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BELMONT v. ASSOCIATES NAT. BANK

August 18, 2000

PETER BELMONT, PLAINTIFF,
V.
ASSOCIATES NATIONAL BANK (DELAWARE), DEFENDANT.



The opinion of the court was delivered by: Trager, District Judge.

    MEMORANDUM AND ORDER

Plaintiff Peter Belmont, an attorney licensed to practice in the State of New York, but acting pro se in this matter, brought this suit against Associates National Bank (Delaware) ("Associates") under the Truth in Lending Act ("TILA" or the "Act"), 15 U.S.C. § 1601 et seq., and Regulation Z thereunder, 12 C.F.R. § 226.13, for failure to properly respond to a notice of billing error and for having threatened to make adverse credit reports while the billing error remained unresolved.

Peter Belmont alleges that on a monthly statement dated May 5, 1998, he was improperly billed for charges made on his son's Associates MasterCard credit card account. While Associates maintained that Peter Belmont was a co-obligor on his son's account and was thus liable for charges on the account after his son filed for bankruptcy, Peter Belmont questioned whether he was an obligor and demanded documentary proof of his obligation. Peter Belmont claims that Associates failed to comply with the requirements of TILA in responding to his notice.

Associates has moved for dismissal of, or in the alternative, for summary judgment on, all claims brought by Peter Belmont. Peter Belmont filed a cross-motion for summary judgment in response.

Background

Associates alleges that its records indicate that on September 21, 1987, Peter Belmont and his son, Jeremy Belmont, opened a Boatmen's Bank of St. Louis ("Boatmen's") MasterCard credit card account which was later purchased by Associates. See Def.'s Notice of Mot., Affidavit of Kenneth L. Gellhaus dated January 6, 2000 [hereinafter Gellhaus Aff.], Ex. G.*fn1 Peter Belmont acknowledges that in September 1987 he did co-sign for a credit card account with his son, but does not recall doing so with either Boatmen's or Associates and states that he no longer has a copy of the credit card application. See Pl.'s Notice of Cross-Mot. at 7; Pl.'s Decl. Opp'n Def.'s Mot. Dismiss at 8 [hereinafter Pl.'s Decl. Opp'n].

On April 6, 1992, Peter Belmont sent a letter entitled "NOTICE OF REVOCATION OF CO_SIGNER_SHIP" to Consumer Loan Center, P.O. Box 9101, Boston, MA 02209-9101, regarding a MasterCard account numbered 5417-6710-0001-9848, in which he stated that he wished to be removed as a co-signer on his son's account.*fn2 See Gellhaus Aff., Ex. J. In the letter, Peter Belmont noted that the account was "in arrears in the amount of $48.00 and going into a 30-day late status." Id. He further stated: "I no longer wish to guarantee borrowing against this account or to have my credit-worthiness affected by the failure of the account's holder, Mr. Jeremy Belmont, to pay his bills in timely fashion." Id. With the letter, Peter Belmont sent a check, dated April 5, 1992, for $48.00 to "The Massachusetts Co." with "Jeremy Belmont 5417 6710 0001 9848 M/C" specified on the check's memo line. See id. On the canceled check, cashed at the Texas Commerce Bank-Dallas on April 11, 1992, the account number was crossed-off on the memo line and replaced by the account number "5419312700002648," see Gellhaus Aff., Ex. J, the Associates account number held by Jeremy Belmont from January 1993 until October 1995, see supra note 1.

Associates denies ever having received Peter Belmont's April 1992 letter and avers that the Consumer Loan Center address specified in the letter was never an address used by Associates. See Mitchell Aff. ¶¶ 9-10. Associates, however, offers no explanation of how its account number came to be placed on the check Peter Belmont enclosed with the letter.

At any rate, the Associates statements on the account sent to Jeremy Belmont at his addresses in Massachusetts and California from January 1993 through April 1998 continued to list Peter Belmont as an addressee.*fn3 The elder Belmont, however, has resided at 166 Columbia Heights, Brooklyn, N.Y. 11201-2105 since September 1992. See Reply Decl. Supp. Pl.'s Cross-Mot. ¶ 3.

The monthly statement for the billing period ending January 5, 1998, indicates that Jeremy Belmont made his last payment on the account on December 29, 1997. See Mitchell Aff., Ex. A. The February, March, and April statements show that no payments were made in, and finance and late charges were assessed for, those months. See id. The March and April statements also advised that the account had been suspended and was in danger of closure if no payment was made. See id.

Then, on April 28, 1998, Associates removed Jeremy Belmont from the account when he filed for bankruptcy. See Pl.'s Notice of Cross Mot., Ex. 3. Associates claims that his son's default made Peter Belmont the primary cardholder on the account and thus, solely responsible for payment of the debt. See id. As a result, Associates sent the next monthly statement, dated May 5, 1998, to "Peter A Belmont, 166 Columbia Heights, Brooklyn, N Y 11201-2105." See id., Ex. 1. This statement showed that the account had been assessed finance charges and a late charge that brought the balance owed to $1,895.49 and stated that a minimum payment of $413.49 was due on May 30, 1998. See Pl.'s Decl. Opp'n, Ex. 1.

On May 15, 1998, Peter Belmont sent Associates a six-page letter (dated May 13, 1998) by certified mail, return receipt requested, with the caption "NOTICE OF BELIEVED BILLING ERROR AND REQUEST FOR DOCUMENTARY EVIDENCE OF CONSUMER INDEBTEDNESS." See Gellhaus Aff., Ex. E [hereinafter Notice of Billing Error]. Associates received the letter on May 19, 1998. See Pl.'s Decl. Opp'n, Ex. 2 (return receipt card). In the letter, Peter Belmont stated that he did not admit to being an obligor on the account and believed the bill for $1,898.49 was in error because he had no contractual obligation to pay any amount borrowed under the account.*fn4 See id. at 2. Specifically, Peter Belmont wrote: "The listing on this BILL of my name and address is, I believe, a computational or similar billing error of an accounting nature." Id. Further, Peter Belmont stated that if he were proven to be obligated in some way, he would continue to challenge the amount due as a billing error, because he had never had prior correspondence from Associates, such as billing statements or other documents detailing the charges. See id. at 2-3. Finally, Peter Belmont demanded that Associates provide him with documentary evidence, including contracts, agreements and applications executed by him for the account, as well as copies of any written communications sent to him by Associates or any other lender pertaining to the account. See id. at 4.

On June 23, 1998, Peter Belmont sent by certified mail, return receipt requested, a second letter to Associates, see Pl.'s Decl. Opp'n, Ex. 2, that was "substantially identical" to his May 13, 1998 letter, Am. Compl. ¶ 8. Associates received this second letter on June 30, 1998. See Pl.'s Decl. Opp'n, Ex. 2 (return receipt card).

On June 25, 1998 — thirty-seven days after Peter Belmont's first letter was received — Associates sent Peter Belmont a letter (signed by "Ebe, J"), "Re: Associates National Bank (Delaware), Account No.: 5457150050246016, Amount Due: $266.00," Pl.'s Decl. Opp'n Def.'s Mot. Dismiss, Ex. 3, which stated:

We have made several attempts to reach you [apparently not in writing] but have been unsuccessful. Our goal is to work out a solution for your delinquent balance and help bring your account to a current status. . . . Do not allow this situation to become more serious. Protecting your credit is important to you both today and in the future.

Id. Enclosed with the letter was another billing statement showing that the account balance was now $1,959.88, with a total amount due of $266.00. See id.

On July 20, 1998 — sixty-two days after Peter Belmont's first letter was received and twenty days after his second letter was received — Associates sent Peter Belmont a letter, "Re: THE ASSOCIATES MASTERCARD, Account Number: 5457 1500 5024 6016," in which Patrick Wilson ("Wilson") of Associates's Customer Relations department wrote: "We have received your recent correspondence regarding the above-referenced account. We have ordered additional information in order to respond to your correspondence properly." Gellhaus Aff., Ex. F.

Associates sent Peter Belmont a second letter signed by Wilson, also dated July 20, 1998, stating that the account had been opened on September 21, 1987 in the names of Peter Belmont and Jeremy Belmont, and adding that plaintiff became the primary cardholder on the account when Jeremy Belmont filed for bankruptcy. See Gellhaus Aff., Ex. G. The letter stated that Associates was unable to find a copy of the original application and further advised Peter Belmont that if he wanted a copy of the original application, he would have to contact Boatmen's. See id.

On July 22, 1999, Associates sent Peter Belmont another letter (signed by "V. Maxey") which was identical to its June 25th letter, except that the amount due was specified as $316.00 and the account balance had risen to $2,024.29. See Pl.'s Decl. Opp'n, Ex. 3. This letter also included the same warning regarding Peter Belmont's credit. See id.

On July 29, 1998, Peter Belmont sent Associates a third letter bearing the caption "NOTICE OF BELIEVED BILLING ERROR AND REQUEST FOR DOCUMENTARY EVIDENCE OF CONSUMER INDEBTEDNESS." See Gellhaus Aff., Ex. I. In the letter, Peter Belmont wrote that he believed the entire balance on the account — $1,959.88 (which included the $1,895.49 he had previously contested, as well as $29.00 in additional late charges and $35.39 in finance charges which were newly billed on the statement for the period ending June 5, 1998) — was erroneously billed. See id. Peter Belmont referenced his previous letters to Associates and stated that the July 20, 1998 letter signed by Patrick Wilson "failed to satisfy [his] demand for documentation in any respect." Id. Finally, Peter Belmont stated that he believed that his April 6, 1992 letter to Consumer Loan Center absolved him of responsibility for Jeremy Belmont's credit card debts. See id.

On August 5, 1998, Associates sent Peter Belmont another monthly billing statement for the MasterCard account. See Pl.'s Notice of Cross-Mot., Ex. 1. The statement showed that no payment had been made, but a finance charge of $37.79 and a late charge of $18.00 had been assessed, raising the balance to $2,080.08, with a minimum payment of $748.08 due on August 30, 1998. See id. Finally, this statement advised: "Your account is seriously past due. Send in the total amount due immediately." Id.

On August 10, 1998, Associates sent Peter Belmont another letter signed by Wilson, which reiterated information from the second July 20th letter, and again asserted that Peter Belmont was the sole obligor on the account because of his son's bankruptcy filing. See Gellhaus Aff., Ex. H. The letter also responded to Peter Belmont's belief that his 1992 request to be removed as a joint cardholder applied to the Associates account by stating:

[O]ur records do not indicate that your name was ever removed as a primary cardholder on this account. Please forward supporting documentation from Boatmen's . . . confirming that your name was removed from this account . . . and we will adjust our records accordingly. Unfortunately, we are not legally obligated to provide you a copy of your original application. In order to obtain a copy of your original application, you will need to contact Boatmen's. . . .

Id.

On August 13, 1998, a consumer credit report for Peter Belmont, issued by Trans Union, a credit reporting firm, included an Associates credit card account 5457-1500-5024-6016 opened in September of 1987 in Peter Belmont's name, closed in February of 1998, and updated in June of 1998.*fn5 See Pl.'s Decl. Opp'n, Ex. 4. The Trans Union report also contained the following adverse credit information: (1) $218 was past due; (2) the account was 120 days past due when it was closed in February 1998; and (3) in the twelve months before closing, the account had been up to 120 days late. See id.

On June 18, 1999, Peter Belmont filed his original complaint in this action, seeking relief under 15 U.S.C. § 1640(a)(2)(A), 1640(a)(3) and 1666(e). On that same day, Associates sent Peter Belmont a letter, signed by Todd Mitchell, an Associates vice president, which advised that Associates had deleted the "tradeline from all credit reporting agencies. Nothing is due." Gellhaus Aff., Ex. C.

On July 16, 1999, Peter Belmont filed an amended complaint which was substantially similar to the original except that it added a request for attorney's fees. Defendant served their answer on September 27, 1999. See Gellhaus Aff., Ex. B. Initial discovery proceeded in accord with Fed. R.Civ.P. 26, and on January 6, 2000, Associates moved to dismiss or, in the alternative, for summary judgment in its favor. On February 28, 2000, Peter Belmont filed a cross-motion for summary judgment.

Discussion

Because defendant relies on matters outside the pleadings, its motion will be treated as one for summary judgment. See Fed.R.Civ.P. 12(b). Plaintiff has responded with evidence made relevant by a motion for summary judgment, and both parties have filed statements and counter-statements pursuant to Eastern District Local Rule of Civil Procedure 56.1.

Summary judgment shall be granted when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). On a motion for summary judgment, the court must consider "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). In making this determination, all factual inferences must be drawn in favor of the party against whom summary judgment is sought, viewing the factual assertions in materials such as affidavits, exhibits, and depositions in the light most favorable to the party opposing the motion. See, id. at 255, 106 S.Ct. at 2513; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). However, "conclusory statements, conjecture, or speculation" by the non-moving party will not defeat the Summary judgment shall be granted when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). On a motion for summary judgment, the court must consider "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). In making this determination, all factual inferences must be drawn in favor of the party against whom summary judgment is sought, viewing the factual assertions in materials such as affidavits, exhibits, and depositions in the light most favorable to the party opposing the motion. See, id. at 255, 106 S.Ct. at 2513; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). However, "conclusory statements, conjecture, or speculation" by the non-moving party will not defeat the motion. Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir. 1996).

(1)

Peter Belmont brought this action under 15 U.S.C. § 1640, alleging that Associates failed to comply with the billing-error correction provisions of TILA, 15 U.S.C. § 1666-1666a. See Am. Compl. ¶¶ 3-4, 17-19. Peter Belmont claims that defendant made a billing error when it sent him the May 5, 1998 billing statement for the MasterCard account numbered 5457-1500-5024-6016 because he had never borrowed on the account, and because he believed that his 1992 letter released him of responsibility for his son's debts. Peter Belmont further claims that Associates's response to his May 13, 1998 Notice of Billing Error did not comply with the provisions of TILA.

Section 1666 provides that if an obligor responds, within sixty days, to a creditor's statement of account pertaining to a consumer line of credit by properly notifying the creditor that he or she believes a billing error has occurred, the creditor must comply with the provisions of the Act. See 15 U.S.C. § 1666. A written notice of a billing error complies with the requirements of § 1666 when it:

(1) sets forth or otherwise enables the creditor to identify the name and account number (if any) of the obligor, (2) indicates the obligor's belief that the statement contains a billing error and the amount of such billing error, and (3) sets forth the reasons for the obligor's belief (to ...

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