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Carton v. Choice Point

September 14, 2006


The opinion of the court was delivered by: Honorable Joseph E. Irenas


IRENAS, Senior District Judge

Before the Court is the Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) of Defendants Choice Point, and Choice Point Services, Inc. (collectively "Choice Point").*fn1

For the reasons that follow, the Motion will be granted in part and denied in part.


Plaintiffs are the sons of James Carton, Jr. ("Carton") who died on January 19, 2000. They bring the present class action suit*fn2 as executors of their father's estate, and as purported representatives of the Class,*fn3 against Choice Point.

Choice Point locates owners of unclaimed property and offers to assist them in securing the property's return. Mellon Investor Services, LLC, ("Mellon"),*fn4 the stock transfer agent for Forest Laboratories, Inc., asked Choice Point to locate Carton because Mellon held in Carton's name 1600 shares of Forest Laboratories, Inc. stock, worth approximately $150,000.*fn5 Plaintiffs allege that Mellon and Choice Point have a contract for the asset location and recovery services that Choice Point provides.

According to the Complaint, Choice Point conducted a probate search on April 8, 2002, and learned Carton's will was probated in Monmouth County, where he resided at his death.*fn6 Later that year, in October, 2002, Choice Point sent Plaintiffs a letter advising that a "stock account" with a "current value in excess of $15,000" was "still outstanding with our client." (Pls. Ex. 2) Plaintiffs assert that the letter was misleading because it stated the value of the stocks was in excess of $15,000 when Choice Point knew their value was close to $165,000 at the time. They also assert the letter was misleading because it listed Carton's address as an Air Force base in Colorado,*fn7 instead of his Monmouth County address where he had lived for the past 55 years.*fn8

In response to the letter, Carton's son, James Carton, III, called Lee Rothman, the assigned "Account Executive" who wrote the letter, to ask what the property was and how much it was worth. The Complaint alleges that Rothman only stated that the asset was worth more than $15,000. Plaintiffs believe Rothman was intentionally vague or evasive about the nature of the asset so as to lure them into agreeing to use Choice Point to recover the asset.

A few days later, Choice Point sent Plaintiffs a "standard agreement" wherein Choice Point agreed to locate the unspecified "asset" in exchange for a finder's fee of 35% of the asset's gross value. Carton, III, signed the agreement but modified the fee to 33 1/3% of any net recovery.

Choice Point is quick to point out that although a fee agreement was signed, Plaintiffs never paid the fee and Choice Point eventually waived the fee.*fn9 At first, however, Choice Point began the process of recovering the stock certificates, writing to Mellon in November, 2002, that Choice Point was "in receipt of a signed contract regarding [Carton's] account" and requesting that a "stop" be placed on the account.*fn10 (O'Conner Ex. 5) Shortly thereafter, Plaintiffs learned that the "asset" Choice Point sought to recover were the Forest Laboratory shares. Plaintiffs never returned the Letter of Authorization and Irrevocable Stock Power Choice Point required to complete the transaction and then attempted to recover the stocks directly from Mellon*fn11 but were unsuccessful because of the stops that were placed on the certificates. (O'Conner Ex. 10)*fn12

Somehow Choice Point came to possess the two stock certificates (each representing 800 shares) on which Mellon had placed stops. While no party explains how this occurred, Choice Point does not deny that it did at one time have possession of the two certificates. Moreover, the record at this early stage of the litigation supports the reasonable inference that Mellon gave Choice Point the stock.*fn13

Specifically, Plaintiffs allege that Choice Point "unlawfully took possession of the stock" in November, 2002, and "did not return it for three years." (Pls. Br. at 3) Plaintiffs further assert that the stocks' value rose during those three years, thereby depriving Plaintiffs of the opportunity to sell the shares for a greater profit than they could have sold them after the certificates were returned. Plaintiffs assert that at the time the stock was converted by Choice Point, its value was $49.60 per share; it reached a high of $76.08 per share on March 1, 2004; and upon the stock's return around March 16, 2005, its value was $37.32 a share.*fn14

The Complaint alleges violations of (1) the New Jersey Consumer Fraud Act and (2) Uniform Unclaimed Property Act, and common law claims of (3) tortious interference; (4) fraud; (5) "breach of duty;" (6) "exercising dominion over property;" and (7) "interference with possession."


Rule 12(b)(6) motions necessitate a ruling on the merits, "purely on the legal sufficiency of a plaintiff's case: even were plaintiff to prove all his allegations, he would be unable to prevail." Mortensen v. First Federal Savings and Loan Association, 549 F.2d 884, 891 (3d Cir. 1977). "If the Court considers matters outside the pleadings in a 12(b)(6) motion, the procedure will automatically be converted into a Rule 56 summary judgment procedure. . . . In addition to having all of plaintiff's allegations taken as true, with all their favorable inferences, the trial court cannot grant summary judgment unless there is no genuine issue of material fact." Id.

In contrast, motions pursuant to Fed. R. Civ. P. 12(b)(1) may either "attack the complaint on its face" or "attack the existence of subject matter jurisdiction in fact, quite apart from any pleadings." Id. Facial attacks are similar to 12(b)(6) motions because the Court must consider the allegations of the complaint as true. "The factual attack, however, differs greatly" because "the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. . . . [N]o presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not ...

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