Page 12 - John Hundley 2009

that if a creditor wants to invoke the ten-year statute, it has to attach signed charge tickets for each
transaction. (Even those may not be sufficient, as they commonly do not identify the issuing bank –
hence failing the requirement to identify all the parties to the contract.)

Citing cases decided under the Fair Debt Collection Practices Act (15 U.S.C.
§§ 1692 et seq.), the court also rejected the claim that the affidavit of debt was
sufficient. Similarly, the account statements were ruled
inadequate; an account statement is a claim of a debt,
but it does not contain the debtor’s promise to pay, or
terms regarding default, or other material terms of an
enforceable contract, so it requires extraneous proof
and fails the relevant test.

Plaintiff argued that the court’s approach was unrealistic in light of the nature of credit card trans-
actions and modern realities, but the court said that “to account for modern business practices is
a matter for the legislature, not this court.”

Section 12-206 also applies a ten-year statute for “other evidences of indebtedness in writing”,
and plaintiff argued that this clause applied to the account statements attached to the complaint. The
court ruled that the “other evidences of indebtedness” permitted by the statute have to be similar to
the “bonds, promissory notes, bills of exchange, written leases [and] written contracts” which are
listed immediately prior to the “other evidences” clause. It then ruled that the prohibition on extran-
eous evidence also applies under the “other evidences” clause.

Finally, plaintiff argued that the contract could be found collectively in the attached documents
under the “composite document” rule, which is applied to find the totality of a contract in a series of
related documents. However, the court said that rule does not apply for limitations purposes.

After Portfolio Acquisitions, a five-year statute will appear to apply to virtually all
credit card cases, unless it is overturned. How broadly the decision will be applied
in other contexts is unclear. Parts of its logic could be used against commercial
line-of-credit agreements, for example. Actions to collect debts arising under
association rules also may be subject to attack.

Moreover, its rationale for rejecting some of the complaint attachments may
have additional implications in credit card cases. If an account statement does “not
indicate proof of receipt or lack of objection” and hence requires parole evidence in
the limitations context, is that evidence any less necessary when the complaint is
timely filed? As Portfolio Acquisitions evidences, delinquent credit card debt is widely traded. Rarely
is the real plaintiff the original creditor, and rarely do the plaintiff’s agents have any personal
knowledge of the underlying transactions. If an affidavit from such a person is insufficient for limita-
tions purposes, why should it be sufficient under other pleading and evidence rules?
How courts may deal with those implications is unclear.

John\Sharp Thinking\#21.doc
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