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Debt buyer’s lawsuit doomed by failure to prove assignment or notify debtor
October 4th, 2011 | By Gerrald Ellis
On July 27th, Judge Katherine A. Levine dismissed a suit against a consumer-debtor over an allegedly unpaid Chase credit card debt because the debt buyer had been unable to prove valid assignment of the debt, and because the notice of such assignments were never sent to the consumer.
<Copyrighted material removed.>Here is the case, pay attention to the last paragraph:
South Shore Adj Co. v Pierrehttp://law.justia.com/cases/new-york/other-courts/2011/2011-51436.html
South Shore Adj Co. v Pierre
Decided on July 27, 2011
Civil Court of the City of New York, Kings County
South Shore Adjustment Co., As Successor Assignee in Interest to Chase Bank., Plaintiff,
Edwin Pierre, Defendant.
9602 Glenwood Road
Brooklyn, NY 11236
Attorneys for Plaintiff
Hope Greenberg, Esq.
2650 Merrick Road
Bellmore, New York 11710
Katherine A. Levine, J.
Plaintiff Creditor South Shore Adjustment Co. ("South Shore" or "plaintiff" or "creditor") sued defendant Edwin Pierre ( "Defendant" or "Pierre" or "debtor") for payment on a credit card account which originated with Chase Bank ("Chase Bank"). Chase Bank sold a number of charged off debts, which allegedly included Pierre's debt, to an entity named Turtle Creek Assets Ltd ("Turtle Creek") which in turn sold Mr. Pierre's account to plaintiff. Plaintiff commenced an action against Pierre for the sum of $2,418.93 with interest from September 2009.
In support of its contention that it legally may collect this debt, South Shore presented copies of statements that Chase purportedly sent to Mt. Pierre from the date he opened the account in 2006 to 2007. It presented as Exhibit "B" a "Bill of Sale' dated May 14, 2009 from Chase to Turtle Creek of 12906 accounts for a total of approximately $49 million of unpaid balances. There is no nothing in this Bill of Sale that mentions, much less indicates that Mr. Pierre's account was included within this bill of sale. Six days later, on May 20, 2007, Turtle Creek sold 551 accounts to plaintiff South Shore (Exhibit "C"). Again, the Bill of Sale makes no mention that Pierre's account was included in this sale. Nor did Chase, Turtle Creek or South Shore inform Pierre of this sale. In fact, the only notice to Pierre submitted into evidence was a letter from plaintiff's counsel informing Pierre that she had been retained to collect a credit card claim against him (Exhibit "D"). [*2]
Plaintiff's papers, the testimony of plaintiff's principal - Adam Greenberg, and the exhibits presented at trial, fail to demonstrate that plaintiff is entitled to judgment as an assignee.
To establish an account stated action, South Shore was required to prove that statements were sent to Pierre which Pierre failed to pay or object to. Velocity Investments, LL. C. v. Concina, 77 AD3d 1306, 1307 (2d Dept. 2010); Velocity Investments, LLC v. McCaffrey, 31 Misc 3d 308, 316 (Dist. Ct., Nass. Co. 201l). Although plaintiff submitted copies of credit card statements allegedly sent to defendant, who purportedly failed to pay or object to them, plaintiff failed to lay a proper foundation for the admission of these documents as business records pursuant to CPLR 4518 (a). See, Cocina, supra; McAffrey, supra at 316-17.
CPLR 4518(a) provides that a business record is admissible if it is established that it was made in the regular course of business, that it in fact was made in the regular course of business and that documents were made "contemporaneous with or within a reasonable time after, the act, transaction, occurrence or event recorded." Cach, LLC. v. Sliss, 2010 NY Slip Op 51557(U), 28 Misc 3d 1230(A) (City Ct., Auburn, 2010). "A proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker's business practices and procedures. West Valley Fire District No. 1 v. Village of Springville, 294 AD2d 949 (4th Dept. 2002). An agent of an assigned creditor who does not have personal knowledge of the original creditor's business practices cannot establish a proper foundation for the account agreement and account statements. Cach LLC v. Sliss, supra.
Contrary to plaintiff's arguments, the purported account statements from Chase and bills of Sale do not fall with in the business records exception to the hearsay, as the "mere filing of papers received from other entities, even if they are retained in the regular course of business, is insufficient to qualify the documents as business records." Cach LLC, supra. Thus, the fact that Greenberg testified that he kept the Chase statements, as well as the Bill of Sale from Chase to Turtle Creek, and from Turtle Creek to South Shore, in the normal course of South Shore's business begs the question. The testimony of one "who merely obtained the records from another entity that actually generated them, was an insufficient foundation for their introduction into evidence." Rushmore Recoveries X, LLC v Skolnick, 2007 NY Slip Op. 51041(U), 15 Misc 3d 1139A (Dist. Ct. Nass 2007) citing Ins. Co. Of North America v. Gottlieb, 186 AD2d 470 (1st Dept. 1991).
Greenberg admitted that he had no personal knowledge of either Chase's or Turtle Bay's business practices and that he did not independently verify whether Pierre owed money to Chase. Rather, "[w]e review the statements and see a balance due and owing, and Turtle Creek, before assigning to use, they determined whether there is a balance due" (Tr. A 20). He also admitted that he was relying upon what Turtle Creek determined" Id. As such, plaintiff has failed to prove that the predicate for its case, a valid account stated, even exists.
For the reasons set forth above, plaintiff also failed to submit any admissible proof of the multiple assignments from Chase to Turtle Creek and from Turtle Creek to South Shore. [*3]Initially, there is absolutely no proof from the original creditor that Pierre's account was one of the 12906 accounts purportedly sole to Turtle Creek. The only proof submitted of the original assignment was a "Bill of Sale" between Chase and Turtle Creek. The bill of sale was signed by some "Operations Manager from Chase." There is no affidavit or testimony from Chase that it actually sold these debts and plaintiff obviously has no personal knowledge of this sale. See, Cach LLC v. Sliss, supra. There being no competent proof that the assignment from Chase to Turtle Creek was valid, plaintiff cannot establish the validity of the assignments from Turtle Creek to plaintiff. See Rushmore Recoveries, supra.
Finally, the court is compelled to dismiss the complaint because plaintiff failed to submit any evidence that either Chase or Turtle Creek notified defendant of the assignment.
In Chase Bank USA, NA v. Cardello, 27 Misc 3d 791 (Civil Ct, Richmond Co. 2010). Judge Straniere concluded that bulk assignments by Chase to debt collectors violated every tenet of due process. He found that due process mandated that the assignor, and not the assignee notify the debtor of the assignment, since the credit card holder had his agreement with the credit card issuer, " and not with the unknown third party debt purchaser."
Judge Straniere elaborated that to allow an assignee third party debt purchaser to give notice "would enable dishonest debt collectors to search the court records, obtain the names of judgment debtors and send the debtor a letter stating that they had purchased the debt "from a credit card issuer and that the debtor had to pay up or face court action. This practice would merely increase fraud and deceptive and misleading practices which were precisely why the federal Fair Debt Collections Practices Act ("FDCPA") was enacted. This court adopts Judge Straniere's ruling.
For all the aforementioned reasons, the case is dismissed.
The foregoing constitutes the decision and order of the court.
Dated: July 27, 2011_______________________KATHERINE A. LEVINE
Judge, Civil Court