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)
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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