American Express Centurion Bank v Teitelbaum

[*1] American Express Centurion Bank v Teitelbaum 2012 NY Slip Op 51542(U) Decided on August 14, 2012 Supreme Court, Kings County Rivera, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through August 16, 2012; it will not be published in the printed Official Reports.

Decided on August 14, 2012
Supreme Court, Kings County

American Express Centurion Bank and AMERICAN EXPRESS BANK, FSB, Plaintiffs,

against

Menashe Teitelbaum, INDIVIDUALLY AND D/B/A ACE PARTY CHAIR/ RNTL AND ACE PARTY CHAIR/ RNTL, Defendants.



25611/11



Attorney for Plaintiffs/counterclaim defendants

Jeffrey Zachter, Esq.

Jaffe & Asher LLP

600 Third Avenue

New York, NY 10016

(212) 687-3000

Attorney for Defendants/counterclaim plaintiffs

Adrienne Odierna, Esq.

Hanig & Schutzman, LLP

22 IBM Road, Suite 210

Poughkeepsie, NY 12601

(845) 471-7177

Francois A. Rivera, J.

By notice of motion filed on May 2, 2012, under motion sequence number one, defendants/counterclaim plaintiffs, Menashe Teitelbaum (hereinafter Teitelbaum) and Ace Party [*2]Chair/ Rntl (hereinafter ACE), have jointly moved pursuant to CPLR 3212 for an order granting summary judgment in their favor dismissing the complaint and an order granting summary judgment in their favor on their counterclaims against the plaintiffs/counterclaim defendants, American Express Centurion Bank and American Express Bank, FSB (hereinafter referred together as "American Express").

By notice of cross-motion filed on June 29, 2012, under motion sequence number two, American Express has moved pursuant to CPLR 3212 for an order granting summary judgment in their favor on the complaint and dismissing all counterclaims against them.

BACKGROUND

On November 14, 2011, American Express commenced the instant action by filing a summons and complaint with the Kings County Clerk's office.Defendants/counterclaim plaintiffs interposed an answer with counterclaims dated December 8, 2011. American Express joined issue by reply dated December 20, 2011. A note of issue has not yet been filed.

American Express' complaint alleges forty-eight (48) allegations of fact in support of six causes of action. The first cause of action is for breach of contract, the second is for an account stated, and the third is for unjust enrichment. The first three causes of action are against Teitelbaum based on his alleged use of an American Express Blue credit card.

The fourth, fifth and sixth causes of action are against both Teitelbaum and ACE based on their alleged use of an American Express executive business credit card. The fourth cause of action is for a breach of contract, the fifth is for an account stated, and the sixth is for unjust enrichment.

The answer of the defendants/counterclaim plaintiffs asserts three counterclaims. The first counterclaim is for a failure to validate the alleged debt as required by the Fair Debt Collection Practices Act (FDCPA); the second is for breach of contract; and the third counterclaim, incorrectly labeled as the fourth counterclaim, is for tortious interference with business relations.

DEFENDANTS/COUNTERCLAIM PLAINTIFFS' MOTION PAPERS

Defendants/counterclaim plaintiffs' motion papers consists of a notice of motion, their attorney's affidavit, Teitelbaum's affirmation and ten annexed exhibits labeled A through J. Exhibit A is a copy of the instant summons and complaint. Exhibit B is a copy of defendants/counterclaim plaintiffs' answer with counterclaims. Exhibit C is a copy of defendants/counterclaim plaintiffs' demand for a verified bill of particulars and other discovery demands. Exhibit D is a copy of a substitution of counsel form. Exhibit E is a copy of American Express' reply to the counterclaims. Exhibit F is a copy of American Express' notice of deposition. Exhibit G is a copy of American Express' response to discovery demands. Exhibit H is a described as copy of a document showing activity of an American Express account. Exhibit I is a copy of a letter from American Express' counsel. Exhibit J is a copy of a letter from defendants/counterclaim plaintiffs' counsel.

AMERICAN EXPRESS' CROSS-MOTION PAPERS [*3]

American Express' cross-motion consists of their attorney's affirmation, a memorandum of law, an affidavit from an assistant custodian of American Express' records and six annexed exhibits labeled A through F. The cross-motion also serves as opposition to defendants/counterclaim plaintiffs' motion. Exhibit A is described as a copy of a blue card member agreement. It is unsigned. Exhibit B is described as a copy of monthly statements. Exhibit C is described as a copy of a business gold card member agreement. It is unsigned. Exhibit D are copies of monthly statements. Exhibit E is a copy of the instant summons and complaint. Exhibit F is a copy of defendants/counterclaim plaintiffs' answer with counterclaims.

LAW AND APPLICATION

It is well established that summary judgment may be granted only when it is clear that no triable issue of fact exists (Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]). The burden is upon the moving party to make a prima facie showing that he or she is entitled to summary judgment as a matter of law by presenting evidence in admissible form demonstrating the absence of any material facts (Giuffrida v. Citibank, 100 NY2d 72 [2003]). A failure to make that showing requires the denial of that summary judgment motion, regardless of the adequacy of the opposing papers (Ayotte v. Gervasio, 81 NY2d 1062 [1993]). If a prima facie showing has been made, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of material issues of fact (Alvarez v. Prospect Hospital, 68 NY2d at 324).

The elements of a breach of contract are the existence of a contract, the plaintiff's performance under the contract, the defendant's breach of that contract and resulting damages (Palmetto Partners, L.P. v. AJW Qualified Partners, LLC, 83 AD3d 804, 807 [2d 2011]).

The elements of an account stated are "an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due" (Fleetwood Agency, Inc. v. Verde Elec. Corp., 85 AD3d 850, 851 [2d 2011], citing Jim-Mar Corp. v. Aquatic Constr., 195 AD2d 868, 869 [3d 1993]). "An agreement may be implied where a defendant retains bills without objecting to them within a reasonable period of time, or makes partial payments on the account" (American Express Centurion Bank v. Cutler, 81 AD3d 761, 762 [2d 2011] citing Jim-Mar Corp. v. Aquatic Constr., 195 AD2d 868, 869 [3d 1993]).

Unjust enrichment is a "quasi-contract theory of recovery, and is an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties concerned (Georgia Malone & Co., Inc. v. Ralph Rieder, 86 AD3d 406 [1d 2011] citing IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 NY3d 132, 142 [2009]). A plaintiff must show "that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered' " (Mandarin v. Wildenstein, 16 NY3d 173 [2011] citing Citibank, N.A. v. Walker, 12 AD3d 480, 481 [2d 2004]). "The essential inquiry in any action for unjust enrichment . . . is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered" (Mandarin v. Wildenstein, 16 NY3d 173 [2011] citing Paramount Film Distrib. Corp. v. State of New York, 30 NY2d 415, 421 [1972]). [*4]

A cause of action for unjust enrichment requires a plaintiff to demonstrate that "services were performed for the defendant resulting in the defendant's unjust enrichment" (Kagan v. K-Tel Entertainment Inc., 172 AD2d 375, 376 [1d 1991]). An unjust enrichment claim can only be sustained if the services were performed at the defendant's behest (Ehrlich v. Froehlich, 72 AD3d 1010 [2d 2010]). If services were performed at the behest of someone other than the defendant, the plaintiff must look to that person for recovery (Id.).

A plaintiff, however, cannot maintain an unjust enrichment claim while simultaneously alleging the existence of an express contract covering the same subject matter (Universal/MMEC, Ltd. v. Dormitory Auth. of State of NY 50 AD3d 352 [1d 2008]).

DEFENDANTS/COUNTERCLAIM PLAINTIFFS' MOTION

The court addresses the motion to dismiss American Express' complaint first. The only sworn allegations of fact submitted by the defendants/counterclaim plaintiffs are the affidavit of their counsel and the affirmation of Teitelbaum. The affidavit of their counsel demonstrates no personal knowledge of any of the facts or transactions alleged in the complaint and therefore has no probative value (Morales v. Coram Materials Corp., 51 AD3d 86 [2d 2008]).

Teitelbaum submitted an affirmation as opposed to an affidavit on religious grounds. "Any person who, for religious or other reasons, wishes to use an affirmation as an alternative to an affidavit may do so. However, to be effective such an affirmation must be made before a notary public or other authorized official (CPLR 2309)" (Slavenburg Corp. v. Opus Apparel, 53 NY2d 799, 800 [1981]).

Teitelbaum's affirmation alleges the following pertinent facts. He is the president of ACE. He never authorized American Express to withdraw funds from ACE's bank account. On three separate occasions American Express withdrew funds from ACE's bank account. At the time of these withdrawals, he and ACE were negotiating the purchase of a commercial building. The seller requested and received ACE's bank statements to determine ACE's financial viability. The statements showed a negative balance caused by the withdrawals in question. The unauthorized withdrawals prompted the seller to back away from the deal.

Teitelbaum's affirmation, however, does not state whether he either individually or as president of ACE, did any of the following: did he sign or have an oral agreement with American Express? Did he use an American Express charge card to obtain goods and services? Did he agree to an account stated with American Express?

By remaining silent on these questions, the defendants/counterclaim plaintiffs have failed to demonstrate the absence of any material facts (Giuffrida v. Citibank, 100 NY2d 72 [2003]). Therefore, the defendants/counterclaim plaintiffs' motion to dismiss the first [*5]and forth causes of action for breach of contract must be denied because they did not make a prima facie showing that they did not breach an agreement with American Express.

Their motion to dismiss the second and fifth causes of action for an account stated must also be denied because, defendant/counterclaim plaintiffs failed to make a prima facie showing that they did not agree to an account stated with American Express.

Furthermore, their motion to dismiss the third and sixth causes of action for unjust enrichment must also be denied because they did not make a prima facie showing that they did not receive goods and services from American Express. Under these circumstances there is no need to review or consider the sufficiency of American Express' opposition papers (Ayotte v. Gervasio, 81 NY2d 1062 [1993]).

The court will next address the defendants/counterclaim plaintiffs' motion for summary judgment in their favor on liability on the three counterclaims they asserted against American Express. The first counterclaim is for a failure to validate the debt in accordance with the FDCPA. In order to prevail on a claim of a violation of the FDCPA, the claimant must prove that he or she is a consumer who allegedly owes the debt or a person who has been the object of efforts to collect a consumer debt, that the defendant collecting the debt is considered a debt collector, and that the defendant has engaged in any act or omission in violation of the FDCPA requirements (See Castillo v. Balsamo Rosenblatt & Cohen, PC, 33 Misc 3d 700[N.Y.City Civ.Ct.,2011] citing Dona v. Midland Credit Management, Inc., 2011 WL 941204 *1 [E.D.NY Feb.10, 2011]). The Fair Debt Collection Practices Act is meant to reach only those who regularly collect debts for others and not creditors collecting on their own behalf (15 USC §1692a(6); United Cos. Lending Corp. v. Candela, 292 AD2d 800, 801-802 [4d 2002]; Monogram Credit Card v. Mata, 195 Misc 2d 96 [NY City Civ. Ct. 2002].

Teitelbaum' affirmation does not allege any facts explaining or supporting this counterclaim. In particular, he has offered no evidence that American Express is a debt collector or that American Express engaged in any conduct which arguably violated the FDCPA. Therefore, defendants/counterclaim plaintiffs' motion for summary judgment in its favor on the first counterclaims must be denied.

The second counterclaim is for breach of contract based on American Express' alleged unauthorized withdrawal of funds from ACE's business account. The defendants/counterclaim plaintiffs, however, have not demonstrated that an agreement exists between them and American Express, and if one exists, what its terms are. In the absence of proof of the existence of a contract, the defendants/counterclaim plaintiffs cannot prove a breach of contract. Therefore, their motion for summary judgment in their favor on the second counterclaim for breach of the contract must be denied.

The third counterclaim is for tortious interference with business relationships. The [*6]"elements of tortious interference with contractual relations are (1) the existence of a contract between the plaintiff and a third party, (2) the defendant's knowledge of the contract, (3) the defendant's intentional inducement of the third party to breach or otherwise render performance impossible, and (4) damages to the plaintiff" (Anesthesia Assoc. of Mount Kisco, LLP v. Northern Westchester Hosp. Ctr., 59 AD3d 473, 476 [2d 2009][internal citations omitted]).

However, to demonstrate a claim of tortious interference with business relationships, a "plaintiff must show that the defendant interfered with the plaintiff's business relationships, either with the sole purpose of harming the plaintiff or by means that were unlawful or improper" (Nassau Diagnostics Imaging and Radiation Oncology Assoc. v. Winthrop University Hosp., 197 AD2d 563, 563-564 [2d 1993]).

This latter applies where there has been no breach of an existing contract right, but only interference with prospective contract rights (see, Carvel Corp. v. Noonan, 3 NY3d 182 [2004]). Furthermore, in such instances, the plaintiff must show more culpable conduct on the part of the defendant (Id.).

A defendant will not be liable for tortious interference with business relations so long as the means employed are not wrongful, that is, the conduct must not amount to a crime or an independent tort (Id). "Wrongful means include physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure; they do not, however, include persuasion alone although it is knowingly directed at interference with the contract" ( Id. at 191, quoting Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 NY2d 183, [1980]).

An exception to that general rule is recognized "where a defendant engages in conduct for the sole purpose of inflicting intentional harm on plaintiffs.' "( Id. at 190, quoting NBT Bancorp., Inc. v. Fleet/Norstar Financial Group, Inc., 215 AD2d 990 [3d 1995]). "If a defendant shows that the interference is intended, at least in part, to advance its own interests, then it was not acting solely to harm the plaintiff" (see Aesthesia Associates of Mount Kisco. LLP v. Northern Westchester Hospital Center, 59 AD3d 473, 477 [2d 2009]).

Teitelbaum's affirmation avers that American Express tortiously interfered with his and ACE's business relationship by withdrawing funds from ACE's business account without their permission. However, he does not state whether he and ACE had a written or oral agreement with American Express. The existence of an agreement, or lack thereof, between the parties is a threshold factual question. If there is an agreement, it must be analyzed to determine whether the conduct of American Express in withdrawing the funds from ACE's account was within or outside of the terms of their agreement.

Teitelbaum's affirmation also does not establish whether he and ACE's had a contract or merely a potential contract with the aforementioned sellers of the commercial [*7]building. As previously set forth, the elements of the tort differ depending on this particular fact. Assuming that there was only a potential contract, they must show that American Express interfered using wrongful means or for the sole purpose of inflicting intentional harm upon them.

Teitelbaum did not explain the method or means American Express used to allegedly withdraw funds from ACE's business account. Nor did he attach copies of the bank statements reflecting the alleged withdrawals. Nor did he allege any facts by which one could reasonably infer that American Express was acting with a specific intent to harm them. In light of the foregoing, defendant/counterclaim plaintiff's failed to make a prima facie showing of entitlement to summary judgment in its favor on the counterclaim for tortious interference with their business relationships.

AMERICAN EXPRESS' CROSS-MOTION

American Express submitted an affirmation of its counsel, a memorandum of law, an affidavit of Richard Kier, the custodian of its records, and five annexed exhibits in support of its cross-motion. The affirmation of its counsel demonstrated no personal knowledge of the transactions and occurrences alleged in the complaint and therefore it has no probative value (Morales v. Coram Materials Corp., 51 AD3d 86 [2d 2008]).

Richard Kier avers that he is the assistant custodian of records for American Express and that his job requires him to have knowledge of the facts regarding American Express account holders who are involved in active litigation with American Express. He then refers to the two card agreements and two card statements annexed to the cross-motion.

There are three foundation requirements for the admission of a business record. The first is that the record must be made in the regular course of business-reflecting a routine, regularly conducted business activity, needed and relied on in the performance of the function of the business. The second is that it must be the regular course of business to make the record, in other words, the record was made pursuant to an established procedure for the routine, habitual, systematic making of such a record. And finally, the record must have been made at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter, assuring the recollection is fairly accurate and the entries routinely made (see CPLR 4518(a)). Also, a proper foundation for the admission of a business record must be provided by someone with personal knowledge of the maker's business practices and procedures (see Sebatino v. Turf House, 76 AD2d 945, 946 [3d 1980]).

Richard Kier's affidavit does not state or demonstrate that he has personal knowledge of American Express' business practices and procedures. In the absence of same, he does not set forth the foundation requirements for the admission of the annexed card agreements and statements in evidence as business records. [*8]

Consequently, American Express has presented no evidence from anyone with personal knowledge of the transactions and occurrences alleged in its complaint. For the same reasons, they have failed to demonstrate entitlement to dismissal of the three counterclaims asserted against them.

In sum, defendants/counterclaim plaintiffs' motion for summary judgment dismissing the complaint and granting summary judgment in their favor on their counterclaims against American Express is denied.

American Express' cross-motion for summary judgment on liability in their favor on the complaint asserted against the defendants/counterclaim plaintiffs and for an order dismissing the counterclaims asserted against them is denied.

The foregoing constitutes the decision and order of this court.

Enterx

J.S.C.

Enter forthwithx

J.S.C.