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American Express Bank, FSB v. Kayatta

November 24, 2010

AMERICAN EXPRESS BANK, FSB PLAINTIFF AND RESPONDENT,
v.
DAVID F. KAYATTA, DEFENDANT AND APPELLANT.



APPEAL from a judgment of the Superior Court of Los Angeles County, Robert A. Dukes, Judge. Affirmed. (Los Angeles County Super. Ct. No. KC053408).

The opinion of the court was delivered by: Manella, J.

CERTIFIED FOR PUBLICATION

INTRODUCTION

David F. Kayatta appeals from judgment in the amount of $265,025.80 following an order granting summary judgment to respondent American Express Bank, FSB (American Express). He contends that the superior court erred in granting summary judgment because American Express had a duty to advise him that "it had filed suit against, or obtained a judgment against, [a third party], in the Los Angeles County Superior Court, for nonpayment of his charge card bill, before issuing [the same third party] an additional card on Mr. Kayatta's charge card account." Because Kayatta has not met his burden of showing that American Express had such a duty of disclosure, we affirm the judgment in its entirety.

FACTUAL AND PROCEDURAL HISTORY

On July 15, 2008, American Express filed a verified complaint for money damages against Kayatta. In the complaint, American Express alleged that Kayatta entered into an agreement with American Express whereby American Express opened an American Express Business Centurion Credit Card for Kayatta (charge card). In return, "Kayatta, as the Authorizing Officer, agreed to pay for all amounts charged on the Business Account card, along with the delinquency charges, interest, costs and fees included in the American Express Business Centurion Card Member Agreement between the parties ('Business Agreement')." The Business Agreement was attached as exhibit A to the complaint. American Express further alleged that the total amount due on the charge card account was $265,025.80.

Kayatta filed a verified answer in which he alleged that he paid in full each and every charge that he personally made on the account. The balance on the charge card account was from charges made by Robert E. Francis and Walter Coulter. Kayatta also asserted an affirmative defense -- that American Express was grossly negligent in issuing a charge card to Francis when "it knew, or should have known, that its affiliate American Express Travel Related Services Company, Inc. obtained a Judgment by Default against him on August 31, 2004 in the Superior Court of the State of California" and thus American Express assumed the risk that Francis would not repay the charges made on Kayatta's charge card account.

On August 31, 2009, American Express filed a motion for summary judgment on its verified complaint for damages. Kayatta filed an opposition to the motion and evidentiary objections to the supporting declarations. On September 29, 2009, the superior court overruled Kayatta's evidentiary objections and granted American Express's motion for summary judgment, noting "Defendant provides no authority, no case law, no statute, [and] no principle of law, for the proposition that he, as the primary cardholder, is relieved from liability if other supplemental cardholders make charges on the account." Judgment in the amount of $265,025.80 was entered on October 22, 2009. Kayatta then filed a timely notice of appeal.

DISCUSSION

This court reviews an order granting summary judgment de novo, "considering all of the evidence the parties offered in connection with the motion (except that which the [trial] court properly excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.]" (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.) "[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. . . . There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) "Once the [movant] has met that burden, the burden shifts to the [other party] to show that a triable issue of one or more material facts exists as to that cause of action." (Id. at p. 849.)

Here, American Express has shown that there is no triable issue of material fact on its contractual cause of action against Kayatta. It is undisputed that Kayatta was the basic cardmember and that Francis was an additional cardmember. It is also undisputed that there is a remaining unpaid balance of $265,025.80 on the charge card account. Finally, it is undisputed that American Express provided Kayatta with a Business Agreement and that Kayatta accepted the agreement.

The Business Agreement provided that: "You [the cardholder] 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."

The Business Agreement also stated that: "Additional Cardmembers do not have accounts with us. Instead, they are authorized users on the Card Account, and the Cards issued to them may be canceled by the Basic Cardmember or Company or us at any time. You must notify us to revoke an Additional Cardmember's permission to use the Card Account. The Company and the Basic Cardmember are responsible under this Agreement for all use of the Card Account by the Basic Cardmember and Additional Cardmembers, and by anyone else the Basic Cardmember or an Additional Cardmember lets use the Card, and the Charges they incur will be billed to the Basic Cardmember. The Company and the Basic Cardmember have this responsibility even if they did not intend for an Additional Cardmember, or other person, to use the Card for any transaction. The Company and the Basic Cardmember are also responsible for any losses as well as any other consequences related to or resulting from actions taken by any third parties authorized to act on behalf of the Company and the Basic Cardmember."

Based on the undisputed facts and the terms of the Business Agreement, there is no triable issue of material fact as to whether Kayatta owed $265,025.80 to American Express. Kayatta contends, however, that he is not liable for this amount because American Express failed to inform him that Francis was a poor credit risk. According to Kayatta, "[t]he fundamental legal issue in this case is whether American Express had a duty to advise Mr. Kayatta either that it had filed suit against, or obtained a judgment against, Mr. Francis, in the Los Angeles County Superior Court, for non-payment of his charge card bill, before issuing Mr. Francis an additional card on Mr. Kayatta's charge card account." Kayatta apparently contends that American Express is barred from enforcing the Business Agreement because it failed to inform him that one of its affiliates had obtained a judgment against Francis. Because the Business Agreement did not provide that American Express has such a duty of disclosure, Kayatta posits three extra-contractual sources ...


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