American Express Centurion Bank v. Heinz Hengstler

FILED
COURT OF APPEALS
DIVISION II'
2015 MAR 24 AM $ ='
34
IN THE COURT OF APPEALS OF THE STATE OF WASHI
NGTQN
BY 1!
DIVISION II
TY
AMERICAN EXPRESS CENTURION BANK, No. 45463 -7 -II
Respondent, Consolidated with
v. No. 45466 -1 - II
HEINZ HENGSTLER, UNPUBLISHED OPINION
Appellant.
WoRSwIcK, P. J. — In this consolidated appeal, Heinz Hengstler appeals two superior
court orders, each granting summary judgment in favor of American Express Centurion Bank in
a separate credit card collection action. Hengstler argues that the superior court erroneously
granted summary judgment because ( 1) evidence supporting the motion, namely Richard Kier' s
affidavits and account records, were inadmissible; ( 2) issues of material fact existed; ( 3)
American Express did not validate the debt as required by the Fair Debt Collection Practices
Act;' and (4) it held Hengstler to the same standards as an attorney. Because the admissible
evidence presented by American Express did not sufficiently demonstrate the existence of
contracts with Hengstler concerning the credit card accounts on which the debt accumulated, we
reverse both summary judgment orders and remand for further proceedings.
1
15 U. S. C. § 1692.
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FACTS
Heinz Hengstler appeals two superior court orders, each granting summary judgment in
favor of American Express Centurion Bank in separate credit card collection actions; one for the
credit card account ending in 01003 and one for the credit card account ending in 71006.
Although the superior court granted summary judgment on both actions in a single hearing, each
action had its own complaint, summary judgment motion, summary judgment order, and appeal.
We consolidated the two appeals.
A. American Express' s Suits and Hengstler' s Responsive Motions
In both cases, American Express filed complaints in superior court against Hengstler for
unpaid debt on credit card accounts. American Express' s counsel signed the complaints as
Attorney for Plaintiff," but American Express itself did not verify the complaints .2 Clerk' s
Papers ( CP) at 2, 316. Hengstler moved to dismiss American Express' s complaints and for
summary judgment, arguing that he was " not in receipt of any document which verifies that
American Express ... authorized this action or is even aware of it." CP at 4, 318. The superior
court denied Hengstler' s motions.
In both cases, American Express moved for summary judgment, supporting its nearly
identical motions with a declaration of American Express' s attorney3 and two specific exhibits:
Exhibit 1, Kier' s affidavit with identified account records, and Exhibit 2, additional unidentified
account records from the related account.
2CR11.
3 The declaration of American Express' s attorney concerned only American Express' s request
for attorney fees.
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In each case, two attachments accompanied Kier' s affidavits: Attachment A, which
consisted of "[ a] true and correct copy of the Cardmember Agreement in effect at the time of
4
cancellation of [Hengstler' s] Account "; and Attachment B, which consisted of "[t] rue and
correct copies of the monthly Account Statements for [ Hengstler' s] Account for the period
ending May ... 2012." CP at 484, 634 -35.
Kier' s affidavit stated he was an " Assistant Custodian of Records for American Express
Centurion Bank," had personal knowledge of American Express' s regular practices and
procedures regarding their credit card billing procedures, business practices, and recordkeeping,
and had access to and was generally familiar with American Express' s account records. CP at
482, 632. Kier' s affidavit also stated he had personally reviewed Hengstler' s account records,
and had based the statements in his affidavit on either his review of American Express' s records
or his personal knowledge. He further averred that he could competently testify to every fact
within his affidavit. Kier' s affidavit stated that all of American Express' s monthly account
statements were generated by computerized processes and that "[ t] he billing statements and other
documents referred to herein were created at or near either the time of the transactions or the
time the original statements were made and have been kept by American Express in the ordinary
course of business." CP at 483; 633. The two Exhibit 2s to the motions for summary judgment,
which were not attached to Kier' s affidavits and not identified by Kier, appeared to be monthly
account statements for Hengstler' s related accounts from early 2011 through April of 2012.
4
The " cardmember" agreement was unsigned, but stated: " When you use the Account (or you
sign or keep the card), you agree to the terms of the Agreement." CP at 490, 640.
3
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To summarize, two exhibits supported each summary judgment motion: Exhibit 1
consisted of Kier' s affidavit and its two attachments, and Exhibit 2 consisted of unidentified
copies of several monthly statements purportedly from Hengstler' s related account.
B. Specifics ofthe Debts Incurred on Each Account
Kier' s affidavit supporting American Express' s summary judgment motion in the case of
the account ending in 01003 stated that based on Kier' s review of American Express' s records,
Hengstler had opened that account in 1993 and used it to make purchases. The one monthly
account identified by Kier (Attachment B) covered only the one -month period ending May 20,
2012, the most recent period in the record. This statement was addressed to Hengstler' s post
office box, and showed a balance of $6, 180. 66.
Kier' s affidavit supporting American Express' s summary judgment motion in the case of
the account ending in 71006 stated that based on Kier' s review of American Express' s records,
Hengstler had opened that account in 1996 and used it to make purchases. The one monthly
account statement identified by Kier (Attachment B) covered only the one -month period ending
May 9, 2012, the most recent period in the record. That statement was addressed to Hengstler' s
post office box and showed a balance of $25, 411. 39.
Neither statement attached to Kier' s affidavits (Attachment B) showed any of the charges
that caused the debts to accrue. No exhibit attached to Kier' s affidavits provided any evidence
showing that Hengstler personally acknowledged either account, such as cancelled checks or
online payment documentation. And although Kier' s affidavits mention monthly billing
statements, they did not identify or reference either Exhibit 2 of American Express' s summary
judgment motions.
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C. Hengstler' s Response to the Summary Judgment Motions, the Superior Court' s Grant of
American Express' s Summary Judgment Motions, and Appeals
In each case, Hengstler filed a response in the form of "objections" to American
Express' s summary judgment motion, asserting numerous claims. CP at 300, 613. Hengstler did
not file affidavits or otherwise submit evidence in either case.
The superior court resolved American Express' s summary judgment motions in both
cases in a single hearing. The superior court ruled that both Exhibit 1 s and both Exhibit 2s were
admissible under the business records exception to the hearsay rule. Based on these records, the
superior court entered an order granting American Express' s summary judgment motions. In the
case of the account ending in 01003, the order awarded American Express a total judgment in the
amount of $6, 420. 66. In the case of the account ending in 71006, the superior court awarded
American Express a total judgment in the amount of $25, 720. 89. Hengstler appealed both
orders, and we consolidated his appeals.
ANALYSIS
I. KIER' S AFFIDAVITS AND THE ACCOUNT RECORDS
Hengstler argues that the superior court erred by considering both Exhibit 1 s and both
Exhibit 2s. We hold that the superior court properly considered both Exhibit 1 s but erred by
considering both Exhibit 2s.
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CR 56( e) states in part:
Supporting and opposing affidavits shall be made on personal knowledge, shall set
forth such facts as would be admissible in evidence, and shall show affirmatively
that the affiant is competent to testify to the matters stated therein.
Emphasis added.) We review de novo the superior court' s evidentiary decisions on summary
judgment. Farrow v. Alfa Laval, Inc., 179 Wn. App. 652, 660, 319 P. 3d 861, review denied,
Farrow v. Flowserve US, Inc., 181 Wn.2d 1003 ( 2014).
A. Right To Cross- Examine Kier
As an initial matter, Hengstler argues that the superior court erred by relying on both
Exhibit 1 s because Hengstler did not receive the opportunity to cross -examine Kier at the
summary judgment hearing. We disagree.
CR 56( c) allows the superior court to grant summary judgment without hearing
testimony, based on only " pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits." Only after summary judgment " should the matter proceed to
trial and allow [ a party] `` to disprove such facts by cross -examination and by the demeanor of the
moving party while testifying. "' Am. Express Centurion Bank v. Stratman, 172 Wn. App. 667,
676, 292 P. 3d 128 ( 2012) ( quoting Mich. Nat' l Bank v. Olson, 44 Wn. App. 898, 905, 723 P.2d
438 ( 1986)). Thus, the superior court did not err by relying on Kier' s affidavits without
providing Hengstler an opportunity to cross -examine Kier.
B. Business Records Exception: Account Records
Hengstler argues that the superior court erred by ruling that the attachments to Kier' s
affidavits and the Exhibit 2s were admissible under the business records exception to the hearsay
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rule. We hold that Kier' s affidavits established the admissibility of Attachments A and B, but
did not establish the admissibility of the Exhibit 2s.
Hearsay" is " a statement, other than one made by the declarant while testifying at the
trial or hearing, offered in evidence to prove the truth of the matter asserted." ER 801( c).
Hearsay is inadmissible unless it comes within an exception established by statute or common
law. ER 802; State v. Kirkpatrick, 160 Wn.2d 873, 881, 161 P. 3d 990 ( 2007).
Business records of regularly conducted activity are an exception to the hearsay rule.
State v. Iverson, 126 Wn. App. 329, 337, 108 P. 3d 799 ( 2005). RCW 5. 45. 020 governs
admission of business records in Washington State. 126 Wn. App. at 337. RCW 5. 45. 020 states:
A record of an act, condition or event, shall in so far as relevant, be competent
evidence if the custodian or other qualified witness testifies to its identity and the
mode of its preparation, and if it was made in the regular course of business, at or
near the time of the act, condition or event, and if, in the opinion of the court, the
sources of information, method and time of preparation were such as to justify its
admission.
Thus, on summary judgment, the custodian of the records or other qualified witness must
aver to ( 1) the record' s identity, ( 2) its mode of preparation, ( 3) if it was made in the regular
course of business, and ( 4) if it was made at or near the time of the act, condition, or event.
RCW 5. 45. 020; Discover Bank v. Bridges, 154 Wn. App. 722, 726, 226 P. 3d 191 ( 2010). If the
affidavit touches upon each of these elements in regards to a record, that record is generally
admissible. See 154 Wn. App. at 726.
Kier, as the assistant custodian of records for American Express, was a qualified witness
under the statute. Additionally, Kier' s affidavit in each case stated that ( 1) Attachment A to his
affidavit was a true and correct copy of the " cardmember" agreement and Attachment B was a
true and correct copy of monthly statements, ( 2) the monthly account statements were made by a
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computerized process, ( 3) Hengstler' s account records were made in the regular course of
business, and ( 4) they were made at or near the time of the act, condition, or event. Thus,
because Kier' s affidavits established the foundation for admissibility of Attachments A and B,
the superior court properly ruled Attachments A and B admissible under the business records
exception to the hearsay rule.
Kier' s affidavits did not reference or identify either Exhibit 2, did not aver to the identity
of either Exhibit 2, or establish any of the other required foundational elements regarding these
exhibits. Thus, the superior court erred by considering them when determining whether
summary judgment was proper.5
II. GENUINE ISSUES OF MATERIAL FACT
Hengstler argues that American Express was not entitled to summary judgment because it
could not show an absence of genuine issues of material fact. We agree because the Exhibit 1 s
alone were insufficient to demonstrate the existence of a contract between Hengstler and
American Express concerning the credit card accounts at issue.
We review summary judgment orders de novo. Ranger Ins. Co. v. Pierce County, 164
Wn. 2d 545, 552, 192 P. 3d 886 ( 2008). Summary judgment is appropriate if, when viewing the
facts in the light most favorable to the nonmoving party, there are no genuine issues of material
fact and the moving party is entitled to judgment as a matter of law. CR 56( c); Ranger Ins. Co.,
5 Hengstler argues American Express Centurion Bank never employed Kier. It appears
Hengstler is referring to Kier' s declaration supporting American Express' s initial, withdrawn
summary judgment motions, in which Kier stated that he was the " Assistant Custodian of
Records for American Express Travel Related Services Company, Inc.... [ which] is the parent
of American Express Centurion Bank." CP at 15. But in Kier' s affidavits attached to the
summary judgment motions at issue here, Kier stated that he was the Assistant Custodian of
Records for American Express. Thus, Hengstler' s argument fails.
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164 Wn.2d at 552. A genuine issue of material fact exists when reasonable minds could reach
different conclusions. Michael v. Mosquera—Lacy, 165 Wn.2d 595, 601, 200 P. 3d 695 ( 2009).
In a summary judgment motion, the moving party initially bears the burden of submitting
adequate affidavits showing that it is entitled to judgment as a matter of law. 165 Wn.2d at 601;
Ranger Ins. Co., 164 Wn.2d at 552. If the moving party does not sustain its burden, the superior
court should deny summary judgment " regardless of whether the nonmoving party has submitted
affidavits or other evidence in opposition to the motion." Hash v. Children' s Orthopedic Hosp.
Med. Ctr., 110 Wn.2d 912, 915, 757 P. 2d 507 ( 1988).
To be entitled to summary judgment on its claims that Hengstler is responsible for debt
on credit card accounts, American Express was required to demonstrate the existence of a
contract with Hengstler concerning the credit card accounts on which the debt accumulated.
Bridges, 154 Wn. App. at 728. A valid contract requires an objective manifestation of mutual
assent to its terms, which generally takes the form of offer and acceptance. Yakima County ( W
Valley) Fire Prot. Dist. No. 12 v. Yakima, 122 Wn.2d 371, 388, 858 P. 2d 245 ( 1993). The
offeror is the master of the offer and may propose acceptance by conduct. Discover Bank v. Ray,
139 Wn. App. 723, 727, 162 P. 3d 1131 ( 2007).
Here, American Express' s unsigned cardmember agreements in the identified account
records provided that the use of the credit card constituted acceptance of its terms:
When you use the Account ( or you sign or keep the card), you agree to the terms
of the [ Credit Card] Agreement.
CP at 490, 640.
9
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Because the cardmember agreements were unsigned, they did not, by themselves, prove
the existence of a contract. But even in the absence of a signed agreement, establishment of a
defendant' s personal acknowledgement of a credit card account is prima facie proof of assent to
the terms of usage offered by the bank. See Bridges, 154 Wn. App. at 727. Thus, the question
before us is whether the identified account records, the only account records the superior court
could consider, provided sufficient evidence to demonstrate Hengstler personally acknowledged
the debt on the credit card accounts. Our analysis is guided by three cases.
In Ray, the bank supported its motion for summary judgment with four years' worth of
self -generated monthly account statements, a copy of an apparently unsigned cardmember
agreement, and several cancelled checks that the defendant had sent as payment on the debt. 139
Wn. App. at 725. In affirming summary judgment, Division Three of this court held this
evidence sufficient to establish that the defendant used his credit card and thereby assented to the
cardmember agreement' s terms. 139 Wn. App. at 727.
But in Bridges, we reversed the superior court' s grant of summary judgment in the bank' s
favor. 154 Wn. App. at 728. In Bridges, as in Ray, the bank provided copies of self generated
-
monthly account statements for a period of two years and an unsigned cardmember agreement.
Bridges, 154 Wn. App. at 724, 727. But the statements provided only a summary of the account
balance and payments made, which did not constitute " detailed, itemized proof of ... card
usage" by the defendants. 154 Wn. App. at 727. Furthermore, unlike in Ray, the bank did not
provide any evidence that the defendants " acknowledged the debt, for example, through evidence
of cancelled checks or online payment documentation." Bridges, 154 Wn. App. at 727. Because
the bank did not produce any " evidence of the [ defendant' s] personal acknowledgment of the
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account" similar to the cancelled checks in Ray, the evidence was insufficient to establish assent.
Bridges, 154 Wn. App. at 728.
In Citibank South Dakota, NA v. Ryan, 160 Wn. App. 286, 247 P. 3d 778 ( 2011), we
reversed a summary judgment order in favor of Citibank based on similar facts as in Bridges.
The bank submitted copies of 13 months' worth of account statements and an unsigned
cardmember agreement. 160 Wn. App. at 288. The monthly account statements indicated that
payments to the account were made but did not show " how the payments were supposedly
made" and did not " cover the period in which the card was first issued or the majority of the debt
was accumulated." 160 Wn. App. at 288. Based on Bridges, we held that " the bare notation of
supposed payments on the [ monthly] account statements Citibank provided" was not sufficient to
prove that the defendant made the payments. Ryan, 160 Wn. App. at 293. We also rejected the
bank' s claim that it had established use of the card:
None of the notations on the statements offered by Citibank here actually explained
what the supposed purchase was or who it was from. Nor is it clear whether these
were individual " purchases" or were only total amounts for the period covered by
the statement. Moreover, these supposed purchases did not add up to anything near
the total Citibank claimed was owed on the card. And the account statements did
not otherwise provide a basis to match the listed amounts with any particular charge
slip or purchase. The materials Citibank provided thus did not constitute the
detailed and itemized documentation required by Bridges. [61
6 American Express cites Stratman in support of its position. In Stratman, Division One of this
court affirmed summary judgment in the bank' s favor, holding that monthly account statements,
standing alone, were sufficiently detailed and itemized to prove that the claimed debt arose from
card usage. 172 Wn. App. at 674. But the defendant in Stratman did not raise the issue of the
bank' s proof that she personally acknowledged the debt. See 172 Wn. App. at 674. Thus, we do
not read Stratman as excusing the bank from presenting, in the absence of a signed cardmember
agreement, some other evidence showing that the defendant personally used the card or other
such evidence of personal acknowledgement.
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Ryan, 160 Wn. App. at 293.
Here, Kier' s affidavits identified the unsigned credit card agreement and one monthly
account statement addressed to Hengstler' s post office box. These records showed no specific
charges for any items, did not reveal how the debt was accumulated, and did not include any
cancelled checks or online payment documentation showing that Hengstler himself
acknowledged the debt on the credit card accounts. Because these records did not reveal how the
debt was accumulated and did not contain any other evidence of Hengstler' s personal
acknowledgment of the debt, American Express did not provide sufficient evidence to
demonstrate the existence of a contract with Hengstler concerning the credit card accounts on
which the debt accumulated.? Therefore, we hold the superior court erred by granting summary
judgment in American Express' s favor. Because we resolved this issue in favor of Hengstler,
we need not consider Hengstler' s remaining arguments. But because the issues are likely to
recur on remand, we consider and reject Hengstler' s arguments that American Express failed to
validate Hengstler' s debt and that pro se pleadings are to be construed liberally.
7 In addition to arguing that sufficient proof of assent exists, American Express relies on the
account stated" doctrine to demonstrate the existence of a contract with Hengstler. Br. of
Resp' t at 15. An "`` account stated ' is "' a manifestation of assent by debtor and creditor to a
stated sum as an accurate computation of an amount due the creditor. A party' s retention
without objection for an unreasonably long time of a statement of account rendered by the other
party is a manifestation of assent. "' Nw. Motors, Ltd. v. James, 118 Wn.2d 294, 304, 822 P. 2d
280 ( 1992) ( quoting RESTATEMENT ( SECOND) OF CONTRACTS § 282 ( 1981)). But an account
stated determines the amount of a debt, where some preexisting liability existed. It does not in
and of itself primary obligation. 118 Wn.2d at 302; Assoc. Petroleum Prods., Inc. v. Nw.
create a
Cascade, Inc., 149 Wn. App. 429, 437, 203 P. 3d 1077 ( 2009). Because American Express did
not provide sufficient evidence to demonstrate the existence of a contract with Hengstler
concerning the credit card accounts on which the debt accumulated, it did not provide sufficient
evidence to establish a primary obligation. Thus, we do not consider whether the debts' specific
amounts were established under the account stated doctrine.
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III. VALIDATION OF DEBT UNDER THE FAIR DEBT COLLECTION PRACTICES ACT
Hengstler argues that summary judgment was improper because American Express failed
to validate Hengstler' s debt pursuant to 15 U.S. C. § 1692, the Fair Debt Collection Practices Act.
We disagree.
15 U. S. C. § 1692 applies only to debt collectors, which are entities who regularly collect
debts for others, not creditors who are collecting debts on their own behalf. Ray, 139 Wn. App.
at 727. Here, American Express is a creditor attempting to collect debts on its own behalf, not a
debt collector collecting debts for another. Thus, because American Express is not a debt
collector subject to the Fair Debt Collection Practices Act, Hengstler' s claim fails.
IV. PRO SE PLEADING
Hengstler argues that the superior court erred by holding him to the same standards as an
attorney, when federal law requires that pro se pleadings are to be construed liberally. We
disagree.
In federal court, pro se pleadings receive liberal construction. Pouncil v. Tilton, 704 F. 3d
568 ( 9th Cir. 2012); see Haines v. Kerner, 404 U. S. 519, 520 -21, 92 S. Ct. 594 30 L. Ed. 2d 6521972). But in Washington courts, a superior court " must hold pro se parties to the same
standards to which it holds attorneys." Edwards v. Le Duc, 157 Wn. App. 455, 460, 238 P. 3d
1187 ( 2010). This is a procedural rule. Federal procedural rules do not control in state courts.
Adams v. LeMaster, 223 F. 3d 1177, 1182 n. 4 ( 10th Cir. 2000). Thus, the Washington rule
applies and the superior court held Hengstler to the proper standard. 8
8 We note that even if the superior court could have properly considered the Exhibit 2s, summary
judgment would still have been inappropriate. The Exhibit 2s contained monthly account
statements showing small, specific charges for certain items, including the date and amount of
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We reverse both summary judgment orders and remand for further proceedings.9
A majority of the panel having determined that this opinion will not be printed in the
Washington Appellate Reports, but will be filed for public record in accordance with RCW
2. 06. 040, it is so ordered.
d°'#.
f,
Worswick, P. J.
We concur:
individual purchases made and the name of the entity from which the goods or services were
purchased. But they did not show charges made prior to 2011, despite the account in each case
being opened in the mid- 1990' s, and did not reveal how the vast majority of debt on the credit
card accounts was accumulated. They did not show charges that, from the record, could be
attributed only to Hengstler sufficient to show that he personally acknowledged and assented to
the terms of the credit card agreement. Furthermore, they did not include any cancelled checks
or online payment documentation showing Hengstler himself acknowledged the debt.
9 Without explanation, Hengstler argues the superior court lacked subject matter jurisdiction due
to the superior court' s misapplication of the rules of civil procedure, alleged ultra vires actions of
American Express, Kier' s failure to testify at the summary judgment hearing, and the failure of
American Express' s attorney to prove that American Express authorized the suit. Because
Hengstler failed to cite any authority supporting these subject matter jurisdiction arguments, we
do not consider them. Pappas v. State Employment Sec. Dep' t, 135 Wn. App. 852, 858, 146 P. 3d
1208 ( 2006).
14