        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

1050
CA 11-00535
PRESENT: FAHEY, J.P., PERADOTTO, LINDLEY, SCONIERS, AND GREEN, JJ.


LHR, INC., PLAINTIFF-RESPONDENT-APPELLANT,

                    V                              MEMORANDUM AND ORDER

T-MOBILE USA, INC. AND SUNCOM WIRELESS OPERATING
COMPANY, LLC, DEFENDANTS-APPELLANTS-RESPONDENTS.


JAECKLE FLEISCHMANN & MUGEL, LLP, BUFFALO (B. KEVIN BURKE, JR., OF
COUNSEL), FOR DEFENDANTS-APPELLANTS-RESPONDENTS.

SCHRÖDER, JOSEPH & ASSOCIATES, LLP, BUFFALO (LINDA H. JOSEPH OF
COUNSEL), FOR PLAINTIFF-RESPONDENT-APPELLANT.


     Appeal and cross appeal from an order of the Supreme Court, Erie
County (John A. Michalek, J.), entered December 1, 2010. The order,
among other things, denied in part the motion of defendants to dismiss
the complaint and denied in part the cross motion of plaintiff seeking
leave to amend the complaint.

     It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by granting that part of defendants’
motion to dismiss the negligence cause of action against defendant T-
Mobile USA, Inc. and granting that part of plaintiff’s cross motion
for leave to amend the complaint to add a conversion cause of action
against that defendant and as modified the order is affirmed without
costs.

     Memorandum: Plaintiff, a debt collection agency and New York
corporation, commenced this action seeking damages resulting from
defendants’ alleged breach of contract and negligence with respect to
the sales by defendant SunCom Wireless Operating Company, LLC (SunCom)
of delinquent customer accounts to plaintiff. SunCom is a Delaware
corporation with a chief executive office in Pennsylvania. In
approximately September 2007, SunCom became a wholly-owned subsidiary
of defendant T-Mobile USA, Inc. (T-Mobile), a Delaware corporation
with retail stores throughout New York State. Defendants moved to
dismiss the complaint against SunCom on the ground that Supreme Court
lacked personal jurisdiction over SunCom. Defendants also moved to
dismiss the negligence cause of action against T-Mobile for failure to
state a claim pursuant to CPLR 3211 (a) (7). Plaintiff thereafter
cross-moved for, inter alia, leave to amend the complaint to add
causes of action for conversion and intentional interference with
contract against T-Mobile.
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                                                         CA 11-00535

     On appeal, defendants contend that the court erred in denying
that part of their motion to dismiss the complaint against SunCom. We
reject that contention. Pursuant to New York’s long-arm statute, “a
court may exercise personal jurisdiction over any non-domiciliary . .
. who in person or through an agent . . . transacts any business
within the state or contracts anywhere to supply goods or services in
the state” (CPLR 302 [a] [1]). Plaintiff does not allege that the
court acquired personal jurisdiction under the “transacts any business
within the state” clause of the long-arm statute, but rather it
contends that personal jurisdiction was acquired because SunCom
“contract[ed] . . . to supply goods or services” in New York (id.).
We agree with the court that, under the circumstances of this case,
SunCom’s sales to plaintiff of delinquent customer accounts
(hereafter, accounts) render it subject to the court’s jurisdiction
(see generally People v Concert Connection, 211 AD2d 310, 315, appeal
dismissed 86 NY2d 837). Here, the 28 purchase agreements executed by
plaintiff and SunCom that are the subject of the breach of contract
causes of action provide that “[a]ll [a]ccounts shall be delivered to
[plaintiff] by [SunCom] simultaneously with the payment of the
[p]urchase [p]rice” and that SunCom “shall provide . . . to
[plaintiff] copies of all [r]ecords reasonably requested by
[plaintiff].” The contracts therefore contemplated the delivery of
goods into New York, the location of plaintiff’s chief executive
office. Further, plaintiff submitted evidence in opposition to the
motion demonstrating that the information pertaining to the accounts
and all records relating thereto were delivered via email to
plaintiff’s office in New York.

     We agree with defendants, however, that the court erred in
denying that part of their motion seeking to dismiss the negligence
cause of action against T-Mobile (see generally Makuch v New York
Cent. Mut. Fire Ins. Co., 12 AD3d 1110, 1111; East Meadow Driving
School v Bell Atl. Yellow Pages Co., 273 AD2d 270), and we therefore
modify the order accordingly. “It is a well-established principle
that a simple breach of contract is not to be considered a tort unless
a legal duty independent of the contract itself has been violated”
(Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389; see
IBM Credit Fin. Corp. v Mazda Motor Mfg. [USA] Corp., 152 AD2d 451,
453). Although a “defendant may be liable in tort when it has
breached a duty of reasonable care distinct from its contractual
obligations” (New York Univ. v Continental Ins. Co., 87 NY2d 308,
316), such “duty must spring from circumstances extraneous to, and not
constituting elements of, the contract” (Clark-Fitzpatrick, Inc., 70
NY2d at 389; see D’Ambrosio v Engel, 292 AD2d 564, lv denied 99 NY2d
503).

     Here, plaintiff alleged that T-Mobile, as a successor to the
purchase agreements, breached those agreements by failing to provide
plaintiff with documents necessary to verify its debt. Plaintiff
further alleged that, regardless whether T-Mobile is a party to those
agreements, T-Mobile is liable in tort on the basis that it had a duty
pursuant to the federal Fair Debt Collection Practices Act ([FDCPA] 15
USC § 1692 et seq.) to preserve and retain such documents. We agree
with defendants that there is no such duty under the FDCPA. The
                                 -3-                         1050
                                                        CA 11-00535

purpose of that statute is to safeguard consumers from abusive
practices by debt collectors (see 15 USC § 1692 [e]). Contrary to
plaintiff’s contention, the statute does not impose a duty on
creditors to ensure that debt sold or otherwise transferred to a debt
collector is in fact collectable. In the absence of the documents
necessary to verify the debt purchased from SunCom, plaintiff may
indeed be unable to collect such debt. Any duty to preserve and
produce documents necessary to verify the debt sold to plaintiff,
however, springs from the purchase agreements, not the FDCPA. Thus,
“plaintiff failed to show that there was a legal duty imposed upon [T-
Mobile] independent of the contract itself, or that [T-Mobile] engaged
in tortious conduct ‘separate and apart from [its alleged] failure to
fulfill [its] contractual obligations’ ” (D’Ambrosio, 292 AD2d at 565,
quoting New York Univ., 87 NY2d at 316).

     We agree with plaintiff on its cross appeal that the court abused
its discretion in denying that part of plaintiff’s cross motion
seeking leave to amend the complaint to assert a cause of action for
conversion against T-Mobile, and we therefore further modify the order
accordingly. “Generally, [l]eave to amend a pleading should be freely
granted in the absence of prejudice to the nonmoving party where the
amendment is not patently lacking in merit” (Anderson v Nottingham
Vil. Homeowner’s Assn., Inc., 37 AD3d 1195, 1198, amended on rearg 41
AD3d 1324 [internal quotation marks omitted]; see CPLR 3025 [b]). “To
establish a cause of action in conversion, the plaintiff must show
legal ownership or an immediate superior right of possession to a
specific identifiable thing and must show that the defendant exercised
an unauthorized dominion over the thing in question . . . to the
exclusion of the plaintiff’s rights” (Five Star Bank v CNH Capital
Am., LLC, 55 AD3d 1279, 1281 [internal quotation marks omitted and
emphasis added]). Here, although plaintiff does not own the account
records maintained by SunCom or T-Mobile, the purchase agreements
specifically provide that SunCom “shall provide, at no cost to
[plaintiff], copies of all [r]ecords reasonably requested by
[plaintiff]” and that, “[i]n the event that [those r]ecords . . . are
not available for a particular [a]ccount, [SunCom] will give
[plaintiff], in lieu of such [r]ecords, a duly executed and notarized
[a]ffidavit of [d]ebt” (emphasis added). Further, plaintiff alleged
that T-Mobile failed or refused to deliver those documents to it upon
request. We therefore conclude that plaintiff alleged sufficient
facts to state a cause of action for conversion.




Entered:   October 7, 2011                     Patricia L. Morgan
                                               Clerk of the Court
