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Schwartz v. Comenity Capital Bank

United States District Court, S.D. New York

February 2, 2015

Bruce Schwartz, individually and on behalf of all others similarly situated, Plaintiff,
v.
Comenity Capital Bank, Defendant.

OPINION AND ORDER

JOHN G. KOELTL, District Judge.

The Plaintiff, Bruce Schwartz brings this action against defendant Comenity National Bank ("Comenity") alleging violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1637, and the enacting regulation ("Regulation Z") prescribed by the Consumer Financial Protection Bureau (the "Bureau"), 12 C.F.R. pt. 1026. This Court has subject matter jurisdiction pursuant to 15 U.S.C. § 1640(e). The defendant now moves for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth below, the defendant's motion is granted in part and denied in part.

I.

Unless otherwise stated, the following facts are undisputed.

A.

Comenity is a bank chartered in the state of Delaware. Comenity issues consumer credit card accounts for use at specific retailers, including the Barneys New York branded credit card account (the "Barneys Card"). Comenity acquired the Barneys Card portfolio of accounts on March 8, 2013. From March 8, 2013, until June 5, 2013, new Barneys Card customers received account opening forms identical to the forms used by Barneys New York prior to Comenity's acquisition of the portfolio of accounts, including a credit card agreement with a billing rights notice (BRN) explaining the customer's rights under TILA. Def.'s 56.1 Stmt. ¶¶ 1-5, 11; Pl.'s 56.1 Resp. ¶¶ 1-5, 11.

In May 2013, Mr. Schwartz applied for and received a Barneys Card and made a $79.00 purchase. Mr. Schwartz received the credit card agreement and BRN at that time. Def.'s 56.1 Stmt. ¶¶ 6-8; Pl.'s 56.1 Resp. ¶¶ 6-8. The relevant portion of the BRN stated:

YOUR BILLING RIGHTS:

KEEP THIS NOTICE FOR FUTURE USE

NOTICE: The following is important information regarding your right to dispute billing errors. This notice contains important information about your right and our responsibilities under the Fair Credit Billing Act.
....
Your Rights and Our Responsibilities After We Receive Your Written Notice [of a Billing Error or Question.]
We must acknowledge your letter within 30 days, unless we have corrected the error by then. Within 90 days, we must either correct the error or explain why we believe the bill was correct.
After we receive your letter, we cannot try to collect any amount you question, or report you as delinquent. We can continue to bill you for the amount you question, including finance charges, and we can apply any unpaid amount against your credit limit. You do not have to pay any questioned amount while we are investigating, but you are still obligated to pay the parts of your bill that are not in question.
....
Special Rule for Credit Card Purchases
If you have a problem with the quality of property or services you purchased with a credit card, and you have tried in good faith to correct the problem with the merchant, you may have the right not to pay the remaining amount due on the property or services.

Compl. Ex. B.

On June 5, 2013, Comenity began using a new credit card agreement form that differed from the one customers had received between March 8, 2013 and June 5, 2013. Def.'s 56.1 Stmt. ¶ 9; Pl.'s 56.1 Resp. ¶ 9. That agreement included a BRN that mirrored the model form provided by the Bureau in the appendix to Regulation Z. See Compl. Ex. C.

On June 17, 2013, Comenity mailed a change in terms of service form to holders of Barneys Card accounts. The change in terms of service included a provision that required disputes be arbitrated and waived the right to bring a class action claim against Comenity. This provision could be rejected by providing a signed, written notice to Comenity within 45 days after the change in terms of service was provided to the customer. Mr. Schwartz timely opted out of the arbitration provision and class action waiver in a written notice. The change in terms of service also included a notice and cure provision which requires customers to provide Comenity with written notice of any claim "arising out of or related to this Agreement" and a "reasonable opportunity, not less than thirty days" to cure the problem prior to initiating a lawsuit or an arbitration. Def.'s 56.1 Stmt. ¶¶ 10-14; Pl.'s 56.1 Resp. ¶¶ 10-14.

B.

On July 15, 2013, the plaintiff brought this suit alleging that the BRN provided by Comenity to Mr. Schwartz and all customers who opened accounts between March 8, 2013 and June 5, 2013 did not adequately disclose the rights of the credit card holders in accordance with TILA. The sole cause of action is for a violation of the account-opening disclosure requirements of TILA pursuant to 15 U.S.C. § 1637(a)(7) and 12 C.F.R § 1026.6. The plaintiff contends that the BRN is inadequate because it is not substantially similar to Model Form G-3(A) (the "Model Form"), published by the Bureau as an appendix to Regulation Z, and allegedly omits four essential elements: (1) a warning to consumers who initiate billing error disputes to contact the creditor no less than three business days before any automated payment is scheduled; (2) a notice that the creditor must acknowledge receipt of a billing error correspondence within thirty days of receiving it; (3) a notice of the preconditions governing the consumer's right not to pay for purchases of unsatisfactory goods and services; and (4) a notice informing the consumers that complaints regarding purchases of unsatisfactory goods or services should be made in writing. The plaintiff has withdrawn all other claims.

The plaintiff has not suffered any actual damages. Instead he seeks the maximum statutory damages available under 15 U.S.C. § 1640(a)(2) plus fees and costs, as well as injunctive relief. The defendant now moves for summary judgment.

II.

The standard for granting summary judgment is well established. "The Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Gallo v. Prudential Residential Servs., LP, 22 F.3d 1219, 1223 (2d Cir. 1994). "[T]he trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Gallo, 22 F.3d at 1224. The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. The substantive law governing the case will identify those facts which are material and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 248 (1986).

In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see also Gallo, 22 F.3d at 1223. Summary judgment is improper if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the non-moving party. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir. 1994). If the moving party meets its burden, the non-moving party must produce evidence in the record and "may not rely simply on conclusory statements or on contentions that the affidavits supporting the ...


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