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Steven T. Erdman v. Hsbc Auto Finance F/Ka/ Household Auto Finance

August 4, 2011

STEVEN T. ERDMAN, PLAINTIFF,
v.
HSBC AUTO FINANCE F/KA/ HOUSEHOLD AUTO FINANCE, DEFENDANT.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

Plaintiff, Steven Erdman, commenced this action on January 1, 2009 in New York State Supreme Court, County of Erie. Defendant, HSBC Auto Finance ("HSBC"), removed the case to this Court on February 6, 2009. Erdman alleges claims for breach of contract, fraud, negligent and intentional infliction of emotional distress, and violations of New York General Business Law § 349 ("GBL § 349"). Jurisdiction is proper under 28 U.S.C. § 1332.*fn1 Presently before this Court is Defendant's Motion to Dismiss. For the following reasons, that motion is granted in part and denied in part.

II. BACKGROUND

A. Facts

Around July 25, 2002, Erdman purchased a Ford Escort from Al Maroone Ford in Williamsville, New York. (Amended Complaint ("Am. Compl.") ¶ 5; Docket No. 9.) He financed $10,584.90 of this purchase through HSBC and made timely payments until May of 2003, when he was injured and unable to pay. (Id. ¶¶ 5-7.) Subsequently, HSBC repossessed and sold the vehicle, leaving a balance of $7,956.76 (Id. ¶¶ 9-10.) In full satisfaction of this debt, HSBC agreed to accept $2,000, which Erdman undisputedly paid in full. (Id. ¶ 10.) However, according to Erdman, HSBC then sold his account (the $7,656.76 debt plus interest) to West Asset Management ("West"), who then sold the account to Sydney Acquisitions, LLC ("Sydney"), both debt collection agencies. (Id. ¶¶ 11-12.) Erdman was completely unaware of these events until, nearly four years later, he applied for a loan to purchase another vehicle and learned that his credit score was below 400. (Id. ¶ 15.) He attributed his low score to either West or Sydney (or both) falsely reporting the $7,656.76 as overdue and delinquent. (Id.) According to Erdman, he then contacted HSBC who told him that it "had no supporting documents on file, could do nothing about the situation, and that a suit letter would be forthcoming imminently." (Id. ¶ 16.)

In July of 2007, Sydney sued Erdman on the account, resulting in a default judgment against him totaling $10,607.17. (Id. ¶¶ 17-18.) This judgment was eventually vacated, but for over a year he was continuously "harassed" by creditors and his credit rating continued to suffer. (Id. ¶¶ 19-20.)

Erdman also claims that as a result of his poor credit rating, HSBC was able to "coerce" him into a "sub-prime," eighteen percent interest rate on his next vehicle purchase. (Id. ¶¶ 22-26.) He complains that he could not obtain financing from other creditors, and that upon contacting HSBC, it offered him an "accommodation," sending him to Superior Toyota of Pennsylvania where he could purchase a vehicle that HSBC would finance. (Id.) Erdman agreed to these terms but alleges that HSBC was able to "coerce" him into such a deal with a high interest rate only because of its earlier misdeeds, which adversely affected his credit score. (Id.) What is more, according to Erdman, HSBC eventually "lost" two payments on this new vehicle, and he was again forced to endure unwarranted harassment via phone call, letter, and threat of repossession. (Id. ¶¶ 27-28.)

B. Procedural History

After HSBC removed this action to this Court, Erdman filed an amended complaint on March 9, 2009. (Docket No. 9.) Four days later, HSBC moved to strike Erdman's amended complaint pursuant to Rule 12(f) of the Federal Rules of Civil Procedure, arguing that it was improperly filed because Erdman had not sought leave from this Court. (Docket No. 11.) In turn, Erdman requested leave to file its amended complaint. (Docket No. 15.) On February 16, 2010, this Court denied HSBC's motion and denied Erdman's motion as moot, finding that Erdman properly amended his complaint after removal as a matter of course under Fed. R. Civ. P. 15(a). (Docket No. 32.)

III. DISCUSSION

A. Legal Standard

Rule 12 (b)(6) allows dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12 (b)(6). Federal pleading standards are generally not stringent: Rule 8 requires only a short and plain statement of a claim. Fed. R. Civ. P. 8 (a)(2). But the plain statement must "possess enough heft to show that the pleader is entitled to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1966, 167 L.Ed.2d 929 (2007).

When determining whether a complaint states a claim, the court must construe it liberally, accept all factual allegations as true, and draw all reasonable inferences in the plaintiff's favor. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007). Legal conclusions, however, are not afforded the same presumption of truthfulness. See Ashcroft v. Iqbal, 556 U.S. __, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) ("The tenet that a ...


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