USA v. Richard J. Chappo (2013)

MEMORANDUM OF DECISION ON AMENDED FACT FINDER'S REPORT DATED FEBRUARY 1, 2013 (# 119.00)

This court has applied the well known standards for this court's review of a fact finder's report.  P.B. § 23–53 through 23–59;  Gen.Stat. § 52–549n through 52–549t;  Wilcox Trucking, Inc. v. Mansour Builders, Inc. 20 Conn.App. 420, 422–24 (1989);  Absolute Plumbing & Heating, LLC v. Edelman, 146 Conn.App. 383, 392 (2013).   Those standards need not be restated in this Memorandum of Decision.   The court read the court file, the Fact Finder's report, the Amended Fact Finder's report, the transcript of the Fact Finder's hearing, the exhibits submitted at the Fact Finder's hearing, and the documents submitted by the parties at oral argument on the acceptance/rejection of the Amended Fact Finder's Report.

The plaintiff's operative complaint is the original complaint dated June 15, 2011.   The plaintiff has sued only one defendant, Richard J. Chappo.   Mr. Chappo has represented himself in these legal proceedings since December 17, 2012.   He was represented by counsel from the commencement of this litigation up to December 17, 2012 including the October 23, 2012 Fact Finder's hearing.   The complaint is in three counts:  breach of contract, unjust enrichment, and account stated.   The pleadings were closed.   No special defenses, set-offs or counterclaims were filed by the defendant.   The matter was duly assigned to a Fact Finder for a hearing.

The Fact Finder conducted a one-day hearing on October 23, 2012.   Both parties appeared and were represented by counsel of record.   Although the Fact Finder's report was dated November 2, 2012, it was coded in on November 5, 2012 (# 113.00).   As is customary, the court assigned the four-page Fact Finder's report for a short calendar hearing.   The defendant, by counsel of record, filed a November 19, 2012 Defendant's Objection to Acceptance of Finding of Fact (# 116.00).   This Objection was timely filed.  P.B. § 23–57(b).  On December 17, 2012 the parties appeared before the undersigned at a duly assigned short calendar hearing.   The defendant, then representing himself having filed an appearance in lieu of counsel, opposed the acceptance and the plaintiff argued in favor of acceptance of the Fact Finder's report.   This court issued a three-page Order on Fact Finder's Report dated December 31, 2012 (# 113.86) on the November 2, 2012 Fact Finder's report.   In that Order on Fact Finder's Report, this court referred the matter back to the same Fact Finder requesting that the Fact Finder review seventeen enumerated issues.

The Fact Finder issued a February 1, 2013 Amended Fact Finder's Report (# 119.00).   It was coded in on February 4, 2013.   The defendant filed a Defendant's Objection to Acceptance of Amended Fact Finder Report dated February 22, 2013 (# 121.00).   This Objection was not filed “within fourteen days after the filing of the finding of facts.”  P.B. § 25–57(b).  The court finds this second Objection was not timely filed.   The defendant filed two other Objections;  Defendant's Reply to Plaintiff's Response to Defendant's Objection to Acceptance of Amended Fact Finder Report dated March 18, 2013 (# 124.00) and Defendant's Primary Objection to Acceptance of Fact Finder Report dated July 18, 2013 (# 127.00).   These two objections were not timely filed.  P.B. § 23–57(b).  The Practice Book does not authorize the filing of multiple objections to a Fact Finder's report.   The February 1, 2013 Amended Fact Finder's report is now before the court for acceptance or rejection (# 119.00).

The defendant, Richard J. Chappo's, primary objection is that the plaintiff sued the wrong party.   He claims that the only party to the credit card agreement was Chappo and Company, Inc. The defendant, Richard J. Chappo, is the President of Chappo and Company, Inc. The defendant testified before the Fact Finder that he never obtained the credit card personally, that it was a company credit card, all the payments made were by Chappo and Company, Inc., and that the only person or entity responsible for the credit card debt is Chappo and Company, Inc. He argues that since the plaintiff chose not to sue Chappo and Company, Inc. and Richard J. Chappo is not the responsible party, the Fact Finder should find for the defendant.

Paragraph 1 First Count of the complaint alleges:  “The Defendant, RICHARD J. CHAPPO (the ‘Defendant’), made application to the Plaintiff, CAPITAL ONE BANK (USA), N.A. (the ‘Plaintiff’), for the issuance of a Visa credit card (the ‘Card’).”   That same allegation is also made in paragraph 1 of the other two counts of the complaint as to the issuance of a Visa credit card (the ‘Card’).

The defendant, Richard J. Chappo, was represented by appearing counsel from the July 29, 2012 Return Date to December 17, 2012.   The short calendar hearing on the Fact Finder's report occurred on December 17, 2012, the date Richard J. Chappo appeared in lieu of counsel.

The defendant, Richard J. Chappo, then represented by counsel of record filed his January 16, 2012 Answer (# 103.00).   As to paragraph 1 of the First Count the Answer stated. “1. Admitted.”   As to paragraph 1 of the Second Count the Answer stated:  “1–2 Defendant herein incorporates his responses to paragraphs 1–2 of Count 1.” As to paragraph 1 of the Third Count the Answer stated:  “1–4 Defendant herein incorporates his responses to paragraphs 1–4 of Count 1” (# 103.00).   The defendant has not withdrawn or sought to amend his January 16, 2012 Answer.

The court finds that the defendant, Richard J. Chappo, has judicially admitted the truth and accuracy of the same paragraph 1 of all three counts.   The Fact Finder reached the same conclusion in Finding 3. “Defendant admits he responded to the solicitation by requesting issuance of a credit card offered.   Answer to Complaint. 1/16/2012 (# 103.00).”  “The admission of the truth of an allegation in a pleading is a judicial admission conclusive on the pleader.”  Jones Distribution, Inc. v. Upjohn, 161 Conn. 191, 199 (1971).  “A judicial admission dispenses with the production of evidence by the opposing party as to the fact admitted, and is conclusive upon the party making it.”  Industrial Metal & Tool, Inc. v. Zaleski, 146 Conn.App. 609, 614 (2013).   The defendant cannot persuade either the Fact Finder nor this court otherwise, even though he consistently argues that the corporation was the only liable party.   He so testified before the Fact Finder.

Three of the defendant's Objections filed on February 22, 2013 (# 121.00), March 18, 2013 (# 124.00) and July 18, 2013 (# 127.00) were not filed within fourteen days of the filing of the February 1, 2013 Amended Fact Finder's report.   The court will not consider these three untimely Objections.   O'Connell v. Doody, 124 Conn.App. 1, 6 (2010).   The court will consider the Objection to Acceptance of Fact Finder filed on November 19, 2012 (# 116.00) as an objection to both the First Fact Finder's report and the Amended Fact Finder's report.   The court will also consider the party's oral arguments, the documents submitted at the oral argument, and the exhibits before the Fact Finder.

The defendant argues that he is not liable because there is no executed agreement signed by him nor any personal guarantee signed by him in evidence before the Fact Finder.   A copy of the credit card agreement was in evidence before the Fact Finder.   Ex. 3. The court finds that there was no signed agreement or personal guarantee.   The credit card agreement was before the Fact Finder.   The plaintiff did not allege that the credit card agreement was in writing executed by the parties.   The credit card agreement is valid as an agreement without the defendant's signature even though the plaintiff did not produce a signed agreement nor any signed guarantee.   The use of a credit card without a signed agreement is sufficient to impose liability.  MBNA America Bank, N.A. v. Bailey, 104 Conn.App. 457, 459 (2007);  American Express Centurion Bank v. Eldridge, Superior Court, judicial district of Stamford/Norwalk of Stamford, Docket Number CV11–6020750 S (August 2, 2012, Wilson, J.) [54 Conn. L. Rptr. 488].

The defendant argues that the plaintiff failed to prove the elements of the third count alleging account stated.   He notes that all payments were made by the corporation.   He argues that the lawsuit was commenced by a June 15, 2011 complaint which was almost three years after the stream of billing ended in November 2008 and almost three years after the last purchase charged to the account in September 2008.   He notes the last payment made on the credit card was on February 20, 2008.   Ex. 4. What the defendant fails to note is that each of the monthly account statements is addressed to Richard J. Chappo, 52 Partrick Road, Westport, CT 06880.   The elements of an account stated are:

Our Supreme Court, in General Petroleum Products, Inc. v. Merchants Trust Co., 115 Conn. 50, 56, 160 A. 296 (1932), articulated the elements of a cause of action based on an account stated theory, stating:  The delivery by the bank to the [debtor] of each statement of the latter's account ․ was a rendition of the account so that retention thereof for an unreasonable time constituted an account stated which is prima facie evidence of the correctness of the account.   Such account stated can be opened and impeached upon proof of mistake or fraud, but the [debtor's] silence as to the correctness of the account rendered puts upon it the burden of providing that the account, as stated, was the result of such fraud or mistake.

CitiBank (South Dakota) N.A. v. Filip, Superior Court, judicial district of Tolland, Docket No. CV 09 6000823 (July 12, 2010, Bright, J.) [50 Conn. L. Rptr. 260].

The Fact Finder found that the plaintiff has proven the elements of an action of account stated.   This court cannot find that the Fact Finder made an error in law in finding the elements of the Third Count of account stated to have been proven.

The defendant notes the high rate of interest and claims that he never agreed to a rate of interest that was at times over 24% per annum.   The court will deal with the subject of interest later in this Memorandum of Decision.   The court notes that the Fact Finder found prejudgment interest at the rate of 10.0%, which is within the limits of Gen.Stat. § 37–3a.   The Fact Finder did not award any interest at a rate determined by the exhibits offered by the plaintiff.   The Fact Finder only awarded interest at the rate of 10.0% per annum.   His Report does not reflect any other rate of interest.

The defendant claims that the debt is in violation of the statute of frauds issue since the credit card agreement is not in writing.   The defendant has provided no legal authority that any of these subsections apply.   The court finds that none of the subsections of Gen.Stat. § 52–500 are applicable.   The defendant claims that this lawsuit is filed against Richard J. Chappo on a debt for another.  Gen.Stat. § 52–550(2).   This claim is just another way of arguing that the corporation is liable, not Richard J. Chappo individually.   The judicial admission of Richard J. Chappo rebuts that claim.   This is a lawsuit on a debt incurred by Richard J. Chappo individually.   It is not a lawsuit on the debt of another.   The statute of frauds, Gen.Stat. § 52–550, is not applicable.

The Fact Finder relied on the accuracy of the monthly account statements in evidence Ex. 4. Exhibit 4 is a package of monthly credit card account statements in chronological order from May 2006 to September 10, 2012.   Many months are missing.   The defendant claims that it shows a balance of $6,599.53.   The defendant, by the use of Exhibit 4, is claiming that the net balance due is $3,997.00.   He prepared his own handwritten calculations based on the numbers in Exhibit 4. Ex. A. He argues that $2,602.53 of the total is interest, fees and over limit fees and they must be eliminated.   He argues these charges have already been paid and that is verified by Exhibit 4. The Fact Finder found that defendant's evidence was not credible as to the $2,602.53 credit.   Finding 15;  “Such claims of Defendant is not credible under the evidence presented.”

The Fact Finder concluded in Finding 16 that the principal balance as of November 7, 2008 was $8,426.47.   The court finds that the Fact Finder properly exercised his discretion and awarded prejudgment interest of 10.0% per annum.   He recommended the award of prejudgment interest on the $8,426.47 from November 7, 2008.  DiLieto v. County Obstetrics & Gynecology Corp. P.C., 310 Conn. 38, 47 (2013).   This 10.0% rate is the maximum interest chargeable either as prejudgment or post-judgment interest under Gen.Stat. § 37–3.  Sears Roebuck and Company v. Board of Tax Review, 241 Conn. 749, 763 (1992).   The Fact Finder did not fully calculate interest and recommended prejudgment interest to the date that this court enters judgment.   The Fact Finder recommended post-judgment interest at the rate of 10.0% pursuant to Gen.Stat. § 37–3a.   He recommended a nominal payment of $35.00 per week plus an award of costs to be taxed by the clerk.

The first Fact Finder's report finds the principal sum due of $8,426.47.   See Finding 16 (# 113.00).   The second Fact Finder's report found the same principal sum in Finding 16 (# 119.00).   Both of these findings were based on the package of monthly account statements in evidence.   Ex. 4. The first Fact Finder's report failed to calculate interest.   This court's December 31, 2012 Order requested the Fact Finder to address interest and the interest calculation in paragraphs 2, 3, 4, 5 and 6.

The Fact Finder's finding # 12 states:  “Defendant admits total purchases on the credit card of $9,416.00 and payments of $3,416.47 with a principal balance of $6,599.53.   Exhibit 1.” The court requested that the Fact Finder explain how $3,416.47 subtracted from $9,416.00 equals $6,599.53.   See Ex. A. The court did not receive an explanation.   The court concludes that the Fact Finder made a significant mathematical error in both reports.   First, the exhibit that contains that calculation is Exhibit A, not Exhibit 1. Second, the defendant's math was incorrect.   If the $9,416.00 and $3,416.47 figures are correct, the resulting subtraction is $5,999.53, a $600 difference.   It is noted that the defendant made the same $600 math error.   Ex. A. The Fact Finder adopted the defendant's math error in Exhibit A. The Fact Finder failed to correct this math error even though it was pointed out to him in this court's December 31, 2012 Memorandum of Decision (# 113.86).

The court confirms the Amended Fact Finder's Report dated February 1, 2013 as to liability on all three counts and finds in favor of the plaintiff, Capital One Bank (USA), NA, as against the defendant, Richard J. Chappo.   The court confirms the Fact Finder's award of prejudgment interest at the rate of 10.0% per annum to the date of judgment, postjudgment interest at 10.0% and the nominal payments of $35.00 per week.

The court must correct the mathematical errors by examining all the exhibits to determine the exact principal due, the date due, and then the interest calculation thereafter.   The court must perform mathematical calculations.   The court will eliminate any compounding of interest caused by the increasing monthly finance charge.  Haworth v. Dieffenbach, 133 Conn.App. 773, 782, fn. 2 (2012);  Loomis & Loomis v. Stecker & Colavecchio, 6 Conn.App. 88, 94 (1986).   The plaintiff is not requesting any compounding of interest.   The Fact Finder did not award compound interest.   The interest statute does not permit a trier of fact to compound interest.  Gen.Stat. § 37–3a.

Exhibit 4 demonstrates the first use of the credit card at issue.   It was a balance transfer of $7,000 that occurred on May 17, 2006 from Chase Member Service.   This $7,000 was a previous balance on another credit card and that balance due was transferred to this new Visa credit card at issue in this litigation.   Payments were made on that $7,000 balance for the remainder of 2006.   No new charges or cash advances were made in 2006.   As of January 3, 2007 the principal balance due was $5,641.00.   Apparently the credit card contained a provision that no finance charge or interest would accrue on any monthly balance during the first year.   The first finance charge appears on the May 2, 2007–June 1, 2007 monthly account statement in the amount of $66.63.   As of that statement, the principal balance had been reduced to $4,995.00.

All but one monthly statement from May 2007, the commencement of the Visa credit card, through and including October 7, 2008 is in Ex. 4. There appears to be two printouts in Exhibit 4 that are not monthly account statements.   No monthly statements are in Exhibit 4 between October 2, 2008 and the spring of 2010.   Commencing on March 11, 2010 to June 10, 2010, new monthly statements appear that contain “previous balance” amounts due of no less than $11,000.   Since the Fact Finder found the balance due as of November 7, 2008, the court will review each monthly statement from May 2007 through the last statement available being October 7, 2008.

For the monthly statements from May 2, 2006 through May 2007, no new charges were incurred, no cash advances were made, no finance charges were incurred, and no late fees or other charges imposed.   On each of those monthly statements there is an amount paid by electronic payment.   Eleven electronic payments were made:  $210.00, $210.00, $191.00, $185.00, $122.00, $124.00, $169.00, $154.00, $159.00, $154.00, $149.00.   The first of these payments was recorded on the June 2, 2006–July 1, 2006 monthly statement.   The last of these payments was recorded on the May 2, 2007–June 1, 2007 monthly statement.   From the commencement of this credit card through the June 1, 2007 date eleven electronic payments were made and recorded in the monthly account statements in Exhibit 4. No other charges were made to this credit card after the original $7,000 balance transfer in the first year.   These 11 payments totaled $1,944.   This would have reduced the $7,000 principal to $5,056.   Yet, the monthly statement for the May 2, 2007–June 1, 2007 printout shows $4,995 principal due.

The court then reexamined each monthly statement.   The first payment of $210 reduced the principal from $7,000 to $6,790.   The second payment of $210 further reduced the principal to $6,580.   The July to August 2006 monthly statement is missing.   That month contained a $210 monthly payment since that $210 monthly payment was credited against the $6,580 principal balance, reducing the principal balance to $6,370.   The next monthly statement September 2, 2006–October 2, 2006 and that statement shows the $6,370 principal balance and is verification of the missing $210 payment.   The court finds that 12 payments were made in the first year and these 12 payments total $2,154.00.

The court finds that the monthly statement for May 2, 2007–June 1, 2007 contains the correct principal balance due after giving credit for the last $149.00 electronic payment of May 30, 2007.   That principal balance was $4,995.00.   The court finds that the principal balance due the plaintiff on May 30, 2007 was $4,995.00.   No payments were missing.   No interest charges, finance charges or late fees were imposed on the account in the first year, nor could they have been, since the defendant was current on his payments.

From June 1, 2007 through October 7, 2008 no new charges, cash advances or purchases were made except for September 2008.   Seven new charges or purchases were made on the credit card in the month of September 2008 and they total $2,377.   That brings the total charged to this credit card to $9,377 (the original $7,000 balance transfer plus the September 2008 purchases of $2,377).   A one-time credit of $4.59 was given on February 2, 2008.   Four more electronic payments were made after the first year:  $222.00 on 12/20/07, $222.47 on 1/19/08, $222.00 on 2/20/08, and $222.00 on 3/19/08.   These payments were made on behalf of the defendant and credited by the plaintiff in Exhibit 4. Those four payments plus the $4.59 credit total $893.06.

On July 2, 2007 a Past Due Fee of $39.00 was charged.   This Past Due Fee was corrected and credited on the next month's statement on July 26, 2007.   Past Due Fees of $39.00 were charged for the months of September, November and December 2007 and July, August, September and October 2008.   These seven Past Due Fees total $273.00.   A $39.00 Over Limit Fee was charged for October 2007, November 2007, December 2007 and October 2008.   These four Over Limit Fees total $156.00.   Mr. Chappo's list of those Past Dues Fees and Over Limit Fees on Exhibit A is accurate.   These two types of fees total $429.00.   This $429.00 is the exact total Mr. Chappo placed in Exhibit A ($156.00 + $273.00 = $429.00).

Interest charges were imposed on this account after its first anniversary.   Each monthly account statement has a box labeled “FINANCE CHARGE.”   The missing July–August 2006 monthly statement would not have a “FINANCE CHARGE” since that was during the credit card's first year.   Mr. Chappo itemized those “FINANCE CHARGES” for each month from May 2007 through November 2008 in Exhibit A. The court compared Exhibit A with each monthly statement in Exhibit 4. Mr. Chappo's figures for these “FINANCE CHARGES” are accurate and they total $2,173.53.   The court could not locate the last monthly statement after October 7, 2008 and its interest charge of $171.35.   Since the defendant used the $171.35 as the interest charge to November 7, 2008, the court will adopt his Exhibit A. The court finds a “FINANCE CHARGE” is interest.   The monthly statements indicate that the “FINANCE CHARGE” is based on different rate of interest per annum.   The court finds that the plaintiff charged $2,173.53 interest and the interest rate varied each month:  15.65%, 22.65%, 27.40%, 15.90%, and 24.9%. Those interest rates are contained in the account statements.   Ex. 4, Ex. A.

The court cannot confirm from its examination of Exhibit 4 the Fact Finder's finding 12 that the total purchases were $9,416.   The court finds that the total purchases were $9,377.   The court finds that the Fact Finder inadvertently included one of the Past Due Fees of $39 to get the $9,416 ($9,377 + $39 = $9,416).   The court finds that the total purchases made on the credit card were $9,377.   By the terms of the contract, no interest was due for the first year.   The court finds that in the first year, the defendant made twelve payments on the principal sum in the amount of $2,154.00.   Thereafter the defendant made four further payments of $893.06 including the $4.59 credit.   The total payments on this credit card made on behalf of the defendant is found to be $3,047.06 ($2,154.00 + $893.06 = $3,047.06).

The court finds that the credit card agreement calls for certain fees to be paid for Over Limit Fees and Past Due Fees. The court finds that those fees are $429.00.   The total principal due is found to be $9,806.00 ($9,377.00 + $429.00).   If the total payments of $3,047.06 were subtracted from the $9,806.00 there would be a balance due of $6,758.94.   The court finds that these fees of $429.00 should be added to the debt without being subject to prejudgment interest.

The Fact Finder found that the principal balance due as of November 7, 2008 was $8,426.47.   This included all or a portion of interest over 10.0% charged by the plaintiff.   The Fact Finder only intended to charge 10.0% per annum interest.   The Fact Finder's Report does not itemize the calculations necessary to reach $8,426.47.   In effect the Fact Finder's calculation of 10.0% interest on the $8,426.47 would be awarding compound interest.   The Fact Finder's Report does not indicate that the Fact Finder had any intent to award compound interest.   The Report does not cite any legal or contract authority for the compounding of interest.

The court finds that the principal due as of June 1, 2007 is $4,995.00.   See Ex. 4, June 1, 2007 monthly statement.   Prejudgment interest on that principal sum due of $4,995.00 should accrue.   Since four payments plus a $4.95 credit were made after June 2007, these payments should be applied first to interest and the balance to a reduction of principal.   This requires four calculations.   These four payments made after June 1, 2007 were $222.00 on December 20, 2007, $222.47 on January 19, 2008, $222.00 on February 20, 2008 and $222.00 on March 19, 2008.

The interest calculation is as follows using a 360–day year at 10.0% per annum:

$4,995.00 6/1/07—12/20/07 $1.3875 per diem x 203 days = $281.66 interest

$281.66 interest less $222.00 paid on 12/20/07 = $59.66 unpaid interest

$4,995.00 12/21/07—1/19/08 $1.3875 per diem x 30 days = $41.62 interest

$59.66 + $41.62 interest = $101.28 interest deducted from

1/19/08 $222.47 payment reduces principal by $121.19.

$4,995.00—$121.19 = $4,873.81

$4,873.81 1/20/08—2/20/08 $1.3583 per diem x 32 days = $43.47 interest

$222.00 payment on 2/20/08 paid $43.47 interest reducing principal by $178.53

$4,873.81—$178.53 = $4,695.28

$4,695.28 2/21/08—3/19/08 $1.30425 per diem x 28 days = $36.52 interest

$222.00 payment on 3/19/08 paid $36.52 interest reducing principal by $185.48

$4,695.28—$185.48—$4,509.80

$4,509.80—$4.95 credit = $4,504.85, rounded off to $4,504

The court finds that the principal due as of March 19, 2008 is $4,504.   The court awards prejudgment interest on $4,504 from March 20, 2008 until November 21, 2013, the date of this judgment.   Interest at 10.0% per annum on the $4,504 is $2,561 from March 20, 2008 through and including November 21, 2013.   Per diem interest of 10.0% on the $4,504 is $1.25.   The court finds the principal due as of March 19, 2008 is $4,504, the interest from March 20, 2008 through and including November 21, 2008 is $2,561.00, and the aforesaid fees of $429.00 for a total judgment of $7,594.

The court enters judgment for the plaintiff, Capital One Bank (USA) N.A., against the defendant, Richard J. Chappo, in the amount of $7,594.

The court will tax costs.

Post-judgment interest on the $4,933 ($4,505 plus $429) at the rate of 10.0% per annum will accrue until paid.

The court orders a weekly payment of $35.00 with the first payment January 6, 2014.

BY THE COURT

Hon. Kevin Tierney

Judge Trial Referee

Tierney, Kevin, J.T.R.