Complaint Dismissed Post-trial Because Consumer Not Notified of Assignment

Today we report on a recent case called South Shore Adjustment Co. v Pierre.[1] In this case, South Shore, a debt buyer, tried to collect from a consumer on an alleged credit card debt that originated with Chase Bank. When Chase was unable to collect on the account, Chase pooled the debt and sold it to an entity called Turtle Creek Assets Ltd., which in turn sold it to South Shore.

At trial, South Shore was unable to prove that it had standing to collect the alleged debt because it could not prove the assignments. South Shore also was unable to prove its account stated claim because it could not establish that the account statements it offered were business records under CPLR 4518(a).

During his trial testimony, the plaintiff’s principal, Adam Greenberg, admitted that he had no personal knowledge of either Chase’s or Turtle Bay’s business practices, and that he did not independently verify whether Pierre owed money to Chase. Rather, Greenberg said, “we review the statements and see a balance due and owing, and Turtle Creek, before assigning to us, they determine whether there’s a balance due.”

Because the plaintiff was unable to establish a foundation for the account statements as business records, the court concluded that “plaintiff has failed to prove that the predicate for its case, a valid account stated, even exists.”

Also, the court found that the plaintiff submitted no admissible proof of the multiple assignments involved, and noted, “there is absolutely no proof from the original creditor [Chase] that Pierre’s account was one of the 12,906 accounts purportedly sold to Turtle Creek.” The only proof plaintiff submitted of the original assignment was a “Bill of Sale” between Chase and Turtle Creek, but no affidavit or testimony from Chase was offered to authenticate it. There being no competent proof that the first assignment was valid, “plaintiff cannot establish the validity of [the second assignment].”

The court concluded by dismissing the complaint because notice of the assignment was never provided to the debtor. Judge Levine adopted Richmond County Civil Court Judge Straniere’s holding in Chase Bank USA, N.A. v Cardello, 27 Misc 3d 791 [2010] in which the court found that due process mandated that the assignor must notify the debtor of the assignment.

-Sheril Stanford, J.D.


[1] The citation is 32 Misc 3d 1227(A) [Civ Ct, Kings County 2011]

Categories: Debt Defense
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