The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
KIM BICKETT and
KIM BICKETT FARMS LLC,
Plaintiffs,
v. Case No. 3:19-cv-57-NJR
CHASE BANK USA NA, CHASE
BANKCARD SERVICES, INC., and
JP MORGAN CHASE BANK, N.A,
Defendants.
MEMORANDUM AND ORDER
ROSENSTENGEL, Chief Judge:
Pending before the Court is a Motion for Summary Judgment filed by Defendants
Chase Bank USA NA, Chase Bankcard Services, Inc., and JP Morgan Chase Bank, N.A.
(Doc. 21). For the reasons set forth below, the Court grants the Motion for Summary
Judgment.
FACTUAL & PROCEDURAL BACKGROUND
Plaintiff Kim Bickett is the owner of Kim Bickett Farms LLC, formerly known as
Bickett Construction (Doc. 1). On January 27, 2018, Bickett lost a credit card issued to him by
Defendants (Id.). The next day, Bickett called Defendants to report the lost card (Id.). During
the call, he inquired about balances (Id.). At this point, Bickett learned about a credit card on
his account that he had no prior knowledge of, which had a balance of approximately $36,000
(Id.).
Bickett learned that Paula Hise, Bickett Construction’s secretary and bookkeeper, had
opened the account under Plaintiffs’ names in 2007 without Bickett’s knowledge or approval
(Id.). Hise registered herself as a secondary card holder and obtained a card with her name
(Id.). Hise used the card from 2007 to 2018 in 7,914 personal transactions totaling to
$1,534,101.33 (Id.).
Plaintiffs claim that Hise paid the bills from Bickett Construction’s bank account and
disguised the charges in the company’s accounting system as expenses for miscellaneous
business transactions (Id.). Plaintiffs claim Hise paid $1,497,400.12 to Defendants in this
manner.
Defendants sent a monthly billing statement each billing period to Plaintiffs at the
business address (Doc. 22-2). Each statement included itemized charges and identified the
cardholder that made each charge, including the charges made by Hise (Id.). The statements
also included payments made on the account (Id.). In November 2015, the account switched
to electronic billing and the statements were then available online and by telephone (Id.).
According to Exhibit E to the Declaration of Tara A. Olloque, payments on the account were
made from a checking account in the name of “KIM D BICKETT” (Id.; Doc. 22-7).
Once Bickett discovered the card and the transactions, Bickett disputed the charges
and the payments associated with the card (Id.). On August 29, 2018 and September 6, 2018,
Defendants sent Bickett letters stating that Defendants had reviewed the account and
determined that Bickett was not responsible for the account (Id.).
Defendants contend that Plaintiffs misrepresent the letters from Defendants stating
that Bickett was “not responsible” for the account (Doc. 31). Defendants allege they only
determined that Plaintiffs were not liable for the account’s outstanding balance (Id.).
Defendants never agreed to reimburse eleven years’ worth of payments, all of which were
for transactions Defendants believe were made with apparent authority (Id.).
Plaintiffs brought this claim pursuant to the Truth in Lending Act (“TILA”), 15 U.S.C.
§ 1643, 15 U.S.C. § 1640, and Regulation Z, 12 C. F. R § 226 (Doc. 1). Plaintiffs allege that they
are not liable for Hise’s use of the credit card because the card was not authorized by Plaintiffs
(Id.). Plaintiffs further allege that Defendants have failed to comply with TILA and
Regulation Z by maintaining that Plaintiffs are responsible for the unauthorized charges on
the unauthorized account and by refusing to return the unauthorized payments that were
made (Id.).
In their motion for summary judgment (Doc. 21), Defendants contend that Plaintiffs’
claims fail as a matter of law because 15 U.S.C. § 1640 does not apply to credit transactions
involving extensions of credit primarily for business purposes (Id.). Further, Defendants
assert that Plaintiffs’ claim fails because they seek as relief the reimbursement of payments
already made to Chase, which 15 U.S.C. § 1643 does not require or authorize (Id). Also,
Defendants state that Plaintiffs’ claims fail because all challenged transactions were made by
a cardholder who was authorized to make them, or by an individual with apparent authority,
defeating Plaintiffs’ claim of unauthorized use under § 1643 (Id.).
LEGAL STANDARD
A district court shall grant summary judgment “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Spurling v. C & M Fine Pack, Inc., 739 F.3d 1055, 1060 (7th Cir. 2014) (quoting FED. R. CIV.
P. 56(a)). Once the moving party has set forth the basis for summary judgment, the burden
then shifts to the nonmoving party who must go beyond mere allegations and offer specific
facts showing that there is a genuine issue of fact for trial. FED. R. CIV. P. 56(e); see Celotex Corp.
v. Catrett, 477 U.S. 317, 232-24 (1986). Stated another way, the nonmoving party must offer
more than “[c]onclusory allegations, unsupported by specific facts,” to establish a genuine
issue of material fact. Payne v. Pauley, 337 F.3d 767, 773 (7th Cir. 2003) (citing Lujan v. Nat’l
Wildlife Fed’n, 497 U.S. 871, 888 (1990)).
In determining whether a genuine issue of fact exists, the Court must view the
evidence and draw all reasonable inferences in favor of the party opposing the motion.
Bennington v. Caterpillar Inc., 275 F.3d 654, 658 (7th Cir. 2001); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986). However, no issue remains for trial “unless there is sufficient
evidence favoring the non-moving party for a jury to return a verdict for that party. See Faas
v. Sears, Roebuck & Co., 532 F.3d 633, 640-41 (7th Cir. 2008). The nonmovant cannot simply
rely on its pleadings; the nonmovant must present admissible evidence that sufficiently
shows the existence of each element of its case on which it will bear the burden of proof at
trial. Midwest Imports, Ltd. v. Coval, 71 F.3d 1311, 1317 (7th Cir. 1995) (citing Serfecz v. Jewel
Food Stores, 67 F.3d 591, 596 (7th Cir. 1995); Greater Rockford Energy and Technology Corp. v.
Shell Oil Co., 998 F.2d 391, 394 (7th Cir. 1993)). “If a party fails to properly address another
party’s assertion of fact as required by Rule 56(c), the court may consider the fact undisputed
for purposes of the motion.” FED. R. CIV. P. 56(e). In sum, if a claim or defense is factually
unsupported, it should be disposed of on summary judgment. Celotex, 477 U.S. at 323-24.
Further, A “court may not assess the credibility of witnesses, choose between competing
inferences or balance the relative weight of conflicting evidence[.]” Reid v. Neighborhood
Assistance Corp. of America, 749 F.3d 581, 586 (7th Cir. 2014) (quoting Abdullahi v. City of
Madison, 423 F.3d 763, 769 (7th Cir. 2005)).
DISCUSSION
Plaintiffs rely on Section 1643 of TILA, which outlines the potential liability of a holder
of a credit card. 15 U.S.C. § 1643. This section outlines when a cardholder can be liable for the
unauthorized use of a credit card. Id. Section 1602(p) defines “unauthorized use” as used in
Section 1643 as “a use of a credit card by a person other than the cardholder who does not
have actual, implied, or apparent authority for such use and from which the cardholder
receives no benefit.” 15 USCS § 1602(p). The Federal Reserve Board’s commentary in
Regulation Z “has made explicit that ‘whether authority exists must be determined under
state or other applicable law….’” Asher v. Chase Bank United States, N.A., 310 F. App’x 912, 920
(7th Cir. 2009). The Seventh Circuit has recognized that the Illinois law of agency accord with
the Restatement of Agency. Id. According to the Restatement, “apparent authority arises
when the principal’s words or conduct cause a third person to reasonably believe that the
putative agent’s conduct on the principal’s behalf is authorized.” Id.; Restat. 3d of Agency,
§ 2.03.
The facts of Asher are similar to the facts in this case. Asher also involved a corporate
cardholder that paid its bills without protest over a period of time even though the statements
included charges by an employee. Asher, 310 F. App’x at 920. The employee also did not have
approval to open the account. Id.
The court in Asher determined that the employee’s use of the credit card was not
unauthorized because the employee had apparent authority. Id. at 921. In reaching this
conclusion, the court considered that other courts analyzing similar facts found that “the
company’s repeated payment of its employee’s fraudulent charges led the card issuer to
reasonably believe that [the employee] had the authority to make charges on the account.”
Id. at 920. The only standout distinction in Asher is that the plaintiff in that case was signing
off on the checks to the bank, paying the bills for the fraudulent employee’s charges. Id. at
920. Here, Plaintiffs claim that Hise paid the bills for the unauthorized card out of the Bickett
Construction bank account (Doc. 1). On the other hand, Defendants provided extensive
exhibits that appear to show that the payments were made from an account under the name
“Kim D Bickett,” which suggests that payments were coming from an account in Bickett’s
name rather than the company’s name (Doc. 22-7). Regardless of this fact, the statements for
the account were regularly mailed to the Plaintiffs’ business address until November 2015
when the statements were made available online (Doc. 22-2). Additionally, Hise’s actions
went on for eleven years resulting in over $1.5 million in transactions (Doc. 1). The Court
hesitates to conclude that solely failing to review account statements creates apparent
authority. See Asher, 310 F. App’x at 920. Plaintiffs’ silence without payment would be
insufficient to lead Defendants reasonably to believe that Hise has the authority to use the
account, as such silence would be consistent with Plaintiffs never receiving statements.See
DBI Architects, P.C. v. Am. Express Travel-Related Servs. Co., 388 F.3d 886, 891 (2004). But the
repeated payment of Hise’s fraudulent charges reasonably led the card issuer to believe that
Hise had the authority to make charges on the account. See Asher, 310 F. App’x at 920.
Moreover, Hise’s actions persisted for much longer at a much larger scale than the actions of
the employee in Asher, whose fraudulent spending lasted from 2001 until 2004, and
amounted to $77,655. Id. at 914. This fact—coupled with continued payments and access to
the account statements—would lead Defendants to reasonably believe that Hise had
apparent authority to use the account. There were eleven years’ worth of continued payments
and account statements for Defendants to reference to reasonably make this inference.
Accordingly, Hise’s use of the credit card was not unauthorized because she had apparent
authority.
Defendants also contend that Plaintiffs’ claims fail as a matter of law because 15 U.S.C.
§ 1640 does not apply to credit transactions involving extensions of credit primarily for
business purposes, and because Plaintiffs’ seek as relief the reimbursement of payments
already made to Chase, which 15 U.S.C. § 1643 does not require or authorize (Id.). Because
Hise’s use of the credit card was not unauthorized, however, Plaintiffs no longer have a valid
claim under Section 1640 or Section 1643. Therefore, the motion for summary judgement is
granted.
CONCLUSION
For these reasons, the Motion for Summary Judgment filed by Chase Bank USA NA,
Chase Bankcard Services, Inc., and JP Morgan Chase Bank, N.A. (Doc. 21), is GRANTED.
This action is DISMISSED with prejudice, and the Clerk of Court is DIRECTED to close the
case and enter judgment accordingly.
IT IS SO ORDERED.
DATED: March 16, 2020
NANCY J. ROSENSTENGEL |
Chief U.S. District Judge
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