Oparaji v. Municipal Credit Union

Background

Maurice Oparaji, proceeding without a lawyer, alleged that Municipal Credit Union charged his checking account 69 overdraft fees of $30 each, totaling $2,070, after fraudulent transactions occurred. He claimed that he had not opted into overdraft protection. In this federal case, he asserted claims under the Electronic Funds Transfer Act and the Consumer Financial Protection Act of 2010.

Oparaji had previously sued Municipal Credit Union in Bronx Civil Court over the same overdraft-fee events. That court dismissed the action after a trial. Oparaji appealed, and while the federal case was pending, the Appellate Term reinstated his breach-of-contract claim and sent it back for trial, while affirming dismissal of his other state-law claims.

Municipal Credit Union moved for judgment on the pleadings or, alternatively, dismissal based on claim preclusion and failure to state a claim. Claim preclusion, also called res judicata, generally prevents a party from bringing a later case based on the same transaction when an earlier case ended in a final judgment on the merits.

Claim Preclusion

Magistrate Judge Sarah Netburn recommended granting the credit union’s motion because the federal claims arose from the same events as the Bronx Civil Court case and could have been brought there. Judge Torres agreed that the Bronx Civil Court was a court with authority to hear the relevant claim and that the Electronic Funds Transfer Act claim could have been brought there.

But the later appellate ruling changed the analysis. Because the breach-of-contract claim had been reinstated and remanded for a new trial, the state case did not yet have a final judgment on the merits. Judge Torres therefore modified the recommendation and found that Oparaji’s federal claims were not barred by claim preclusion.

Declaration and Motion to Strike

Oparaji moved to strike a declaration from the credit union’s lawyer because it did not say that it was made under penalty of perjury or based on personal knowledge. Judge Netburn concluded that any defects were minor and caused no prejudice because the attached documents were either part of the state-court record or had also been submitted by Oparaji.

Judge Torres found no clear error in that conclusion. She adopted the recommendation on this issue, overruled Oparaji’s objections, and denied his motion to strike the declaration.

Failure to State a Claim

Judge Netburn had not decided whether Oparaji’s complaint adequately stated a claim under the Electronic Funds Transfer Act because she had recommended dismissal based on claim preclusion. She asked that issue to be sent back for further consideration if claim preclusion did not apply.

Judge Torres reviewed Oparaji’s objection to that approach for clear error, found none, and overruled the objection. She did not decide whether the complaint actually stated a valid Electronic Funds Transfer Act claim.

Disposition

Judge Torres adopted the recommendation in part and modified it in part. She found that claim preclusion did not bar the claims, denied Oparaji’s motion to strike the declaration, overruled his specified objections, and otherwise adopted the recommendation. The court remanded the credit union’s Rule 12 motion to Judge Netburn for consideration of the dismissal arguments.