Opinion
C.A. No.: 99C-01-207 SCD
Submitted: November 10, 2003
Decided: November 13, 2003
ORDER
This 13th day of November, 2003, upon consideration of Defendants', The Bank of New York (Delaware) and James Armistead (referred to collectively as "Bank"), motions for judgment on the pleadings or for summary judgment as to all claims against them, responses thereto, as well as argument of counsel, it appears:
1. Bank's business includes issuing credit cards. When customers fail to pay, it is necessary to engage in collection activities. Those activities are conducted in-house, initially, then the accounts are given to primary collection agencies, and for the most difficult — least likely to be successfully collected — the accounts are given to secondary collection agencies. Secondary collection agencies are paid a higher percentage of the recovery than primary collection agencies because of the reduced likelihood of success. The plaintiff in this case is a secondary collection agency, one of several used by Bank to pursue debtors.
2. In deciding a motion for judgment on the pleadings, a court accepts as true the nonmovant's well pleaded factual allegations and grants the non-movant the benefit of any inferences that one may fairly draw from the allegations. A court should not grant such a motion unless it appears to a reasonable certainty that the non-movant would not be entitled to relief for its claims under any set of facts that could be proven in support of its allegations. Similarly, a moving party is entitled to summary judgment where, based on the evidence before the Court, there are no material issues of fact and the moving party is entitled to judgment as a matter of law.
3. The relationship between Empire and Bank arises from a contract. The contract provides that the defendant is a "Collection Agency" of Bank of New York for purposes of collecting credit card debts. The contract specifically provides: Paragraph 3. "You, upon receipt of an account, will take such appropriate action as to assure the collection of the account either by commencing suit or performing such other collection procedures as deemed advisable."
Warner Communications, Inc. v. Chris-Craft Indus., Inc., 583 A.2d 962, 965 (Del.Ch. 1989), aff'd without opinion, 567 A.2d 419 (Del. 1989).
Id
Moore v. Sizemore, 405 A.2d 679 (Del.Super. 1979).
4. The plaintiff asserts various causes of action, contract and tort. The tortious claims are predicated on the notion that plaintiff had trade secrets or confidential information which it was entitled to withhold from the Bank. That argument overlooks the fact that under the terms of the contract, Bank had the absolute right to audit any accounts, which means that information regarding payment agreements, attorneys hired to secure judgment, or any other aspect of the claim was available to Bank at will. "Encompassed within [the] general duties of an agent is a duty to disclose information that is relevant to the affairs of the agency entrusted to him." Plaintiff's argument that its "customer lists, attorney lists, matters referred to attorneys and debtor account information and account histories" are proprietary and confidential and that they constitute a trade secret is simply without factual basis. That being the case, there is no basis for the claims of unjust enrichment (counts 7 and 10), and conversion (count 1). Summary Judgment on those counts is GRANTED.
Paragraph 11:
"The Bank retains the right to review and audit any and all accounts which have been referred to you for collection without prior notice to you as to the accounts to be audited. The Bank shall notify you three (3) business days in advance of said audit."
Paragraph 20:
"It is agreed you will furnish reports to the manager of the Recovery Department, upon requests, which reports will show the account number, the date of referral, the status, and the balance."
Science Accessories Corp. v. Summagraphics Corp., 425 A.2d 957, 962 (Del. 1980).
5. Count 5 of the complaint demands an accounting. An accounting is a form of relief, not a cause of action. Thus, the motion for judgment on the pleadings as to count 5 is GRANTED.
6. Count 3 seeks relief for tortious interference. This cause of action is misapplied by plaintiff. The essence of the concept is that the conduct of a defendant interferes with the plaintiff's contractual relationship with a third party. The contract in dispute here was between Empire and Bank. Termination of that contract does not implicate a third-party relationship. To the extent that Empire argues that the imperiled relationship was between Empire and the attorneys it secured to handle collection work, that too fails to state a cause of action. Empire was an agent of Bank, and because the attorneys represented Bank, not Empire, there was no relationship to be imperiled. The motion for judgment on the pleadings as to count 3 is GRANTED.
DeBonaventura v. Nationwide Mutual Ins. Co., 428 A.2d 1151, 1153 (Del. 1981); Gillenardo v. Connor Broadcasting Delaware Co., 1999 WL 1240837 at *8 (Del.Super. 1999).
7. Count 8 alleges breach of contract. The contract in question contains a termination clause which provides:
Paragraph 14. "It is expressly understood and agreed that the Bank retains the right to recall any and/or all accounts from you for any reason whatsoever and no compensation shall be due you for any monies collected thereon by seven (7) business days after recall."
This broad language permits the Bank to terminate the contract for "any reason whatsoever." That being the case, the termination letter issued on January 29, 1997, does not violate the contract. It matters not that the relationship with the agency had been good, or that the recall was unprecedented; it was within the absolute control of the Bank to terminate the contract and exercising such a provision cannot support a cause of action. Empire argues that Bank violated it implied duty to act in good faith. This is not a situation where the contract was terminated because Empire refused to acquiesce to a demand that it do something illegal or improper. Delaware law is clear that "courts will not readily imply a contractual obligation where the contract expressly addresses the subject of the alleged wrong." The contract between Empire and Bank gave Bank broad authority to terminate the contract for any reason. Where the parties have entered into an agreement that expresses their obligations, the "[c]ourt will not rewrite the parties' agreement by implying a duty that the parties themselves expressly contracted not to create." Summary Judgement on this claim is GRANTED.
See Schuster v. Diro cili, 775 A.2d 1029 (Del. 2001).
Abex Inc., v. Koll Real Estate Group, Inc., 1994 WL 728827 at *12 (Del.Ch. 1994).
Id.
8. Count 9 in the complaint alleges civil conspiracy. The cause of action requires: a confederation or combination of two or more persons; an unlawful act done in furtherance of the conspiracy, and actual damages. Empire argues that there are sufficient facts from which an inference could be drawn that the Bank, through Armistead, conspired with Ocasio to move its work from Empire to a new company which Ocasio intended to start; and that the unlawful act was the unauthorized removal of information by Ocasio from Empire. The troubling aspect of this case is the fact that there was a meeting between Armistead, the individual at Bank who had responsibility regarding debt collection — particularly the placement of bad debts with collection agencies — and Ocasio, the individual who was running Empire's operations in February 1997. Shortly after that meeting, Armistead sent a letter dated January 29, 1997 to Ocasio in his capacity as the manager at Empire informing Empire that under paragraph 14 of the contract, it was recalling all its accounts.
Lipson v. Anesthesia Sevices, PA., 790 A.2d 1261, 1287 (Del.Super. 2001).
Paragraph 14: "It is expressly understood and agreed that the Bank retains the right to recall any and/or all accounts from you for any reason whatsoever and no compensation shall be due you for any monies collected thereon by seven (7) business days after recall."
The letter states, in part:
As you know, the Bank has been selling charged-off receivables at the primary level for several months. The amount of placements available for assignment to secondary collection vendors has diminished and is currently minimal.
The Bank has made a decision to recall the remaining accounts from your organization. Effective Wednesday, February 5, 1997, return all Bank of New York (Delaware) accounts to this office. Any payments made after February 5, are to be remitted to the Bank in full. No contingency fees are to be deducted. In addition, your entire post dated check file should be forwarded to the Bank along with a final inventory of returned accounts inclusive of the Balance and Status.
Letter from James Armistead, Assistant Vice President, The Bank of New York, to Elviro Ocasio, President, Empire Financial Services (Jan. 29, 1997).
Plaintiff's counsel represented at oral argument that the letter was found on the desk at Empire when Empire's principles discovered that Ocasio had pillaged the business, removing records pertinent to the Bank account. At deposition, Armistead testified that after Ocasio's departure from Empire, Bank received information from Ocasio which made it possible for Bank to make contact with attorneys who had been doing collection work for Bank, attorneys whose names were not readily available to Bank because the records had been removed. That delivery of data indicates that Bank knew that Ocasio departed Empire in possession of records to which he was not entitled, or so it appears on this record. Because Bank received that information, and entered into an agreement dated February 12, 1997 with DBA Collection and Administrative Services, Inc., the collection agency Ocasio was starting, there is evidence sufficient to create a factual question as to whether there was a civil conspiracy between Ocasio and Bank. "[A]n agent can make arrangements or plans to go into competition with his principal before terminating his agency, provided no unfair acts are committed or injury done his principal." This claim will turn on what inferences the jury draws from these and other circumstances. The motion for Summary Judgement on the claim of civil conspiracy is DENIED.
Science Accessories, 425 A.2d at 962.
In conclusion, Bank's motions are GRANTED as to all claims except civil conspiracy.
IT IS SO ORDERED.