Key Takeaway
This NY appellate case shows credit card companies must prove breach of contract and account holder assent, creating potential defenses for cardholders facing collection lawsuits.
Credit card collection cases typically follow predictable patterns, but occasionally a decision emerges that shifts the legal landscape for both creditors and defendants. The Second Department’s ruling in Citibank (South Dakota), N.A. v Abraham demonstrates how courts scrutinize the foundational elements that credit card companies must establish to succeed in breach of contract claims.
This case highlights critical issues that frequently arise in credit card litigation: proving the terms of the cardholder agreement, establishing account holder assent to changes, and demonstrating the absence of dispute regarding account statements. These elements become particularly complex when credit limits change and promotional rates expire, as the court’s analysis reveals.
For attorneys defending credit card cases, understanding how courts evaluate evidence like defective notarization and the sufficiency of affidavits remains crucial to building effective defenses.
Jason Tenenbaum’s Analysis:
Citibank (South Dakota), N.A. v Abraham, 2016 NY Slip Op 03133 (2d Dept. 2016)
The usual credit card non-payment case is straightforward. This one is not, and could give us attorneys that defend credit card defendants some wiggle room.
This is the case where the credit card issuer lowers the credit limit, the client does not adjust his minimum payment due and the promotional rate moves northward to 29.99%. The Court found the breach of contract absent the cardholder agreement not to be proved.
The account statement was not granted due to the failure to show an absence of protest. The court also found that a minimal payment in relation to the minimum due on account did not express an assent. This is an interesting case.
Key Takeaway
The Abraham decision demonstrates that credit card companies cannot simply rely on account statements and minimal payments as proof of contract breach or cardholder assent. Courts require clear evidence of the cardholder agreement terms and must see affirmative acceptance of contract modifications, particularly when credit limits and interest rates change significantly.
