United States District Court, D. New Jersey
WILLIAM J. MARTINI, U.S.D.J.
Cotapaxi Custom Design and Manufacturing, LLC
(“Plaintiff”) brings this action against Chase
Bank USA, N.A. (“Defendant”), alleging violations
of the Truth in Lending Act (“TILA”), 15 U.S.C.
§ 1601, et seq., and various state law claims.
This matter comes before the Court on Defendant's motion
for summary judgment on Count 1, the TILA claim, pursuant to
Federal Rule of Civil Procedure 56. There was no oral
argument. Fed.R.Civ.P. 78(b). For the reasons set forth
below, Defendant's motion for summary judgment is
is a Delaware corporation with its principal place of
business in Carlstadt, New Jersey. Notice of Removal, Ex. 1
¶ 1, ECF No. 1 [hereinafter “Compl.”].
Defendant is a Delaware corporation with its principal place
of business in Wilmington, Delaware. Id. ¶ 2.
Plaintiff engaged Defendant's credit card services in the
form of a Chase United Mileage Plus business credit card
account (the “Account”) from at least early 2013
through May 2016. See id. at ¶¶ 4, 6, 12.
Plaintiff alleges damages of $643, 998.99 arising out of
purported fraudulent charges made to the Account by a
third-party entity, BP Promos, beginning on May 6, 2013, and
ending in May 2016. See id. at ¶¶ 8-12.
Defendant now moves for summary judgment on the sole
remaining count of the Complaint, Plaintiff's TILA
claim. Def.'s Mem. of Law in Supp. of Its
Mot. (“Def.'s Mem.”) 1, ECF No. 21-2. The
following facts are undisputed.
May 6, 2013, and May 23, 2016, BP Promos made $644, 363.89 in
charges to the Account. See Decl. of M. Griffith
(“Griffith Decl.”) ¶ 5, ECF No. 21-3;
Pl.'s Statement of Additional Material Facts ¶ 3,
ECF No. 24-1. Prior to that time, in early 2013, Plaintiff
retained Bonhill Productions to provide printing services,
which was owned by an individual named Gerald Nussbaum.
See Compl. ¶¶ 4-6. Plaintiff ceased using
Bonhill Productions in April 2013, after which time Mr.
Nussbaum apparently formed BP Promos and began making the
alleged fraudulent charges to the Account. See id.
received hundreds of charges from BP Promos over the ensuing
three-year period, which were reflected on the monthly
billing statements provided by Defendant. See
Griffith Decl. ¶ 4, Exs. A & B. Plaintiff paid $598,
723.61 of those charges without contest. See id.
¶¶ 7-10. On May 23, 2016, Plaintiff's
bookkeeper finally noticed BP Promos' charges and called
Defendant, informing it of the charges' fraudulence.
See id. ¶ 6; Compl. ¶ 13. After that call,
BP Promos made no further charges to the Account.
See Griffith Cert. ¶ 10. After July 2016,
Plaintiff ceased paying its balance on the Account, leaving
$145, 945.16 in unpaid charges, at least $15, 668.44 of which
were attributable to BP Promos. See id. ¶¶
9, 11-12. In March 2017, Defendant ceased attempting to
collect the unpaid balance from Plaintiff. Id.
argues that Plaintiff's TILA claim fails as a matter of
law because TILA does not provide a right of reimbursement
for fraudulent charges already paid by Plaintiff.
See Def.'s Mem. at 4-5. Defendant further argues
that Plaintiff cannot recover damages for charges that it
never paid because unpaid charges do not reflect an actual
loss. See id. 5-7. Moreover, Defendant submits that
it has ceased attempting to collect on those unpaid charges
and, therefore, no actual controversy exists for the Court to
adjudicate. See id.
opposes, arguing that Defendant's conduct violated TILA
because Defendant cannot possibly claim that Plaintiff acted
in a manner that created apparent authority for BP Promos to
continue charging its account. See Mem. of Law of
Pl. in Opp'n to Def.'s Mot. (“Pl.'s
Opp'n”) 5-9, ECF No. 24. Plaintiff suggests that
the cases cited to by Defendant are distinguishable from the
instant facts because those cases involved fraudulent charges
made by a company's internal employee, not by an external
vendor as here. See id. at 6-8. Furthermore,
Plaintiff cites to a June 2016 phone call with
Defendant's employee, where the employee allegedly made
multiple false statements concerning Defendant's
investigation into the fraudulent charges. See id.
filed a reply, responding that Plaintiff's attempt to
distinguish the instant facts from Third Circuit precedent is
meritless. See Def.'s Reply Mem. of Law
(“Def.'s Reply”) 2-3, ECF No. 26. Defendant
further submits that Plaintiff fails to show that a live
controversy exists because the unpaid charges are not actual
damages. See id. at 3-5. Finally, Defendant asserts
that Plaintiff's arguments regarding apparent authority
are irrelevant. See id. 5-6.
Rule of Civil Procedure 56 provides for 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.” Fed.R.Civ.P. 56(a);
see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986); Turner v. Schering-Plough Corp., 901 F.2d
335, 340 (3d Cir. 1990). A factual dispute is genuine if a
reasonable jury could find for the non-moving party, and is
material if it will affect the outcome of the trial under
governing substantive law. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). The Court considers all
evidence and inferences drawn therefrom in the light most
favorable to the non-moving party. Andreoli v.
Gates, 482 F.3d 641, 647 (3d Cir. 2007).
Court agrees entirely with Defendant that Plaintiff's
TILA claim fails as a matter of law. Plaintiff's claim
arises out of 15 U.S.C. § 1643, which limits the
liability of a cardholder for unauthorized use of a credit
card. See Pl.'s Opp'n at 5. The Third
Circuit, however, has unequivocally stated that the statute
does not also provide a cardholder with a right to
reimbursement of fraudulent charges that it has already paid
to the card issuer. In Sovereign Bank v. BJ's
Wholesale Club, Inc., the Third Circuit explained:
The TILA § 1643 does not impose any obligation on
issuers of credit cards to pay the costs associated with
unauthorized or fraudulent use of credit cards. It simply
limits the liability of cardholders, under certain
circumstances, to a maximum of $50 for unauthorized charges.
Indeed, § 1643 does not address, nor is it even
concerned with, the liability of an ...