Tuesday, September 7, 2010

Credit Card Liability - Dispelling Two Myths

A recent Medina County Court case provides dictum regarding two myths regarding credit cards. The case, Citibank v. Kovach, 157 Ohio Misc.2d 24 involved the use of a credit card issued by Citibank to the defendant. Three pertinent facts were established: 1) The defendant did not sign any agreement or contract with the bank, 2) he did use the credit card to the tune of $20,569.06 and 3) the bank attached to its complaint a complete itemization of charges, payments and credits. The two myths dispelled by the case are:

Myth No. 1: The plaintiff must establish that the defendant executed a contract or credit agreement with credit card company to establish liability. This is untrue. Under Ohio law, a cardholder becomes liable for charges made on a credit card by using the credit card itself, Chase Bank USA v. Lopes, 8th Appellate Dist No. 91480, 2008 Ohio 6000, 2008 WL 4950985. In fact, the use of the credit card subjects the card holder to the terms of the credit card agreement, Am. Express v. Silverman, 10th Dist. No. 06AP-338, 2006 Ohio 6374, WL 3491741.

Myth No. 2: The creditor need only produce a summary account attached to its complaint to establish a prima facie case of liability. This is also untrue. In order to establish a prima facie case for money owed on an account, “an account must show the name of the party charged and contain: (1) a beginning balance (zero, or a sum that can qualify as an account stated, or some other provable sum); (2) listed items, or an item, dated and identifiable by number or otherwise, representing charges, or debits, and credits; and (3) summarization by means of a running or developing balance, or an arrangement of beginning balance and items which permits the calculation of the amount claimed to be due." Gabriele v. Reagan (1988), 57 Ohio App.3d 84, 87, 566 N.E.2d 684

Thursday, September 2, 2010

Use of the Internet Subjects Non-Residents to Jurisdiction in Ohio Courts

American jurisprudence has long held that a state courts fail to obtain jurisdiction against a non-resident unless certain “minimum contents” occur that subjects that non-resident to jurisdiction in Ohio courts. In other words, a person residing outside of Ohio can not be sued in Ohio courts unless they’re actions meet the “minimum contacts” required.

Personal jurisdiction, or the right to sue a person in The State of Ohio, is defined in Ohio’s long-arm statute, R. C. 2307.382. Determining whether an Ohio trial court has personal jurisdiction over a nonresident defendant involves a two-step analysis: (1) whether the long-arm statute and the applicable rule of civil procedure confer jurisdiction, and if so, (2) whether the exercise of jurisdiction would deprive the nonresident defendant of the right to due process of law under the Fourteenth Amendment to the United States Constitution, U.S. Sprint Communications Co. Ltd. Partnership v. Mr. K's Foods, Inc. (1994) 68 Ohio St.3d 181, 183-184, 1994 Ohio 504, 624 N.E.2d 1048.

Civ.R. 4.3 allows service of process on nonresidents in certain circumstances and mirrors the long-arm statute:

"(A) Service of process may be made outside of this state, as provided in this rule, in any action in this state, upon a person who, at the time of service of process, is a nonresident of this state or is a resident of this state who is absent from this state. 'Person' includes an individual * * * who, acting directly or by an agent, has caused an event to occur out of which the claim that is the subject of the complaint arose, from the person's: ...

"(3) Causing tortious injury by an act or omission in this state, including, but not limited to, actions arising out of the ownership, operation, or use of a motor vehicle or aircraft in this state;...

"(9) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when the person to be served might reasonably have expected that some person would be injured by the act in this state."

With the advent of the Internet a conundrum arises because parties are from different parts of the country and, therefore, courts must determine if cases are properly before them. A recent Ohio Supreme Court case address this problem, at least in defamation cases. The case Kauffman Racing Equip. V. Roberts, 126 Ohio St. 3d 81, involved a defamation case brought by Kauffman, an Ohio supplier of engine blocks against Scott Roberts a resident of Virginia. The defendant purchased an engine block from the Plaintiff over the internet. Roberts was never physically in Ohio at the time of the purchase nor at any time during the events that gave rise to the lawsuit.

After the purchase, Roberts became dissatisfied claiming Kauffman sold him a defective engine block and posted numerous rancorous criticisms of Kauffman over the internet. As a result, Kauffman brought an action for defamation against Roberts in The Knox County Common Pleas Court. The trial court granted Robert’s motion to dismiss for lack of personal jurisdiction. Kauffman appealed and the Fifth District Court of Appeals reversed the trial court’s judgment. Roberts appealed to The Ohio Supreme Court.

In its analysis the court cited the U.S. Sprint case using the case as a foundation for its findings. In its opinion, the court stated the following:

“Roberts contends that Ohio's long-arm statute does not confer personal jurisdiction because he did not direct the alleged tortious statements to Ohio or publish them here. Despite the fact that Roberts's publication of his comments did not emanate from Ohio, those comments were received in Ohio. KRE submitted evidence that at least five Ohio residents had seen the comments posted by Roberts. In Fallang, 40 Ohio St.3d 106, 532 N.E.2d 117, paragraph one of the syllabus, this court held, Civ.R. 4.3(A)(3) authorizes assertion of personal jurisdiction over a nonresident defendant in a defamation action when publication of the offending communication occurs in Ohio. In Fallang, the defendant had written an allegedly defamatory letter and had sent it to a person in Ohio. The tort of libel occurs in the locale where the offending material is circulated (published) by the defendant to a third party. Keeton v. Hustler Magazine, Inc. (1984), 465 U.S. 770, 777, 104 S.Ct. 1473, 79 L.Ed.2d 790. In the instant case, [the defamatory] letter was published in Ohio by virtue of its receipt through the mail. Thus, under the principle announced in Keeton, supra, the tort was committed in Ohio. Fallang, 40 Ohio St.3d at 107, 532 N.E.2d 117.”

The court went on to say, “Roberts contends that Ohio's long-arm statute does not confer personal jurisdiction because he did not direct the alleged tortious statements to Ohio or publish them here. Despite the fact that Roberts's publication of his comments did not emanate from Ohio, those comments were received in Ohio. ... In Fallang, 40 Ohio St.3d 106, 532 N.E.2d 117, paragraph one of the syllabus, this court held, Civ.R. 4.3(A)(3) authorizes assertion of personal jurisdiction over a nonresident defendant in a defamation action when publication of the offending communication occurs in Ohio. In Fallang, the defendant had written an allegedly defamatory letter and had sent it to a person in Ohio. The tort of libel occurs in the locale where the offending material is circulated (published) by the defendant to a third party. Keeton v. Hustler Magazine, Inc. (1984), 465 U.S. 770, 777, 104 S.Ct. 1473, 79 L.Ed.2d 790. In the instant case, [the defamatory] letter was published in Ohio by virtue of its receipt through the mail. Thus, under the principle announced in Keeton, supra, the tort was committed in Ohio." Fallang, 40 Ohio St.3d at 107, 532 N.E.2d 117.

“Roberts posted his allegedly defamatory statements on the Internet, ostensibly for the entire world to see. How much of the world saw the comments is unknown; but we do know that at least five Ohioans saw Roberts's statements. The comments were thus published in Ohio. Because Roberts's allegedly defamatory statements were published in Ohio, his alleged tort was committed in Ohio, and he falls within the grasp of R.C. 2307.382(A)(3) and Civ.R. 4.3(A)(3).”

Finally, the court stated, “But even if Roberts did not publish or circulate his statements within the territorial boundaries of Ohio, he is not shielded him from the reach of Ohio's long arm. R.C. 2307.382(A)(6) and Civ.R. 4.3(A)(9) permit a court to exercise personal jurisdiction over a nonresident defendant and provide for service of process to effectuate that jurisdiction if the cause of action arises from a tortious act committed outside Ohio with the purpose of injuring persons, when the nonresident defendant might reasonably have expected that some person would be injured thereby in Ohio, Clark v. Connor (1998), 82 Ohio St.3d 309, 313, 1998 Ohio 385, 695 N.E.2d 751.

Since Roberts published his comments on a medium for all the world to see, it was reasonable for Roberts to expect that the comments would be read in Ohio and thereby injure an Ohio resident.

The question, is how far will this decision go? This case involves defamation. Will this case be used to expand the reach of Ohio courts in breach of contract issues and other non-tortious issues? Only time will tell.