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John Joseph v. Federated Financial Corporation of America

September 13, 2011


The opinion of the court was delivered by: Mae A. D'Agostino, U.S. District Judge:



In a complaint dated June 2, 2011 (the "Complaint"), Plaintiff pro se alleges that Defendant, through fraudulent means, converted an application for a credit card into a promissory note that it then exchanged "for a bank liability to create an[ ] 'open' credit-card account." See Dkt. No. 1 at 4. Currently before the Court is Defendant's motion to dismiss the Complaint. See Dkt. No. 7.


Approximately twelve years ago, Plaintiff claims that he was offered a credit card for his business from Advanta Bank Corporation, which has since been dissolved. See Dkt. No. 1 at 3. Plaintiff asserts that "[a]n alleged debt was incurred against this account, [and] as of April 2006 it was alleged at 19889.19." See id. In a March 31, 2006 letter, Defendant informed Plaintiff that it had purchased his account from Advanta Bank Corporation and that the outstanding balance of the account was $19,889.16. See id. at 12.

Plaintiff claims that he was never fully informed of the terms and conditions "of the alleged 'accounts.'" See id. Moreover, Plaintiff asserts that, in series of events that are not altogether clear, Defendant committed fraud in its dealings with him. See id. at 4. For example, Plaintiff asserts that "Defendant Assignee following the Federal Reserve Corporation's monetary expansion rules in the Fed's publication titled 'Modern Money Mechanics,' employing the 'transaction concept' of money, converted the application made by Plaintiff into a Promissory Note and exchanged it for a bank liability to create and 'open' credit-card account." See id. Thereafter, Plaintiff claims that "Defendant Assignee also 'raised an asset' when it opened these 'accounts' using [his] signature[.]" See id.

On April 7, 2008, Defendant filed a complaint in New York State Supreme Court, Orleans County, against Plaintiff to recover the debt accumulated on his Advanta Credit Card. See Dkt. No. 1 at 20-23. In its state-court complaint, Defendant claimed that Plaintiff defaulted on its debt on July 6, 2005. See id. Plaintiff filed an "Affidavit in Support of Motion to Dismiss the Complaint" on May 6, 2008, in which he challenged the state-court's personal jurisdiction and venue. See Dkt. No. 1 at 3, 14-15. Plaintiff, however, did not dispute the existence of the debt alleged in Defendant's complaint. See id. at 14-15.

In the state-court action, Defendant ultimately moved for, and was awarded, a default judgment against Plaintiff for $41,192.46, representing the debt accumulated on Plaintiff's credit card, plus interest from the date of default. See Dkt. Nos. 7-3 and 7-4.*fn1 In the affidavit of facts submitted in support of Defendant's motion for default, Defendant's Vice President of Portfolio Services stated that Defendant "maintained and rendered monthly statements of account to [Plaintiff], who accepted and retained said statement[s] without dispute," and that the state-court action "was commenced to recover . . . for breach of a written Business Credit Card Agreement in the amount of $32,117.46 representing the agreed price, reasonable value and balance due [Defendant] from [Plaintiff], not part of which has been paid, although duly demanded." See Dkt. No. 7-4.

Currently before the Court is Defendant's motion to dismiss, in which it asserts that Plaintiff's action is barred by the doctrine of collateral estoppel and, alternatively, that Plaintiff has failed to state a claim for which relief may be granted. See Dkt. No. 7-1.


A. Standard of review

A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the party's claim for relief. See Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir. 2007). In considering the legal sufficiency, a court must accept as true all well-pleaded facts in the pleading and draw all reasonable inferences in the pleader's favor. See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (citation omitted). This presumption of truth, however, does not extend to legal conclusions. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009) (citation omitted). Although a court's review of a motion to dismiss is generally limited to the facts presented in the pleading, the court may consider documents that are "integral" to that pleading, even if they are neither physically attached to, nor incorporated by reference into, the pleading. See Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir. 2006) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002)).

To survive a motion to dismiss, a party need only plead "a short and plain statement of the claim," see Fed. R. Civ. P. 8(a)(2), with sufficient factual "heft to 'sho[w] that the pleader is entitled to relief[,]'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (quotation omitted). Under this standard, the pleading's "[f]actual allegations must be enough to raise a right of relief above the speculative level," see id. at 555 (citation omitted), and present claims that are "plausible on [their] face," id. at 570. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully."

Iqbal, 129 S. Ct. at 1949 (citation omitted). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of "entitlement to relief."'" Id. (quoting [Twombly, 550 U.S.] at 557, 127 S. Ct. 1955). Ultimately, "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief," Twombly, 550 U.S. at 558, or where a plaintiff has "not nudged [its] claims across the line from conceivable to plausible, the[] complaint must be dismissed[,]" id. at 570.

Federal Rule of Civil Procedure 9(b) sets forth a heightened pleading standard for allegations of fraud: "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). The Second Circuit has explained that, in order to comply with Rule 9(b), "the complaint must: (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) ...

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