Elite Funding Corp. v. Mid-Hudson Better Business Bureau
| Decision Date | 31 March 1995 |
| Docket Number | MID-HUDSON |
| Parties | ELITE FUNDING CORP., Plaintiff, v.BETTER BUSINESS BUREAU, Defendant. |
| Court | New York Supreme Court |
Richard G. Monaco, Bedford Hills, for plaintiff.
Whitman Breed Abbott & Morgan, New York City, for defendant.
The operative facts are not in dispute. The defendant Mid-Hudson Better Business Bureau (hereinafter "Bureau") is a not-for-profit organization supported by the local business community which seeks to bring consumers and businesses together by mediating disputes between them to the end of resolving the dispute. It has no coercive powers and relies instead on its efforts to open a dialogue between the two parties. Consumer complaints are generally telephonically communicated to the Bureau which then triggers the informal complaint mediation procedures of the Bureau, to wit, eliciting the details of the complaints in writing, either in letter form or on a Bureau complaint form supplied. The complainants are also asked to provide documentation, if available and pertinent. Once the written complaint is received by the Bureau, it is entered into its computer system, and a copy is mailed to the subject company. In this first mailing, the Bureau solicits from the company a response or explanation of its position concerning the consumer complaint. If no response is received, approximately thirty (30) days later the Bureau sends a second request to the company. If no response is received during the ensuing two (2) to four (4) week period, the complainant is so notified by the Bureau. The complaint is then closed as a "no response" complaint unless the consumer advises the Bureau that the complaint was resolved.
If the Bureau notices a pattern of "no response" complaints in a particular company's file, then the Bureau mails a certified return receipt letter to that company indicating that, as a result of its failure to respond to the complaints, the Bureau intends to issue it an "unsatisfactory" rating. The Bureau again requests a response from the company and gives it yet another opportunity to respond.
In fact, the Bureau has three (3) types of consumer ratings for businesses, based on the file history of a company for the past three (3) years, although it clearly does not endorse, recommend or disapprove of any product, service or company. Generally, a "satisfactory" rating is given to companies which have been in business for at least one (1) year, have voluntarily provided the Bureau with information about their business, have no unusual volume or pattern of complaints, and respond promptly to any complaints filed with the Bureau. In addition, to obtain a "satisfactory" rating the company must not have been the subject of a major law enforcement action involving the business-consumer relationship which materially calls into question its marketplace integrity. If the company was the subject of a Bureau investigation or advertising challenge, it must have substantiated its claims or modified its practices to the Bureau's satisfaction.
An "unsatisfactory" rating is given to companies which have an unusually high volume of complaints, fail to respond to two (2) or more complaints, answer complaints but fail to resolve the customer's problem in a high percentage of the cases, or fail to eliminate the underlying cause of complaints. This rating is also given to companies which are the subject of one (1) or more major law enforcement actions involving the consumer-business relationship which materially call into question the company's marketplace integrity. Finally, this rating is also given to companies that fail to substantiate or modify misleading selling and advertising practices. The Bureau issues this rating to companies who knowingly misuse the Bureau's name or, if pre-committed to binding arbitration, fail to perform or satisfy an arbitration award.
Finally, a company may not qualify for either a "satisfactory" or "unsatisfactory" rating in the absence of sufficient information or the record falls somewhere in between "satisfactory" and "unsatisfactory". In these cases, the Bureau merely describes the nature of the business and gives any complaint history, patterns or other relevant information.
Within this operational context, it cannot be gainsaid that at the time of the instant application, the Bureau had received six (6) consumer complaints concerning plaintiff Elite Funding Corp. (hereinafter Elite) and its operations: the Levene complaint in December, 1991, the Silverman complaint and the Cunningham complaint in May 1992, the Sylvester complaint and the Somos complaint in August 1992 and finally the Esposito complaint which was received after the instant action was commenced. In each instance the Bureau wrote to Elite informing it that it had received a complaint and describing its nature. Then, lacking a response, a second notice was forwarded to Elite. In each instance, the complaint file was closed as a "no response". On July 13, 1992, after the first three (3) "no response" files (Levene, Silverman and Cunningham), the Bureau sent a certified letter to Elite informing it that, if no responses were received by the Bureau before July 27, 1992, the Bureau file report on Elite would reflect an "unsatisfactory" rating. Again, the Bureau received no response from Elite. Thereafter the Sylvester and Somos files were closed as "no response".
In August, 1993, the Bureau informed Elite that, in order to correct its "unsatisfactory" rating, Elite need only respond to the substance of the five listed complaints, still unresolved at that time, or, alternatively, provide information from the Banking Department that these complaints had been satisfied. The Bureau agreed that if it received either information within two (2) weeks, Elite's "unsatisfactory" rating would be removed. Elite never responded.
After Elite commenced this action, the Bureau received the Esposito complaint. Once again Elite did not respond to the Bureau's two separate sequential notifications concerning the Esposito complaint.
The complaint at bar seeks to recover monetary damages from defendant Bureau in the sum of $100,000.00. Plaintiff Elite alleges that the Bureau made , thereby implying that Elite was "incompetent and/or dishonest in its business practices". Plaintiff contends that defendant knew that the statements were not privileged and false when made and/or made the statements with a gross and reckless disregard for the truth or veracity thereof and in derogation of the rules and procedures of the defendant's organization and that the statements tend to damage the plaintiff in its trade, business or profession, to wit the provision of mortgage brokerage services, and that it has suffered monetary damages in its trade, business and profession, as a result.
The defendant Bureau contends that based upon the six (6) unresponded to customer complaints, the Bureau File Report on Elite accurately states that the company has an "unsatisfactory" record because of its pattern of not responding to customer complaints. Quite notably, the File Report also states that the Bureau "does not endorse, recommend, or disapprove of any product, service or company". The Bureau further contends that it gave Elite multiple opportunities to correct its rating, none of which were accepted, and that it never acted with malice towards Elite. Indeed, it was not until the Bureau received and passed on numerous complaints, without a single response from Elite, that it gave Elite an "unsatisfactory" rating. Based upon the history of dealings between the Bureau and Elite, defendant Bureau concludes the statements in the File Report are a statement of its opinion as to Elite's complaint-handling history: unsatisfactory. This opinion is based upon the long-established history of the Bureau's communications to Elite and the latter's patent failure to respond to customer...
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