Kurz v. Chase Manhattan Bank

• Decision Date: 21 July 2003
• Docket Number: No. 00 CIV.1573 CM.,00 CIV.1573 CM.
• Parties: Daniel KURZ, Plaintiff, v. CHASE MANHATTAN BANK, Defendant.
• Court: U.S. District Court — Southern District of New York

273 F.Supp.2d 474

Daniel KURZ, Plaintiff, v. CHASE MANHATTAN BANK, Defendant.

No. 00 CIV.1573 CM.

United States District Court, S.D. New York.

July 21, 2003.

AMENDED DECISION AND ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

MCMAHON, District Judge.

Plaintiff, an attorney admitted to practice in this District, filed a six count complaint, alleging defendant had violated the Truth in Lending Act (TILA), 15 U.S.C. § 1666, on numerous occasions in connection with credit card billing. On February 16, 2001 this Court granted defendant's motion for dismissal or summary judgment on all counts. The Third Count was dismissed without prejudice, so plaintiff could affirmatively plead that defendant had failed to respond to his billing inquiries in the manner required by the Fair Credit Billing Act and Regulation Z (12 C.F.R. § 226.13).

Plaintiff subsequently filed a Third Amended Complaint. Defendant, after answering, denying the complaint and asserting affirmative defenses and counterclaims alleging deceit, breach of contract and breach of the implied covenant of good faith and fair dealing, conversion and unjust enrichment, renewed their motion for summary judgment.

Facts Pertinent to the Motion

Plaintiff holds an open-ended credit card account with defendant bank. In December 1998 plaintiff commenced a campaign of billing error complaints against defendant. Plaintiff, a practiced litigator in Truth in Lending Act matters, scrutinized his bills for any discrepancies between the receipts that he or members of his family had signed when making various purchases on his credit card and the detail relating to those purchases that appeared on his monthly billing statements. Not surprisingly he found differences. These took the form of differences in merchant name (perhaps a formal corporate name as distinct from the name of the store) or a posting date that was one or two days later than the date of the actual purchase.

One example of such a discrepancy disputed by plaintiff arose when he purchased air tickets from a travel agent. Plaintiff freely admits that he signed a blank sales slip authorizing payment of $1,910 to the travel agent. Despite using the tickets and being billed only once for them, plaintiff disputed the payment when it was credited to "Picasso Travel" on his account. Having informed defendant that he did not recognize the name of the merchant, he then withheld payment for some seven months. When the bank sent him a copy of the sales slip with his signature recorded on it plaintiff reluctantly paid the charge, although he still complained that the issue regarding the correct name of the travel agent had not been resolved. In Plaintiff's Counter Statement of Facts Pursuant to Local Rule 56.1(b) he seeks a total of $1,600 in penalties for defendant's failure to resolve this billing inquiry in a timely manner. (Counter Statement of Material Facts at 12).

From December 1998 until this case was filed, plaintiff bombarded defendant with letters detailing billing discrepancies. From December 1998 to November 2001, plaintiff sent defendant a total of thirty-two such letters. Sometimes he included complaints about several different discrepancies in one letter. Sometimes he enclosed payment along with his letters of complaint. Defendant asked that plaintiff stop confusing its representatives by making multiple claims in single letters and by enclosing payments along with claims, but plaintiff questioned defendant's right to make such requests and continued to issue confusing letters.

Plaintiff does not claim that the technical discrepancies he uncovered were prompted by a good faith belief that he had not incurred the charges in question. Rather, he asserts that TILA requires creditors to respond to billing inquiries within a specified time and in a specified way and authorizes actual and/or statutory damages against a creditor who fails to do so, regardless of the bona fides of the inquiry. When pressed in deposition for a justification for his continual complaints, plaintiff said only that if he did not question the validity of the charge within the time period set by TILA he might ultimately become responsible for a double billing. (EBT at 295).

Discussion

A party is entitled to summary judgment when there is no "genuine issue of material fact" and the undisputed facts warrant judgment for the moving party as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In addressing a motion for summary judgment, "the court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in [its] favor." Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Whether any disputed issue of fact exists is for the Court to determine. Balderman v. United States Veterans Admin., 870 F.2d 57, 60 (2d Cir.1989). The moving party has the initial burden of demonstrating the absence of a disputed issue of material fact. Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once such a showing has been made, the non-moving party must present "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The party opposing summary judgment "may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir.1998). Moreover, not every disputed factual issue is material in light of the substantive law that governs the case. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

The Truth in Lending Act (TILA)

The Truth in Lending Act, originally enacted in 1968, was the first federal consumer protection law. It is a remedial statute and as such it is intended to be construed liberally in favor of the consumer. TILA is designed to promote the provision of accurate and understandable information concerning credit agreements signed by members of the public. Congress also sought to force creditors to be more responsive to their customers, both by displaying relevant information clearly and by ensuring that they would respond promptly to complaints regarding billing errors.

It was for this reason that Congress enacted 15 U.S.C. § 1666, which clearly sets out the required procedure to be followed if the obligor wishes to query his bill. Under this section the obligor is required to:

(1) set out details of his name and account;

(2) indicate his belief that the statement contains a billing error and the amount of the alleged billing error; and

(3) set out his reasons for believing that there has been a billing error.

Having received such an inquiry, the law requires the creditor to:

(A) send a written acknowledgment of the notice to the obligor not later than thirty days after its receipt, unless the action required in subparagraph (B) is taken within such thirty-day period, and

(B) not later than two complete billing cycles of the creditor (in no event later than ninety days) after the receipt of the notice and prior to taking any action to collect the amount, or any part thereof, indicated by the obligor under paragraph (2) either-

(i) make appropriate correction in the account of the obligor, including the crediting of any such finance charges on amounts erroneously billed, and transmit to the obligor a notification of such corrections and the creditor's explanation of any change in the amount indicated by the obligor under paragraph (2) and, if any such change is made and the obligor so requests, copies of documentary evidence of the obligor's indebtedness; or

(ii) send a written explanation or clarification to the obligor, after having conducted an investigation, setting forth to the extent applicable the reasons why the creditor believes the account of the obligor was correctly shown in the statement and, upon request of the obligor, provide copies of documentary evidence .....

15 U.S.C. § 1666 (2003).

Section 1640 of the statute governs the award of damages for TILA violations:

... any creditor who fails to comply with any requirement imposed under this chapter [ 15 U.S.C. § § 1631 et seq.] ... is liable to such a person in an amount equal to the sum of ____

(1) any actual damage sustained by such person as a result of the failure;

(2)(A)(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction.

Section 1666(e) specifically governs the noncompliance of the creditor with the specified procedure for correcting billing errors:

Any creditor who fails to comply with the requirements of this section or section 162 (15 U.S.C. § 1666a) forfeits any right to collect from the obligor the amount indicated by the obligor ... and any finance charges thereon, except that the amount required to be forfeited under this subsection may not exceed $50.

Courts have held that TILA, being a remedial statute, must be strictly construed. "Once the court finds a violation no matter how technical it has no discretion with respect to the imposition of liability." Grant v. Imperial Motors, 539 F.2d 506, 510 (5th Cir.1976). See also N.C. Freed Co., Inc. v. Board of Governors of Federal Reserve System, 473 F.2d 1210, 1214 (2d Cir.1973) cert. denied, 414 U.S. 827, 94 S.Ct. 48, 38 L.Ed.2d 61 (1973) (TILA is remedial in nature, designed by Congress to remedy predatory creditor practices, and must be construed in a liberal fashion); Trombly v. State Credit Adjustment Bureau, Inc., 1984 U.S. Dist. Lexis 24874 (D.Conn. Sept. 17, 1984) (plaintiffs need only establish one example of non-compliance in order to recover under any provision of 15 § U.S.C. 1601 et. seq.). Courts have applied the same liberal construction when considering the awarding of actual...