Opinion
CV176012174S
07-30-2018
DISCOVER BANK c/o Discover Products, Inc. v. James J. SMITH
UNPUBLISHED OPINION
OPINION
Sicillian, J.
In this case, tried to the court on June 29, 2018, the plaintiff, Discover Bank, brought a two-count complaint against the defendant, James J. Smith, alleging, in the first count, default in payment of amounts due under a credit card account agreement and, in the second count, an action for account stated. The plaintiff alleges that the defendant has failed to pay $17,002.99 in charges incurred on his credit card account with the plaintiff for a combination of purchases using his credit card, cash advances, "balance transfers," interest, and fees. The defendant challenges the plaintiff’s claims on several grounds. He asserts that this action is barred by the doctrine of res judicata and that he should not be liable for the amounts allegedly due because the plaintiff continued to induce him to "borrow more money" when it knew or should have known that the defendant was in financial distress. The defendant also challenges the sufficiency of the plaintiff’s proof of the alleged debt.
I
THE EVIDENCE
The plaintiff’s sole witness was Dawn Maners, an employee of Discover Products Incorporated, which acts as the servicer for the plaintiff. She testified that in her current position of "Vendor Analyst," which she has held since 2010, her duties include acting as the plaintiff’s custodian of records, in which capacity she reviews electronic account records of customers’ statement and payment histories, examines and investigates issues or problems in customers’ accounts, and testifies on behalf of the plaintiff in actions such as this one. Ms. Maners has been employed by the plaintiff or its affiliates for some twenty-eight years and testified that she is very familiar with the company’s record keeping as it relates to customer accounts. The plaintiff introduced three exhibits authenticated by Ms. Maners, all of which were admitted without objection. Ms. Maners testified that exhibit 1 is a copy of the defendant’s initial account opening application, dated December 1986; that exhibit 2 is a copy of the "Cardmember Agreement" between the plaintiff and the defendant that went into effect in December 2010, and was in effect at the time the defendant’s account went into "chargeoff" status pursuant to federal regulation; and that exhibit 3 is a series of reprints of the defendant’s account statements for the period October 21, 2011 through October 22, 2013.
Ms. Maners testified that the plaintiff’s records reflect transactions, recorded at the time the transactions are made, and account statements, issued monthly and delivered to the defendant in accordance with the customer’s stated delivery preference. She also testified that, pursuant to regulation, the plaintiff places a "dispute flag" into a customer’s account whenever the customer disputes a charge reflected in the customer’s account statement. She indicated that such "dispute flags" remain in the account record permanently. Ms. Maners reviewed the plaintiff’s records for the defendant’s account and confirmed that there were no existing "dispute flags."
Ms. Maners testified that she reviewed the plaintiff’s records of the defendant’s charges and credits in his credit card account and determined that the defendant owed $17,002.99 on his account when the plaintiff put the account into "chargeoff" status pursuant to federal regulation as of September 20, 2013. Ms. Maners testified that the balance due arose from a combination of the defendant’s purchases using his Discover credit card, cash advances taken by the defendant, and the defendant’s use of "balance transfer" or "convenience" checks written on his account. Ms. Maners testified that no charges or credits were recorded on the defendant’s account, and no interest or late charges were assessed, after September 20, 2013.
The defendant, who is self-represented, testified in narrative form without any testamentary objections from the plaintiff. Much of his "testimony" consisted of legal argument, which the court treated as part of the defendant’s closing argument.
The defendant testified that the plaintiff brought a prior action, asserting the same claims asserted in this action, which prior action was dismissed for failure to prosecute pursuant to Practice Book § 14-3 after at least two warnings from the court. The defendant testified that he is a science teacher who encountered financial difficulties when he lost his teaching position. He indicated that he continued to use his credit card with the expectation that he would find new employment, but that his efforts to land a new job were not successful. The defendant testified that, contrary to the advice of a bankruptcy attorney, he used funds from his retirement account to make payments to creditors. Nevertheless, when that money ran out, he began to default.
The defendant offered several exhibits. The plaintiff did not object to the defendant’s exhibit C. The rest of the defendant’s exhibits were admitted over the plaintiff’s relevance objections. The defendant’s exhibit C consists of a set of account statements for the credit card account at issue for the period October 21, 2011 through June 20, 2013, which the defendant testified were accurate copies of statements he received from the plaintiff. The information regarding charges and payments reflected on these statements is consistent with the information on the corresponding statements included within the plaintiff’s exhibit 3.
The defendant also introduced communications from the plaintiff to the defendant relating to, among other things, promotional offers, notices regarding past due amounts, and credit report activity alerts regarding the past due status of some of the defendant’s financial accounts, including the account in question here. See defendant’s exhibits B, E, G, and H. The defendant also introduced handwritten notes of what he testified was one of several telephone conversations that he had with the plaintiff’s representatives during which he sought to negotiate forgiveness or revised payment terms for the amounts he owed. The defendant testified that the plaintiff offered some, modest accommodation during these conversations but no agreement was reached. See defendant’s exhibit F. The defendant introduced an account statement reflecting that he had a credit balance in his account as of June 21, 2011, before incurring some $5,499.24 in charges, most of that amount in connection with a "balance transfer check," during the period June 21, 2011 through July 20, 2011. See defendant’s exhibit D. The defendant also introduced copies of account statements that he testified were offered by the plaintiff in support of its motion for summary judgment, but which he claimed were altered. See defendant’s exhibit J.
II
DISCUSSION
A
Action for Account Stated
Connecticut has long recognized an action for account stated. See General Petroleum Products, Inc. v. Merchants Trust Co., 115 Conn. 50, 106 A. 296 (1932); Credit One, LLC v. Head, 117 Conn.App. 92, 97-98, 977 A.2d 767, cert. denied, 294 Conn. 907, 982 A.2d 1080 (2009); Citibank (South Dakota), N.A. v. Manger, 105 Conn.App. 764, 766 n.2, 939 A.2d 629 (2008). "The delivery by the bank to the [debtor] of each statement of the latter’s account ... [is] a rendition of the account so that the retention thereof for an unreasonable time constitute[s] an account stated which is prima facie evidence of the correctness of the account." General Petroleum Products, Inc. v. Merchants Trust Co., supra, at 56. In its second count, the plaintiff asserts a claim for account stated.
The plaintiff’s exhibit 3 consists of statements of the defendant’s Discover card account for the period October 21, 2011 through October 22, 2013, which Ms. Maners testified would have been delivered to the defendant by the defendant’s chosen delivery method. Ms. Maners testified that the defendant did not dispute the correctness of these statements. The plaintiff’s position is that these statements and Ms. Maners’ testimony establish a prima facie case for account stated, thereby shifting the burden to the defendant to prove that the account, as stated, was the result of fraud or mistake. See General Petroleum Products, Inc. v. Merchants Trust Co., supra, 115 Conn. 56; Credit One, LLC v. Head, supra, 117 Conn.App. 97-98; Citibank (South Dakota), N.A. v. Manger, supra, 105 Conn.App. 766 n.2.
The defendant argues, however, that the plaintiff failed to meet its burden to establish a prima facie case of account stated because plaintiff’s exhibit 3 is incomplete. Specifically, the defendant argues that exhibit 3 contains only a partial set of the statements on which the plaintiff bases its claim for account stated. He notes that the earliest statement in exhibit 3, covering the period from October 21, 2011 through November 20, 2011, reflects a beginning balance of $13,685.32, and that none of the statements offered by the plaintiff document the charges and credits that are alleged to have given rise to this beginning balance. The defendant relies on Citibank (South Dakota), N.A. v. Filip, Superior Court, judicial district of Tolland, Docket No. CV-09-6000823-S (July 12, 2010, Bright, J.). In Filip, the court held that a plaintiff seeking summary judgment on a claim for account stated must submit evidence that it provided a debtor each of the account statements on which it seeks to rely to establish the debtor’s obligation. The court rejected the plaintiff’s motion for summary judgment where the earliest account statement offered by the plaintiff showed a substantial opening balance, holding that "the lion’s share of the alleged debt is undocumented."
Here, as in Filip, the plaintiff has failed to offer into evidence all of the account statements necessary to document the lion’s share of the defendant’s debt. The plaintiff has, therefore, failed to meet its burden of proof on its claim for account stated. The court finds for the defendant on that count.
B
Breach of Contract
The plaintiff’s first count is for breach of contract. The testimony of Ms. Maners, which the court finds credible, along with the plaintiff’s exhibits, establishes that the defendant incurred charges, including for purchases, balance transfer checks, interest and fees, totaling $17,002.99, and that the defendant failed to pay the amounts incurred and owing pursuant to his "Cardmember Agreement." While the plaintiff’s failure to provide a full set of account statements is fatal to its claim for account stated, Ms. Maners’ testimony regarding the plaintiff’s business records of charges and credits incurred in the defendant’s account, including how those charges and credits are reflected in the account statements in exhibit 3 and exhibit C, establish that the defendant incurred charges of $17,002.99 that remain unpaid. Ms. Maners testified that she reviewed the plaintiff’s records of the defendant’s accounts, confirmed that there were no pending disputes regarding charges or credits on the account, and confirmed that the balance due at the time of "chargeoff" was $17,002.99. The court finds that the plaintiff met its burden to prove by a preponderance of the evidence that the defendant’s failure to pay this amount due constitutes a breach of his agreement with the plaintiff.
1
Defendant’s Defenses
The defendant challenges the plaintiff’s breach of contract claim on three bases. First, the defendant notes that the plaintiff previously sued him on the same claims but that the prior suit was dismissed for failure to prosecute pursuant to Practice Book § 14-3. The defendant argues that the plaintiff’s current action is barred by the doctrine of res judicata in light of this prior dismissal. Connecticut law is to the contrary.
[T]he doctrine of res judicata, or claim preclusion, [provides that] a former judgment on a claim, if rendered on the merits, is an absolute bar to a subsequent action on the same claim ... The doctrine of res judicata applies if the following elements are satisfied: the identity of the parties to the actions are the same; the same claim, demand or cause of action is at issue; the judgment in the first action was rendered on the merits; and the parties had an opportunity to litigate the issues fully. (Citation omitted; internal quotation marks omitted.) Farmington Valley Recreational Park, Inc. v. Farmington Show Grounds, LLC, 146 Conn.App. 580, 588, 79 A.3d 95 (2013). Judgments based on the following reasons are not rendered on the merits: want of jurisdiction; pre-maturity; failure to prosecute; unavailable or inappropriate relief or remedy; lack of standing ... Bruno v. Geller, [ 136 Conn.App. 707, 725, 46 A.3d 974, cert. denied, 306 Conn. 905, 52 A.3d 732 (2012) ].U.S. Bank, N.A. v. Foote, 151 Conn.App. 620, 626, 94 A.3d 1267, cert. denied, 314 Conn. 930, 101 A.3d 952 (2014) (Internal quotation marks omitted; emphasis altered.) Res judicata does not bar the plaintiff’s claims.
Second, in his closing argument, the defendant contended that the account statements contained in exhibit 3 and on which the plaintiff relies were prepared for litigation, are not admissible as business records, and are not reliable. Nevertheless, the defendant did not object to the introduction of exhibit 3 as a full exhibit and, therefore, waived any objection to the court’s reliance on that exhibit. Even if there had been an objection, the testimony of Ms. Maners established all of the requirements for the admission of the account statements in exhibit 3 under the business records exception to the hearsay rule. She described her deep familiarity with the plaintiff’s record keeping practices based on her twenty-eight years of employment and her current responsibilities; she testified that transactions of the kind reflected in the statements are recorded in the ordinary course of the plaintiff’s business at or about the time they occur; she testified that account statements are issued monthly based on these transactions; she testified that the plaintiff maintains these account records for seven years; and she testified that the reprints of statements contained in exhibit 3 were prepared in accordance with federal regulatory requirements as they existed at the time of trial. The defendant had a full opportunity to inquire of Ms. Maners regarding all of these matters, and her responses to his cross examination questions made clear that she was more than adequately familiar with the plaintiff’s records and how those records are made, kept, and produced in the form of exhibit 3 to establish them as admissible business records of the status of charges and credits in the defendant’s account. Indeed, the defendant offered into evidence his own set of account statements, which were consistent in all material respects with those submitted by the plaintiff, and testified that he received those statements from the plaintiff. The defendant did not in any way challenge the correctness of the charges reflected on any of the account statements admitted into evidence, whether offered by him or by the plaintiff. The plaintiff satisfied its burden to demonstrate the admissibility of the account statements and the information contained in them.
Finally, the defendant argues that his debt to the plaintiff was the result of the plaintiff’s "improvident lending" and, therefore, he should not be required to pay. The defendant referenced materials that the plaintiff sent to him extending offers to use "balance transfer checks" and cash advances to pay down higher rate balances on other accounts or to cover other expenses, along with a series of "Credit Report Activity Reports" reflecting past due balances on several of the defendant’s accounts, including his account with the plaintiff. The plaintiff properly objected to this line of evidence and argument on the ground that the defendant had not pled a special defense or a counterclaim based on his theory of "improvident lending." Practice Book § 10-50 requires that "[f]acts which are consistent with [plaintiff’s] statements but show, notwithstanding, that the plaintiff has no cause of action, must be specially alleged. Thus, ... duress, fraud, [and] illegality not apparent on the face of the pleadings ... must be specially pleaded ..." For this reason alone, the defendant’s argument must be rejected.
But even if the court properly could ignore the defendant’s failure to plead a special defense based on "improvident lending," the evidence on which the defendant seeks to rely does not support his contentions, including his contention that he was induced to borrow more while the plaintiff was simultaneously warning him that he was not paying his obligations. The defendant argues that the "Credit Report Activity Alerts" contained in exhibit G demonstrate that the plaintiff was aware of the defendant’s financial difficulties but still sought to induce the defendant to borrow more, as shown in the correspondence contained in the defendant’s exhibit E. Nevertheless, what the defendant characterizes as the promotional offers in exhibit E all appear to have been made in May 2012, or earlier. The first "Credit Report Activity Alert" in exhibit G is dated May 2, 2012, and that is simply an alert that a request had been made for the defendant’s credit report. The earliest "Credit Report Activity Alert" that warns of an overdue balance is dated November 25, 2012, some six months after the last promotional correspondence contained in exhibit G. In short, even if the defendant had asserted a special defense based on "improvident lending," and even if the law recognized such a defense, the evidence does not support such a defense as a matter of fact.
The defendant’s testimony also demonstrates that he was not misled or deceived. He testified that he began to suffer financially when he lost his job, but that he assumed he would find a new job. Against the advice of a bankruptcy attorney, he began to use his retirement funds to cover his expenses, still anticipating that he would find employment. When that money was exhausted, he was unable to pay his debts and began to default on his obligations to creditors, including the plaintiff, because he made the understandable choice to pay his household expenses rather than to pay his creditors. There is nothing in the defendant’s testimony or his exhibits that supports the conclusion that the plaintiff engaged in any unfair, misleading, or deceptive conduct; that the plaintiff breached any agreement with or obligation to the defendant; or that the defendant incurred any of the charges reflected in his credit card statements involuntarily, inadvertently, or while under any sort of misunderstanding.
III
CONCLUSION
The plaintiff has established by a fair preponderance of the evidence that the defendant breached his obligation under his credit card agreement with the plaintiff to pay the amounts due on his account. The court finds for the plaintiff on count one of the complaint and awards damages to the plaintiff in the amount of $17,002.99.
The plaintiff has failed to prove its claim for account stated. The court finds for the defendant on count two of the complaint.
In her closing argument, counsel for the plaintiff requested an award of postjudgment interest. Nevertheless, in its complaint, the plaintiff stated: "The Plaintiff requests that no postjudgment interest be awarded," Complaint, count one, paragraph 3. The court finds that the plaintiff disclaimed any entitlement to postjudgment interest and that an award of postjudgment interest would not be appropriate.
So ordered.