Kreiger v. Bank of America, N.A.
Filing
18
MEMORANDUM (Order to follow as separate docket entry). Signed by Honorable Matthew W. Brann on 1/17/17. (lg)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
WILLIAM KRIEGER,
:
:
:
:
:
:
:
:
:
Plaintiff,
v.
BANK OF AMERICA, N.A.,
Defendant.
Case No. 4:16-CV-00830
(Judge Brann)
MEMORANDUM
January 17, 2017
Before the Court for disposition is Defendant Bank of America, N.A.’s
Motion to Dismiss Plaintiff’s Amended Complaint. For the following reasons,
Defendant’s Motion will be granted.
I.
FACTUAL BACKGROUND1
This action was brought before the Court by Notice of Removal on May 9,
2016.2 At its core, Plaintiff William Krieger’s (“Plaintiff”) Amended Complaint
concerns Defendant Bank of America, N.A.’s (“Defendant”) actions in light of
what he contends was a fraudulent transaction billed to his account. In support of
1
For purposes of this Motion to Dismiss, the allegations presented in Plaintiff’s Amended
Complaint will be taken as true, and all inferences will be construed in the light most favorable
to Plaintiff.
2
ECF No. 1.
1
this contention, Plaintiff’s Amended Complaint contains the following factual
narrative.
The instant dispute stems from functional problems which Plaintiff3 was
experiencing with his computer in June 2015. Specifically, on or about June 27,
2015, Plaintiff received a telephone call from an unknown third party identifying
himself as a Microsoft employee.4 This unknown party informed Plaintiff that his
computer woes were the result of a virus, and requested that Plaintiff grant him
remote access to remedy the situation.5 As this unknown party was accessing the
computer to “remove the virus,” Plaintiff’s daughter arrived home and informed
him that this call was likely the result of a scam.6 To remedy the situation, she
then disconnected the computer from the internet.7 Plaintiff asserts that, as his
daughter pulled the plug, his credit card number displayed on the computer screen.8
3
Plaintiff was, at all times relevant to this action, a holder of a BankAmericard Visa account
with Defendant. Am. Compl. (ECF No. 8) ¶ 10, at 2. He avers that he used said account for
personal, family, and household purposes and that Defendant regularly extended open-end credit
upon which it later assessed finance charges. Id. ¶¶ 10–11, at 2–3.
4
Am. Compl. (ECF No. 8) ¶ 13, at 3.
5
Id. ¶ 14.
6
Id. ¶¶ 15–16.
7
Id. ¶ 17, at 3.
8
Id.
2
To mitigate the potential effects of this scam, Plaintiff and his daughter
made two telephone calls. First, they called Microsoft and were informed that the
individual accessing their computer was not a Microsoft employee.9 Second,
Plaintiff called Defendant to inquire about possible unauthorized charges made by
this unknown third party.10 During this latter conversation, Plaintiff was told that a
Western Union money transfer had been purchased in the amount of $657.00.11
Although Plaintiff then relayed that he had not authorized the charge and that his
account was compromised, Defendant’s customer service department instructed
Plaintiff that action concerning the charge could be taken only after he received a
billing statement.12
On July 29, 2015, Plaintiff received a billing statement from Defendant
which reflected the Western Union charge from June 27, 2015.13 During a
subsequent telephone call made to Defendant, Plaintiff again expressed that the
charge was unauthorized.14 Defendant initially expressed that it could not do
9
Am. Compl. ¶ 18.
10
Id. ¶ 19, at 4.
11
Id. ¶ 20.
12
Id. ¶¶ 21-24, at 4. During this call, Defendant also cancelled the account number associated
with the charge and issued a new credit card. Id. ¶ 25.
13
Id. ¶¶ 26–27.
14
Am. Compl. ¶ 28, at 5.
3
anything concerning the charge because Western Union had already authorized the
charge.15 However, Defendant later advised Plaintiff during a second telephone
call that it would credit the account while it investigated the charge.16 Two letters
later received by Plaintiff, and attached to his Amended Complaint, memorialized
the substance of these telephone conversations.17 Based on both these letters and a
billing statement received after August 18, 2015, Plaintiff believed the disputed
charge had been resolved to his satisfaction.18
Defendant then mailed a letter on September 11, 2015 which indicated that it
had completed its investigation of the disputed charge, and, because Western
Union had documentation supporting the validity of the charge, it would be
reinstating the disputed amount.19 Defendant also enclosed a document entitled
“Western Union Chargeback Response” which listed the recipient of the money
order as Amit Rajak in Mumbai, India.20 Plaintiff avers that he has never been to
15
Id. ¶ 29.
16
Id. ¶ 31.
17
Id. ¶¶ 32–33, at 5–6. See also Letters Confirming July 29, 2015 Phone Call (ECF No. 8-3).
18
Id. ¶¶ 34–37, at 6.
19
Am. Compl. ¶¶ 38–39, at 6–7. See also September 11, 2015 Letter from Defendant (ECF No.
8-5).
20
Id. ¶ 40, at 7.
4
India, nor does he know any named Amit Rajak.21 A billing statement for August
19, 2015 through September 18, 2015 subsequently confirmed the reinstatement of
this charge.22
On September 23, 2015, Plaintiff again contacted Defendant to discuss this
now-rebilled Western Union charge.23 During this telephone call, Defendant’s
representatives stated that the Western Union money transfer had not been paid out
until August 1, 2015—following what Plaintiff avers were numerous warnings to
Defendant that the charge was unauthorized.24 A Notice of Billing Error was
thereafter sent by Plaintiff on September 26, 2015 and received by Defendant on
September 29, 2015.25 An acknowledgement sent by Defendant on October 3,
2015 confirmed its receipt.26 Defendant further responded in a letter dated October
9, 2015 that it was unable to credit Plaintiff’s account based on the results of its
investigation of the charge.27
21
Id. ¶ 41.
22
Id. ¶¶ 42–43, at 7.
23
Id. ¶ 44, at 8.
24
Am. Compl. ¶¶ 45–46.
25
Id. ¶¶ 48–50. See also Notice of Billing Error and Corresponding Mail Receipts (ECF No. 8-
7).
26
Id. ¶ 51. See also Defendants Acknowledgment of Receipt of Billing Error Notice (ECF No.
8-8).
27
Id. ¶¶ 52–53, at 8–9.
5
Based on these events, Plaintiff asserts that Defendant violated (1) the Fair
Credit Billing Act (“FCBA”),28 (2) the Truth in Lending Act (“TILA”),29 and (3)
the Fair Credit Extension Uniformity Act (“FCEUA”)30 and Unfair Trade Practices
and Consumer Protection Law (“UTPCPL”).31 Defendant, in turn, has moved to
dismiss the entirety of Plaintiff’s Amended Complaint under Federal Rule of Civil
Procedure 12(b)(6).32 This matter has since been fully briefed and is ripe for
disposition.33
II.
DISCUSSION
A. Legal Standard
Under Federal Rule of Civil Procedure 12(b)(6), a defendant may file a
motion to dismiss for “failure to state a claim upon which relief can be granted.”
Such a motion “tests the legal sufficiency of a pleading” and “streamlines litigation
by dispensing with needless discovery and factfinding.”34 “Rule 12(b)(6)
28
15 U.S.C. § 1666.
29
15 U.S.C. § 1601 et seq.
30
73 P.S. § 2270.1 et seq.
31
73 P.S. § 201-1 et seq.
32
ECF No. 10.
33
ECF Nos. 11, 16, & 17.
34
In re Hydrogen Peroxide Litigation, 552 F.3d 305, 316 n.15 (3d Cir. 2008) (Scirica, C.J.)
(quoting Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 675 (7th Cir. 2001) (Easterbrook,
J.)). Neitzke v. Williams, 490 U.S. 319, 326–27 (1989).
6
authorizes a court to dismiss a claim on the basis of a dispositive issue of law.”35
This is true of any claim, “without regard to whether it is based on an outlandish
legal theory or on a close but ultimately unavailing one.”36
Beginning in 2007, the Supreme Court of the United States initiated what
some scholars have termed the Roberts Court’s “civil procedure revival” by
significantly tightening the standard that district courts must apply to 12(b)(6)
motions.37 In two landmark decisions, Bell Atlantic Corporation v. Twombly and
Ashcroft v. Iqbal, the Roberts Court “changed . . . the pleading landscape” by
“signal[ing] to lower-court judges that the stricter approach some had been taking
was appropriate under the Federal Rules.”38 More specifically, the Court in these
two decisions “retired” the lenient “no-set-of-facts test” set forth in Conley v.
Gibson and replaced it with a more exacting “plausibility” standard.39
Accordingly, after Twombly and Iqbal, “[t]o survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim
35
Neitzke, 490 U.S. at 326 (citing Hishon v. King & Spalding, 467 U. S. 69, 73 (1984)).
36
Neitzke, 490 U.S. at 327.
37
38
Howard M. Wasserman, The Roberts Court and the Civil Procedure Revival, 31 Rev. Litig.
313 (2012).
550 U.S. 544 (2007); 556 U.S. 662, 678 (2009). Wasserman, supra at 319–20.
39
Iqbal, 556 U.S. at 670 (citing Conley v. Gibson, 355 U.S. 41 (1957)) (“[a]cknowledging that
Twombly retired the Conley no-set-of-facts test”).
7
to relief that is plausible on its face.’”40 “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”41 “Although the
plausibility standard does not impose a probability requirement, it does require a
pleading to show more than a sheer possibility that a defendant has acted
unlawfully.”42 Moreover, “[a]sking for plausible grounds . . . calls for enough facts
to raise a reasonable expectation that discovery will reveal evidence of
[wrongdoing].”43
The plausibility determination is “a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.”44 No
matter the context, however, “[w]here a complaint pleads facts that are ‘merely
consistent with’ a defendant’s liability, it ‘stops short of the line between
possibility and plausibility of entitlement to relief.’”45
When disposing of a motion to dismiss, a court must “accept as true all
40
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).
41
Iqbal, 556 U.S. at 678.
42
Connelly v. Lane Const. Corp., 809 F.3d 780, 786 (3d Cir. 2016) (Jordan, J.) (internal
quotations and citations omitted).
43
Twombly, 550 U.S. at 556.
44
Iqbal, 556 U.S. at 679.
45
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557 (internal quotations omitted)).
8
factual allegations in the complaint and draw all inferences from the facts alleged
in the light most favorable to [the plaintiff].”46 However, “the tenet that a court
must accept as true all of the allegations contained in the complaint is inapplicable
to legal conclusions.”47 “After Iqbal, it is clear that conclusory or ‘bare-bones’
allegations will no longer survive a motion to dismiss.”48 “Threadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not
suffice.”49
As a matter of procedure, the United States Court of Appeals for the Third
Circuit has instructed that:
Under the pleading regime established by Twombly and Iqbal, a
court reviewing the sufficiency of a complaint must take three
steps. First, it must tak[e] note of the elements [the] plaintiff must
plead to state a claim. Second, it should identify allegations that,
because they are no more than conclusions, are not entitled to the
assumption of truth. Finally, [w]hen there are well-pleaded factual
allegations, [the] court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to
relief.50
46
Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008) (Nygaard, J.).
47
Iqbal, 556 U.S. at 678 (internal citations omitted).
48
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (Nygaard, J.).
49
Iqbal, 556 U.S. at 678.
50
Connelly, 809 F.3d at 787 (internal quotations and citations omitted).
9
B. Analysis
Through the instant Motion to Dismiss, Defendant now asks this Court to
dismiss Plaintiff’s Amended Complaint in its entirety. Having considered the
arguments of both parties, I will grant this Motion. My reasoning for this
conclusion follows below and is separated in accordance with the claim analyzed.
(1)
Plaintiff Has Not Alleged a Plausible Claim For Relief
Under the Fair Credit Billing Act.
The Fair Credit Billing Act “provides a procedure through which a debtor
can dispute statements containing a billing error issued by a creditor.”51
Specifically, when a creditor receives written notice from the consumer of the
alleged errors within 60 days of the issuance of the statement containing those
charges, the FCBA requires creditors to investigate and correct any charges
erroneously billed to a consumer's account.52 To trigger such an investigation, the
written notice of billing error must contain: “(1) information that allows
the creditor to ascertain the consumer's name and account number, (2) an
indication that the consumer believes the statement contains a billing error and the
amount of that error, and (3) the reasons for the consumer's belief.”53
51
Pinner v. Schmidt, 805 F.2d 1258, 1264 (5th Cir. 1986).
52
15 U.S.C. § 1666(a); see also Burrell v. DFS Servs., LLC, 753 F.Supp.2d 438, 451 (D.N.J.
2010).
53
Burrell, 753 F.Supp.2d at 451 (citing 15 U.S.C. § 1666(a)).
10
In the matter at hand, Defendant alleges that its obligations under the FCBA
were not triggered because Plaintiff failed to send a written notice of billing error
within 60 days after receiving the first billing statement containing the Western
Union charge.54 I agree with this contention. According to the facts as plead by
Plaintiff, the first statement containing the Western Union charge was received on
July 29, 2015.55 Plaintiff, however, first contested this charge by written notice
received by Defendant on September 29, 2015.56 The duration between July 28,
2015 (the absolute earliest date on which first statement containing the Western
Union charge could have been issued) and September 29, 2015 (the date which
Plaintiff alleges Defendant received his written notice) is 63 days.57 Because this
passage of time exceeds 60 days, Defendant’s obligations under Section 166(a)(A)
and (B) were never triggered. Liability under this statute can therefore not be
imposed.
In light of this clear deficiency, Plaintiff valiantly attempts to rescue his
claim by making creative, but ultimately unpersuasive arguments concerning the
54
Def.'s Br. in Supp. of its Mot. to Dismiss (ECF No. 11) at 8–10.
55
Am. Compl. ¶ 26, at 4.
56
Id. ¶ 50, at 8.
57
This duration of 63 days is the lowest possible duration between issuance of the billing
statement by Defendant and the receipt by Defendant of Plaintiff’s written notice of billing error.
In all likelihood, the actual duration exceeded 63 days as the billing statement was likely issued
and mailed before July 28, 2015.
11
written notice requirement. First, Plaintiff argues that, although 12 C.F.R. §
1026.13(b) of Regulation Z governs this dispute under the FCBA, the Consumer
Financial Protection Bureau’s official interpretations of this section require a cross
reference with 12 C.F.R. § 1026.12. Therefore, because Section 1026.12 provides
that notification may be made “by telephone, or in writing,”58 Plaintiff provided the
required notice by informing Defendant of the Western Union charge by telephone
on July 29, 2015. This argument is incorrect. As noted by Defendant, Section
1026.12(b)(3) concerns the liability of a cardholder for unauthorized charges.
Here, the instant action as plead by Plaintiff concerns card issuer Defendant's
liability under Section 1666(a) of the FCBA for failure to conduct a reasonable
investigation. As I previously recognized in Knowles v. Capital One Bank (USA),
N.A., this card issuer obligation is only triggered upon written notice of billing
error.59
Plaintiff argues, in the alternative, that he complied with the writing and
timeliness requirements of the FCBA because his written notice of billing error
was made in response to the re-billed charge on the September 18, 2015 statement.
To support this argument, Plaintiff relies upon inspired arguments concerning what
he believes the law should be. I am compelled, however, by the plain language of
58
12 C.F.R. § 1026(b)(3).
59
See Knowles v. Capital One Bank (USA), N.A., Civil Action No. 4:11-CV-1257, 2015 WL
3405288, at *4 (M.D.Pa. May 26, 2015). See also Burrell, 753 F.Supp.2d at 451; Middleton v.
Rogers Ltd., Inc., 804 F.Supp.2d 632, 637 (S.D. Ohio 2011).
12
the applicable governing regulation—12 C.F.R. § 226.13(b)—to reject this
argument. This regulation specifically states
A billing error notice is a written notice from a consumer that:(1) Is received
by a creditor at the address disclosed under § 226.7(a)(9) or (b)(9), as
applicable, no later than 60 days after the creditor transmitted the first
periodic statement that reflects the alleged billing error.60
This language clearly contradicts Plaintiff's argument. Thus, because written
notice was received by Defendant more than 60 days after the first billing
statement containing the error, Plaintiff's FCBA claim must be dismissed.61
(2)
Plaintiff Has Not Alleged a Plausible Claim Under the
Truth in Lending Act.
Defendant next seeks dismissal of the second count contained within
Plaintiff's Amended Complaint. Defendant argues that dismissal is proper because
the statutory section of the Truth in Lending Act cited by Plaintiff—15 U.S.C. §
1643—does not provide cardholders with a cause of action. Based on a review of
the case law concerning this provision, I agree with this argument and will also
dismiss this claim.
Section 1643 of the Truth in Lending Act places limits on the liability of a
cardholder for unauthorized use of a credit card. Most pertinently, this Section
provides that "[a] cardholder shall be liable for the unauthorized use of a credit
60
12 C.F.R. § 226.13(b)(1) (emphasis added).
61
Middleton, 804 F.Supp.2d at 638 (dismissing an FCBA where written notice was received by
Defendant more than sixty days after Plaintiff received the first statement with the incorrect
charges).
13
card only if . . . the liability is not in excess of $50."62 This provision, however,
does not provide a cardholder with a right to reimbursement nor a private cause of
action. Specifically, as noted by the Third Circuit in Azur v. Chase Bank, USA,
N.A., Section 1643
"places a ceiling on a cardholder's obligations under the law and thus limits a
card issuer's ability to sue a cardholder to recover fraudulent purchases. The
language of § 1643 does not, however, enlarge a card issuer's liability or
give the cardholder a right to reimbursement."63
Simply put, this section, while limiting a card issuer’s potential recovery for
fraudulent purchases, "imposes liability only upon the cardholder."64
In the matter at hand, Plaintiff, a cardholder, alleges a claim under Section
1643 of the TILA against Defendant, a card issuer. In so doing, Plaintiff attempts
to use Section 1643 as a sword bent on forcing liability through a novel cause of
action. As described above, however, this use has been invalidated by the Third
Circuit. Therefore, despite the best efforts of Plaintiff to obscure this finding, I am
compelled to dismiss the instant TILA claim.
(3)
The Court Cannot Exercise Supplemental Jurisdiction over
Plaintiff’s Claim Under the Fair Credit Extension
Uniformity Act/Unfair Trade Practices and Consumer
Protection Law.
62
15 U.S.C. § 1643(a)(1)(B).
63
601 F.3d 212, 217 (3d Cir. 2010)(emphasis added).
64
Id. (quoting Sovereign Bank v. BJ.'s Wholesale Club, Inc., 533 F.3d 162, 175 (3d Cir.
2010)(emphasis added)).
14
The final count included in Plaintiff's amended complaint alleges a violation
of the Pennsylvania Fair Credit Extension Uniformity Act65 as enforced by the
remedial provision of the Unfair Trade Practices and Consumer Protection Law.66
Defendant moves for dismissal of this count for failure to state a claim upon which
relief can be granted. However, because my prior dismissal of Plaintiff’s claims
under the FCBA and TILA removed this Court’s original jurisdiction, I am unable
to exercise supplemental jurisdiction pursuant to 28 U.S.C. § 1367 and therefore
cannot reach Defendant’s arguments.
Title 28 of the United States Code, Section 1367 governs jurisdiction over
supplemental state law claims brought in federal court. Specifically, Section
1367(a) states that “the district courts shall have supplemental jurisdiction over all
other claims that are so related to claims in the action within such original
jurisdiction that they form part of the same case or controversy under Article III of
the United States Constitution.”67 This exercise of supplemental jurisdiction may
be declined, however, if the court “has dismissed all claims over which it has
original jurisdiction.”68 Furthermore, the Third Circuit has recognized that “where
65
73 Pa. Stat. § 2270.1 et seq.
66
73 Pa. Stat. § 201–9.2.
67
28 U.S.C. § 1367(a).
68
Id. § 1367(c)(3).
15
the claim over which the district court has original jurisdiction is dismissed before
trial, the district court must decline to decide the pendent state claims unless
considerations of judicial economy, convenience, and fairness to the parties
provide an affirmative justification for doing so.”69
As more fully discussed above, Plaintiff has failed to plead plausible claims
under the FCBA and TILA over which this Court would have original jurisdiction.
In accordance with the directives of the Third Circuit, I further find that there
exists no affirmative justification for this Court to exercise supplemental
jurisdiction on the instant state law claim. Plaintiff’s state law claim under the
FCEUA/UTPCPA must therefore be dismissed without prejudice to Plaintiff refiling this claim in state court.70
(4)
Plaintiff Will Not Be Granted Leave to Amend His FCBA
or TILA claims.
Plaintiff will not be granted leave to amend. The Third Circuit has directed
that, when a complaint is subject to Rule 12(b)(6) dismissal, a court “must permit a
curative amendment unless such an amendment would be inequitable or futile.”71
Specifically, the Third Circuit in Phillips v. County of Allegheny has stated that
69
Hedges v. Musco, 204 F.3d 109, 123 (3d Cir. 2000)(citing Borough of West Miflin v.
Lancaster, 45 F.3d 780, 788 (3d Cir. 1995)).
70
See 28 U.S.C. § 1367(d) (providing for at least a thirty-day tolling of any applicable statute of
limitation to allow a plaintiff time to re-file state-law claims in state court).
71
Phillips v. Cnty of Allegheny, 515 F.3d 224, 245 (3d Cir. 2008).
16
[E]ven when plaintiff does not seek leave to amend his complaint after a
defendant moves to dismiss it, unless the district court finds that amendment
would be inequitable or futile, the court must inform the plaintiff that he or
she has leave to amend the complaint within a set period of time.72
Concerning futility, the Third Circuit has sanctioned denial of leave to amend “if
the amended complaint would not survive a motion to dismiss for failure to state a
claim upon which relief could be granted.”73
In this case, amendment of Plaintiff’s FCBA and TILA claims would be
futile. I reach this conclusion because the factual and legal deficiencies delineated
above cannot be cured so as to survive a second motion to dismiss. Moreover,
concerning Plaintiff’s state law FCEUA/ UTPCPA claim, amendment is not proper
as the Court has declined to exercise supplemental jurisdiction over this claim. As
discussed above, however, Plaintiff's ability to re-file this claim in state court will
not be impaired.
III.
CONCLUSION
Based on the above reasoning, Defendant’s Motion to Dismiss is granted.
Counts I and II of Plaintiff’s Complaint are accordingly dismissed with prejudice.
The Court will also decline to exercise supplemental jurisdiction over Count III
without prejudice to Plaintiff re-filing this state-law claim in state court.
An appropriate Order follows.
72
Id.
73
Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000).
17
BY THE COURT:
s/ Matthew W. Brann
Matthew W. Brann
United States District Judge
18
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