FSB v. Lisa Neundorf (2012)

MEMORANDUM OF DECISION

Background

This is a vigorously contested credit card collection action initiated by the Plaintiff by writ, summons and complaint dated December 3, 2009, claiming the collection of $25,968.63.   The defendant filed an Answer denying the allegations of the complaint and alleging a special defense claiming (1) that the defendant does not owe the account, and (2) the account in question was issued to Castles Condos & Cottages, LLC.

On February 23, 2012, a trial was held in this court on this matter.   The plaintiff was represented by counsel.   The defendant was self-represented.   Evidence was presented including testimony and exhibits.   Both parties thereafter filed briefs setting forth their respective claims.   One or more of the said briefs may be found to contain information not found in the evidence and to the extent that is true the court will not consider the extraneous matters in the formulation of this opinion.

Finding of Facts

From the evidence, including the reasonable and logical inferences from the same, and taking into account the court's evaluation of the credibility of the witnesses, the following facts are found.

The Plaintiff, American Express, is a federally chartered thrift institution with a principal place of business at 4315 South West in Salt Lake City, UT. Defendant, Lisa Neundorf, is an individual of legal age, who resides at 1 Winfield Way in Ledyard, CT.

Defendant, Lisa Neundorf, in anticipation of conducting a business operation went through the legal process of forming an LLC. The Secretary of the State acknowledged the filing and the IRS issued the LLC a tax identification number.  (Def's Exhs G & H.) Thereafter, sometime prior to January 2006, the defendant applied for and was issued an American Express Business Platinum credit card.   The application process used by American Express at that time included possible written application, telephone application or online applications.   No application was in evidence at the trial.   The process utilized at the time by American Express involved collecting information about the individual making application for the card, not the business which was listed on the card.   The personal information thus collected was used in plaintiff's practice to determine eligibility for the extension of credit by American Express.   At the initiation of a new business account it was the regular practice of American Express at the relevant time to send to the applicant, with the card itself, a copy of the Business Platinum Card Agreement (Plaintiff's Exh. 2) which contained the terms and conditions upon which the credit was extended.

That Agreement states in the first line of its opening paragraph that:  “This document and the accompanying supplement(s) constitute your Agreement.”   The paragraph goes on to state that:  “When you keep, sign or use the Business Card issued to you (including any renewal or replacement Business Cards), or you use the account associated with this Agreement (your “Card Account”), you agree to the terms of this Agreement.”   Thus the court finds that each use of the account by the defendant was defendant's acquiescence of the Agreement and defendant's acceptance of all terms and conditions contained in the Agreement (Plaintiff Exhibit P2).  Each time the CardMember used the credit card she made an implied representation regarding her intent to repay the credit card debt upon the terms set forth in the Agreement.   Lisa Neundorf, as the CardMember is found to be bound by the terms of the Promise to Pay section of the agreement which reads as follows:

Promise to Pay

You promise to pay all Charges, including Charges incurred by Additional Cardmembers, on your Account.   This promise includes any Charge for which you or an Additional Cardmember indicated an intent to incur the Charge, even if you or the Additional Cardmember have not signed a charge form or presented the Card. You also promise to pay any Charge incurred by anyone that you or an Additional Cardmember let use the Card, even though you have agreed not to let anyone else use the Card.

“You” is defined in the opening paragraph of the Agreement:  “The words ‘you,’ ‘your’ and ‘yours' mean the person named on the Business Card and/or, where applicable, the Company.”   The Agreement goes on to state that:  “The Company, Basic Cardmember and Additional Cardmembers agree, both jointly and individually, to be bound by the terms of this Agreement.”   Defendant is further bound under the terms of the Status of and Responsibility for Basic and Additional Cardmembers section of the agreement which states in part:  “․ by each use of the Additional Card to incur Charges, the Additional Cardmember indicates his or her agreement to pay us for the Charge if the Company and/or the Basic Cardmember fail to or refuse to pay it, and we may, at our discretion, pursue Additional Cardmembers for payment of Charges they incur or authorize even though we send bills to the Basic Cardmember and not to Additional Cardmembers.”

The account and, thereafter, the monthly statements indicated the name “Lisa D. Neundorf, CC & C, LLC” as the credit card holder.   Regular monthly statements were mailed first to the business address of the defendant's business and thereafter to her home address.  (Plaintiff's Exh. 1.) Payments were made on the account sometimes using business checks of the defendant's business (the LLC) and some using the defendant's personal checking account.   (Plaintiff's Exh. 5.) The account was used by the defendant for various purchases many of which were of a personal nature as well as to transfer account balances from other accounts.  (Plaintiff's Exh. 1.) The defendant failed to make the required monthly payments on the Account.   According to evidence submitted by the defendant, near the end of 2009 the Castles Condos & Cottages, LLC fell on “hard times.”  (Def's Exh. D.) The Account became delinquent and in November 2009, was closed by Plaintiff.  (Def's Exh. K.) American Express then brought this action against Defendant to recover the unpaid balance of $25,968.63.

Law and Analysis

The elements of a breach of contract action are well established:  “the formation of an agreement, performance by one party, breach of the agreement by the other party and damages.”  Rosato v. Mascardo, 82 Conn.App. 396, 411 (2004).  “The existence of a contract is a question of fact to be determined by the trier on the basis of all the evidence.”  Fortier v. Newington Group, Inc., 30 Conn.App. 505, 509, cert. denied, 225 Conn. 992 (1993).

“As a general rule, in awarding damages upon a breach of contract, the prevailing party is entitled to compensation which will place him in the same position he would have been in had the contract been properly performed.”   (Internal quotation marks omitted.)  Sperry v. Moler, 3 Conn.App. 692 (1985).”A party cannot recover on a contract unless he has fully performed his obligations under it, has tendered performance or has some legal excuse for not performing.”  Ravitch v. Stollman Poultry Farms, Inc., 165 Conn. 135, 149, 328 A.2d 711, 719 (1973).

Section 4–6 of the Connecticut Code of Evidence provides that:  “Evidence of ․ the routine practice of an organization is admissible to prove that the conduct ․ of the organization on a particular occasion was in conformity with the ․ routine practice.”

The issue raised by the defendant, Lisa Neundorf, is whether she individually is liable for the default with respect to this business card account.   She did not offer evidence to indicate that the charges shown on the statements (Plaintiff's Exh 1) were not in fact incurred or thereafter paid by American Express.   Nor was there evidence of payment after the close out of the account with a balance of $25,968.63.

A review of the terms of the agreement unambiguously indicate and it is found by the court that the defendant, as the “person named on the Business Card” became personally bound by the Agreement and specifically to the Promise to Pay clause in which defendant “․ promise(d) to pay all Charges, including Charges incurred by Additional Cardmembers, on your Account.”   As the “You” is defined in the Cardmember Agreement, the named card holder, Lisa Neundorf, is bound by the Promise to Pay clause which specifically provides:  “You promise to pay all Charges ․” Lisa Deundorf took a benefit under the contract.   She used the subject account for a period of 4 years.   The account statements (Plaintiff Exh 1) show a history of use by the defendant.   She used the account for the purchase of goods and services, (see clothing stores, November 7, 2007, December 8, 2007, February 2, 2008, December 3, 2008 and January 3, 2009;  Supermarkets, October 12, 2007;  Liquor Stores, July 17, 2009;  Beauty Parlors;  October 17, 2007;  Netflix June 9, 2008 and July 9, 2008;  home heating oil, December 6, 2006) and balance transfers from other accounts (see Bank One $14,197.91, December 28, 2005 and MBNA $13,796.72, September 24, 2007).

It is found that the plaintiff fully performed under the contract.   When defendant presented her card, gave her account number over the telephone or used it for shopping online, plaintiff paid the vendors.   Defendant has breached the Agreement by failing to make her monthly payments.   Finally, the court finds that the plaintiff has suffered damages by defendant's breach to the amount of $25,968.63 as evidenced by the balance due on the December 6, 2009 statement.

Defendant's Special Defense, as pled in her Answer, was that she never agreed to be personally liable on the account.   Defendant in argument states that she believes that only the now defunct business, Castles, Condos & Cottages, LLC, is liable for the outstanding balance on the account.   Defendant provided no evidence or testimony to support her Special Defense.   The multitude of exhibits filed by the defendant do not support that special defense.   She has proven only that there was an LLC which is now defunct.

The defendant has the burden under our rules to prove by a preponderance of the evidence the allegations of a Special Defense.  Slack v. Greene, 294 Conn. 418, 435 (2009).

Having presented no testimony or evidence which supports that Special Defense, defendant has not met her burden.

The courts here in Connecticut have found that clauses contained within Cardmember Agreements to be enforceable;  “In the absence of a statute requiring a signature ․ parties may become bound by the terms of a contract, even though they do not sign it, where their assent is otherwise indicated, such as by the acceptance of benefits under the contract.”  (Internal quotation marks omitted.)  Schwarzchild v. Martin, 191 Conn. 316, 321–22.   See also Bennett v. Meader, 208 Conn. 352, 361 (1988).

Conclusion

There is a paucity of reported cases which are directly on point to the issue the defendant has raised here.   But the case of Heiges v. JP Morgan Chase Bank, N.A., (N.D.Ohio 2007) 521 F.Sup.2d 641, cited by the plaintiff, supports the plaintiff's argument.   In that case the court said:

Only sparse case law addresses the personal obligations of an individual employee who uses a credit card embossed with his name where the card was issued to his corporate employer.

Cases from other jurisdictions generally have found the individual to be bound by the agreement if the contract includes a clause extending liability to all persons named on the card or to whom the card issuer issued the card.   Baker v. Am. Express Travel Related Servs., 2002 WL 1205065, 2 (W.D.Ky.);   In re Adams, 2007 Bankr.LEXIS 2026, 5–6 (Bankr.M.D.Ala.);   Am. Express Travel Related Servs. v. Redner, 2006 Mich.App. LEXIS 728, 11 (Ct.App.Mich.).

In Adams, the court, considering a clause virtually identical to the one at issue in this case, emphasized that “if a contract is unambiguous on its face, there is no room for construction and it must be enforced as written.”   2007 Bankr.LEXIS 2026, 5 Ohio Buckeye Pipe Line Co., 53 Ohio St.2d 241, 245–46 (1978) ․

Thus, where, as here, a credit card agreement unambiguously states that all persons named will be held liable, all such persons are bound by the agreement and its terms.   The agreement unambiguously states that any person named on the card is to be regarded as a “card member” and the person referred to as “you” throughout the agreement.   That plaintiff in his own mind, may have thought that only the business was assuming liability is insignificant in the face of the clear words of the Agreement.

(Emphasis added.)

The court finds that the plaintiff has sustained the burden of proof as to its allegations in the complaint.   Judgment is entered for the plaintiff against the defendant, Lisa D. Neundorf, individually, in the amount of $25,968.63, together with costs.

Robert C. Leuba, JTR

Leuba, Robert C., J.T.R.