Schwartz v. HSBC Bank USA, N.A.

• Decision Date: 09 February 2016
• Docket Number: 14 Civ. 9525 (KPF)
• Citation: 160 F.Supp.3d 666
• Parties: Bruce Schwartz, Plaintiff, v. HSBC Bank USA, N.A., Defendant.
• Court: U.S. District Court — Southern District of New York

160 F.Supp.3d 666

Bruce Schwartz, Plaintiff,

v.HSBC Bank USA, N.A., Defendant.

14 Civ. 9525 (KPF)

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

Signed February 9, 2016

Brian Lewis Bromberg, Jonathan Robert Miller, Bromberg Law Office, P.C., Harley Jay Schnall, Law Office of Harley J. Schnall, New York, NY, for Plaintiff.

Aaron Van Nostrand, Duane Morris, LLP, Newark, NJ, Louis Smith, Greenberg Traurig LLP, Florham Park, NJ, for Defendant.

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge

For the second time in as many years, Plaintiff Bruce Schwartz has filed suit against Defendant HSBC Bank, with which Schwartz holds an open end consumer credit card account. This time, Plaintiff alleges that Defendant has violated, and continues to violate, certain provisions of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 -1667f, and its implementing regulation, Regulation Z, 12 C.F.R. Part 1026. Specifically, Plaintiff alleges that Defendant (i) improperly imposed a late fee and finance charge on Plaintiff's timely payment, in violation of 15 U.S.C. § 1637(o)(2) and the corresponding provisions of Regulation Z; and (ii) failed to disclose the penalty annual percentage rate (“APR”) applicable to Plaintiff's account, thereby violating 15 U.S.C. § 1637(b)(12) and the corresponding provisions of Regulation Z. In addition to his claims under TILA, Plaintiff asserts a claim for state law breach of contract based on Defendant's imposition of a late fee and finance charge. For the reasons stated in this Opinion, Defendant's motion to dismiss is converted to a motion for summary judgment in regards to Plaintiff's claim for improper imposition of fees under TILA and for breach of contract, and is granted on those claims. Defendant's motion is denied in regards to Plaintiff's APR disclosure claim.

BACKGROUND¹

A. Factual Background

Plaintiff Bruce Schwartz resides in Queens County, New York, and holds a personal-use open end consumer credit card account with Defendant HSBC. (FAC ¶¶ 7, 11). In connection with his account, Plaintiff receives periodic billing statements from Defendant. (Id. at ¶ 12). Plaintiff's November 2013 statement contained payment instructions, which stated in relevant part:

Payments should be mailed with a single coupon to the payment address shown on the front of this billing statement. Payments must be made by a single check or money order.... Payments received on any day at the payment address shown on the front by 5:00 p.m. Central Time will be credited to your Account as of the date of receipt.... Payments received after the tim[e] indicated will be credited the next day. Crediting payments to your Account may be delayed up to five days if the payment is not made as described above, or, is not mailed to and received at the address provided for remittance; is not accompanied by the payment coupon; [or] is received in an envelope other than the envelope provided for remittance[.]

(Id. at ¶ 15, Ex. B).

Prior to November 28, 2013, Plaintiff mailed a check for $100 as payment on his account, in an envelope provided by Defendant. (FAC ¶ 16). Plaintiff included in the envelope a payment coupon that had been issued by Defendant in conjunction with Defendant's July 2013 billing statement. (Serritella Decl. ¶ 3). The payment envelopes issued by Defendant contain a glassine window that permits the return address printed on the payment coupon to show through the envelope window. (Id. at ¶ 4). The remittance address printed on Plaintiff's July 2013 payment coupon reads “PO Box 5255, Carol Stream, IL 60197-5255.” (Id. at ¶ 3; Serritella Dep. 20). The remittance address printed on Plaintiff's November 2013 payment coupon reads “PO Box 4657, Carol Stream, IL 60197-5255.” (FAC Ex. B).

Plaintiff's payment arrived at the post office in Carol Stream, Illinois, on November 29, 2013, at 8:40 a.m.; the particular post office box at which the payment was received that day, however, is not reflected in the record. (FAC ¶ 16, Ex. C). November 28, 2013, was Thanksgiving Day, and consequently Defendant was allegedly not accepting mailed payments on that date. (Id. at ¶ 18).²

When Plaintiff received his December 2013 billing statement, it reflected two transactions: a $100 payment credited on December 3, 2013, and a $25 late fee debited on November 28, 2013. (FAC ¶ 13, Ex. A). That statement additionally reflected Plaintiff's balance subject to interest; Plaintiff's new balance; the applicable APR rates for purchases and cash advances, respectively; and a warning that a late payment could lead to a late fee assessment and the payment of greater interest charges. (Id. at ¶ 14). The back of the billing statements received by Plaintiff state that late payments could subject his account to a penalty APR (id. at Ex. A, B, E), and Plaintiff's cardholder agreement indicates that the potential penalty APR applicable to Plaintiff's account was 29.99% (as opposed to the prevailing APRs of 16.99% for purchases and 24.99% for Cash Advances, see id . at ¶ 19, Ex. D). Nowhere does Plaintiff's May 2014 billing statement indicate, however, that Plaintiff's account could be subjected to a 29.99% penalty APR, and the “Late Payment Warning” on the front of that statement makes no reference to a penalty APR at all. (Id. at ¶ 21, Ex. E).

B. Procedural Background

Plaintiff filed his initial Complaint in this matter on December 1, 2014. (Dkt. #1). Defendant notified the Court, by letter dated February 6, 2015, of its intention to file a motion to dismiss, and on February 24, 2015, the Court held a conference regarding Defendant's proposed motion. (See Dkt. #10, 11). Plaintiff filed his First Amended Complaint on March 27, 2015, in an effort to cure deficiencies identified by Defendant. (Dkt. #12). Despite this revision, Defendant filed the instant motion to dismiss on May 1, 2015. (Dkt. #16). Plaintiff filed his opposition on June 1, 2015 (Dkt. #21), and Defendant filed its reply on June 15, 2015 (Dkt. #23).

On July 6, 2015, Plaintiff moved to strike portions of Defendant's reply memorandum, as well as two declarations of Robert Serritella submitted by Defendant. (Dkt. #28). Defendant filed its opposition to Plaintiff's motion to strike on July 17, 2015 (Dkt. #31), and Plaintiff filed his reply on July 24, 2015 (Dkt. #32). On December 15, 2015, the Court issued an Order denying Plaintiff's motion. (Dkt. #33). The Court additionally advised the parties that it would, pursuant to Defendant's request, partially convert Defendant's motion—specifically, the portion of Defendant's motion addressing Plaintiff's claims of an improperly imposed late fee and interest charge under TILA and state contract law—to one for summary judgment under Federal Rule of Civil Procedure 56. To ensure that Plaintiff would not be prejudiced by this conversion, the Court granted Plaintiff leave to depose an additional witness under Federal Rule of Civil Procedure 30(b)(6), and to file a surreply in opposition to Defendant's motion. Plaintiff filed his surreply on January 22, 2016, thereby concluding the briefing. (Dkt. #37).

DISCUSSION

A. Applicable Law

1. Motions to Dismiss Under Fed. R. Civ. P. 12(b)(6)

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court should “draw all reasonable inferences in [the plaintiff's] favor, assume all well-pleaded factual allegations to be true, and determine whether they plausibly give rise to an entitlement to relief.” Faber v. Metro. Life Ins. Co. , 648 F.3d 98, 104 (2d Cir.2011) (internal quotation marks omitted). Thus, “[t]o survive a motion to dismiss, 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) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). “While Twombly does not require heightened fact pleading of specifics, it does require enough facts to ‘nudge [a plaintiff's] claims across the line from conceivable to plausible.”’ In re Elevator Antitrust Litig. , 502 F.3d 47, 50 (2d Cir.2007) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). “Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.”’ Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ). Moreover, “the tenet that a court must accept a complaint's allegations as true is inapplicable to threadbare recitals of a cause of action's elements, supported by mere conclusory statements.” Id. at 663, 129 S.Ct. 1937.

“In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint.” DiFolco v. MSNBC Cable LLC , 622 F.3d 104, 111 (2d Cir.2010). “Even where a document is not incorporated by reference, the court may nevertheless consider it where the complaint ‘relies heavily upon its terms and effect,’ which renders the document ‘integral’ to the complaint.” Chambers v. Time Warner, Inc. , 282 F.3d 147, 153 (2d Cir.2002) (quoting Int'l Audiotext Network, Inc . v. Am. Tel. & Tel. Co. , 62 F.3d 69, 72 (2d Cir.1995) (per curiam)).

2. Converting a Rule 12(b)(6) Motion into a Rule 56 Motion

Rule 12(d) of the Federal Rules of Civil Procedure provides that “[i]f, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed. R. Civ. P. 12(d). A district court may thus convert a motion to dismiss into a motion for summary judgment when the motion presents...