Opinion
12388/09.
Decided February 22, 2010.
Daniels Norelli, P.C., Westbury, NY, Attorney for Plaintiff.
Elizabeth Lavallee, Pro se Defendant, Freeport, NY.
Plaintiff, DNS Equity Group, suing as the alleged assignee of a credit card debt that originated with a Chase Manhattan Bank account, seeks summary judgment on its claim. For the reasons stated hereinafter, the motion is DENIED. On multiple points, plaintiff fails to submit prima facie proof in evidentiary form establishing its entitlement to judgment as a matter of law. Given the frequency in which debt buyers are seeking to enforce alleged debts in this Court, and the frequency with which their moving papers fail to satisfy well established legal standards, it may be useful to restate, at some length, the applicable rules, and to explain why plaintiff's papers fail to satisfy them.
The papers submitted in support of plaintiff's summary judgment motion include billing statements, regular on their face, showing charges, payments and credits applied to a certain "Chase" credit card account in the name of defendant, Elizabeth Lavallee, during the period 01/09/06 — 09/08/06.
In March, 2009, plaintiff DNS Equity Group, Inc., commenced an action against defendant upon a complaint alleging that plaintiff "is the assignee and/or purchaser of all rights and privileges of the credit issuer (to wit, CHASE MANHATTAN BANK) which issued a credit card to the Defendant(s)."
Defendant served and filed an answer in April, 2009, setting forth her general denial of the truth of plaintiff's alleged cause of action. Following referral of the case to arbitration, plaintiff moved for summary judgment, and in connection with that motion, obtained an order from this Court staying arbitration pending determination of plaintiff's motion.
The sufficiency (or insufficiency) of plaintiff's moving papers will be determined under well-settled standards. The basic requirements are concisely summarized in cases such as Rushmore Recoveries X, LLC v Skolnick, 15 Misc 3d 1139(A), 2007 NY Slip Op 5104 (U) (Dist Ct Nassau Co), Citibank, N.A. v. Martin, 11Misc 3d 219 (Civ Ct NY Co), and Palisades Collection, LLC v. Gonzales, 10 Misc 3d 1058(A), 2005 NY Slip Op 52015(U) (Civ Ct NY Co). Additional guidance is provided by relevant precedents requiring particular proof of plaintiff's status as an assignee, see Palisades Collection, LLC v. Kedick , 67 AD3d 1329 , NY Slip Op 08259 (4th Dept 2009), Anglo-American Authors Assn. v. Slutsky, 116 NYS 31 (App Term 1909), proof that the debtor was given notice of the assignment, see Caprara v. Charles Court Assoc., 216 AD2d 722, 723 (3d Dept 1995), proof that the assignment was not acquired for an improper or illegal purpose, cf MVB Collision, Inc. v. Allstate Ins. Co. , 25 Misc 3d 168 (Dist Ct Nassau Co 2009), and proof that the plaintiff is not engaging in usurious conduct. See Citibank (South Dakota), N.A. v. Mahmoud , 19 Misc 3d 1141 (A), 1008 NY Slop Op 51091(U) (Civ Ct Richmond Co).
Plaintiff's proof is plainly deficient under these standards.
First and foremost, with respect to plaintiff's right to pursue the claim on the basis of its status as a lawful assignee, the evidence submitted falls far short of what the law requires. In order for the plaintiff to have had the legal right to commence this action against defendant in March, 2009, plaintiff would have had to have obtained a valid assignment prior to that date. See, e.g. Indymac Bank, FSB v. Boyd, 22 Misc 3d 1112(A), 2009 WL 142572 (Sup Ct Kings Co). No valid proof is submitted on this point.
To the extent that plaintiff's "verified" complaint, dated March 2, 2009, alleges that plaintiff possessed such a right, the Court notes that the verification is made by its counsel, on information and belief. Such an attorney verification "is pure heresay utterly devoid of evidentiary value." Feffer v. Malpeso, 210 AD2d 60, 61 (2d Dept 1994), quoting Joosten v. Gale, 129 AD2d 531, 535 (1st Dept 1987).
Furthermore, the other affidavits submitted in support of plaintiff's motion contain a series of contradictory assertions by individuals who claim, without documentary proof, that they have some form of "personal knowledge" of facts relating to the chain of assignment. One affidavit, from an "authorized representative" of a non-party company named Dodeka, LLC, asserts that the latter company "has made a complete assignment of said debt and that DNS Equity Group, Inc is the owner thereof . . ." But that affidavit, sworn to on May 11, 2009, is silent as to when the assignment was made. It, too, appears to have been made on "information and belief." And the assignment, itself, is not annexed or otherwise specifically described. Nor does the affidavit disclose what position the affiant holds at Dodeka. Nor does the affidavit describe her authority or describe what records she has relied upon in making the subject assertions. Such conclusory allegations, on their face, are insufficient to prove plaintiff's entitlement to judgment as an assignee. See Cach, LLC v. Davidson, 21 Misc 3d 1106(A), 2008 NY Slip Op 51987(U) (Civ Ct NY Co).
Moreover, in contradiction to plaintiff's claim in this lawsuit, a second affidavit, from a Chase Bank USA "Team Leader," swears "that Dodeka, L.L.C. is now the owner of said account . . ." (emphasis added). A third affidavit, from an "authorized agent" of DNS Equity Group, Inc., claims that Chase sold the account to Dodeka, which sold it to DNS, but that "[b]y valid assignment" " CACV of Colorado, LLC," "as the successor in interest, is contractually entitled to collect the amount owed on the Account," (emphasis added).
Do these affidavits constitute prima facie proof, in evidentiary form, sufficient to prove that plaintiff, DNS Equity Group, Inc., is entitled to judgment against defendant as the lawful assignee of defendant's alleged debt to Chase? The answer is obvious. The deficiencies and contradictions, identified above, are more that enough to require denial of plaintiff's motion. Cf Palisades Collection, LLC v. Kedick, supra; Rushmore Recoveries, X, LLC v. Skolnick, supra .
Plaintiff's moving papers, in any event, contain no proof whatsoever that defendant was given notice of any of the foregoing assignments. As a matter of law, notice to the debtor is necessary before the debtor has any duty to make payment to an assignee. See Tri City Roofers, Inc. v. Northeastern Industrial Park, 91 Ad2d 769, 770 (3d Dept 1982), affd. 61 NY2d 79 (1984). An assignee's failure to "set forth by evidentiary material the date defendant was notified of the assignment" is enough, by itself, to warrant denial of plaintiff's motion. Caprara v. Charles Court Assoc., supra .
Moreover, if plaintiff bought suit against defendant without ever giving her notice of its claim as assignee, it would raise an inference that plaintiff was engaged in the practice of buying claims for the sole purpose of suing upon them, in the hope of making a windfall profit. Such a practice is quite likely illegal under Judiciary Law § 489. See MVB Collision, Inc. v. Allstate Ins Co., supra (discussing the doctrine of champerty).
Even if plaintiff were to overcome all of the deficiencies outlined, it nevertheless would not be entitled to judgment on its claim, as a matter of law, for at least two other reasons. Under applicable rules of evidence, the moving affidavit of plaintiff's "authorized agent" may not properly authenticate and lay a foundation for the submission of Chase's billing statements and credit card agreement as "business records" (CPLR 4518). See Rushmore Recoveries, X, LLC v. Skolnick, supra . Submission of the underlying statements, in proper evidentiary form, is required in assigned debt cases, like this one. See e.g. PRA III, LLC v. Gonzalez , 54 AD3d 917 (2d Dept 2008).
Lastly, the underlying billing statements, on their face, include a shocking calculation of Chase Bank's "Effective Annual Percentage Rate" on the account. For the very first billing statement issued, that rate is set forth at "54.72%." Within a short eight month period in 2006, actual charges totaling less than $3,200.00 resulted in a claimed debt of nearly $4,800.00 (a 50% increase). While the Court is cognizant that such business practices may well be deemed lawful under laws and precedents that this Court is duty bound to follow, cf. Smiley v. Citibank, 517 U.S. 735 (1996), this Court is not foreclosed from requiring the plaintiff to prove its entitlement to the sum sought, under the usury laws of New York and applicable conflict of laws principles. See Citibank (South Dakota), N.A. v. Mahoud, supra; Citibank v. Martin, supra. Plaintiff's moving papers, however, make no effort to address the issue.
For all these reasons, plaintiff's motion for summary judgment is DENIED, and the matter is referred back to arbitration for consideration of plaintiff's claim in a manner consistent with the views expressed in this opinion.
SO ORDERED