Issuance of Credit Card (Still) Not Subject to CLRA
The Fourth District California Court of Appeal reaffirmed in a published opinion that the issuance of a credit card is not subject to the California Consumers Legal Remedies Act ("CLRA") (Civ. Code § 1750 et seq.). In Ball v. FleetBoston Financial Corporation, the Court of Appeal affirmed the Superior Court's denial of plaintiff's motion for leave to amend her complaint to allege violations of the CLRA and to seek declaratory relief against card issuer FleetBoston, citing prior cases that established "the CLRA does not apply to the issuance of a credit card."
In Ball, plaintiff sued FleetBoston (later Bank of America) for a violation of California's unfair competition law, Business and Professions Code § 17200 et seq., alleging that FleetBoston's cardholder agreement was procedurally and substantively unconscionable. She later filed an amended complaint adding additional allegations of substantive unconscionability. When Ball filed her complaint and first amended complaint, she did not have a credit card account with FleetBoston. After Proposition 64 and subsequent cases confirmed that a non-cardholder had no standing to sue under 17200, Ball opened a credit card account and sought leave to amend her complaint for a second time to allege her new customer status, to allege violations of the CLRA, and to seek declaratory relief. The Superior Court denied plaintiff's motion for leave to amend. Plaintiff appealed.
The Court of Appeal affirmed, citing Berry v. American Express Publishing, Inc. (2007) 147 Cal.App.4th 224, which held that the CLRA does not apply to the issuance of a credit card. Plaintiff attempted to characterize the cardholder agreement as intended to result in the sale or lease of goods or services, and thus subject to the CLRA. The Court disagreed: "the act of extending credit alone is not subject to the CLRA." The Court similarly disposed of plaintiff's proposed declaratory relief allegations, noting that since these allegations were "wholly derivative" of the defective CLRA claims, they were not viable.
In Ball, plaintiff sued FleetBoston (later Bank of America) for a violation of California's unfair competition law, Business and Professions Code § 17200 et seq., alleging that FleetBoston's cardholder agreement was procedurally and substantively unconscionable. She later filed an amended complaint adding additional allegations of substantive unconscionability. When Ball filed her complaint and first amended complaint, she did not have a credit card account with FleetBoston. After Proposition 64 and subsequent cases confirmed that a non-cardholder had no standing to sue under 17200, Ball opened a credit card account and sought leave to amend her complaint for a second time to allege her new customer status, to allege violations of the CLRA, and to seek declaratory relief. The Superior Court denied plaintiff's motion for leave to amend. Plaintiff appealed.
The Court of Appeal affirmed, citing Berry v. American Express Publishing, Inc. (2007) 147 Cal.App.4th 224, which held that the CLRA does not apply to the issuance of a credit card. Plaintiff attempted to characterize the cardholder agreement as intended to result in the sale or lease of goods or services, and thus subject to the CLRA. The Court disagreed: "the act of extending credit alone is not subject to the CLRA." The Court similarly disposed of plaintiff's proposed declaratory relief allegations, noting that since these allegations were "wholly derivative" of the defective CLRA claims, they were not viable.
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