Ritchie v. N. Leasing Sys., Inc.

• Decision Date: 28 March 2016
• Docket Number: 12-cv-4992 (KBF)
• Parties: PATRICIA J. RITCHIE, Plaintiff, v. NORTHERN LEASING SYSTEMS, INC. et al., Defendants.
• Court: U.S. District Court — Southern District of New York

PATRICIA J. RITCHIE, Plaintiff, v. NORTHERN LEASING SYSTEMS, INC. et al., Defendants.

12-cv-4992 (KBF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 28, 2016

OPINION & ORDER

KATHERINE B. FORREST, District Judge:

This case has been pending for over three and a half years. During that time, it has consumed extraordinary judicial resources and no doubt significant resources from the parties as well. There was a prolonged period before operative pleadings were finalized and there were numerous discovery motions. Little in this case was accomplished without direct judicial intervention and oversight. Having now had the benefit of the parties' best collection of record evidence on these motions for summary judgment, it is clear that this case should have never been brought. Indeed, it is clear that the narrative which this Court was repeatedly told as to what this case involved, was (kindly put) without evidentiary support.

Plaintiff's core allegation is that she was dunned and sued for a debt that she did not owe. Indeed, she has argued that she could not possibly owe the debt as the documentation underlying the obligation was based on a forgery. According to plaintiff, she was dunned and sued by an unscrupulous company that knew the lease that formed the basis for its alleged entitlement to the debt had been forged. Of course, an essential and implicit point in this story is that plaintiff never owed the debt in the first instance. The undisputed facts in the record tell a far different story.

The record leaves no doubt that plaintiff applied to lease equipment, signed documentation agreeing to make such payments, submitted bank account information to allow payments to be taken directly, made payments for an extended period of time, and used the equipment. The record also reveals that what happened next was due to unique and personal circumstances that plaintiff alone controlled: she closed up the business for which she used the equipment, returned the equipment to the wrong company, and stopped making payments for the equipment. The debt collection calls and suit followed.

All of plaintiff's twelve myriad causes of action—sounding in civil RICO, fraud, and state and federal fair credit statutes—stem from five core allegations:

1) That defendants' letters and phone calls to her contained the false allegation that she owed them money;¹

2) That defendants wrongfully deducted money from her bank account;²

3) That defendants impermissibly pulled her credit information;³4) That defendants furnished false information about her account to a credit reporting agency;⁴ and

5) That defendants' New York Civil Court ("NYCC") lawsuit against her contained false allegations and was designed to extort money from her;⁵

The facts proffered by plaintiff on the motions before this Court do not support anything close to the claims alleged. There is, for instance, no record evidence to raise a triable issue as to major aspects of the RICO or common-law fraud claims. Alleging those claims on the true facts was frivolous. The other claims—there are ten in total, including the New York General Business Law § 349 claim and other statutory claims—are similarly unsupportable. Defendants have moved for summary judgment on all of plaintiff's affirmative claims—and the Court grants that motion now. The Court also accordingly denies plaintiff's motion for partial summary judgment on the affirmative claims relating to the federal and state fair credit laws. However, plaintiff's motion for summary judgment on the counterclaim is granted as unopposed.

I. FACTUAL BACKGROUND

The following facts are not in dispute unless stated otherwise.⁶

A. Plaintiff's Application for Credit Card Swiping Equipment

From approximately 2007 through 2009, plaintiff Patricia Ritchie operated a legal document preparation business called "Divorce Document Assistance." (Defs.' Local R. 56.1 Stmt. of Material Facts Not in Dispute ("Defs.' 56.1") ¶ 10.) In October 2008, plaintiff received an offer in the mail from a company called Merchant Made Easy ("MME"), inviting her to apply for credit card processing services and a credit card machine for her business. (Defs.' 56.1 ¶ 15.) After a telephone conversation with Fred Cox, an MME representative, plaintiff received a Merchant Processing Application (the "Application"), and reviewed its contents. (Ritchie Dep., Def's 56.1 Ex. 2, ("Ritchie Dep.") at Tr. 186:9-17.) The Application bore the logo of iPayment Inc. The Application was prepared by a "Fred Cox" and sent to Ritchie via MME's fax; the fax header stated "Merchants Made Easy." (Defs.' 56.1 ¶ 22, Ex. 4, ("Application"), at 0030.) On October 13, 2008, plaintiff filled out and signed the Application in her own handwriting. (Id. at 0032.)

The Application provides for the provision of equipment over a "Lease Term" of 48 months for a "Total monthly lease charge" of "$54.00 w/o Tax."⁷ (Defs.' 56.1 ¶ 22; Application at 0031.) The Application further provides that if the "merchant"(e.g. the individual who would be using the leased equipment in his or her business, here plaintiff) chooses to "receive products and/or services offered under one or more of the Third Party Agreements referenced in the Program Guide, they hereby acknowledge and agree that the executed Signature page of the application shall also serve as a signature page for each of the respective Third Party Agreement(s) . . ." (Application at 0032.) The Application provides specific authorization for iPayment to obtain credit and financial information relating to Ritchie, perform credit checks and obtain other necessary financial information. (Id. at 0032.)

The Application bears the name and logo of the company iPayment, Inc., "a registered ISO / MSP of Wells Fargo Bank, N.A., Walnut Creek, CA." (Id. at 0030.) Other than the fax header indicating that it was sent to plaintiff by Merchants Made Easy, the Application does not mention MME, LFG, or Northern. (Id. at 021-0024.)

Plaintiff faxed the completed Application to Cox, the representative from MME. (Defs.' 56.1 ¶¶ 17, 21.) Along with her Application, plaintiff also sent a copy of a voided check from her Bank of America business account for deduction of monthly lease payments. (Defs.' 56.1 ¶¶ 13, 21, 23; Application at 0034.)

B. The Lease

The cornerstone of plaintiff's case has always been that the lease obligation defendants used as the basis for debt collection was forged and without legal effect. That lease originated with MME, who provided it to defendants Lease FinancingGroup ("LFG") and Northern Leasing Systems ("Northern"). MME is an independent sales organization ("ISO") authorized to offer equipment leases on behalf of defendant LFG, an equipment finance lessor that specializes in equipment such as credit card swiping machines, (Defs.' 56.1 ¶¶ 1, 3-4), MME and LFG have an independent contractor relationship. (Defs.' 56.1 ¶ 6.) Northern services leases on behalf of LFG. (Pl.'s Local R. 56.1 Stmt. of Material Facts Not in Dispute ("Pl.'s 56.1") ¶ 4.) Defendant Jay Cohen is the CEO of Northern and defendant Ricardo Brown is its Legal Recovery Director. (Answer to SAC, ECF No. 118, ¶¶ 9, 12.)

When MME originates a lease and submits it to LFG, it makes several representations and warranties, including that the signatures on the lease are "genuine and duly authorized." (Defs.' 56.1 ¶ 6.) When LFG issues an equipment finance lease to a lessee—usually a business entity who is offering its own customers the option of using a credit card machine—it requires a personal guarantor, usually a principal of the lessee. (Defs.' 56.1 ¶ 3.)

On or about December 8, 2008, MME sent to LFG a three-page equipment finance lease and guarantee ("the Lease") relating to equipment to be provided to plaintiff Ritchie. (Defs.' 56.1 ¶ 23.) The Lease is for a Nurit 8010 credit card swiping machine, and bears plaintiff's name and address⁸ as the sole lessee and personal guarantor and LFG as the lessor. (Defs.' 56.1 ¶¶ 25-26.) It also contains information similar to that on the Application which plaintiff had filled out,including her social security number, bank account and bank routing numbers, and provides for a base monthly payment of $54, plus taxes and fees, and a term of 48 months. (Defs.' 56.1 ¶¶ 27, 28.) The Lease has two handwritten signature pages on it: in the space for "Lessee #1 Signature" located over the print name "PATRICIA RITCHIE" on page one and in the space for "Guarantor Signature" on page two. (Defs.' 56.1 ¶ 29.) It is undisputed that these signatures are not plaintiff's. Put otherwise, it is accepted for purposes of this motion that they were forged; while plaintiff filled out an Application for the same equipment at the same price and according to the same terms, she did not execute the Lease. At the same time that it received the Lease, Northern also received a copy of plaintiff's Application and a voided check associated with plaintiff's bank account. (Defs.' Rule 56.1 Counterstatement of Material Facts ("Defs.' Counter Stmt.") ¶ 23-26.)

After receiving the Lease, Northern/LFG requested and obtained plaintiff's credit report from Experian, a credit reporting agency ("CRA"). (Defs.' 56.1 ¶ 34; Pl.'s 56.1 ¶ 81.) Northern/LFG then obtained plaintiff's credit score. (Pl.'s 56.1 ¶¶ 40-41.) Northern/LFG did not provide plaintiff notice of these actions. (Pl.'s 56.1 ¶ 88.) On December 11, 2008, LFG approved the Lease. It then paid MME an acquisition fee of $1,747.22. (Defs.' 56.1 ¶ 37.)

C. Plaintiff's Subsequent Actions and Inaction

As mentioned, the driving force behind plaintiff's claims is that her signatures on the Lease were forged. (SAC ¶ 16.) Although plaintiff admits that the signatures on the Application and voided check were genuine, she claims thatshe never signed the subsequent lease with LFG. A key factual question is whether defendants knew the Lease documents were forged. There is no record evidence that they had any such knowledge, nor is...