on the following grounds:

! That Finch applied to the facts in this matter and was dispositive relative

to Plaintiffs' claims as CACH had obtained its debt collection license

before judgment was entered and thus said judgment is not void.

! That CACH, as a foreign limited liability company, was not required to

register as a foreign limited liability company prior to engaging in any

business activity, to include debt collection activity.

! That the statute of limitations on Plaintiffs' claims had run and that

Plaintiffs' claims were barred and subject to dismissal.

Accordingly, on December 4, 2015 the action initiated in the Circuit Court for Prince George’s

County, Maryland was dismissed without prejudice and the Johnsons timely filed their notice of

appeal to the Maryland Court of Special Appeals on January 13, 2016.

10. Following submission of briefs by the Johnsons and the Defendants, oral

argument was held before the Maryland Court of Special Appeals on February 10, 2017. The

Court of Special Appeals has yet to issue its ruling relative to the appeal noted.

11. On or about March 19, 2017, SquareTwo filed a Voluntary Petition before the

United States Bankruptcy Court for the Southern District of New York under the provisions of

Chapter 11 of the Bankruptcy Code in Case No: 17-10659; and, CACH, on or about said date

similarly filed a Voluntary Petition under the provisions of Chapter 11 of the Bankruptcy Code

in Case No: 17-10663. Upon such filings, the automatic stay imposed by 11 U.S.C. § 362 went

into effect which stayed the action pending before the Maryland Court of Special Appeals

between the parties hereto.

12. On April 17, 2017, upon the filing of a Suggestion of Bankruptcy in the Maryland



Court of Special Appeals, the Court issued an Order staying the action pending before it pending

further order of the Court and requiring the parties thereto to inform the Court in writing of any

orders issued by the United States Bankruptcy Court for the Southern District of New York that

affect the automatic stay as it relates to the pending appeal.

JURISDICTION

13. The instant bankruptcy proceedings were commenced on or about March 19,

2017 (the "Petition Date") upon the filing by Debtor SquareTwo Financial Services Corporation

(“SquareTwo”) of a Voluntary Petition under the provisions of Chapter 11 of the Bankruptcy

Code in Case No: 17-10659; and, upon the filing by Debtor CACH, LLC (“CACH”) on or about

said date of a Voluntary Petition under the provisions of Chapter 11 of the Bankruptcy Code in

Case No: 17-10663. Said cases are being jointly administered in the captioned Case No: 17-

10659 pursuant to Order of this Court.

14. This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C.

§1334 and 28 U.S.C. § 157. Further, the instant adversary proceeding is a "core proceeding" as

provided in 28 U.S.C. § 157(b)(2)(A) and (J). Pursuant to the provisions of Bankruptcy Rule

7012, to the extent applicable, your Plaintiffs do hereby consent to the entry of final orders or

judgments by a Judge of this Court.

PARTIES

15. Curtis Johnson (hereinafter individually identified as “Mr. Johnson” and, together

with Jolie Johnson, “Plaintiffs”) and Jolie Johnson (hereinafter individually identified as “Ms.

Johnson” and, together with Curtis Johnson, “Plaintiffs”) are individuals, married to each other

and reside within Prince George’s County, Maryland. At all times relevant, the debt subject of

this proceeding was a “consumer debt.” Plaintiffs and all putative class members were and/or



are residents of the State of Maryland and/or employed within the State of Maryland; and, are

“consumers” as defined under Maryland Commercial Code Ann., § 13-101.

16. Debtor/Co-Defendant CACH is a Colorado limited liability company licensed in

the State of New York as a foreign limited liability company, in good standing, that maintains a

principal office located at 4340 S. Monaco Street, 2nd Floor, Denver, Colorado 80237. CACH

maintains a registered agent in the State of New York identified as follows:

CT Corporation System111 Eighth AvenueNew York, New York 10011

CACH is licensed in the State of Maryland as a foreign limited liability company and is in good

standing as of the date hereof. CACH has no employees and is owned and operated by

SquareTwo. All planning and coordination of CACH activities are conducted by officers and

employees of its alter ego SquareTwo. CACH is a “collection agency” as defined by Maryland

Business Regulation Code Ann., 7-101©.

17. Debtor/Co-Defendant SquareTwo is a Delaware stock corporation licensed in the

State of New York as a foreign business corporation, in good standing, that maintains a principal

office located at 16011 College Boulevard, Suite 101, Lenexa, Kansas 66219. SquareTwo

maintains a registered agent in the State of New York identified as follows:

CT Corporation System111 Eighth AvenueNew York, New York 10011

SquareTwo is licensed in the State of Maryland as a foreign corporation and is in good standing

as of the date hereof. SquareTwo is a parent corporation to CACH. Officers and employees of

SquareTwo conduct all planning and coordination of CACH activities which is, for all intents

and purposes, its alter ego. SquareTwo is a “collection agency” as defined by Maryland




18. Co-Defendant Merriman Investments, LLC (“Merriman”) is a Delaware limited

liability company licensed in the State of New York as a foreign limited liability company, in

good standing, that maintains a principal office located at 140 Broadway, 26th Floor, New York,

NY 10005. SquareTwo maintains a registered agent in the State of New York identified as

follows:

Registered Agent Solutions, Inc.Suite 100899 Washington AvenueAlbany, New York 12260

Merriman is licensed in the State of Maryland as a foreign limited liability company and is in

good standing as of the date hereof. Merriman is a “collection agency” as defined by MD


RELEVANT FACTS

19. Plaintiffs defaulted on a credit card debt with their original creditor, Chase

Manhattan Bank ("Chase") sometime during the spring of 2005. Plaintiffs defaulted on this debt

as Mr. Johnson became gravely ill and, as a result thereof, the family's income substantially

declined due to Mr. Johnson’s inability to maintain full time employment.

20. Chase, upon information and belief, subsequently “charged-off” and sold

Plaintiffs' consumer debt to CACH in 2006. At the time of purchase, CACH was not a licensed

debt collection agency pursuant to Maryland Business Regulation Code Ann., 7-101©.

21. CACH filed suit against the Plaintiffs on July 30, 2007, in the District Court of

Maryland for Prince George’s County, Case No. 050200222582007.

22. At the time of filing suit, as said, CACH was not licensed by the State of



Maryland as a collection agency.

23. At the time of filing suit, as said, CACH was not registered and/or licensed with

the Maryland State Department of Assessments and Taxation (“SDAT”) as a foreign limited

liability company and/or under any other business form.

24. On December 4, 2008, CACH obtained a judgment in the District Court of

Maryland against Plaintiffs in the sum of Fourteen Thousand Five Hundred Thirty-Three and

52/100 Dollars ($14,533.52), plus pre-judgment interest in the sum of Two Thousand One

Hundred Seven and 9/100 Dollars ($2,107.09), together with post-judgment interest at the legal

rate. Said judgment was then filed and recorded with the Circuit Court for Prince George’s

County, Maryland on January 28, 2009. In so doing, a lien automatically attached to and was

placed against Plaintiffs' primary residence.

25. On July 30, 2007, CACH lacked legal authority to file its collection action against

Plaintiffs; specifically, to wit, CACH was precluded by statue from filing and maintaining

said action pursuant to Maryland Corp. and Assoc. Code Ann., § 4A-1007(a). Accordingly, the

judgment entered as a result thereof was and is “void” ab initio.

26. On July 15, 2013, CACH assigned its rights under the aforesaid judgment,

together with other judgments obtained against all other putative class members, to Merriman,

which, after receiving notice of said “void” judgment, has continued to enforce collection on said

judgments against the Plaintiffs and all putative class members.

27. Despite repeated demands, Merriman refused and continues to refuse to release

said lien.

28. Merriman, at all times relevant, was aware that CACH did not possess the

requisite license to operate as a debt collector in the State of Maryland.



29. Merriman, as assignee of CACH's unlawfully obtained judgments, has and

presently is enforcing said unlawful judgments against Plaintiffs and all other putative class

members.

CLASS DEFINITIONS

30. The class of persons ("Class") represented by Plaintiffs are composed of all

natural persons who are and/or were residents of and/or are and/or were employed in the State of

Maryland and who, collectively, have been sued by CACH with judgments having been entered

in favor of CACH while CACH was non-compliant with Maryland licensing laws. The relevant

time period is January 1, 2005 through February 18, 2008.

31. Plaintiffs estimate that there are over one thousand class members.

FACTUAL ALLEGATIONS COMMON TO PLAINTIFFS AND THE CLASS

32. The Defendants' principal business is the purchase and/or servicing of consumer

debt that is purchased after default and at a substantial discount.

33. Upon information and belief, the Defendants, and each of them, acquire consumer

debt in default for a couple of cents on the dollar.

34. The Defendants, and each of them, do business within the State of Maryland.

35. The Defendants, and each of them, routinely contact Maryland consumers in

attempts to collect alleged consumer debt.

36. The Defendants, and each of them, have filed more than one thousand lawsuits

and have obtained judgments and judgment liens in Maryland within the relevant time period

stated herein.

37. By doing business in Maryland, the Defendants, and each of them, assent to the

laws of the State of Maryland and appoint SDAT, each, as its agent for service of process with



respect to causes of action arising out of doing business within the State of Maryland.

38. By doing business in Maryland, the Defendants, and each of them, are required to

register with SDAT.

39. During the relevant time period stated herein, the Defendants were not registered

with SDAT.

40. During the relevant time period stated herein, Defendants were not licensed as

collection agencies.

41. The Defendants, and each of them, are defined as a "collection agency" as set

forth under Maryland Business Regulation Code Ann., § 7-101 which defines a “collection

agency” as a “person who engages directly or indirectly in the business of...collecting a

consumer claim the person owns, if the claim was in default when the person acquired it.” Id. at

§ 7-101(c)(1)(ii).

42. A "collection agency" is required to be licensed pursuant to Maryland. Bus. Reg.,

§ 7-301.

43. During the relevant time period stated herein, the Defendants initiated lawsuits

while at the same time failing to possess a license to operate as a collection agency.

44. During the relevant time period stated herein, virtually every collection effort

against the Plaintiffs and putative class members by the Defendants, including each and every

civil action filed in Maryland and each and every judgment and judgment lien obtained in the

State of Maryland, constitutes an unfair and deceptive trade practice; and, every judgment

entered is void ab initio pursuant to Finch v. LVNV Funding, LLC, 212 Md.App. 748, 71 A.3d

193 (2013).

45. The Defendants, for all dates and acts relevant to this class action, were alter egos



of each other.

46. Questions of law and fact common to the Class during the relevant time

period are:

(A) Whether the Defendants, individually or collectively, have conducted business in

the State of Maryland to the degree that the Defendants are required to be

registered as foreign entities in the State of Maryland.

(B) Whether the Defendants have acted, individually or collectively, as a collection

agency in the State of Maryland.

(C) Whether the Defendants are required, individually or collectively, to be licensed

as a collection agency.

(D) Whether the Defendants, individually or collectively, have filed hundreds of civil

actions, or more, in Maryland that were precluded by statute from being filed by

the Defendants.

(E) Whether the Defendants should be ordered to seek orders vacating all judgments

entered in favor of the Defendants during the relevant time period.

(F) Whether the Defendants should be ordered to disgorge all funds that they have

wrongfully collected from Maryland consumers without being registered to do

business in the State of Maryland, and without being licensed as a collection

agency.

(G) The declaratory relief sought in this civil action.

47. These questions of law and fact are common to the Class and predominate over

questions affecting only individual members. A class action is superior to other available

methods for a fair and efficient adjudication of the controversy because such action is uniquely



suited to determining the rights and damages to hundreds of similarly situated individuals while

minimizing the amount of legal resources which must be utilized to resolve the controversy.

48. The only individual questions concern the identification of Class members and the

actual damages of each Class member to be disgorged by the Defendants. This information can

be determined by a simple examination of Court records and judgment indexes for the relevant

time period. Additionally, and upon information and belief, the Defendants maintain business

records that consist of extensive and sophisticated computer records that can be searched,

downloaded, and printed in minutes. Such business records are, of course, the same records that

the Defendants have used to support their thousands of improper civil actions in Maryland. Such

business records are admissible as an exception to hearsay and as a statement by a party.

49. The Plaintiffs claims are typical of the claims of the class members.

50. The Plaintiffs are similarly situated with and have suffered similar damages as the

other members of the Class.

51. The Plaintiffs will fairly and adequately protect the interest of all Class members

in the prosecution of this action.

52. The Plaintiffs have retained attorneys who are experienced in consumer

protection laws, experienced in the collection of consumer debt and the defense of such acts and

litigation, and experienced in class actions. The Plaintiffs' attorneys are adequate to represent

the Class.

COUNT I

DECLARATORY JUDGMENT

CLAIM ON BEHALF OF CLASS

53. Plaintiffs alleges and incorporates paragraphs 1 through 52 and 61 through 78 as



if fully set forth herein.

54. This is an action for declaratory judgment for the purposes of determining a

question of actual controversy between the parties as is more fully detailed in this pleading.

55. At all times relevant, CACH was required to be registered as a foreign limited

liability company with SDAT before filing suit against Plaintiffs.

56. At all times relevant, CACH was not registered to do business in Maryland and

was precluded by statute from filing or maintaining a civil action based on contract or equity.

57. At all times relevant, CACH was required to be licensed by the State of Maryland

as a collection agency.

58. At all times relevant, CACH was not licensed by the State of Maryland as a

collection agency.

59. The civil actions filed by CACH to collect consumer debt in the State of

Maryland during the relevant time period in which it was precluded by law from so doing

constitute a fraud upon the Courts in the State of Maryland.

60. Merriman has been and continues to enforce judgments obtained from CACH

which it has no lawful right to so do as said judgments are void ab initio.

WHEREFORE, Plaintiffs and the Class respectfully pray unto this honorable Court as

follows:

(1) That the Court certify this action as a class action with Curtis and Jolie Johnson as

class representatives and their attorneys as counsel on behalf of the Class;

(2) That the Court enter an omnibus Declaration that Defendants lacked authority to

have filed and/or maintained any lawsuit or collection action against Plaintiffs

and other class members in any Court within the State of Maryland to include the



various District Courts for the State of Maryland and the various Circuit Court for

the various counties within the State of Maryland;

(3) That the Court enter an omnibus Declaration that all judgments entered during

the relevant time period were and are void ab initio;

(4) That the Court enter an omnibus Order releasing all liens obtained by CACH and

Merriman relative to judgments obtained during the relevant time period;

(5) That the Court issue an award of reasonable attorneys' fees, litigation expenses,

and costs of this action;

(6) That the Court issue an award of punitive damages in such amount and as deemed

appropriate by the Court; and

(7) For such other and further relief as may be deemed appropriate under the

circumstances.

COUNT II

UNJUST ENRICHMENT




62. As heretofore set forth, Defendants acquired consumer debts, collected payments,

and obtained judgments to which they were not entitled as a matter of law, which conferred a

substantial benefit on the Defendants.

63. The Defendants were aware of, and had knowledge of, this substantial benefit.

64. The Defendants have come into possession of money in the form of payments to

which they had no right to receive or retain at law and/or in equity.



65. It would be inequitable for the Defendants to retain any such funds to which they

had no right to possess, as said.

66. As a consequence of Defendants actions, as said, the Plaintiffs and putative class

members have been damaged.


follows:



(2) That the Court enter judgment in favor of Plaintiffs and the Class and against the

Defendants, jointly and severally, in such amount as is determined at trial hereon;


and costs of this action; and,


circumstances.

COUNT III

RESPONDENT SUPERIOR




68. As heretofore set forth, CACH is a foreign limited liability company and

SquareOne is a foreign corporation.

69. CACH is a subsidiary of SquareOne.

70. CACH has no employees and is controlled and directed by officers and



employees of SquareOne.

71. Each act or omission of CACH in the State of Maryland to collect consumer debt

was done on behalf of SquareOne and under the direction and control of SquareOne.

72. Each act or omission of CACH in the State of Maryland to collect consumer debt

was in furtherance of the interests of SquareOne.

73. Plaintiffs and each member of the Class have suffered damages as a direct and

proximate result of the acts of CACH on behalf of SquareOne.


follows:



(2) That the Court enter judgment in favor of Plaintiffs and the Class and against the

Defendants, jointly and severally, in such amount as is determined at trial hereon;




circumstances.

COUNT IV

DECLARATORY JUDGMENT




75. Pursuant to the Declaratory Judgment Act set forth at 28 U.S.C. § 2201, et seq.,



In a case of actual controversy within its jurisdiction...any court of the United States,upon the filing of an appropriate pleading, may declare the rights and other legal relationsof any interested party seeking such declaration, whether or not further relief is or couldbe sought. Any such declaration shall have the force and effect of a final judgment ordecree and shall be reviewable as such.

28 U.S.C. § 2201(a).

76. As heretofore set forth, there is an actual controversy between Plaintiffs, for and

on their individual behalves and on behalf of all putative class members, and the Defendants


follows:



(2) That the Court enter an omnibus Declaration that Defendants lacked authority to

have filed and/or maintained any lawsuit or collection action against Plaintiffs

and other class members in any Court within the State of Maryland to include the

various District Courts for the State of Maryland and the various Circuit Court for

the various counties within the State of Maryland;

(3) That the Court enter an omnibus Declaration that all judgments entered during

the relevant time period were and are void ab initio;

(4) That the Court enter an omnibus Declaration that all liens obtained by CACH and

Merriman relative to judgments obtained during the relevant time period are void

ab initio;

(5) That the Court enter a Declaration that all debts due and owing Plaintiffs and the

putative class members by the Defendants be excepted from any discharge as may

be granted the Defendants CACH and SquareTwo pursuant to the provisions of



11 U.S.C. §§ 523(a)(2)(A) and 523(a)(6);




circumstances.

COUNT V

EXCEPTION TO DISCHARGE UNDER 11 U.S.C. § 523(a)(2)(A)


77. Plaintiffs alleges and incorporates paragraphs 1 through 76 as if fully set forth

herein.

78. The debts due and owing Plaintiffs and the putative class members by the

Defendants, as hereinabove detailed, constitute an exception from discharge pursuant to the

provisions of 11 U.S.C. §§ 523(a)(2)(A) and 523(a)(6) which provide as follows:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title

does not discharge an individual debtor from any debt--

* * *

(2) for money, property, services, or an extension, renewal, or refinancing of

credit, to the extent obtained by - -

(A) false pretenses, a false representation, or actual fraud, other than a

statement respecting the debtor's or an insider's financial condition.

* * *

(6) for willful and malicious injury by the debtor to another entity or to the

property of another entity.




follows:



(2) That the debts due and owing Plaintiffs and the putative class members by the

Defendants be excepted from any discharge as may be granted the Defendants

CACH and SquareTwo pursuant to the provisions of 11 U.S.C. §§ 523(a)(2)(A)

and 523(a)(6); and,


circumstances.

Dated: Respectfully submitted,May 12, 2017

__/_s_/__D_o_u_g_l_a_s__N_.__G_o_t_t_r_o_n___________Douglas N. Gottron, Esq.Morris Palerm, LLC2 Barrister's Place751 Rockville PikeRockville, MD 20852P: (301) 424-6290F: (301) [email protected]



JURY DEMAND

Plaintiffs demand trial by jury as to all issues of fact triable of right by a jury.

Dated: Respectfully submitted,May 12, 2017

__/_s_/__D_o_u_g_l_a_s__N_.__G_o_t_t_r_o_n___________Douglas N. Gottron, Esq.Morris Palerm, LLC2 Barrister's Place751 Rockville PikeRockville, MD 20852P: (301) 424-6290F: (301) [email protected]



B1040 (FORM 1040) (12/15)

ADVERSARY PROCEEDING COVER SHEET(Instructions on Reverse)

ADVERSARY PROCEEDING NUMBER(Court Use Only)

PLAINTIFFS DEFENDANTS

ATTORNEYS (Firm Name, Address, and Telephone No.) ATTORNEYS (If Known)

PARTY (Check One Box Only)Trustee/Bankruptcy Admin

PARTY (Check One Box Only)Debtor U.S. Trustee/Bankruptcy AdminCreditor OtherTrustee

CAUSE OF ACTION (WRITE A BRIEF STATEMENT OF CAUSE OF ACTION, INCLUDING ALL U.S. STATUTES INVOLVED)

NATURE OF SUIT(Number up to five (5) boxes starting with lead cause of action as 1, first alternative cause as 2, second alternative cause as 3, etc.)

FRBP 7001(1) – Recovery of Money/Property 11-Recovery of money/property - §542 turnover of property12-Recovery of money/property - §547 preference13-Recovery of money/property - §548 fraudulent transfer14-Recovery of money/property - other

FRBP 7001(2) – Validity, Priority or Extent of Lien 21-Validity, priority or extent of lien or other interest in property

FRBP 7001(3) – Approval of Sale of Property31-Approval of sale of property of estate and of a co-owner - §363(h)

FRBP 7001(4) – Objection/Revocation of Discharge41-Objection / revocation of discharge - §727(c),(d),(e)

FRBP 7001(5) – Revocation of Confirmation51-Revocation of confirmation

FRBP 7001(6) – Dischargeability66-Dischargeability - §523(a)(1),(14),(14A) priority tax claims62-Dischargeability - §523(a)(2), false pretenses, false representation,

actual fraud67-Dischargeability - §523(a)(4), fraud as fiduciary, embezzlement, larceny

(continued next column)

FRBP 7001(6) – Dischargeability (continued)61-Dischargeability - §523(a)(5), domestic support68-Dischargeability - §523(a)(6), willful and malicious injury63-Dischargeability - §523(a)(8), student loan64-Dischargeability - §523(a)(15), divorce or separation obligation

(other than domestic support)65-Dischargeability - other

FRBP 7001(7) – Injunctive Relief71-Injunctive relief – imposition of stay72-Injunctive relief – other

FRBP 7001(8) Subordination of Claim or Interest81-Subordination of claim or interest

FRBP 7001(9) Declaratory Judgment91-Declaratory judgment

FRBP 7001(10) Determination of Removed Action01-Determination of removed claim or cause

OtherSS-SIPA Case – 15 U.S.C. §§78aaa et.seq.02-Other (e.g. other actions that would have been brought in state court

if unrelated to bankruptcy case)

Check if this case involves a substantive issue of state law Check if this is asserted to be a class action under FRCP 23trial is demanded in complaint Demand $

Other Relief Sought

Curtis Johnson and Jolie Johnson SquareTwo Financial Services Corp., CACH, LLC and Merriman Investments, LLC

Douglas N. Gottron and Morris Palerm, LLC751 Rockville Pike, Suite 2ARockville, Maryland 20852 Tel: (301) 424-6290

XX

X

Complaint to Determine Dischargeability of Debt Pursuant to U.S. Code, Title 11, Sections 523(a)(2)(A) and 523(a)(6) and for damages. This is a class action Complaint arising under the laws of the State of Maryland and involving putative class members that are residents of the State of Maryland.

X

X

X

X

X

X XTo Be Determined; Over $1,000,000.00X

17-01061-jlg Doc 1-1 Filed 05/12/17 Entered 05/12/17 21:38:13 Adversary Proceeding Cover Sheet Pg 1 of 2

B1040 (FORM 1040) (12/15)

BANKRUPTCY CASE IN WHICH THIS ADVERSARY PROCEEDING ARISESNAME OF DEBTOR BANKRUPTCY CASE NO.

DISTRICT IN WHICH CASE IS PENDING DIVISION OFFICE NAME OF JUDGE

RELATED ADVERSARY PROCEEDING (IF ANY)PLAINTIFF DEFENDANT ADVERSARY

PROCEEDING NO.

DISTRICT IN WHICH ADVERSARY IS PENDING DIVISION OFFICE NAME OF JUDGE

SIGNATURE OF ATTORNEY (OR PLAINTIFF)

DATE PRINT NAME OF ATTORNEY (OR PLAINTIFF)

INSTRUCTIONS

The filing of a bankruptcy case creates an “estate” under the jurisdiction of the bankruptcy court which consists of all of the property of the debtor, wherever that property is located. Because the bankruptcy estate is so extensive and the jurisdiction of the court so broad, there may be lawsuits over the property or property rights of the estate. There also may be lawsuits concerning the debtor’s discharge. If such a lawsuit is filed in a bankruptcy court, it is called an adversary proceeding.

A party filing an adversary proceeding must also must complete and file Form 1040, the Adversary Proceeding Cover Sheet, unless the party files the adversary proceeding electronically through the court’s Case Management/Electronic Case Filing system (CM/ECF). (CM/ECF captures the information on Form 1040 as part of the filing process.) When completed, the cover sheet summarizes basic information on the adversary proceeding. The clerk of court needs the information to process the adversary proceeding and prepare required statistical reports on court activity.

The cover sheet and the information contained on it do not replace or supplement the filing and service of pleadings or other papers as required by law, the Bankruptcy Rules, or the local rules of court. The cover sheet, which is largely self-explanatory, must be completed by the plaintiff’s attorney (or by the plaintiff if the plaintiff is not represented by an attorney). A separate cover sheet must be submitted to the clerk for each complaint filed.

Plaintiffs and Defendants. Give the names of the plaintiffs and defendants exactly as they appear on the complaint.

Attorneys. Give the names and addresses of the attorneys, if known.

Party. Check the most appropriate box in the first column for the plaintiffs and the second column for the defendants.

Demand. Enter the dollar amount being demanded in the complaint.

Signature. This cover sheet must be signed by the attorney of record in the box on the second page of the form. If the plaintiff is represented by a law firm, a member of the firm must sign. If the plaintiff is pro se, that is, not represented by an attorney, the plaintiff must sign.

SquareTwo Financial Services Corp. & CACH, LLC 17-10659 (Jointly Administered)

Southern District of New York Manhattan James L. Garrity

Douglas N. GottronMorris Palerm, LLC

May 12, 2017

17-01061-jlg Doc 1-1 Filed 05/12/17 Entered 05/12/17 21:38:13 Adversary Proceeding Cover Sheet Pg 2 of 2

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