12

- 1200

- cv , 12

- 1342

- cv

Cruz v. TD Bank, N.A., Martinez v. Capital One Bank, N.A. U NITED S TATES C OURT OF A PPEALS FOR THE S ECOND C IRCUIT August Term 2012 (Argued: December 12 , 2012 Decided: December 18 , 2 01 3 )

Docket No s . 1 2

- 1200

- cv , 12

- 1342

- cv

________________________ G ARY C RUZ and C LAUDE P AIN , individually and on behalf of all others similarly situated, P laintiff s - Appellant s ,

v.
TD B ANK

, N.A. , Defendant

- Appellee.

________________________ G ERALDO F. M ARTINEZ and J OSEPH C UMMINGS , individually and

on behalf of all others similarly situated, Plaintiff s - Appellant s ,

v. C APITAL O NE B ANK , N.A.,

Defendant

- Appellee.

________________________ Before: P OOLER , H ALL , and C HIN , Circuit Judges

.- 2

- Appeal s heard in tandem from judgment s of the United States
District Court for the Southern District of New York ( Castel , J

. , and Sullivan, J. ) dismissing plaintiff s - appellants ' claims under Article 52 of the New York Civil
Practice Law and Rules , as amended by the Exempt Income Protection Act, 2008
N.Y. Laws c h. 5 75, and under N ew York common law

.

AFFIRMED and REMANDED to permit plaintiffs to move for leave to amend their complaints

. G. O LIVER K OPPEL L (Daniel F. Schreck, on the brief ) , Law Offices of G. Oliver Koppell & Associates , New York , New York , for Gary Cruz, Claude Pain, Geraldo F. Martinez, Joseph Cummings

. Alexander D. Bono, Ryan E. Borneman , Duane Morris, LLP, Philadelphia , Pennsylvania , for TD Bank, N.A. Robert Plotkin, Kurt E. Wolfe, Matthew A. Fitzgerald, McGuire Woods LLP, New York, New York, Washington, D.C., and Richmond, Virginia, for Capital One Bank, N.A. Gina M. Calabrese, St. Vincent de Paul Legal Program, Inc., Elder Law Clinic, St. John's University School of Law, Jamaica, New York, and Claudia E. Wilner, Neighborhood Economic Development Advocacy Project Inc. , New York, New York, for Amici Curiae AARP, District Council 37 Municipal- 3

- Employees Legal Services, The Legal Aid Society, Lincoln Square Legal Services, Inc., MFY Legal Services, Neighborhood Economic Development Advocacy Project, Inc., St. Vincent de Paul Legal Program, Inc., The Urba n Justice Center

. P ER C URIAM : These appeals, heard in tandem, challenge two separate judgments
entered in the United States District Court for the Southern District of New York ( Castel , J. , and Sullivan, J

. ) , in favor of defendants

- appellees TD Bank, N.A. ("TD Bank") and Capital One Bank, N.A. ("Capital One") , respectively, dismissing plaintiffs' claims that the banks violated (1) Article 52 of the New York Civil Practice Law and Rules ("CPLR") , as amended by the Exempt Income Protection
Act ( the "EIPA"), 2008 N.Y. Laws Ch. 5 75 (codified as amended at CPLR 5205, 5222, 5222

- a, 5230, 5231, and 5232) , and (2) their rights under New York common
law

. The facts are set forth in detail in our opinion filed in this case on March 27, 2013. See Cruz v. TD Bank, N.A., 711 F.3d 261 , 264

- 67 (2d Cir. 2013). We assume familiarity with our prior opinion.

In both cases, the plaintiff judgment debtors maintained accounts
with the defendant banks

. T he banks notified plaintiffs that their accounts were- 4

-

frozen pursuant to restraints served by third

- party creditors

. Plaintiffs allege, however, that the banks failed to provide them with certain required notices and
forms , restrained their accounts, and assessed them fees , all in violation of the
EIPA

. The district courts dismissed the complaints pursuant to Federal Rule of Civil Procedure 12(b)(6), concluding that judgment debtors do not have a private right of action against their banks for the banks' violations of the EIPA's procedural requirements. See Cruz v. TD Bank, N.A. , 855 F. Supp. 2d 157 , 170

- 74 (S.D.N.Y. 2012) ; Martinez v. Capital One, N.A. , 863 F. Supp. 2d 256 , 262

- 66 (S.D.N.Y. 2012)

.

In our prior opinion, we certified the following questions to the New
York Court of Appeals :

f irst , whether judgment debtors have a private right of action for money damages and injunctive relief against banks that violate EIPA's procedural requirements ; and

s econd , w hether judgment debtors can seek money damages and injunctive relief against banks that violate EIPA in special proceedings prescribed by Article 52 of the CPLR and, if so, whether those special- 5

-

proceedings are the exclusive mechanism for such relief or whether judgment debtors may also seek relief in a plenary action

.

In an opinion filed November 21, 2013, the Court of Appeals answered the certified questions. Cruz v. TD Bank, N.A., No. 191 (N.Y. Nov. 21, 2013) , available at 2013 WL 6096124 . It answered the first question in the negative, holding that "a private right to bring a plenary action for injunctive relief and money damages cannot be implied from the EIPA." Id. , slip op. at 23
. As for the second question, the Court held that "a judgment debtor can secure relief from a bank arising from a violation of the EIP A in a CPLR Article 52 special proceeding " and that the special proceedi ngs set forth in A rticle 52 are the
"exclusive" mechanism s for relief. Id.

The rulings of the Court of Appeals resolve the principal claims before us. The district courts correctly dismissed plaintiffs' claims to the extent they sought to assert a private right of action under the EIPA. Plaintiffs'
exclusive mechanism for seek i ng relief for alleged violations of the EIPA's procedural requirements is a special proceeding under A rticle 52 of the CPLR.

Plaintiffs also asserted

-- and the district courts dismissed

-- common law claims for conversion, breach of fiduciary duty, fraud, negligence, and unjust- 6

-

enrichment based on defendants' alleged violations of the EIPA. See Cruz , 855 F. Supp. 2d at 174

- 79; Martinez , 863 F. Supp. 2d at 266

- 68. We affirm the dismissal of the common law claims substantially for the reasons stated by th e district

courts in their thorough opinions . Plaintiffs' common law claims are based on
def endants' alleged violations of A rticle 52 of the CPLR, and but for the EIPA's requirements, the banks had no obligation to provide plaintiffs with the omitted
noti ces or to refrain from assessing the disputed fees . Hence, as A rticle 52 provides plaintiffs' exclusive remedies, they may n ot seek to circumvent A rticle 52 by relying on separate common law causes of action. See Assured Guar. (UK)
Ltd . v. J.P. Morgan In v. Mg m t. Inc. , 18 N.Y.3d 341, 353 ( N.Y. 2011); Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. P'ship , 12 N.Y.3d 236, 247 ( N.Y. 2009).

We therefore find the district courts properly granted the motions to dismiss. Plaintiffs have, however, requested an opportunity to replead their claims in a manner consistent with the decision by the Court of Appeals

. A party may amend its pleading once as a matter of right before a resp onsive pleading
has been served and otherwise by leave of the court. Fed. R. Civ. P. 15(a). T he "court should freely give leave when justice so requires," id. , and i t is the usual practice upon granting a motion to di smiss to allow leave to replead, Cortec- 7

-

Indus., Inc. v. Sum Holding, L.P. , 949 F.2d 42, 50 (2d Cir. 1991). Nevertheless, we
leave it to the district courts to decide in the first instance whether to grant plaintiffs leave to amend. We thus hold that the district courts correctly
dismissed the complaints, but we remand the cases to the district courts, with
ins tructions to permit plaintiffs to move for leave to amend their complaints.

AFFIRMED and REMANDED

.