Witherwax v Transcare, Inc.
Annotate this CaseDecided on April 22, 2005
Supreme Court, New York County
Charles Witherwax and Marianne J. Witherwax, Plaintiffs,
against
Transcare, Inc., d/b/a Metrocare, and ROES ONE through TEN, Defendants.
114065/03
Marilyn Shafer, J.
Background
On June 14, 2000, plaintiff Charles Witherwax was transported by one of Transcare's ambulances to St. Luke's Hospital. Mr. and Mrs. Witherwax ("Mr. Witherwax") contend that an employee from Transcare, Inc. d/b/a Metrocare ("Transcare") was present during the admissions process at St. Luke's Hospital when the plaintiffs provided their address. Mr. Witherwax claims [*2]that the Transcare employee failed to correctly note his address at the time of his admission to the hospital. Mr. Witherwax never paid for the services rendered by Transcare, claiming they did not receive the invoices. Transcare, as Mr. Witherwax's creditor, turned over his debt to a debt collection agency, Paul Michael Associates ("Paul Michael"). Mr. Witherwax claims that Paul Michael subsequently reported the plaintiffs' debt to the three credit reporting agencies as being "seriously past due date/assigned to attorney collection agency, or credit grantor's internal collection department" (See Complaint, para. 9).
Mr. Witherwax tried to resolve the debt, and in communications with Paul Michael, learned that the invoice had been sent to an incorrect address: 30 West 61st Street, New York City, 10023, Apt. 12P, instead of 30 West 63 Street, New York City, 10023, Apt. 12P. Furthermore, Transcare never sent the bill to Mr. Witherwax's insurer, and never telephoned him even though it had the correct telephone number in its records prior to turning the matter over to Paul Michael. Mr. Witherwax contends that as a result of Paul Michael's decision to report the plaintiffs' outstanding debt to the credit reporting agencies, they "received denials and reductions of credit from several other sources, all based upon credit reports containing the Paul Michael Marketing bad debt allegation" (See Complaint, para. 14).
On June 25, 2002, Mr. Witherwax commenced a lawsuit in the United States District Court for the Southern District of New York entitled "Charles H. Witherwax and Marianne J. Witherwax v Paul Michael Associates, a/k/a Paul Michael Marketing, Transcare, Inc. d/b/a Metrocare et al", Case No. 02 CV 4898 (KMW) ("District Court Action"). The allegations mirror the allegations in the instant action except for the federal claims.
Mr. Witherwax settled with Paul Michael in July, 2003, and continued litigating against
Transcare in the District Court Action, alleging that Transcare should be liable under the Fair Debt Collection Practices Act 15 U.S.C., Section 1692 ("the FDCPA") for the acts of Paul Michael. Mr. Witherwax also alleged that Transcare was liable for negligence, gross negligence and defamation..
Transcare moved to dismiss the complaint in the District Court Action. By Order dated July 26, 2004, the District Court rejected the plaintiffs' attempt to hold Transcare liable for the actions of Paul Michael and declined to exercise supplemental jurisdiction over the plaintiff's remaining state law claims of defamation of credit, negligence, gross negligence and punitive damages. The District Court dismissed the federal action as to Transcare on the grounds that the FDCPA was inapplicable to Transcare as a creditor.
On August 5, 2003, Mr. Witherwax filed a Summons with Notice in this action. Mr. Witherwax subsequently served the complaint in this action alleging claims of defamation of credit, negligence, gross negligence and punitive damages.
Transcare is seeking an Order (I) dismissing the plaintiff's complaint pursuant to CPLR 3211(a)(7), on the grounds that the complaint fails to state a cause of action; (ii) dismissing the plaintiffs' complaint pursuant to CPLR 3211(a) on the grounds that plaintiffs' claims are barred by documentary evidence; (iii) dismissing plaintiffs' complaint as time-barred pursuant to CPLR 3211 (a)(5); and (iv) that this action is pre-empted by federal law.
Discussion[*3]
I. THIS ACTION IS NOT PRE-EMPTED BY FEDERAL LAW
The FDCPA, and its pre-emption provisions, does not apply to Transcare as it is a creditor and
not a debt collector (See U.S.C.A., Section 1692a.(6); Wadlington v Credit Acceptance Corp., 76 F 3rd 103 [6th Cir.1996]; Holmes v Telecredit Services Corp., 736 F.Supp 1289 [D. Del. 1990]; Perry v
Stewart Title Co., 756 F.2d 1197, 1208 [5th Cir. 1985]. Mr Witherwax seeks damages in the instant action based on state common law claims, and not Federal law claims under the FDCPA. Since the FDCPA does not apply to Transcare and since each of the causes of action is for state common law claims, pre-emption, as a matter of law, is not applicable (See Wadlington, Holmes and Perry, supra .). Transcare's claim that Mr. Witherwax is attempting to re-litigate identical issues decided in the Federal Court action is inaccurate. The District Court dismissed only the federal action against Transcare, and declined to exercise jurisdiction over the remaining state law claims.
II. DEFAMATION OF CREDIT CAUSE OF ACTION HAS NOT BEEN PROPERLY PLED
The Court finds that a prima facie cause of action for defamation has not been pled. The elements of a cause of action for defamation of credit are: (1) a false and defamatory statement of and concerning the plaintiffs uttered by the defendants; (2) publication by Transcare of such
statement to a third party; (3) fault on the part of the defendant; and (4) injury to the plaintiffs (See
Jacobsen v Deutche Bank, A.G., 206 F.Supp 2d 590 [S.D.NY 2002]). In the instant action, Mr.
Witherwax has not alleged a false and defamatory published statement by Transcare. The only alleged defamatory statements were made to the credit agencies by Paul Michael not Transcare. Mr. Witherwax's claim that Transcare told its collection agent that it should go after the plaintiffs because they don't pay their bills is unsubstantiated. Truth is a complete defense to a claim of defamation and the only statement that Transcare made was in relaying Mr. Witherwax's debt to
Paul Michael. Mr. Witherwax does not dispute the debt and that it was not paid at the time that
Transcare relayed the information to Paul Michael (See Dibella v Hopkins, 187 F. Supp. 2d 192 [S.D.NY 2002]; Dillon v City of New York, 261 AD2d 31, 39 [1st Dept. 1999]).
Finally, Mr. Witherwax's claim is subject to dismissal under the doctrine of qualified privilege. New York courts recognize "[i]t is an established rule that communications made by one person to another upon a subject in which both have an interest are protected by a qualified privilege" (See Brennan v Granite Equip. Leasing Corp., 60 AD2d 877 [2nd Dept. 1978]. In the case at bar, any communications between Transcare and the debt collector, Paul Michael, was the type of communications in which each party had an interest and was subject to this privilege. [*4](id.)
III. NEGLIGENCE AND GROSS NEGLIGENCE CAUSES OF ACTION ARE NOT TIME BARRED
On June 14, 2000, Transcare provided an ambulance to Mr. Witherwax and incorrectly recorded his address and insurance information. On September 12, 2001, Mr. Witherwax claims that Transcare instructed its collection agency to pursue collection of his debt. Mr. Witherwax claims that this is the earliest possible date that any statute of limitations could have begun to run. On March 15, 2002, Mr. Witherwax discovered that Transcare had put his alleged debt into collection. On September 9, 2002, Transcare filed for protection under Chapter 11 of the Bankruptcy Act, and all statutes of limitation were tolled. On August 5, 2003, Mr. Witherwax commenced this action by filing a summons with notice.
The statute of limitations on a negligence and gross negligence cause of action, which is three years from the date of the alleged negligence, had not expired when this action was commenced.
Furthermore, Transcare filed for protection under Chapter 11 of the Bankruptcy Act on September 9, 2002, and agreed to lift the stay as to the instant action on August 4, 2003. The limitations period was tolled during this time period.
By stipulation dated February 12, 2004, Transcare was given an open extension of time to answer until after determination of the Federal Court motion. The state negligence and gross negligence causes of action were timely filed and not subject to dismissal based upon any applicable statute of limitations.
IV. NEGLIGENCE CAUSE OF ACTION HAS BEEN PROPERLY PLED
To state a cause of action for negligence, Mr. Witherwax must show: (1) that Transcare owed them a "duty, or obligation, recognized by law", (2) a breach of that duty, (3) a "reasonably close causal connection between [defendant's] conduct and the resulting injury" and (4) loss of damage resulting from the breach (See McCarthy v Olin Corp, 119 F.3d 148, 156 [2d Cir. 1997]; Becker v Schwartz, 46 NY2d 401 [1978]). On a CPLR 3211(a)(7) motion to dismiss, factual allegations of the complaint are considered true, and affidavits submitted on the motion are considered for the limited purpose of determining whether the plaintiff has stated a claim, not whether a claim actually exists (Wall Street Associates v Brodsky, 257 AD2d 526 [1st Dept. 1999]). It is well settled that a pleading shall be liberally construed and will not be dismissed as insufficient merely because it is inartistically drawn (Foley v D'Agostino, 21 AD2d 60 [1st Dept. 1964]). The relevant inquiry is whether the requisite allegations of any valid cause of action cognizable by the state courts can be fairly gathered from the four corners of the complaint (id.)."
Mr. Witherwax's complaint alleges that a duty is owed by Transcare to plaintiffs. Mr. Witherwax's claims arise out of acts by the debt collector and the alleged duties owed by the debt collector to Mr. Witherwax. Transcare is liable for the negligence of its agent, the debt collector (Paul Michael). Engaging an outside entity to collect a debt does not excuse Transcare [*5]from the wrongful acts of its agent committed during the course and scope of its agency (See Parlato v Equitable Life Assurance Soc. Of New York, 749 NYS2d 216 [1st Dept. 2002]). Mr. Witherwax contends that Transcare negligently furnished its agent with erroneous information knowing that the agent would rely on and use that information in pursuit of Transcare's claim against the plaintiffs. Furthermore, the complaint sufficiently alleges injuries that were proximately caused by Transcare through its agent Paul Michael, the credit agency. Plaintiffs' damages consist of damage to their credit reports and alleged emotional distress and embarrassment resulting from the reduction and/or freezing of their credit lines. Based on the foregoing, this Court finds that the complaint sufficiently pleads a cause of action for negligence. However, Mr. Witherwax did not properly plead a cause of action for gross negligence. Plaintiffs would have had to plead that Transcare so recklessly disregarded facts as to amount to gross negligence (See Credit Alliance Corporation et al. v Arthur Andersen & Co., 65 NY2d 536 [1985]). Accordingly, the second cause of action for gross negligence is dismissed. Mr. Witherwax has pled a valid negligence cause of action, but not a gross negligence cause of action.
IV. PLAINTIFFS' CAUSE OF ACTION FOR PUNITIVE DAMAGES IS DISMISSED AS A MATTER OF LAW
Count IV of Mr. Witherwax's complaint seeks recovery for punitive damages. It is well established that there is no independent cause of action for punitive damages. Plaintiffs acknowledge that their independent cause of action for punitive damages should be dismissed, but contend that they should be allowed to pursue punitive damages for the remaining claims of negligence and gross negligence. Punitive damages are not recoverable for ordinary negligence, as their purpose is not to remedy private wrongs, but to vindicate public rights (See Rocanova v Equitable Life Assur. Secy. of U.S., 83 NY2d 603 [1994]; Mayes v UVI Holdings, Inc., 280 AD2d 153, 161 [1st Dept. 2001]). A private party seeking to recover punitive damages must not only demonstrate egregious tortious conduct by which he or she was aggrieved, but also that such conduct was part of similar conduct aimed at the public generally.
Claims for punitive damages must present evidence of such a high degree of moral turpitude and wanton dishonesty as to imply criminal indifference to civil obligations which is aimed at the public generally (See Lavanant v General Accident Ins. Co., 212 AD2d 450 [1st Dept. 1995]; Bothmer v Schooler, Weinstein, Minsky & Lester, 266 AD2d 154 [1st Dept. 1999](dismissing claim for punitive damages where there is "no showing that defendants' repeated error was motivated by malice or a desire to benefit themselves"). In the instant action, Mr. Witherwax's complaint fails to allege any facts that establish the requisite conduct for an award of punitive damages.
Conclusion
Accordingly, it is ordered that Transcare's motion to dismiss the complaint pursuant to CPLR 3211(a)(7), is denied as to the first cause of action for negligence, and it is further ordered that Transcare's motion to dismiss the complaint pursuant to CPLR 3211(a)(7) is granted as to the second cause of action for gross negligence, the third cause of action for defamation, and the fourth cause of action for punitive damages. [*6]
This reflects the decision and order of the court.
Dated: April 22, 2005 _________________________
J.S.C.
Check one: __FINAL DISPOSITION _X_ NON-FINAL DISPOSITION
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