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Dr. Ibelka Vargas, and the Class of Those Persons Similarly Situated v. Choice Health Leasing

May 9, 2011


The opinion of the court was delivered by: Denise Cote, District Judge:


Plaintiff Ibelka Vargas ("Vargas" or "the plaintiff") -- by and through her counsel, Phillip Jaffe ("Jaffe"), who was formerly a named plaintiff in this lawsuit -- brings this putative class action challenging the lawfulness of late fees she incurred in connection with a lease of certain dental equipment. Jaffe was listed as the lessee. On January 21, 2011, defendant Choice Health Leasing ("Choice") moved to dismiss the plaintiffs' second amended complaint (the "Second Amended Complaint"). For the following reasons, the motion to dismiss is granted.


The factual background to this case has already been described in an Opinion of August 26, Vargas v. Choice Health Leasing, No. 09 Civ. 8264 (DLC), 2010 WL 3398482 (S.D.N.Y. Aug. 26, 2010) (the "August Opinion"), familiarity with which is assumed. Only the facts necessary to a resolution of the pending motion are included here. These facts, taken from the Second Amended Complaint and its attachments, are assumed to be true for the purposes of deciding the motion.*fn1

After graduating from dental school, Vargas sought to rent the office space and the equipment necessary to establish a dental practice. Vargas asked Jaffe to co-sign the lease for office space and to lease "in his name" dental equipment from Choice. While Jaffe is "legally responsible for any indebtedness" to Choice, pursuant to an oral contract between Vargas and Jaffe, Vargas "has made all payments on equipment" to Choice.

Initially, Vargas made her payments to Choice on time or "near the deadline." At some point, Vargas spoke with a person "associated with Choice[]," who informed her that "if she paid the monthly fee on the day it was due by telephone . . . her payment would be timely and [would] not . . . trigger[] a 'late payment' fee." Nonetheless, in some instances, when Vargas paid on time by telephone she was assessed late fees. Vargas incurred twenty-one late fees based on fifty-five timely telephone payments, and twenty-nine late fees from sixty-eight timely telephone payments. Vargas paid Choice $228,671.29 in principal and interest and $24,206.93 in late fees on a $200,000 loan.


On September 29, 2009, Jaffe, proceeding pro se, filed this lawsuit as a purported class action against Choice and Citibank, N.A. ("Citibank") for violating various federal and state laws (the "Initial Complaint"). On October 28, Choice and Citibank filed separate motions to dismiss the Initial Complaint. In his opposition to these motions, Jaffe sought permission to add claims. By Order dated January 11, 2010, Jaffe was directed to amend the pleading by February 5.

On or about February 2, Jaffe, now serving as counsel, filed an amended complaint on behalf of Vargas and a putative class of similarly situated persons (the "Amended Complaint"). Although the Amended Complaint did not include Jaffe as a plaintiff, he was still identified as "the legal owner of the equipment leased" from Choice, and the person "legally responsible for any indebtedness to Choice[]." Choice and Citibank moved to dismiss the Amended Complaint. In the August Opinion, Citibank's motion to dismiss was converted to a motion for summary judgment and granted. The August Opinion also dismissed the plaintiff's claims arising under the National Bank Act, 12 U.S.C. §§ 85-86, and the Depository Institutions Deregulation and Monetary Control Act, 12 U.S.C. § 1831d. Plaintiff's civil claim under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1964(c) ("RICO") was dismissed with leave to amend by October 1.

On October 1, the Court received a letter from Jaffe accompanied by a document labeled "Second Amended Complaint and Demand for Jury." On December 3, Jaffe was given until December 10 to serve Choice with a copy of the Second Amended Complaint and until December 17 to file proof of service.*fn2

On January 21, 2011, Choice filed a motion to dismiss the Second Amended Complaint. The motion became fully submitted on March 14.


Choice has moved to dismiss all of the claims asserted in the Second Amended Complaint pursuant to Rule 12(b)(6), Fed. R. Civ. P. "Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a 'short and plain statement of the claim showing that the pleader is entitled to relief.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). For a plaintiff's claim to survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007) (citation omitted)). ...

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