Personal Guarantor Liability for Corporate Credit Card

American Express, FSB v. KL; Supreme Court, Kings County, Case filed 2013

American Express, FSB was represented by Panteris & Panteris, LLP, located at 3516 Bell Boulevard, Bayside, NY 11361, tel 718-281-2154

In this business credit card debt collection lawsuit, American Express, FSB was seeking a judgment against the business and one of the owners of the business who’s name appeared on the credit card alongside the name of the business. American Express, FSB, through Panteris & Panteris, LLP alleged the individual account holder was liable as a primary account holder or personal guarantor.

The Hurwitz Law Firm, P.C. represented the business and the individual account holder.

The balance due on the credit card account was over $400,000.

Most importantly, our clients sent us the Summons and Complaint as soon as they received it from the Process Server, so we were able to file a timely Answer and avoid entry of a default judgment.

We served discovery demands, including interrogatories and document demands, on Panteris & Panteris as attorneys for American Express.

I don’t think Panteris & Panteris liked it when we started asking questions about how American Express verifies a consumer’s identity when opening a credit card account, how American Express determines which additional cardmembers are responsible to pay for charges incurred on a corporate charge card account, how American Express calculates the interest and finance charges shown on a credit card billing statement, and whether American Express really mails all billing statements to the person or address shown on the billing statements.

Panteris & Panteris quickly filed a motion for summary judgment in Kings County, Supreme Court. We opposed Panteris & Panteris’ motion for summary judgment, and we filed affidavits and legal arguments explaining to the judge that American Express had not proven whether the business defendant or its additional cardmembers were liable for payment of the debt, and there was no proof the additional cardmember ever made any charges or payments on the account, even if his name was included on the billing statements. No personal guarantee was proven.

Kings County, Supreme Court justice Carolyn Demarest denied Panteris & Panteris, LLP’s motion for summary judgment filed on behalf of American Express. The judge granted The Hurwitz Law Firm’s cross-motion for additional discovery, and set a schedule for depositions and a court settlement conference.

We took the deposition of American Express’ collection supervisor and discovered many useful facts. We also discovered a key weakness in American Express’ operations.

Two months after depositions, we were back in court with Panteris and AmEx for a settlement conference with the court attorney, where American Express seemed quite uneasy about their ability to prove in court who was legally responsible for payment of the credit card charges on this account.

After several rounds of negotiations, a settlement was reached providing our clients more than $200,000 of debt forgiveness and an extended payment plan for the remaining settlement amount.

It’s a good thing we served an Answer to the lawsuit on time and put up a strong defense to American Express’ debt collection claim. If our clients had not acted fast, a default judgment could have been entered against them for nearly half a million dollars. Our clients could have then been subjected to a wage garnishment, bank restraining notice and asset levy, and a judgment may have even forced our clients into Chapter 7 bankruptcy.

Handling a debt collection case correctly from the beginning can make all the difference.

If you have received any legal debt collection notices, please send them to us for a free case review today.