On April 17, 2012 a Delaware court issued an opinion on the case involving Edward Cherry and Chase Bank. This matter also named the following defendants; Laura Hess, Edward T. Kennedy, Eric Silversen, Home Plate Consultants, Self made LLC, The Consumer Law Center of Delray Beach, The Consumer Law Center of Boca Raton
Defendant Cherry engaged in various willful, deceptive, and unfair trade practices in violation of Chapter 501, Part II, Florida Statues (2007). Although the exact commencement of his activities is unknown, Cherry began soliciting and procuring distressed consumers across the United States by representing himself as an expert in the field of debt settlement and debt reduction on or around May 23, 2005.
In addition to securing these consumers as clients of the Receivership Entities, Cherry organized various legal entities and registered several fictitious names in conjunction with the operation of the Receivership Entities.
Cherry operated as the principal signatory of the checks written from the Bank Atlantic and Bank of America accounts of the Receivership Entities.4 After a consumer signed a services contract with one of the Receivership Entities, the consumer began making monthly payments, which were wired or otherwise deposited into the Bank Atlantic and Bank of America accounts of the Receivership Entities to supposedly pay the consumers’ credit card debts to creditors or legal fees.
From early 2006 to November 2007, however, Cherry issued checks from one account at Bank Atlantic to persons and entities that were neither creditors nor lawyers. Specifically, Cherry issued checks totaling more than $12 million and distributed them to his wife, his former wife, his brothers-in-law, himself as the Consumer Recovery Team and Global Payment Processing, and illegal client solicitors. From May 2006 through April 9, 2008, Cherry also effected wire transfers from a Bank of America account to The Credit Exchange Corp. and Coastal Credit Solutions, which totaled more than $8 million and were used for illegal client solicitations.
On or about September 30, 2007, Cherry registered three fictitious names with the Florida Department of State, Division of Corporations, which imitated the names of established and reputable banks.9 Specifically, Cherry registered the following three fictitious names: Capital One, Chase Card Services, and Discover Financial. On or after September 30, 2007, Cherry issued several checks payable to Capital One and Chase Card Services, which were then deposited into Cherry’s accounts at BankUnited, F.S.B. It is estimated that Cherry issued checks totaling more than $4 million from these Receivership Entities to his personal accounts at BankUnited, F.S.B. Additionally, Cherry issued Receivership Entities’ checks of an indeterminate amount to American Express for family expenditures.
The actions of Cherry and the co-defendants caused Chase cardmembers, who were responsible for more than 12,000 credit card accounts, to withhold payments owed on more than $75 million of outstanding debt due to Chase.14 This, in turn, caused Chase cardmembers to do the following: cease making payments on their outstanding credit card debts; assert sham billing error disputes under the Fair Credit Billing Act; bring frivolous lawsuits against Chase; and raise meritless dilatory defenses in collections actions brought by Chase to recover on defaulted credit card balances.
Therefore, Chase initiated the instant matter, asserting claims for following: tortious interference with contract; unjust enrichment; abuse of process; conspiracy and violations of the Delaware Deceptive Trade Practices Act and the Delaware Consumer Fraud Act; and declaratory, injunctive, and monetary relief.
On February 29, 2008, Chase filed the original complaint in this action against Cherry and the co-defendants. On April 1, 2008, Laura Hess and several other codefendants moved to dismiss the original complaint for lack of personal jurisdiction, improper venue, or forum non conveniens, or in the alternative, for transfer to Florida. This court, however, denied the parties’ motion to dismiss.
On January 5, 2009, the Florida Circuit Court of the Seventeenth Judicial Circuit in and for Broward County approved a Consent Judgement Entering Injunctive Relief (“Florida Injunction”) against Cherry. The Florida Injunction permanently enjoined Cherry from the following:
- engaging in consumer-debt related services, whether secured or unsecured, including debt settlement services, debt management services, or any other service related to the consolidation, invalidation, reduction or dispute of consumer debts, either directly or indirectly, whether as the practice of law through a law office or law firm or as a business through any type of business or entity that is not a law office, law firm or engaged in the practice of law;
- representing and/or soliciting through advertisement and/or oral communication, either directly or indirectly, that they offer, provide or otherwise render consumer-debt related services, whether secured or unsecured, including debt settlement services, debt management services, or any other service related to the consolidation, invalidation, reduction or dispute of consumer debts, either directly or indirectly, whether as the practice of law through a law office or law firm or as a business through any type of business entity that is not a law office, law firm or engaged in the practice of law; and
- accepting, receiving or otherwise obtaining payment from consumers for consumer-debt related services, whether secured or unsecured, including debt settlement services, debt management services, or any other service related to the consolidation, invalidation, reduction or dispute of consumer debts, either directly or indirectly, whether as the practice of law through a law office or law firm or as a business through any type of business entity that is not a law office, law firm or engaged in the practice of law.
On July 13, 2009, Chase entered into a settlement and release agreement with the defendants via the court-appointed receiver then managing these entities. On September 30, 2009, Chase filed a motion for leave to amend its complaint in this action to add additional defendants, including Cherry, also known as Edward T. Kennedy.
On November 16, 2009, this court granted Chase’s request, and Chase filed its amended complaint the following day.22 On November 23, 2009, Cherry filed a motion to dismiss Chase’s amended complaint. On January 6, 2011, however, this court denied Cherry’s motion to dismiss.
On January 31, 2011, Cherry answered Chase’s amended complaint and filed a counterclaim, seeking a declaratory judgment related to his behavior outside Florida state lines. Cherry argues the Florida Injunction does not preclude him from “drafting or assisting in drafting pleadings, correspondence and the like or lecturing publishing or otherwise providing attorneys and non-attorneys with information relating to the rights afforded under the Fair Credit Billing Act or the common law of the states of Delaware or Florida.” Specifically, Cherry claims neither his lecture at a Florida Bar Approved CLE seminar on or around April 30, 2010, nor the dispute letters sent to Chase and lawsuits filed based upon those dispute letters were explicitly delineated as precluded activities by the Florida Injunction.27 Therefore, Cherry asserts the court has subject matter jurisdiction and an actual controversy exists.
Basing his counterclaim on FED. R.CIV. P. 57 and the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, Cherry seeks the following declaratory relief as support that his activities did not violate federal law:
- A Declaration that this Court has jurisdiction fo a real and active justiciable controversy between these parties;
- A Declaration that notices to creditors only need to meet the timeliness and content requirements of [the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. (“TILA”)] in order to trigger a billing dispute;
- A Declaration that a creditor’s error of legal judgment with respect to a person’s obligation under TILA is not a bona fide error;
- A Declaration that one or more of the dispute letters attached to Chase’s complaint satisfy the TILA notice requirements;
- A Declaration that one or more of the dispute letters attached to Chase’s [complaint] commences a valid credit card billing dispute if transmitted to Chase within 60 days from Chase transmitting a period billing statement to
a cardmember; and
- A Declaration that one or more of the dispute letters attached to Chase’s account [sic] if transmitted to Chase within 60 days form Chase transmitting a periodic billing statement to a cardmember would require Chase to comply with procedures set forth in TILA.28 Presently before this court is Chase’s motion to dismiss Cherry’s counterclaim, which was filed on March 7, 2011. – Source