Himmelstein v. Comcast of the Dist., L.L.C.

• Decision Date: 10 December 2012
• Docket Number: Civil Action No. 12–1475 (JEB).
• Citation: 908 F.Supp.2d 49
• Parties: Marc HIMMELSTEIN, Plaintiff, v. COMCAST OF THE DISTRICT, L.L.C., et al., Defendants.
• Court: U.S. District Court — District of Columbia

908 F.Supp.2d 49

Marc HIMMELSTEIN, Plaintiff,

v.COMCAST OF THE DISTRICT, L.L.C., et al., Defendants.

Civil Action No. 12–1475 (JEB).

United States District Court, District of Columbia.

Dec. 10, 2012.

Nathan I. Finkelstein, Finkelstein & Goldman, P.C., Bethesda, MD, Matthew E. Feinberg, Finkelstein & Goldman, PC, Washington, DC, for Plaintiff.

Adam Shartzer Caldwell, Leslie Gallagher Moylan, Davis Wright Tremaine, LLP, Washington, DC, Ronald S. Canter, The Law Offices of Ronald S. Canter, Rockville, MD, for Defendants.

MEMORANDUM OPINION

JAMES E. BOASBERG, District Judge.

Dissatisfied with his cable provider, Plaintiff Marc Himmelstein terminated his service agreement with Comcast in June 2010. His services were subsequently disconnected, and Comcast's equipment was removed from his home. A modem was mistakenly left behind, however, and his account was charged $220 for the unreturned equipment. This outstanding balance was then forwarded to a collection agency—Defendant Credit Protection Association, L.P. (CPA)—and was ultimately reported to the national credit-reporting agencies. Upon discovering the mix-up, Himmelstein returned the modem to Comcast and sought to have the company correct his account. Despite reassurances from Comcast that the issue was resolved, the mistake remained on his credit report, which ultimately resulted in Himmelstein's having to pay an additional $26,000 when he sought to refinance the mortgage on his home.

Plaintiff thus brought this suit, asserting four causes of action against Comcast and three against CPA.¹ Himmelstein asserts claims of breach of contract (Count I), breach of the implied covenant of good faith and fair dealing (Count II), negligence (Count III), and constructive fraud (Count IV) against Comcast. He sues CPA for negligence (Count V), constructive fraud (Count VI), and violations of the Fair Credit Reporting Act (Count VII). Although CPA has filed an Answer, Comcast now moves to dismiss Counts II–IV under Rule 12(b)(6) for failure to state a claim upon which relief may be granted. The Court, agreeing with some defense arguments, will grant the Motion as to Counts II and IV, and deny it as to Count III. Because Comcast has not challenged Count I, that claim, as well as those against CPA, may also proceed.

I. Background

According to the Complaint, which must be presumed true at this stage, Himmelstein was a long-time customer of Comcast, receiving residential cable and high-speed internet services at his home in Northwest Washington. See Compl., ¶ 9. These services were provided pursuant to a service contract with Comcast. See id., ¶ 10 & Exh. A (Comcast Agreement for Residential Services). Himmelstein elected to terminate his contract around June 2010, contacting Comcast to schedule a time for services to be disconnected and the equipment to be removed from his home. See id., ¶¶ 12, 14.

A Comcast technician came to his residence on June 17, 2012, to remove the equipment, picking up the cable box, but inadvertently leaving behind a modem. See id., ¶¶ 15, 19, 21. Himmelstein, under the impression that all equipment had been picked up by the technician and that he would be receiving a credit for $123.19 when his account was terminated, contacted Comcast in August 2010 to inquire about the refund. See id., ¶¶ 15–19. On this call, he was informed for the first time that he owed Comcast approximately $220 for cable-modem equipment that had not been returned. See id. “Shortly thereafter, Himmelstein received a demand letter from a collection agency [CPA] seeking to recover, on Comcast's behalf, the alleged $220.00 outstanding balance.” Id., ¶ 21. He then contacted Comcast again regarding the status of the account and was told that the charge would be removed and corrected when he returned the missing modem. See id. Himmelstein located the missing modem and returned it immediately to Comcast. See id., ¶ 22.

Despite contacting Comcast “on at least three occasions,” Himmelstein received no written confirmation from Comcast that they had received the modem, but he was told that his account balance had been corrected and he would be issued a refund check. See id., ¶ 23. Himmelstein never received the refund check, however, and CPA continued to pursue collection of the $220 balance. See id., ¶¶ 24–25. The collection agency, moreover, reported the debt to the national credit-reporting agencies in December 2010. See id., ¶ 26. When Himmelstein contacted CPA to dispute the debt, it acknowledged the error, ceased collection on the account, and contacted Comcast to report the account for deletion—but never contacted the national credit bureaus regarding the mistake. See id., ¶¶ 27–28.

Later that spring, Himmelstein sought to refinance his mortgage with Citibank. See id., ¶ 29. His credit report continued to reflect the Comcast debt, despite Himmelstein's repeated efforts to redress this with both Comcast and CPA. See id. Because of this outstanding debt, Citibank required Himmelstein to pay an additional $26,000 (1% of the value of the mortgage) for the same loan. See id., ¶ 30. In addition to these added financing costs, he has never received the $123.19 credit he was owed upon termination of his account. See id., ¶ 33.

II. Legal Standard

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of an action where a complaint fails to “state a claim upon which relief can be granted.” When the sufficiency of a complaint is challenged under Rule 12(b)(6), the factual allegations presented in it must be presumed true and should be liberally construed in a plaintiff's favor. Leatherman v. Tarrant Cnty. Narcotics & Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993). Although the notice-pleading rules are “not meant to impose a great burden on a plaintiff,” Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005), and “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation omitted). Plaintiff must put forth “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Though a plaintiff may survive a 12(b)(6) motion even if “recovery is very remote and unlikely,” Twombly, 550 U.S. at 556, 127 S.Ct. 1955 (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)), the facts alleged in the complaint “must be enough to raise a right to relief above the speculative level.” Id. at 555, 127 S.Ct. 1955.

III. Analysis

In moving to dismiss, Comcast raises putative defects in three of the four causes of action asserted against it (Counts II, III & IV). It does not, however, seek to dismiss the breach-of-contract claim (Count I). The Court will address the three challenges in turn.

A. Count II: Breach of the Implied Covenant of Good Faith and Fair Dealing

Defendant first contends that Himmelstein has failed to allege facts that would permit the Court to infer that Comcast acted with the bad faith required to state a claim for breach of the implied covenant of good faith and fair dealing. See Mot. at 6–8. Plaintiff counters that it has alleged sufficient bad faith in “Comcast's repeated egregious behavior and misrepresentations made throughout the collections process,” and the “fact that Comcast's errors and misrepresentations occurred at least three (3) times to a single customer is sufficient to infer that Comcast's actions were not merely a simple ‘mistake, misunderstanding, or oversight,’ ... but rose to the level of bad faith.” Opp. at 12. The Court disagrees. The accounting mistakes made by Comcast in handling Himmelstein's account—while unquestionably frustrating—do not raise an inference of bad faith sufficient to state a claim for breach of the covenant.

The District of Columbia recognizes that “in every contract there is an implied covenant that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract, which means that in every contract there exists an implied covenant of good faith and fair dealing.” Hais v. Smith, 547 A.2d 986, 987 (D.C.1988) (internal quotation marks and citation omitted); see also Allworth v. Howard Univ., 890 A.2d 194, 201 (D.C.2006) (“all contracts contain an implied duty of good faith and fair dealing”) (internal citation omitted). A party may be liable for a breach of this duty if it “evades the spirit of the contract, willfully renders imperfect performance, or interferes with performance by the other party.” Paul v. Howard Univ., 754 A.2d 297, 310 (D.C.2000).

In Allworth, the court looked to the Restatement for guidance on the meaning of “good faith” in the context of a breach of the covenant, noting:

The phrase “good faith” is used in a variety of contexts, and its meaning varies somewhat with the context. Good faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party; it excludes a variety of types of conduct characterized as involving “bad faith” because they violate standards of decency, fairness or reasonableness.

Allworth, 890 A.2d at 201–202 (quoting Restatement (Second) of Contracts § 205 cmt. a). The court further observed that bad faith “ ‘may be overt or may consist of inaction,’ ” involving “ ‘evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party's performance.’ ” Id. (quoti...