Maryland's federal trial court recently decided a collection case with a slight twist - a man deposited money into an account that wasn't his and sued to recover when the funds were used to offset a past due debt on a credit card associated with the account.
Kevin C. Betskoff, Sr., filed a lawsuit in the Carroll County Circuit Court against the Bank of America, alleging that it violated the Maryland Consumer Debt Collection Act, the Maryland Consumer Protection Act, the Truth in Lending Act and committed trover and conversion and intentional infliction of emotional distress when it took the $1064 he deposited in an account owned by Iona Investment Group LLC. He had received permission to use the account from L. Iona Canaday, the company's resident agent.
When Betskoff attempted to retrieve the money several days later, he was notified that the bank had offset all of his funds to pay arrears on an unsecured credit card associated with the account. Betskoff contacted the bank and told it that he did not possess a credit card with the account and was not responsible for associated debt. He asked the bank to return the funds. The bank refused
The lawsuit was moved to federal court on the basis of diversity and federal question. Ruling that Betskoff had failed to state a claim upon which relief could be granted, the United States District Court for the District of Maryland threw the case out of court.
The court examined each of the five claims. The Maryland Consumer Debt Collection Act (MCDCA) prohibits certain acts by debt collectors. A consumer transaction is defined as "any transaction involving a person seeking or acquiring real or personal property, services, money or credit for personal, family or household purposes." The court noted that Betskoff had not alleged the bank was attempting to enforce a consumer debt when it removed money from the account. As a result, the court said, he had not alleged the presence of a consumer transaction and the MCDCA did not apply.
The Maryland Consumer Protection Act forbids unfair and deceptive trade practices against consumers. Under the MCPA, a consumer is defined as "an actual or prospective purchaser . . . or recipient of consumer goods, consumer services, consumer realty or consumer credit." The purpose of the MCPA is restore public confidence in merchants and to protect consumers by setting minimum standards. The MCPA was not violated, the court said, because the bank had no duty to inform Betskoff before it took the funds and because the bank did not have a relationship with Betskoff.
Betskoff also alleged that the bank violated the Truth in Lending Act by removing the funds from the company's account without his consent. TILA defines a consumer transaction as "one in which the party to whom credit is offered or extended is a natural person, and the money, property, or services which are the subject of the transaction are primarily for personal, family or household purposes." Betskoff's TILA claim failed, the court said, because he had not alleged that the transaction was a consumer transaction. As Betskoff acknowledged, the account was owned by Iona Investment Group, a limited liability company, not a "natural person," the court noted. As a result, TILA did not apply and Betskoff's TILA claim had to be dismissed.
The court also threw out the claim for intentional infliction of emotional distress, ruling that it can only apply in instances where a defendant engages in reckless or outrageous conduct. Betskoff alleged that he had pleaded with the bank to return the money, explaining that he needed it to pay a fine or face arrest and that the unexpected withdrawal of the money had caused him to develop an anxiety disorder requiring doctor's visits and medication. "Although Mr. Betskoff's situation is unfortunate, the allegations he has put forth are in no way sufficient to prove that the Bank's conduct was extreme and outrageous," the court said.
Finally, in Maryland, a claim for conversion is "any distinct act of ownership or dominion exerted by one person over the personal property of another in denial of his right." To recover for conversion, "one must have either have been in actual possession or have had the right to immediate possession in the converted asset." In Maryland, money can be the subject of a claim for conversion. Trover is the technical name of the action to recover damages for a wrongful conversion. Once Betskoff deposited funds into the company's account, he lost his right to those funds, the court said. And, because he had no right to the immediate possession of the funds in the company's account, his claim of wrongful conversation had to be dismissed, the court observed.
Kevin C. Betskoff, Sr. v. Bank of America, N.A. was released October 15, 2012.
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