AMERICAN EXP. TRAVEL RELATED SERV. CO. v. Henein, 00-CV-2686 (FB).

• Decision Date: 18 January 2001
• Docket Number: No. 00-CV-2686 (FB).,00-CV-2686 (FB).
• Parties: AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., Plaintiff-Appellant, v. Magdi HENEIN a/k/a Magdi G. Henein, Defendant-Appellee.
• Court: U.S. District Court — Eastern District of New York

257 B.R. 702 (2001)

AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., Plaintiff-Appellant,
v.
Magdi HENEIN a/k/a Magdi G. Henein, Defendant-Appellee.

No. 00-CV-2686 (FB).

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

January 18, 2001.

257 BR 703

COPYRIGHT MATERIAL OMITTED

257 BR 704

Paul J. Hooten, Paul J. Hooten & Associates, Mount Sinai, NY, for the Plaintiff-Appellant

Hanna Z. Hanna, New York City, for the Defendant-Appellee.

MEMORANDUM AND ORDER

BLOCK, District Judge.

Plaintiff-Appellant American Express Travel Related Services Company, Inc. ("American Express"), appeals an order of the bankruptcy court granting defendant-appellee, Magdi Henein's ("Henein"), motion to dismiss American Express's amended complaint pursuant to Rule 7012(b) of the Federal Rules of Bankruptcy Procedure, incorporating by reference Rule 12(b)(6) of the Federal Rules of Civil Procedure.

I. BACKGROUND

On April 22, 1999, Henein filed for bankruptcy pursuant to Chapter 7. On August 16, 1999, American Express filed a complaint seeking to have charges totaling $17,996.73 declared nondischargeable pursuant to 28 U.S.C. §§ 157(a), (b)(1), (b)(2)(I), 1334(b) and 11 U.S.C. § 523(c), on the ground that Henein made willful misrepresentations regarding these charges.

257 BR 705

On September 24, 1999, Henein moved to dismiss the complaint. The bankruptcy court, upon oral argument held on November 4, 1999, denied the motion to dismiss and ordered American Express to amend its complaint. On November 16, 1999, American Express filed an amended complaint that was substantially similar to its original complaint in that it did not allege any new facts. Specifically, American Express alleges that $80,235 of Henein's unsecured nonpriority debt is the result of credit/charge card debt; Henein earned $16,780 in 1997, $19,600 in 1998 and $5,800 in 1999 (at the time of filing); the $17,996.73 was incurred between June and September 1998; the charges include $3,250 at Bay Ridge Auto for "gas and other," $3,140 at Alia New York for airline tickets, $3,430 at United Sendaway for "Barber, Beauty Shops," $2,870 at Three Golden Stars for grocery, and $2,461.71 at Avis car rental; and Henein had insufficient income or assets from which he reasonably could expect to pay his bill. See Plaintiff's Designation of Items to be Included in the Record on Appeal at Tab 7, ¶ 13-17("R"). With respect to Henein's state of mind, American Express alleges that the goods and/or services were obtained through false representations, Henein knew he was unable to pay his bill and he did not intend to pay. Id. at ¶ 22-28

On January 12, 2000, the bankruptcy court held oral argument for a second time and noted on the record that the complaint "merely states that the defendant obtained goods on his American Express account through false representations and that American Express justifiably relied on the false representations and that Defendant did not intend to pay them, without substantiating these legal assertions with facts as to the fraud, reliance and the defendant's intention." R. at Tab 8. On March 31, 2000, the bankruptcy court entered an order dismissing the complaint on the ground that "the amended complaint recited in essence the facts set forth in the initial complaint, and the court finds that plaintiff has submitted legal theories to object to the dischargeability of the Defendant's debt, but did not submit factual allegations to establish its legal allegation of fraud pursuant to Bankruptcy Code § 523(a)(2)(A)." R. at Tab 9. This appeal followed.

II. DISCUSSION

A district court has jurisdiction to hear appeals "from final judgments, orders and decrees" of a bankruptcy court. 28 U.S.C. § 158(a)(1). A bankruptcy court's conclusions of law are reviewed de novo, and findings of fact are reviewed under a clearly erroneous standard. In re Ionosphere Clubs, Inc., 922 F.2d 984, 988 (2d Cir.1990). Accordingly, the Court reviews the order of the bankruptcy court de novo.

In reviewing pleadings on a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), a court "must limit itself to facts stated in the complaint as exhibits or incorporated in the complaint by reference." Newman & Schwartz v....