950 F. Supp. 2d 698
S.D.N.Y.2013Background
- Plaintiff Elizabeth Taub filed this action on Dec 14, 2012, alleging Comenity Bank violated TILA/FCBA by misdisclosing rights in the J. Crew Card agreement and seeks to certify a nationwide class.
- Defendant moved to dismiss claiming Taub failed to comply with a notice-and-cure provision in the agreement prior to suit; motion denied.
- Plaintiff opened a J. Crew Card on Dec 14, 2011, received an account-opening disclosure with a billing rights notice, and then made a purchase.
- The agreement contained a notice-and-cure provision requiring written notice and a 30-day period to resolve a claim before suit/arbitration.
- Plaintiff alleges the billing-rights notice was not substantially similar to the Bureau model form and omitted certain required preconditions and procedures.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the notice-and-cure provision applies to Taub’s TILA claim. | Taub argues the provision does not apply because the claim is a TILA disclosure violation, not contract breach. | Defendant argues the provision applies to claims that relate to the agreement. | No; provision does not bar the TILA claim. |
| Whether pleading performance of conditions precedent was required. | Not necessary for TILA claims seeking statutory damages. | Plaintiff must plead performance of conditions precedent. | Not required; motion to dismiss denied on this basis. |
Key Cases Cited
- Abercrombie v. Wells Fargo Bank, N.A., 417 F.Supp.2d 1006 (N.D. Ill. 2006) (notice and cure provisions cannot undermine TILA’s initial disclosures)
- St. Breaux v. United States Bank, 919 F.Supp.2d 1371 (S.D. Fla. 2013) (TILA claims arise from disclosures, not contract, so cure provision not dispositive)
- Kurz v. Chase Manhattan Bank, 273 F.Supp.2d 474 (S.D.N.Y. 2003) (TILA damages available without requiring actual damages for initial disclosures)
- Thomka v. A.Z. Chevrolet, Inc., 619 F.2d 246 (3d Cir. 1980) (violation of initial disclosure is presumed to cause injury)
- Brooklyn Savings Bank v. O’Neil, 324 U.S. 697 (U.S. 1945) (statutory rights may not be waived if it contravenes public policy)
- Parker v. DeKalb Chrysler Plymouth, 673 F.2d 1178 (11th Cir. 1982) (public policy effect of waivers in statutory rights)