New Jersey Appellate Division sets a higher bar for judgment in suits on unpaid credit cards

The typical suit on a credit card balance is as bare bones as you can get. Typically all the Complaint says is that money is owed on an account. Defending these suits usually falls into one of two categories, either "prove it", or "I don't owe you the money". Typically, at some point the creditor will file a motion for "summary judgment" the jist of which is that there really is no legitimate dispute of fact which needs to take up the court's time on a trial.

That is what happened when LVNV Funding sued Mary Colvel on a Citibank credit card. The trial court granted summary judgment based only on a computer-generated report that showed only a balance due and Ms. Colvel's name. But she disputed that she had gotten any bills on this card or ever had any credit card agreement with Citibank.

On appeal, the New Jersey Appellate Division reversed that judgment, and in doing so, raised the bar a considerable distance to make it harder for lenders to adopt the "because we say so" approach to credit card liability. The Appellate Division has instructed courts that in order to grant summary judgment on an unpaid revolving credit card account, they must be provided a complete account history identifying all transactions and payments or credits, all the applicable periodic rates of interest on the account, all information showing how finance charges are computed on each billing cycle, and the resulting balances. In essence, the lender has to provide the supporting billing statements.

Although this ruling follows the requirements of New Jersey court rules for a default judgment, there is a very good argument that at a contested trial, the lender will have to provide all the same  proofs to obtain a judgment, if the defendant contests liability or the balance due.

This is a standard that few creditors on credit card accounts have been willing to meet. Indeed, the plaintiff is often an entity like LVNV, that bought up a lot of these accounts in bulk, and very likely did not get more than a final statement with the balance owed. Forcing the lender to clear this hurdle creates incentives for settlement.

LVNV Funding LLC v Colvell, decided July 12, 2011 and approved for publication, (Docket No. A-1313-10TC)