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BERMAN v. PARCO

February 6, 1997

STEPHEN BERMAN, et al., Plaintiffs, against VINCENT PARCO, et al., Defendants.


The opinion of the court was delivered by: PECK

 ANDREW J. PECK, United States Magistrate Judge:

 To the Honorable Kimba M. Wood, United States District Judge:

 This action, which is the aftermath of a prior matrimonial action, is being litigated with the emotionalism and disregard of economics typical, unfortunately, of many matrimonial actions. The ex-wife, plaintiff Lucille Turecki, and her current husband, Stephen Berman, have sued the ex-husband's divorce attorney, defendant Edward Greenberg, and the ex-husband's private investigator, defendants Vincent Parco and his company, defendant International Investigations, Inc. (collectively, "Parco"), for violation of the Fair Credit Reporting Act, 15 U.S.C. ยง 1681 et seq.

 Defendants have moved for summary judgment, alleging, inter alia, that (1) the Fair Credit Reporting Act is not applicable to them and (2) a settlement agreement between plaintiffs and Dr. Turecki released plaintiffs' claims against defendants.

 For the reasons set forth below, the Court finds that the release is unclear, parol evidence thus can be considered, and that there are genuine issues of material fact about whether the Settlement Agreement released defendants. Thus, I recommend that the Court deny summary judgment on the release issue. As to the Fair Credit Reporting Act, there are issues of fact as to whether defendant Parco obtained "consumer report" information from a "consumer reporting agency" and thus summary judgment should be denied as to Parco. Summary judgment on the Fair Credit Reporting Act claim should be granted as to defendant Greenberg, because there is no evidence that he acted willfully. I further recommend that the Court deny plaintiffs' eleventh hour attempt to amend the complaint (yet again) to assert a negligence claim against defendant Greenberg. Finally, I recommend that the Court decline to exercise pendent jurisdiction over plaintiffs' state law invasion of privacy claim against defendant Greenberg.

 FACTS

 The allegations of the complaint and certain of defendants' defenses are summarized in the Court's prior decision in this matter, familiarity with which is assumed. Berman v. Parco, 1996 U.S. Dist. LEXIS 11921, 96 Civ. 0375, 1996 WL 465749 (S.D.N.Y. Aug. 15, 1996).

 The Divorce Arbitration Proceeding

 Defendant Greenberg began representing Dr. Turecki in February 1994 in connection with divorce support proceedings. (Greenberg 3(g) P 1; Plfs. 3(g); Greenberg Dep. at 15-16.) On July 15, 1994, Greenberg filed a Demand for Arbitration on behalf of Dr. Turecki against Lucille Turecki to reduce Dr. Turecki's support obligations, on the ground that Lucille Turecki and Berman allegedly were cohabiting and that Lucille Turecki had income from a tax-free municipal bond fund. (Greenberg 3(g) PP 3-5; Plfs. 3(g); Greenberg 9/30/96 Dec. P 2; Greenberg Dep. at 35-37, 119-20; Lucille Turecki 10/16/96 Dec. P 8; Berman 8/2/96 Dec. P 3.) While Berman was not a party to the arbitration, he was a witness. (Greenberg 3(g) P 9; Plfs. 3(g); Berman Dep. at 7.)

 Defendant Greenberg listed defendant Parco as a witness on Dr. Turecki's arbitration witness list. (See, e.g., Berman Dep. at 7; Greenberg Dep. at 66-67.) Greenberg did not retain Parco's services; Parco was retained directly by Dr. Turecki. (Greenberg Dep. at 60, 135; Parco Dep. at 138, 143, 149-50; Greenberg 3(g) PP 34-36.) *fn1"

 On June 21, 1995, Berman wrote Greenberg that he intended to file complaints against Greenberg with various agencies including the bar Grievance Committee. (Greenberg 3(g) P 10 & Ex. C; Plfs. 3(g).) Because of that letter, the arbitrator adjourned the arbitration at Greenberg's request. (Greenberg Dep. at 95-102; Greenberg 3(g) P 11; Greenberg 9/30/96 Dec. Ex. B; Plfs. 3(g).) Greenberg retained his current counsel, Morris D. Weintraub, to represent him in any matter involving Berman. (Weintraub Dep. at 6-7; Greenberg Dep. at 165-67.) "Shortly after being retained as counsel, Weintraub wrote a letter to Berman, requesting copies of any letters Berman had written to banks, other financial institutions or anyone else accusing Parco of illegally investigating plaintiffs that mentioned Greenberg by name. A few days later, Weintraub received a telephone call from Berman to discuss Weintraub's letter." Berman v. Parco, 1996 WL 465749 at *2 (record citations omitted). The Berman-Weintraub telephone call is discussed in the Court's prior opinion. Id. at *2-3. As a result of that conversation, Berman wrote to Greenberg, acknowledging that Parco and not Greenberg was responsible and releasing Greenberg from liability. (Greenberg 3(g) P 12 & Ex. D; Plfs. 3(g).) Berman's July 26, 1995 letter stated:

 
Dear Mr. Greenberg:
 
After having discussed the matter of Vincent Parco with Donald Frank [Lucille Turecki's counsel in the arbitration], I am convinced that you were not involved in or in any way responsible for Parco's actions in accessing my bank account's or American Express's records.
 
. . . .
 
You can consider this letter as an unconditional release as I have no intention of charging you or your client with any illegal act, or to begin any civil legal proceeding in this matter.

 (Greenberg 3(g) Ex. D.)

 The Court previously rejected plaintiffs' argument that this letter was written under legal duress. Berman v. Parco, 1996 WL 465749 at *2-3, *6-9 & n.3-4. As a result, Berman voluntarily dismissed his claim against Greenberg, and Berman's company (Steve Miller Inc.) was dropped totally as a plaintiff. (See also Kresky 9/26/96 Dec. P 19.) Lucille Turecki's claim against Greenberg, and both plaintiffs' claims against Parco, are the subject of this motion.

 By stipulation dated September 28, 1995, the arbitration was discontinued with prejudice. (Greenberg 3(g) P 16; Plfs. 3(g); Greenberg Dep. at 19, 103-07, 111-12.)

 The 1996 Settlement Agreement and Release

 Lucille Turecki and Berman signed a Settlement Agreement with Dr. Turecki on or about January 11, 1996. (Greenberg 3(g) P 18; Plfs. 3(g); Janice Weintraub 9/30/96 Aff. Ex. E; Berman Dep. at 83-84.) *fn2" In order to "seek to end all contact between them except as absolutely necessary in the case of emergencies or other unavoidable circumstances and to avoid any future interference in each other's lives through legal actions . . . ," Dr. Turecki paid Lucille Turecki $ 450,000 to settle all of his obligations under their Separation Agreement. (Janice Weintraub 9/30/96 Aff. Ex. E, Wherefore clause & P 3.) *fn3" The Settlement Agreement further provided a release from plaintiffs to Dr. Turecki, his agents and attorneys:

 
9. For good and valuable consideration, receipt of which is hereby acknowledged, Ms. Turecki and Mr. Berman hereby release and discharge Dr. Turecki and Susan Turecki, and their heirs, executors, administrators, successors, agents, attorneys, *fn4" representatives and assigns, from any and all actions, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extent, executions, claims, and demands whatsoever, in law, admiralty or equity, which against Dr. Turecki and/or Susan Turecki, or their heirs, executors, administrators, successors, agents, attorneys, representatives and assigns, Ms. Turecki and/or Mr. Berman, their heirs, executors, administrators, successors, agents, attorneys, representatives and assigns ever had, now have, or hereafter can, shall or may have, from the beginning of the world to the date of this Agreement for, upon, or by reason of any matter, cause or thing whatsoever.

 (Id. P 9, emphasis added.) The Settlement Agreement refers, however, to the possibility of litigation against "third parties" that might involve Dr. Turecki:

 
16. The parties [defined in the Settlement Agreement as Berman, Lucille Turecki and Dr. Turecki] agree that they will not subpoena, depose, call as a witness, investigate or otherwise involve any other party or Susan Turecki in any litigation, arbitration, action or other proceeding with any third party (hereinafter referred to as "Third Party Litigation") arising out of any conduct, claim, information, litigation or other event occurring prior to the Closing Date. The parties further agree that any reference to any other party in a pleading or court submission in a Third Party Litigation shall be limited to such references as are reasonably necessary to permit the prosecution of such Third Party Litigation. . . .

 (Id. P 16.)

 Berman negotiated the Settlement Agreement on behalf of himself and Lucille Turecki. (E.g., Berman 10/16/96 Dec. P 13.) Berman claims that he made clear to Dr. Turecki's attorney who negotiated the settlement, Edward Rosenthal, that Berman and Lucille Turecki intended to sue Greenberg and Parco after execution of the Settlement Agreement. (Berman 10/16/96 Dec. PP 11-21; Lucille Turecki 10/16/96 Dec. PP 25-26.) Thus, Berman declared:

 
11. After Greenberg walked out of the arbitration, I received a letter dated August 11, 1995 from Edward Rosenthal who was representing Dr. Turecki in two lawsuits commenced by Lucille and me for damages caused by our false arrest. Rosenthal indicated that Dr. Turecki was interested in pursuing negotiations with Lucille and me which would resolve all of the disputes between us. . . .
 
14. Edward Rosenthal and I had numerous conversations and exchanged a great deal of correspondence in the months to come, until a final settlement was signed on January 11, 1996. I made it clear to Rosenthal throughout these discussions that it was Lucille's and my intent to sue Greenberg and Parco for their invasion of our privacy. Rosenthal, in turn, made clear that his only concern was protecting Dr. Turecki.
 
15. He told me specifically that paragraph 9 of the settlement was for the protection of the attorneys involved in the negotiations, Kresky, Frank and himself as well as Dr. Turecki, Susan Turecki and their employees.
 
16. Several of my conversations with Rosenthal were taped. I annexed hereto excerpts of the tapes which confirm the above. In fact, in our conversation of December 18, 1995 I suggested that Rosenthal could call Greenberg and Parco, and if they kicked in $ 50,000 or $ 100,000, Lucille and I would not sue them. Mr. Rosenthal did not report back to me on this. I do not believe Rosenthal ever spoke to Greenberg or Parco.
 
17. Indeed, much of the negotiations was consumed with the question of how to protect Dr. Turecki from involvement in the litigation Lucille and I intended to pursue against Greenberg and Parco. . . .
 
18. . . . The "Third Party Litigation" contemplated [in P 16 of the Settlement Agreement] was, of course, this very lawsuit.

 (Berman 10/16/96 Dec. PP 11-18, emphasis added; see also id. Ex. L.)

 The Parco-Dr. Turecki-Greenberg Relationship

 Plaintiffs' Fair Credit Reporting Act claim is based on a June 15, 1995 letter from defendant Parco to defendant Greenberg. (Lucille Turecki 10/16/96 Dec. P 12 & Ex. B.) Lucille Turecki and Berman base their conclusion that Parco had improperly accessed their credit information on that June 15, 1995 Parco letter. (Lucille Turecki 7/9/96 Dep. at 11, 25, 28; Berman Dep. at 127; Greenberg 3(g) PP 25-29.) Prior to having seen the June 15, 1995 letter, Lucille Turecki had no information that Parco had made any illegal access to her personal credit information. (Turecki 7/9/96 Dep. at 11.)

 The June 15 letter provides detailed billing information for December 1994-May 1995 on Berman's and Lucille Turecki's American Express cards. (Id. Ex. B at pp. 1-4.) The letter further stated that "utilizing a proper pretext," Parco contacted a certain hotel which appeared on Berman's American Express bill to determine when (and with whom) Berman stayed at the hotel. (Id. at pp. 3, 4, 8.)

 The balance of Parco's letter repeated information that was previously "reported in February 1993" (id. at p. 5), including detailed listings (by bank, account number and type) of banking information about Berman and Lucille Turecki, as well as similar detailed information about their brokerage account. (Id. at pp. 5-8.) That portion of Parco's letter also contained the following statements:

 
ASSIGNMENT:
 
Perform a background investigation of the subject and Steve Miller a/k/a Steve Berman.
 
CREDIT INFORMATION:
 
Credit profiles and Social Security Number Traces were requested for both Lucille Turecki and Steve Berman. These searches generally indicate spouses, co-owners and any co-makers of loans or joint accounts. As you can see, Lucille Turecki and Steve Berman are listed separately.
 
* * * *
 
INCOME SEARCH:
 
We are awaiting the income search which is being conducted by a confidential source. Upon receipt of this information, it will be forwarded to you under a separate cover.
 
As events warrant we will be in future communication.

 (Id. at 5, 9.)

 Parco testified that some of the account information was given to him by Dr. Turecki. (E.g., Parco Dep. at 10, 18-19.) Lucille Turecki, however, testified that she had not provided the account information in Parco's June 15, 1995 letter to Dr. Turecki. (Lucille Turecki 7/9/96 Dep. at 18, 20, 25; see also Berman 10/16/96 Dec. PP 2-4.) Parco also testified that he got additional information from restaurants and stores using "the proper pretext." (E.g., Parco Dep. at 11-16.) According to Parco, as long as his investigators "do not say they are a government agent or clergyman, they can use any pretext to get verbal information." (Parco Dep. at 14, 49.) Pretext could involve "bending" but not breaking the law. (Parco Dep. at 72-74.) In Parco's view, "proper pretext" to obtain information about bank accounts could include pretending to be Berman or Lucille Turecki and calling their banks. (E.g., Parco Dep. at 43-44.) Parco agreed that this was "bending the law." (Parco Dep. at 75.) According to Parco, neither he nor his agents obtained information about Lucille Turecki or Berman from TRW, Transunion or similar credit reporting companies. (Parco Dep. at 47-48, 98-99, 150.) Parco, however, was unable to provide specific details as to how his agency obtained the information about Berman and Lucille Turecki contained in his June 15, 1995 letter. (See generally Parco Dep.; see, e.g., Parco Dep. at 22-24.)

 Greenberg had no knowledge of what Parco did to obtain the information in Parco's June 15, 1995 letter. (Greenberg Dep. at 151-52.)

 Neither Lucille Turecki's nor Berman's credit standing has been injured in any way as a result of Parco's alleged improper access to their personal credit history. (Greenberg 3(g) PP 30-33; Plfs. 3(g); Lucille Turecki 7/9/96 Dep. at 29; Lucille Turecki 8/27/96 Dep. at 19-31; Berman Dep. at 129.) Lucille Turecki has not applied for any credit since then. (Id.) Her only out-of-pocket financial loss, therefore, was the attorney fees in the marital arbitration. (Lucille Turecki 7/9/96 Dep. at 29; Lucille Turecki 10/16/96 Dec. P 27.)

 Lucille Turecki's only information that Greenberg retained Parco's services is the June 15, 1995 letter itself. (Lucille Turecki 7/9/96 Dep. at 79-80; Lucille Turecki 8/27/96 Dep. at 22-23; see Greenberg 3(g) PP 27-28; Berman Dep. at 127.) "Plaintiffs contend that Greenberg's role in illegally accessing confidential information concerning plaintiffs can be established circumstantially." (Kresky 10/16/96 Dec. P 3.)

 Both Parco and Greenberg unequivocally testified that Parco's client was Dr. Turecki and that Greenberg was never Parco's client. (E.g., Greenberg 3(g) PP 34-36; Greenberg Dep. at 60; Parco Dep. at 138, 150.) Greenberg unequivocally testified as follows:

 
Q. When did you retain the services of Mr. ...

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