Calton v. Pressler & Pressler, LLP et al

Filing 37

MEMORANDUM AND ORDER: For the reasons discussed above, Calton fails to allege any misleading or deceptive acts by any of the Defendants. Calton also fails to allege that the conduct was directed at anyone other than himself. Calton's state law claims are therefore dismissed. For the above reasons, Defendants' motion to dismiss pursuant to Rule 12(b)(6) are granted. (Signed by Judge Lawrence M. McKenna on 8/2/2011) (mbe)

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - X DAVID CALTON, on behalf of himself and all others similarly situated, : : Plaintiff, : 10 Civ. 2117 (LMM) -v- : PRESSLER & PRESSLER,LLP; PALISADES COLLECTION, LLC; and JP MORGAN CHASE & CO., : MEMORANDUM AND ORDER : Defendants. : - - - - - - - - - - - - - - - - X McKENNA, D.J. David Calton (“Calton”) brought this action against Pressler & Pressler, LLP (“Pressler”), Palisades Collection, LLC (“Palisades”), and JP Morgan Chase & Co., (“Chase”) (collectively “Defendants”) alleging violations of the Fair Debt Collection and Practices Act (“FDCPA”), New York CPLR § 5222(j), and New York General Business Law § 349. Defendants move to dismiss Calton’s claims pursuant to Rule 12 of the Federal Rules of Civil Procedure, or in the alternative pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the foregoing reasons Defendants’ motions to dismiss pursuant to Rule 12(b)(6) are GRANTED. BACKGROUND On or about February 4, 2010, Pressler, a law firm, on behalf of its client, Palisades, a debt collection agency, served Chase with a restraining notice to enforce a default judgment obtained against Calton in Palisades Collection LLC v. Calton, New York City Civil Court, index number 48954-05 (the “Restraining Notice”). (See Compl. ¶¶ 11, 13, 15; Decl. of Sheri Lambert in Supp. of Chase’s Mot. to Dismiss (“Lambert Decl.”) Ex. E (“Restraining Notice”).) Calton does not dispute the validity of the New York Civil Court Judgment. On or about February 11, 2010, Chase notified Calton that it had placed a hold on his accounts, including two accounts that he had opened at a Chase branch in New York (containing $303.85 and $73.34) and two accounts that he had opened at a Chase $1,541.43 and $91.46). branch (See in Michigan (containing Compl. ¶¶ 16-18; Decl. of David Calton in Supp. of Pl.’s Opp’n to Chase’s Mot. to Dismiss Ex. A (“Chase Letter”).) Chase charged Calton a Legal Processing fee of $125 for servicing the Restraining Notice. On (See Compl. ¶ 19; Chase Letter.) February 19, 2010, Calton and the creditors instructed Chase to release $350 from Plaintiff’s account to resolve the dispute. (See Chase’s Mem. in Supp. of Its 2 Mot. to Dismiss (“Chase’s Mem.”) at 5; Lambert Decl. Ex. F.) On March 10, 2010, Calton filed a complaint against Pressler and Palisades. his complaint adding On April 2, 2010, Calton amended new claims and naming Chase as a defendant. Calton alleges (collectively, the that Pressler and “Creditor-Defendants”) Palisades violated 15 U.S.C. §§ 1692e and 1692f because they failed to inform Chase of imposed certain under monetary New restraining notices restrained Calton’s and York law and as geographic regarding a accounts. result, the issuance Chase Compl. (See restrictions of unlawfully ¶¶ 21-31.) Calton also alleges that Chase violated New York CPLR § 5222(j) when it charged Calton a legal processing fee in connection with servicing an unlawful restraint. ¶¶ 32-36.) conduct Finally, violated New Calton York alleges General that Business (Compl. Defendants’ Law § 349. (Compl. ¶¶ 37-40.) On April 22, 2010, Palisades moved to dismiss Calton’s complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. motion. 3 Pressler joined this On June 4, 2010, Chase moved to dismiss Calton’s complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted, or alternatively, for summary judgment pursuant to Rule 12(d) and Rule 56 of the Federal Rules of Civil Procedure. DISCUSSION A. Motion to Dismiss Standard When deciding a motion to dismiss pursuant to Rule 12(b)(6) for failure ordinarily accepts allegations and 2d 560, as draws plaintiff's favor.” Supp. to 572 state true all a all claim, “the well-pleaded reasonable Court factual inferences in the In re Parmalat Sec. Litig., 501 F. (S.D.N.Y. 2007) (citing Levy v. Southbrook Int'l Invs., Ltd., 263 F.3d 10, 14 (2d Cir. 2001)). To survive a 12(b)(6) motion to dismiss, “the plaintiff must provide the grounds upon which [the] claim rests through factual allegations sufficient ‘to raise a right to relief above the speculative level.’” ATSI Comm'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “[O]nce the claim has been adequately stated it may be supported by showing any set of facts consistent 4 with the allegations in Twombly, 550 U.S. at 562). the complaint.” Id. (citing Thus, “if it is clear that no relief could be granted under any set of facts that could be proved consistent with the” plaintiff’s allegations then the complaint should be dismissed. Swierkiewicz v. Sorema N. A., 534 U.S. 506, 514 (2002)(internal quotation marks and citations omitted). B. Calton’s FDCPA Claims (Counts I and II) In Counts I and II, Calton alleges that Creditor- Defendants should have informed Chase that: 1) under New York state law Chase could not lawfully restrain Calton’s out-of-state accounts and (2) under New York CPLR § 5222(i) Chase could not lawfully restrain any of Calton’s accounts because each threshold. at 3.) account contained less than the statutory (See Pl.’s Opp’n to Palisade’s Mot. to Dismiss Calton alleges that as a result of these omissions, Creditor-Defendants inadvertently unlawfully restrain Calton’s inadvertent advice constituted advised accounts “false, and Chase that deceptive, to this or misleading representations or means in connection with the collection of any debt” and “unfair or unconscionable means to collect or attempt to collect any debt” in violation of 15 U.S.C. §§ 1692e and 1692f, respectively. (See Compl. ¶¶ 21-31; Pl.’s Opp’n to Palisade’s Mot. to Dismiss at 9.) 5 Calton’s FDCPA claims thus hinge on the premise that under New York law, Chase could not lawfully restrain Calton’s out-of-state accounts and the premise that under New York CPLR § 5222(i), Chase could not lawfully restrain Calton’s accounts because the balance in his accounts was below the statutory threshold. New York law, however, is Calton’s understanding of misguided for the reasons discussed below. 1. Restraint of Out-of-State Accounts In Koehler v. Bank of Bermuda, Ltd., 12 N.Y. 3d 533 (N.Y. 2009), the New York Court of Appeals held that New York CPLR Article 52 post-judgment enforcement mechanisms can have extra-territorial reach. Id. at 541. Specifically, the court held that “a court sitting in New York that has personal jurisdiction over a garnishee bank can order the bank to produce [property] located outside New York, pursuant to CPLR 5225(b).” Id. Thus, under the Court of Appeal’s holding in Koehler, where a bank does business in New York and therefore is subject to the jurisdiction of New York courts, it is “permissible for [a judgment creditor and a judgment creditor’s bank] to issue and honor [a] restraining notice served pursuant to New York CPLR Section 5222.” 759 F. Supp. 2d 265, McCarthy v. Wachovia Bank, N.A., 274-75 6 (E.D.N.Y. 2011)(dismissing plaintiff’s due process claim because it was based on the inaccurate assertion that a restraint on out-of-state property was impermissible under CPLR § 5222).1 Here, Chase does business in New York and in fact, Calton opened branches. two (See of his Compl. accounts ¶ 16.) at Chase’s Accordingly, New York Chase is subject to the jurisdiction of New York Courts and Chase could lawfully restrain Calton’s out-of-state accounts under New York law. 2. New York CPLR § 5222(i) Next, Calton’s assertion that Chase could not lawfully restrain his accounts under New York CPLR § 5222(i) is similarly unpersuasive. New York CPLR § 5222(i) provides that a restraining notice “shall not apply to an amount equal to or less than [$1,740 (which is equal to 240 times the greater of the applicable state or federal minimum wage)].” 5222(i). N.Y. CPLR If “an account contains an amount equal to or 1 The cases cited by Calton to argue that a restraining notice cannot be used to restrain property outside of New York are inapposite. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Adv. Employment Concepts, Inc., 703 N.Y.S.2d 3 (N.Y. App. Div. 1st Dep’t 2000), was decided before the Court of Appeal’s ruling in Koehler and John Wiley & Sons, Inc. v. Kirstaeng, 2009 WL 3003242 (S.D.N.Y. Sept. 15, 2009), involved a pre-judgment attachment under New York CPLR Article 62, which is governed by different legal principles than those that apply to Article 52 post-judgment enforcement mechanisms. See McCarthy, 759 F. Supp. 2d at 275 (“[i]n issuing its decision [in Koehler], the Court of Appeals went to great lengths to differentiate pre-judgment attachment, which is governed by CPLR article 62, from post-judgment enforcement”(citing Koehler, at 12 N.Y. 537)). 7 less than ninety percent of [$1,740], the account shall not be restrained and the restraining notice shall be deemed void, except as to those funds that a court determines to be unnecessary for the reasonable requirements judgment debtor and his or her dependents.” provision, effective January 1, 2009, and of This Id. other the similar provisions were added to New York CPLR Article 52 to ensure that “a certain threshold of funds [was] available to meet the account holder’s basic living expenses.” USA, N.A. v. Greene, 901 N.Y.S.2d 898 Chase Bank (N.Y. Civ. Ct., Queens County, Jul. 21, 2009); see also Portfolio Recovery Assocs., LLC v. Calderia, 881 N.Y.S.2d 870, 874 (N.Y. Sup. Ct., Nassau County, June 3, 2009). Calton does not dispute that the balance in his Chase accounts is threshold $2,010.08, of which $1,740. is Calton above the instead statutory argues that section 5222(i) should be applied separately to each of his four Chase accounts. Dismiss at 4-6.) total balance Chase could because each threshold. however, Therefore, Calton argues, even though the of not Calton’s Chase lawfully restrain account (Id.) finds (See Pl.’s Opp’n to Chase’s Mot. to no contained Calton’s support in 8 accounts any less the of than proposed was $2,010.08, his the accounts statutory interpretation, statutory language or stated legislative purpose of New York CPLR § 5222(i). In fact, Calton’s proposed interpretation would to much more than ensure access to a minimum safety net by enabling a judgment debtor enforcement accounts to elude mechanisms with his Article by simply bank, 52’s post-judgment maintaining regardless of multiple the aggregate 5222(i) requires balance. Next, Calton argues that section that a bank served with a restraining notice leave $1,740 available to the judgment debtor regardless of the total amount in the judgment debtor’s account. to Chase’s Mot. to Dismiss at 5-6.) to no authority to support his (See Pl.’s Opp’n Again, Calton points proposed interpretation. New York CPLR § 5222(i) prohibits only the restraint of “an account [that] contains an amount equal to or less than ninety percent of [$1,740].” N.Y. CPLR § 5222(i). Here, Calton’s Chase accounts had an total balance of $2,010.08, which was above the statutory threshold, and thus, Chase’s restraint of Calton’s accounts did not run contrary to New York CPLR § 5222(i). Moreover, Creditor-Defendants fully apprised Chase of the applicable law in the Restraining Notice (see Restraining Notice (citing to New York CPLR § 5222(i))) and thus, any claim that Creditor-Defendants 9 inadvertently advised Chase to act in a way that violates New York CPLR § 5222(i) fails as a matter of law.2 Calton’s FDCPA claims, therefore, are dismissed. C. Calton’s State Law Claims (Counts III and IV) Next, this court has discretion under 28 U.S.C. § 1367 to exercise its supplemental remaining state law claims. jurisdiction over Calton’s See Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir. 1996)(“[T]he district court may, at its discretion, exercise supplemental jurisdiction over state law claims even where it has dismissed all claims over which it had original jurisdiction.”) It is appropriate to exercise supplemental jurisdiction where, as here, the state law claims arise out of the same set of facts as the federal claims and like the federal claims, lack merit. Mgmt. Corp., 2010 2010)(exercising WL Pu v. Charles H. Greenthal 774335, supplemental *5 (S.D.N.Y. jurisdiction to Mar. 9, “avoid further waste of judicial resources,” the court dismisses 2 Chase attached a copy of the Restraining Notice to its moving papers. This Court may consider the Restraining Notice in deciding this motion -- Calton had actual notice of the Restraining Notice, which was attached to the Chase Letter that notified Calton his accounts had been frozen (see Chase Letter at 1), Calton relied on the terms and effect of the Restraining Notice in framing his complaint, and further, Calton does not dispute the authenticity of the document. See Chambers v. Time Warner, Inc., 282 F3d 147, 153 (2d Cir. 2002)(holding that “where plaintiff has actual notice of all the information in [documents attached to the movant’s papers] and has relied upon these documents in framing the complaint the necessity of translating a Rule 12(b)(6) motion into one under Rule 56 is largely dissipated” and the court may consider such documents). 10 plaintiff’s state allegations law that the claims, court which premised on previously had were rejected in dismissing the plaintiff’s federal claims). In Count III, Calton alleges that Chase violated New York CPLR § 5222(j) by charging Calton a legal processing fee in connection with servicing the Restraining Notice. (See Compl. ¶¶ 28-31.) New York CPLR § 5222(j) prohibits a banking institution from charging a fee if “a restraint is placed on judgment debtor’s account in violation of any section of [CPLR Article 52].” the reasons discussed N.Y. CPLR § 5222(j). above, the restraint of For Calton’s accounts was not in violation of any provision in CPLR Article 52, and thus, it was permissible for Chase to charge plaintiff a legal processing fee in connection with servicing the restraint. In Count IV, Calton alleges Defendants’ conduct in connection with the attempted collection of Calton’s debt was wrongful and deceptive and General Business Law § 349. thus, violated New (See Compl. ¶¶ 37-40.) York To state a claim under New York General Business Law § 349, a plaintiff must allege that: (1) the defendant’s act was misleading in a material way; (2) the act was directed at consumers; and (3) the plaintiff has been injured as a result of the deceptive act. See Stutman v. Chemical Bank, 11 95 N.Y.2d 24, above, 29 (N.Y. Cal ton fails 2000). reasons discussed For to allege any misleading or deceptive acts by any of the Defendants. Calton also fails to allege conduct was directed at anyone other than himself. that Calton's state law claims are therefore dismissed. CONCLUSION For the above reasons! Defendants' motions to dismiss pursuant to Rule 12(b) (6) are GRANTED. SO ORDERED. Dated: August~, 2011 Lawrence M. McKenna U.S.D.J. 12

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