Cruz v. TD Bank, N.A.

Decision Date02 March 2012
Docket NumberNo. 10 Civ. 8026(PKC).,10 Civ. 8026(PKC).
Citation855 F.Supp.2d 157
PartiesGary CRUZ, and Claude Pain, Individually and on behalf of all others similarly situated, Plaintiffs, v. TD BANK, N.A., Defendant.
CourtU.S. District Court — Southern District of New York


Gabriel Oliver Koppell, Law Offices Of G. Oliver Koppell & Assoc., Charles Wayne Juntikka, Charles Juntikka & Associates, LLP, Daniel Feist Schreck, New York, NY, for Plaintiffs.

John Dellaportas, Justin Joseph D'Elia, Duane Morris, LLP, New York, NY, Alexander D. Bono, Michael Salvatore Zullo, Duane Morris LLP, Philadelphia, PA, for Defendant.


P. KEVIN CASTEL, District Judge:

Plaintiffs Gary Cruz and Claude Pain bring this putative class action against their bank, TD Bank, N.A. (TD Bank) under the Exempt Income Protection Act (“EIPA”) and New York common law. Plaintiffs allege that TD Bank restrained their bank accounts and charged them fees in violation of Article 52 of the New York Civil Practice Law and Rules, as amended by EIPA. Article 52, New York's statutory scheme governing the collection and enforcement of money judgments, was amended by EIPA in 2008 to expand procedural protections to judgment debtors and broaden the types of property that may be exempt from restraint by a creditor.

TD Bank moves to dismiss plaintiffs' Amended Complaint for failure to state a claim upon which relief can be granted under Rule 12(b)(6), Fed. R. Civ. P. TD Bank urges that the newly added EIPA provisions do not create a private right of action for money damages by a judgment debtor against a banking institution, an issue the parties agree has not yet been addressed by a reviewing court.

The Court first considers whether it should abstain from exercising jurisdiction over plaintiffs' claims. The Court concludes abstention is not warranted. Addressing the merits, the Court concludes that EIPA does not create a new private right of action for the plaintiffs to sue TD Bank for money damages and that the plaintiffs' common law claims fail as a matter of law. TD Bank's motion to dismiss is granted.


For the purposes of the defendant's motion, all nonconclusory factual allegations are accepted as true. Matson v. Bd. of Educ. of City Sch. Dist. of N.Y., 631 F.3d 57, 63 (2d Cir.2011); see also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949–50, 173 L.Ed.2d 868 (2009). As the non-movants, all reasonable inferences are drawn in favor of the plaintiffs. Matson, 631 F.3d at 63.

Named plaintiffs Gary Cruz and Claude Pain are residents of New York who opened accounts with TD Bank. TD Bank is a national bank that maintains branches in several states, including New York. (Am. Compl. ¶ 10.) Cruz held a savings and checking account at a New York City branch, while Pain held a checking account at one of TD Bank's New York State branches. ( Id. ¶¶ 11, 15.) Cruz and Pain had approximately $3,020 and $340 in their bank accounts prior to the events of which they now complain. ( Id. ¶¶ 13, 16.)

Thereafter, the plaintiffs each received notice from TD Bank that their accounts had been frozen pursuant to a restraint by a third-party creditor. ( Id. ¶¶ 12, 16.) TD Bank allegedly charged each of the plaintiffs administrative fees and overdraft fees associated with the restraints. ( Id. ¶¶ 13, 16.) Cruz's checking and savings accounts were restrained from August 2009 until April 2010, while Pain's checking account has been frozen since December 31, 2010. ( Id. ¶¶ 12–13, 17.)

TD Bank never received from the third-party creditors any disclosures concerning income in plaintiffs' accounts that might be exempt. TD Bank thus did not send any such disclosures to the plaintiffs advising them how to claim an exemption. ( Id. ¶¶ 14, 18.) TD Bank also did not provide plaintiffs with a copy of the restraining notice that the third-party creditors served upon TD Bank. ( Id.)

On October 21, 2010, the plaintiffs filed a Complaint in this Court seeking compensatory damages and injunctive relief against TD Bank. With permission of the Court, the plaintiffs filed an Amended Complaint on March 14, 2011, alleging that TD Bank employs a general practice of not complying with the statutory requirements of EIPA.

Plaintiffs allege that TD Bank did not ask creditors for copies of certain notices and forms that explain the rights of debtor—account holders. ( Id. ¶ 27.) TD Bank then did not forward any such notices or forms to the debtors, but still honored restraints imposed by third-party creditors and charged overdraft fees to the plaintiffs' accounts. ( Id. ¶ 28.) The foregoing are alleged to be violations of the requirements of EIPA and are said to give rise to a private right of action for money damages.


Defendant TD Bank moves to dismiss the Amended Complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), Fed. R. Civ. P. Rule 8(a)(2) requires ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (ellipsis in original) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must provide the grounds upon which the claims rest, through factual allegations sufficient ‘to raise a right to relief above the speculative level.’ ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). “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.” Iqbal, 129 S.Ct. at 1949. “The plausibility standard ... asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. Legal conclusions and [t]hreadbare recitals of the elements of a cause of action” do not suffice to state a claim, as Rule 8 ... does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 1949–50.

In ruling on a motion to dismiss, the Court draws all reasonable inferences in the plaintiff's favor and accepts as true all well-pleaded factual allegations in the complaint. In re Elevator Antitrust Litig., 502 F.3d 47, 50 (2d Cir.2007) (per curiam). Although the Court is generally limited to facts as stated in the complaint, it may consider exhibits or documents incorporated by reference without converting the motion into one for summary judgment. See Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir.1995). This Court may also consider any document integral to the complaint upon which it “relies heavily.” See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002). Lastly, this Court may consider matters of public record of which it make take judicial notice. See Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir.1993).


Plaintiffs bring six claims against TD Bank, seeking relief under EIPA and asserting five claims under New York common law: conversion, breach of fiduciary duty, fraud, unjust enrichment, and negligence. (Am. Compl. ¶¶ 40–77.) 1

I. Plaintiffs Have Standing to Pursue This Case

TD Bank alleges that the two named plaintiffs, Cruz and Pain, lack standing to pursue their claims. (Def.'s Mem. L. at 4–6.) Cruz allegedly lacks standing because he filed a Chapter 7 bankruptcy petition in which he did not schedule this cause of action. Because Cruz thereafter received a discharge of his bankruptcy proceeding, TD Bank claims this lawsuit is property of the bankruptcy estate, not Cruz. ( Id.) Plaintiff Pain allegedly lacks standing because he originally opened his TD Bank checking account at one of its New Jersey branches. TD bank thus argues that New Jersey law, not EIPA, applies to plaintiffs' allegations. ( Id. at 6.)

The plaintiffs have standing to pursue their claims. Plaintiffs have put forth evidence that prior to filing the Amended Complaint, Cruz reopened his bankruptcy proceeding and amended his schedule to include this action. Subsequently, the trustee presiding over Cruz's estate filed a “no-asset report” abandoning its right to this action. (Koppell Decl. Ex. A.) Because the asset therefore reverts to Cruz, he has standing. Fedotov v. Peter T. Roach & Assocs., P.C., 354 F.Supp.2d 471, 475–76 (S.D.N.Y.2005) ( [P]roperty, including a cause of action, properly scheduled pursuant to [the Bankruptcy Code] and not administered by the Trustee, reverts to the debtor's possession once the bankruptcy estate is fully administered ....”). As to Pain, TD Bank offers no evidence disputing Pain's allegation that he was a New York resident at the time the collection was enforced against him and at the time this action was filed. Nor has TD Bank provided this Court any judicial or statutory authority holding that Article 52 or EIPA's provisions apply only to bank accounts initially opened in New York.

Accordingly, the plaintiffs have standing to pursue their claims.

II. Article 52 and the Exempt Income Protection Act

Plaintiffs seek relief against TD Bank for failing to comply with Article 52 of the CPLR as amended by EIPA. (Am. Compl. ¶¶ 40–51.) As noted previously, whether a judgment debtor can invoke EIPA to bring a private right of action for money damages against his bank has not been decided by a New York court in a reported decision.

Article 52 governs the enforcement and collection of money judgments in New York state courts. It defines specific types of property exempt from restraint or attachment, CPLR § 5205, the methods for notifying a debtor that his account has been restrained, id. § 5222, “special proceedings” wherein creditors, debtors, and “any interested person” can adjudicate disputes over income or property, id. §§ 5225(b), 5227, 5239...

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