CITIBANK (SD), NA v. Hauff
| Decision Date | 13 August 2003 |
| Docket Number | No. 22664.,22664. |
| Citation | 668 N.W.2d 528,2003 SD 99 |
| Parties | CITIBANK (S.D.), N.A., Plaintiff and Appellant, v. Tonette L. HAUFF, Defendant, Third-Party Plaintiff and Appellee, v. David Hauff, Third-Party Defendant. |
| Court | South Dakota Supreme Court |
Roberto A. Lange of Davenport, Evans, Hurwitz and Smith Sioux Falls, SD, for plaintiff and appellant.
Robert Gusinsky of Lynn, Jackson, Shultz & Lebrun, P.C., Rapid City, SD, for defendant, third-party plaintiff, and appellee.
[¶ 1.] While Tonette Hauff and David Hauff were married, Tonette applied for and received a Citibank credit card account. Although it was Tonette's account, she authorized David to obtain a card and become an authorized user of her account. In preparation for their subsequent divorce, Tonette and David paid off the account. After the divorce, the credit cards expired, Tonette left the marital home, but Citibank sent renewal cards to Tonette at that home. Without telling Tonette, David fraudulently took possession of the new cards, he activated them through a telephone call with Citibank, and he made charges using the new cards. Citibank subsequently commenced an action against Tonette for the charges made by David with the new cards he activated. Tonette denied that she was liable, and she counterclaimed for intentional infliction of emotional distress and barratry. The circuit court granted Tonette's motion for summary judgment against Citibank on the collection action. The court denied Citibank's motion for summary judgment against Tonette on her counterclaim. Citibank appeals both rulings. We affirm the summary judgment against Citibank on its collection action, and we reverse the circuit court's denial of summary judgment for Citibank on Tonette's counterclaim.
[¶ 2.] Tonette applied for and obtained a credit card account from Citibank. Although it was Tonette's account, she authorized her husband David to obtain an additional card and become an authorized user of the account.
[¶ 3.] In 1998, Tonette and David were in the process of getting a divorce. In preparation for the divorce, Tonette contacted Citibank to determine the amount required to pay off the account. Tonette and David subsequently obtained a home equity loan from Black Hills Federal Credit Union (BHFCU) to pay off three different credit cards, including the Citibank account.
[¶ 4.] The parties disagree whether the account was closed when the balance was paid from the proceeds of the home equity loan. Citibank contends that it did not receive a required written notice that Tonette wished to close the account. A BHFCU home equity loan checklist also failed to indicate that the credit union sent a written notice to close the account when the loan proceeds were advanced. However, Carolie Zacher, the BHFCU employee who handled the home equity loan, testified (by affidavit) that she may have sent a termination letter without indicating so on the checklist. Additionally, Hauff's' other accounts were closed when BHFCU made the loan to pay off the accounts.
[¶ 5.] It also appears that prior to Citibank's receipt of the payoff, Tonette told Citibank that she wanted the account closed. This occurred during a collection call Citibank made to Tonette. The parties agree that during the call, Tonette informed Citibank that the account would soon be paid off and that she wanted the account closed. Citibank, however, contends that its representative told Tonette that she would have to call a customer service number to close the account. Tonette testified (by affidavit) that she did not remember being told that she had to call customer service. Tonette testified that after this conversation and the payment from BHFCU, she believed that the account was closed. However, the account was not closed.
[¶ 6.] After the divorce, Tonette moved from the marital home, and David resided there. Although Tonette's "account" was not closed, it is undisputed that on their face, the plastic credit cards expired in the fall of 1998. However, pursuant to a Citibank internal procedure, it sent renewal cards to Tonette at the former marital residence.1 David opened Tonette's letter, found the new cards, and Citibank permitted him to "activate" them by a telephone call. David subsequently made the charges at issue using the new cards. David did all of these acts without Tonette's knowledge or permission.
[¶ 7.] Tonette first learned that her ex-husband made these charges in May 1999. When Citibank called Tonette to collect for the charges, Tonette informed Citibank that she and David were divorced, and that she thought the account had been closed in July 1998. Citibank immediately closed the account upon receiving Tonette's information.
[¶ 8.] Tonette refused to pay Citibank for the charges made by David. Citibank eventually brought this collection action naming only Tonette as a party.2 Tonette filed a counterclaim alleging intentional infliction of emotional distress and barratry. Tonette also filed a third party complaint against David.
[¶ 9.] After substantial discovery, the circuit court granted Tonette's motion for summary judgment on the collection action. The circuit court denied Citibank's motion for summary judgment on Tonette's counterclaim for intentional infliction of emotional distress and barratry. The circuit court certified its decisions as final orders under SDCL 15-6-54(b).3 Citibank now appeals both decisions raising two issues, which we restate as follows:
DECISION
[¶ 10.] Our standard of review of summary judgment is well settled.
In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and [established] entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party[,] and reasonable doubts should be resolved against the moving party.... Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied.
Braun v. New Hope Township, 2002 SD 67, ¶ 8, 646 N.W.2d 737, 739 (quoting South Dakota State Cement Plant Comm'n v. Wausau Underwriters Ins. Co., 2000 SD 116, ¶ 9, 616 N.W.2d 397, 400-01).
[¶ 11.] 1. Under the terms of the credit card agreement, an "authorized user," who was not the "account holder," was not entitled to activate newly issued renewal cards thereby subjecting the "account holder" to liability for subsequent unauthorized charges on the new cards.
[¶ 12.] A credit card contract is similar to an insurance contract in that it is negotiated and prepared exclusively by the issuer. Gray v. American Exp. Co., 743 F.2d 10, 18 (D.C.Cir.1984) (internal citations omitted). Consequently, in cases like this, where liability between a cardholder and the account holder is not clear, courts have construed the agreement strictly against the credit card issuer who drafted the agreement. Cleveland Trust Co. v. Snyder, 55 Ohio App.2d 168, 380 N.E.2d 354, 360 (1978).
Dakota, Minnesota & Eastern R.R. Corp. v. Heritage Mut. Ins. Co., 2002 SD 7, ¶ 11, 639 N.W.2d 513, 515-16 ().
[¶ 13.] Applying these principles of construction, we believe that the terms of the Citibank agreement control the disposition of this dispute.4 In that agreement, Citibank created two separate and distinct classifications of users. That distinction is seen in the burdens and privileges given the "account holder," but denied to a mere "authorized user" in the "Additional Cards" provision of the agreement. That provision allowed an account holder like Tonette to name another person as an authorized user of the card. However, the authorized user's privileges were specifically limited to the right of access and use of "the card" and account. The agreement did not also make an authorized user an "account holder," nor did it grant the authorized user any of the other rights that the owner of the account possessed. The Additional Cards provision simply provided:
You may request additional cards on your account for yourself or others and you may permit another person to have access to the card or account number. However, if you do, you must pay us for all charges made by those persons, including charges for which you may not have intended to be responsible. You must notify us to revoke permission for any person you previously authorized to use your account. If you tell us to revoke another person's use of your account, we may close the account and issue a new card or cards with a different account number. You are responsible for the use of each card issued on your account according to the terms of this Agreement.
(emphasis added).5
[¶ 14.] Thus, under the agreement, an "authorized user" was only given the...
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