September 19, 2011
Ariz. judge rules Citibank can't collect in credit card debt case
A bank's error in legally pursuing a customer for a credit card debt is going to leave it without the ability to collect the funds owed.
The state Court of Appeals said a trial judge was correct in refusing to grant any damages to Citibank.
Judge Michael Brown, writing for the majority, said the failure of the bank's attorneys to attach a necessary affidavit, coupled with the failure to appear in court, allowed the trial judge to conclude the bank's damages should be set at zero.
But appellate Judge Jon Thompson, in a dissent, said the decision of the trial court to force the issue to a hearing was in error. He said the bank was entitled to the money owed.
Court records show the bank sued Gary D. and Robin Davis, saying the coupled owed $28,785.
Attached to the complaint was an affidavit signed by a Citibank representative that listed the total due. It also repeatedly referenced the “statement transaction detail” as “Exhibit A.”
There was, however, no exhibit attached.
When the couple did not appear at a hearing, the bank sought a default judgment. But the bank did not list a specific amount, only referring back to the original complaint.
Yavapai County Superior Court Judge Michael Bluff scheduled a hearing, saying it was necessary to take evidence because of the missing affidavit.
When neither party appeared at the default hearing, Bluff entered judgment for Citibank, awarding it $328 in costs -- but no damages. The bank appealed after the trial judge did not back down.
Court rules say that when a plaintiff's claim against a defendant in a default action is for a “sum certain” the court, on motion of the plaintiff and affidavit of the amount due “shall enter judgment for that amount.” The bank's lawyers said it complied by suing for a precise amount.
Brown, however, said trial courts have “broad discretion” when deciding if a hearing is necessary to gather more evidence.
In this case, Brown said, the trial judge noted while there was an affidavit attached to the complaint that did allege a specific sum owed, that affidavit repeatedly referred to the non-existing Exhibit A as giving the breakdown of what was due on the Davis' account. Brown said that allowed Bluff to conclude the affidavit was incomplete and a hearing was necessary to establish the truth of what the bank was saying.
The appellate court was no more convinced that Bluff abused his discretion in awarding zero dollars in damages.
“Citibank does not cite any law, nor are we aware of any, supporting the proposition that an award of zero dollars of damages necessarily reflects improper application of the law,” Brown wrote. He said while the default by the Davis' does amount to admission of the facts pled in the complaint, “this admission does not relieve the plaintiff of demonstrating proof as to the extent of the damages.”
And Brown said the award of zero damages was not a punishment against the bank for its failure to appear.
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