Scalercio-Isenberg v. Citizens Financial Group, Inc.

Background

Sherry Scalercio-Isenberg, proceeding without a lawyer, sued Citizens Financial Group, Inc. and Bruce Van Saun. She alleged that she and her husband obtained a home-equity line of credit from Charter One in April 2008 and that Citizens later acquired it. She claimed that Citizens failed to post payments, reported inaccurate negative credit information, opened a new account in her name without authorization, sent threatening letters, made repeated automated calls to her cellphone, and used multiple entity names to obscure its debt-collection activities.

The defendants moved to dismiss the Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. On such a motion, the court generally accepts the complaint’s factual allegations as true, draws reasonable inferences for the plaintiff, and decides only whether the allegations plausibly support relief. The court also construes complaints filed by people without lawyers liberally.

Claims Against Bruce Van Saun

The court granted the motion to dismiss all claims against Van Saun in his individual capacity. Under the New York law applied to the state-law claims, corporate officers and directors are generally not personally liable for the corporation’s debts or contract breaches. Personal liability may arise when an officer knows about or participates in alleged fraud. The court held that receiving two letters about the billing dispute, and not responding to the first, did not sufficiently allege that Van Saun intentionally participated in fraud.

Count I: Breach of Contract and the Fair Credit Billing Act

The court granted the motion to dismiss the breach-of-contract claim. The plaintiff alleged an agreement, her own performance, and damages, but the court found that she had not adequately alleged a breach of the contract’s incorporated Fair Credit Billing Act rights.

The contract directed billing-error notices to the Charter One Servicing Department at a specified Providence, Rhode Island, post-office-box address. The court explained that the Fair Credit Billing Act generally requires written notice within 60 days of the first statement showing the billing error, and the notice must reach the address provided for billing disputes. Assuming the plaintiff first learned of the problem when Citizens returned her check on March 4, 2016, her May 4 letter came 61 days later. The complaint also did not show that the letter was mailed to the contractually specified address. Her November 9, 2016 letter was sent to a different address. The court therefore held that the notices did not trigger Citizens’ duties under the Act or establish a breach of the HELOC agreement.

Count II: New York General Business Law § 349

The court granted the motion to dismiss this claim. A claim under New York General Business Law § 349 requires consumer-oriented conduct that is materially misleading and causes injury. The court held that the alleged failure to post payments, negative credit reporting, and unauthorized new account involved private disputes between the parties. The plaintiff did not specifically identify conduct affecting consumers more broadly, and the court found that she had not adequately alleged injury caused by a misleading practice.

Count III: Arizona Criminal Code § 13-2310

The court granted the motion to dismiss this claim. It held that the plaintiff had not shown a private right to sue under the Arizona criminal statute and had not explained why that statute applied to this dispute.

Count IV: Telephone Consumer Protection Act

The court denied the motion to dismiss the telephone-call claim. The plaintiff alleged that Citizens used an automated technical dialing device to call her cellphone repeatedly, that no person was on the line when she answered, and that returned calls were automatically answered with a Citizens Bank message. Although she did not expressly state that she had withheld consent, the court found it apparent from her allegations that the calls were unwanted.

The court held that these allegations were sufficient at the pleading stage to make use of an automatic telephone dialing system plausible. Whether the equipment met the statute’s technical requirements was left for discovery.

Count V: Fair Credit Reporting Act

The court denied the motion to dismiss the credit-reporting claim. It reiterated that the Fair Credit Reporting Act provision concerning furnishers’ initial duty to provide accurate information, 15 U.S.C. § 1681s-2(a), does not provide a private right of action. But a claim under § 1681s-2(b) may arise when a credit-reporting agency notifies the information provider that a consumer disputes reported information and the provider fails to investigate appropriately.

The plaintiff alleged that she disputed Citizens’ reporting with a credit-reporting agency on April 23, 2018. In opposing dismissal, she submitted a later Experian dispute-results document indicating that Experian generally sends disputes to the company that supplied the information. The court inferred that the plaintiff may have disputed the information with Experian and held that the allegations warranted discovery on whether Citizens received notice of the dispute. Rather than require the plaintiff to file a third amended complaint to add the later document, the court accepted that an issue requiring discovery existed.

Count VI: Fair Debt Collection Practices Act

The court granted the motion to dismiss this claim. Creditors generally are not subject to the Fair Debt Collection Practices Act when collecting their own debts, although a creditor may become subject to the Act if it uses another name suggesting that a third party is collecting the debt or uses an alias.

The court held that the plaintiff’s allegations did not show that Citizens used an alias to collect its own debt. Most of the listed entity names included the word “Citizens,” and the court had previously recognized that Citizens acquired the HELOC originally issued by Charter One. The amended allegations therefore did not plausibly show that Citizens was acting as a third-party debt collector.

Count VII: Common-Law Fraud

The court granted the motion to dismiss the common-law fraud claim. Under New York law, fraud requires a material misrepresentation or omission, knowledge that it was false, an intent to induce reliance, reasonable reliance, and resulting injury. Federal Rule of Civil Procedure 9(b) additionally requires fraud to be pleaded with particularity, including the time, place, speaker, and content of the alleged misrepresentation.

The plaintiff alleged that Citizens sent a letter stating that it had not received a payment for a new account that she said she had not opened. The court held that she did not allege facts showing that Citizens knew the statement was false or intended to induce her reliance. Because she denied opening the account, the court also found that she could not reasonably have relied on the statement. Her allegations that Citizens and its lawyers conspired to force the loan into default, increase legal fees, and profit were conclusory and did not identify specific fraudulent statements or facts showing an intent to defraud.

Disposition

The court granted in part and denied in part the defendants’ motion to dismiss. It denied the motion as to the Telephone Consumer Protection Act claim in Count IV and the Fair Credit Reporting Act claim in Count V. It granted the motion as to all claims against Bruce Van Saun, the breach-of-contract claim in Count I, the New York General Business Law § 349 claim in Count II, the Arizona criminal-statute claim in Count III, the Fair Debt Collection Practices Act claim in Count VI, and the common-law fraud claim in Count VII. The court denied as moot the defendants’ motion to strike the plaintiff’s sur-reply.