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Henry v. Bank of America

Supreme Court of New York, First Department

February 23, 2017

Jonathan M. Henry, Plaintiff-Appellant,
Bank of America, et al., Defendants-Respondents.

          Henry & Regan-Henry, White Plains (John V. Henry of counsel), for appellant.

          Goodwin Procter LLP, New York (Lindsay E. Hoyle of counsel), for respondents.

          Mazzarelli, J.P., Andrias, Saxe, Feinman, Gische, JJ.

         Order, Supreme Court, New York County (Anil C. Singh, J.), entered on or about May 8, 2015, which, to the extent appealed from, granted defendants' motion to dismiss as time-barred the causes of action for statutory fraud, common-law fraud, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and unconscionability, unanimously affirmed, without costs.

         Plaintiff was enrolled in defendants' Credit Protection Plan (CPP) on March 8, 2001 and their Privacy Assist Service (PAS) program in March 2007 [1]. He was billed for the services in his monthly account statements. On March 6, 2009, when plaintiff advised defendants of his dire financial situation and unemployment since on or about November 17, 2007, defendants enrolled plaintiff in a less expensive CPP program that provided lesser benefits.

         Plaintiff closed his credit card account on June 14, 2010. CPP and PAS fees plus interest and penalties were included in plaintiff's account balance which reached $29, 246.06 as of approximately February 7, 2011. On May 31, 2013, defendants issued a refund check to plaintiff for PAS fees improperly charged during the period of March 2007-November 2008, when no PAS services were actually provided.

         On August 27, 2014, plaintiff, alleging that he was enrolled in the two optional credit card products without his consent, for which he received no benefit, commenced this action seeking, inter alia, compensatory and punitive damages. Plaintiff asserts that he became aware of defendant's scheme in or about November/December 2012 when he was advised of a California CPP class action, and on May 31, 2013 when he was informed by defendants that he had been charged PAS fees for which he received no services. [2]

         Supreme Court granted defendants' motion to dismiss as time barred the first (Delaware Consumer Fraud Act), second (New York Consumer Fraud and General Business Law statutes), and seventh (breach of fiduciary duty) causes of actions, governed by a three-year statute of limitations, and the third (common law fraud), fifth (breach of covenant of good faith and fair dealing), and eighth (unconscionability) causes of action, governed by a six-year statute of limitations [3]. We now affirm.

         The subject causes of action accrued either in March 2001, when defendants allegedly enrolled plaintiff without his consent in the CPP, or in March 2007, when they allegedly enrolled him without his consent in the PAS program, more than six years before the commencement of this action in 2014 (see State ex rel. Brady v Pettinaro Enters., 870 A.2d 513, 526 [Del Ch 2005]; Gaidon v Guardian Life Ins. Co. of Am., 96 N.Y.2d 201, 210 [2001]).

         Plaintiff's reliance on the continuing wrong doctrine to toll the limitations periods is misplaced. The continuous wrong doctrine is an exception to the general rule that the statute of limitations " runs from the time of the breach though no damage occurs until later'" (Ely-Cruikshank Co. v Bank of Montreal, 81 N.Y.2d 399, 402 [1993]). The doctrine "is usually employed where there is a series of continuing wrongs and serves to toll the running of a period of limitations to the date of the commission of the last wrongful act" (Selkirk v State, 249 A.D.2d 818, 819 [3d Dept 1998]). Where applicable, the doctrine will save all claims for recovery of damages but only to the extent of wrongs committed within the applicable statute of limitations (see Jensen v General Elec. Co., 82 N.Y.2d 77, 83-85, 88 [1993] ; Sutton Inv. Corp. v City of Syracuse, 48 A.D.3d 1141, 1143 [4th Dept 2008], lv dismissed 10 N.Y.3d 858');">10 N.Y.3d 858 [2008]).

         The doctrine "may only be predicated on continuing unlawful acts and not on the continuing effects of earlier unlawful conduct. The distinction is between a single wrong that has continuing effects and a series of independent, distinct wrongs" (Doukas v Ballard, 39 Misc.3d 1227(A) [Sup Ct, New York County 2013]; see also Roslyn Sav. Bank v National Westminster Bank USA, 266 A.D.2d 272');">266 A.D.2d 272 [2d Dept 1999]). The doctrine is inapplicable where there is one tortious act complained of since the cause of action accrues in those cases at the time that the wrongful act first injured plaintiff and it does not change as a result of " continuing consequential damages'" (Town of Oyster Bay v Lizza Indus., Inc., 22 N.Y.3d 1024, 1032 [2013]; see also Quintana v Wiener, 717 F.Supp. 77, 80 [SD NY 1989]). In contract actions, the doctrine is applied to extend the statute of limitations when the contract imposes a continuing duty on the breaching party (see Bulova Watch Co. v Celotex Corp., 46 N.Y.2d 606, 611 [1979]; Meadowbrook Farms Homeowners Assn., Inc. v JZG Resources, Inc., 105 A.D.3d 820, 822 [2d Dept 2013], lv dismissed 21 N.Y.3d 1024');">21 N.Y.3d 1024 [2013]; King v 870 Riverside Dr. Hous. Dev. Fund Corp., 74 A.D.3d 494, 496 [1st Dept 2010]). Thus, where a plaintiff asserts a single breach - with damages increasing as the breach continued - the continuing wrong theory does not apply (see Kahn v Kohlberg, Kravis, Roberts & Co., 970 F.2d 1030, 1041 [2d Cir 1992], cert denied 506 U.S. 986 [1992]).

         Here, the alleged wrongs are the enrollment of plaintiff in the CPP and PAS programs in March 2001 and 2007, respectively, and there was no breach of a recurring duty. The monthly billings demanding payment of CPP and PAS fees, both before and after plaintiff closed his account, represent the consequences of those wrongful acts in the form of continuing damages, not the wrongs themselves, and do not qualify for application of the continuous wrong doctrine.

         Plaintiff's argument that he could not reasonably have discovered the alleged fraudulent conduct within the limitations period due to defendants "concealment" and ongoing "scheme, " is not reconcilable with his admissions that he was billed for the charges monthly. There is no more information that plaintiff could have needed to determine if he had been involuntarily enrolled in the programs (see Sanchez de Hernandez v Bank of Nova Scotia, 76 A.D.3d 929 [1st Dept 2010], lv denied 16 N.Y.3d 705');">16 N.Y.3d 705 [2011]).

         Plaintiff's argument that the CPP and PAS claims accrued on March 6, 2009, when defendants involuntarily enrolled him in a new CPP contract at different fees is without merit. While plaintiff characterizes it as enrollment in a new program, defendants merely switched him from a more expensive CPP program to a cheaper ...

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