Cruz v. TD Bank, N.A., Martinez v. Capital One Bank, N.A.
742 F.3d 520
2d Cir.2013Background
- Plaintiffs (judgment debtors) maintained deposit accounts at TD Bank and Capital One; banks froze accounts after third-party restraints and charged fees.
- Plaintiffs alleged banks violated procedural notice and form requirements of Article 52 of the CPLR as amended by the Exempt Income Protection Act (EIPA).
- District courts dismissed plaintiffs’ complaints under Fed. R. Civ. P. 12(b)(6), ruling no private right of action against banks under the EIPA and rejecting related common-law claims.
- The Second Circuit certified two questions to the New York Court of Appeals about (1) whether judgment debtors have an implied private right of action for money damages and injunctions under the EIPA and (2) whether relief lies in CPLR Article 52 special proceedings and whether those are exclusive.
- The New York Court of Appeals held there is no implied private right of action under the EIPA, and that Article 52 special proceedings are the exclusive means for a judgment debtor to obtain relief against a bank for EIPA violations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether EIPA implies a private plenary right of action against banks for money damages and injunctive relief | Plaintiffs argued EIPA’s procedural protections imply a private right to sue banks for damages and injunctions | Banks argued EIPA does not create an implied private right to bring plenary actions against them | Court: No implied private right of action under the EIPA (NY Court of Appeals and affirmed) |
| Whether plaintiffs can seek relief for EIPA violations in CPLR Article 52 special proceedings | Plaintiffs contended they could use Article 52 or plenary actions for relief | Banks contended Article 52 provides the proper, exclusive remedy | Court: Relief must be sought in CPLR Article 52 special proceedings; those procedures are exclusive |
| Whether plaintiffs may pursue common-law claims (conversion, fiduciary duty, fraud, negligence, unjust enrichment) based on alleged EIPA violations | Plaintiffs tried to base common-law claims on banks’ failure to follow EIPA procedures | Banks argued common-law claims are precluded because Article 52 provides the exclusive remedy for EIPA-related claims | Court: Common-law claims dismissed — plaintiffs cannot circumvent Article 52; dismissal affirmed |
| Whether plaintiffs should be allowed to amend complaints after dismissal | Plaintiffs requested leave to replead consistent with Court of Appeals’ rulings | Banks opposed or left to court discretion | Court: District courts correctly dismissed but remanded to permit plaintiffs to move for leave to amend; leave to amend left to district courts’ discretion |
Key Cases Cited
- Cruz v. TD Bank, N.A., 711 F.3d 261 (2d Cir. 2013) (prior Second Circuit opinion setting out facts and procedures)
- Cortec Indus., Inc. v. Sum Holding, L.P., 949 F.2d 42 (2d Cir. 1991) (leave to amend generally should be freely given)
- Assured Guar. (UK) Ltd. v. J.P. Morgan Inv. Mgmt. Inc., 18 N.Y.3d 341 (N.Y. 2011) (statutory remedies can displace common-law claims)
- Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. P'ship, 12 N.Y.3d 236 (N.Y. 2009) (recognizing exclusivity of statutory remedial schemes)
- Cruz v. TD Bank, N.A., 855 F. Supp. 2d 157 (S.D.N.Y. 2012) (district court dismissal ruling)
- Martinez v. Capital One, N.A., 863 F. Supp. 2d 256 (S.D.N.Y. 2012) (district court dismissal ruling)