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CACH, LLC unable to Pin Liability on Individual for Business Credit Card

We usually see CACH, LLC suing on delinquent consumer debts. But this Colorado debt buyer also sues on defaulted business accounts.

But in order to hold an individual liable for a corporate credit-card debt, the law requires documentary evidence of that liability. In CACH, LLC v. Kugelman, the court was unconvinced by CACH’s argument that Kugelman’s individual liability was presumed by his lack of objection to statements allegedly mailed to the corporate address. This presumptive theory is called “account stated,” which operates to create liability based on a series of transactions that point to a sum or “account” as having been explicitly or implicitly agreed upon. Banks and collection lawyers often successfully argue that credit-card statements establish the “series” of transactions, and that a debtor’s failure to object to the most recent statement impliedly establishes the outstanding balance as the “account stated.”

Not so fast, holds the court. Without evidence that Kugelman agreed to be personally liable, CACH was not permitted to use the account-stated theory as an independent basis of liability. In other words, an account-stated theory may only be used after a debtor-creditor relationship is established. Moreover, a failure to object to statements only raises a presumption of assent. And like any other presumption, it may be rebutted by circumstances supporting a different inference.

In this case, CACH’s failure to produce any contract or guarantee implicating Kugelman’s personal liability wiped out its account stated theory. The court was apparently not persuaded by FIA’s Card Services’ affidavit mentioning Kugelman as having opened the account. The court instead pointed to CACH’s lack of business records or documents proving Kugelman’s liability “either primarily or by guarantee.”

Contact us if you have received any document naming CACH, LLC or its attorneys, Daniels Norelli Scully and Cecere, P.C.