Spengler v. Sears, Roebuck & Co.

SHARER, J. Arthur J. Spengler, Jr., appellant, declined to pay certain credit card debt, which he maintained he did not owe, to appellee, Sears, Roebuck & Company. As a result, Sears reported Spengler’s delinquencies to various credit rating agencies, causing impairment to his credit standing. Spengler filed a four-count complaint in the Circuit Court for Wicomico County, alleging: (1) that he was entitled to a declaratory judgment relieving him of the debt; (2) breach of contract; (3) defamation; and (4) interference with business relations. The trial court granted Sears’ motion for judgment as to the breach of contract and defamation counts; Spengler voluntarily withdrew the count for declaratory judgment; and the case went to the jury on the single count of interference with business relations.

Favoring appellant, the jury awarded $145,000 in damages. Sears filed a timely motion for judgment notwithstanding the verdict, which, following a hearing, the court granted. Aggrieved at the loss of his favorable verdict, Spengler has noted this appeal. Spengler presents for our consideration seven questions, which, as distilled and recast are: 1 ²²⁷ I. Whether the circuit court erred in granting Sears’ motion for judgment on the breach of contract and defamation counts.

II

Whether the circuit court erred in granting Sears’ motion for judgment NOV on the interference with business relations count.

III

Whether the circuit court erred in granting Sears’ motion for judgment on the claim for punitive damages.

IV

Whether the circuit court abused its discretion in excluding evidence of other lawsuits filed by Sears. V. Whether the circuit court erred in denying Spengler’s request for a spoliation instruction. Our answer to each of the questions is “No”; thus, we shall affirm. 2 FACTUAL BACKGROUND In 1989, Spengler opened a credit card account with Sears. He added his wife to the account as an “authorized user” in ²²⁸ 1996.

In 1997, in what Spengler asserts was an effort to terminate his account, he paid the account balance and destroyed the account credit card. The last date of purchase on the card was July 17, 1997. In a lapse that would become central to this litigation, Spengler never notified Sears that he wished to close the account — he merely destroyed the card— nor did he ever advise Sears that his wife was no longer an authorized user. The User Agreements The relationship between Spengler and Sears involved three account user agreements, the first in 1996. 3 That agreement provides, in pertinent part: CHANGE IN TERMS — CANCELLATION.

As permitted by law, Sears has the right to change any term or part of this agreement.... Sears will send me written notice of any such changes when required by law. Sears also has the right to cancel this agreement as it relates to future purchases. I agree to return all credit cards to Sears upon notice of such ' cancellation.

XXX CHANGE OF RESIDENCE: If I change my residence, I will inform Sears. * X X AUTHORIZED BUYERS: This agreement controls all charges made on [my] account by me or any other person I authorize to use the account. If I claim that charges are unauthorized, I agree to cooperate with Sears in its reasonable investigation of my claim. X X X CREDIT INVESTIGATION AND DISCLOSURE: Sears has the right to ... report the way I pay the account to credit bureaus and other interested parties[.] *■ * * ²²⁹ If you fail to pay the amount [Sears] think[s] you owe, [Sears] may report you as delinquent. However, if [Sears’] explanation does not satisfy you and you write to [Sears] within ten days telling [Sears] that you still refuse to pay, [Sears] must tell anyone [it] report[s] you to that you have a question about your bill[.] (Alterations added.) In 1997, the account agreement was revised, providing in relevant part: BASIC AGREEMENT ACCEPTANCE AND LIABILITY. 1 am responsible for all amounts owed on my account.

I agree to pay all amounts owed on my account according to the terms of this agreement. This agreement is effective when any account holder or authorized user either uses the account, activates the card, or takes any other action which indicates acceptance of the account or card. AUTHORIZED BUYERS. This agreement controls all charges made on the account by me or any person I authorize to use my account.

If I believe or claim that any charges are unauthorized, I agree to notify [Sears] immediately ... Unauthorized use does not include use by a person to whom I have given the credit card or authority to use the account and I will be liable for all use by such person. To terminate this authority, I must notify [Sears]. I will attempt to retrieve the credit card from the previously authorized user and return it to [Sears] at the address mentioned above along with a letter explaining my action.

PHONE CALLS, CREDIT INVESTIGATION, REPORTING & INFORMATION SHARING ²³⁰ CREDIT INVESTIGATION AND DISCLOSURE OF INFORMATION____ If I fail to fulfill the terms of this agreement, a negative report reflecting on my credit record may be submitted to a credit reporting agency. I may notify [Sears] by telephone ... if I believe [Sears] has reported inaccurate information regarding my account to a credit reporting agency. :|: * * FUTURE CHANGES CHANGE OF TERMS — CANCELLATION. As permitted by law, [Sears] has the right to change any term or part of this agreement, including.... [Sears] will send me written notice of any such changes when required by law. [Sears] also has the right to cancel this agreement as it relates to future purchases or other charges as any time. I agree to return all credit cards to [Sears] upon notice of such cancellation.

CHANGE OF RESIDENCE. If I change my residence, I will inform [Sears]. (Alterations added.) Finally, the account was again revised in July 1999: Section 2. LOANS AND LIABILITY * * * (b) Liability.

You agree to pay all amounts owed on the Account whether incurred by you, any other account holder, anyone you allow to use the Account or any person from which you receive a benefit. Every person who uses the Card or Account is liable for the use of the Card and Account according to the terms of this Agreement. Court decrees for divorce or separation do not affect liability for any use of the Card of Account. * * * Section 4. AUTHORIZED AND UNAUTHORIZED USE. ²³¹ (a) Authorized Users.

You may ask that an individual be added, deleted or changed as an authorized user (“Authorized User”) by calling ... or writing us.... You understand we will issue a Card to each Authorized User. If you terminate this authority, you will retrieve the Card from the Authorized User and destroy the Card. Any Authorized User may use the Account, and may take any action on the Account that you could take, either on behalf of yourself or the Authorized User.

You understand that ... (ii) you are responsible for and will pay all charges made by the Authorized User ... AND (v) we may, without any liability, accept and act upon the directions and requests of any Authorized User[.] * * * Section 23. CHANGE OF TERMS.

We may, at any time and subject to applicable law: * * * Change any term or condition of this Agreement relating to your account ... We will send you a written notice of any such change(s) or addition(s) as required by law. Section 24. TERMINATION.

You may terminate this Account at any time by paying all sums due under this Agreement and destroying all cards issued on the Account. We may, at any time without prior notice to you, terminate this Agreement[.] * * * Section 25. YOUR NOTICE OF CHANGES. You will promptly inform us if you change your name, residence or place of employment....

We may continue to send Account Statements and other notices to the last address we maintained on the Account until you notify us of any change. (Alterations added.) A significant distinction among the three agreements is that neither the 1996 nor 1997 agreement contains a provision ²³² detailing what an account user must do to terminate an account. The 1999 revision is more precise in that regard. In January 2001, Spengler and his wife separated, and Spengler moved out of the marital residence.

He did not provide Sears with his new address. A few months later, in approximately March 2001, Sears sent out a bulk mail “campaign mailer” to its account holders, one of which was addressed to the Spengler household where, of course, appellant no longer resided. Because he had not advised Sears of a new address, Spengler did not receive the mailing. The face of the mailer contained the following words: “Congratulations!

You have been selected to receive an upgrade to the new Sears Gold MasterCard — offered only to valued customers.” Additionally, the mailer provided: “Your upgrade is automatic — there’s nothing you need to do. Your Sears Gold MasterCard automatically replaces your Sears Card ... [I]f you choose not to be upgraded to the Sears Gold MasterCard, you must call us at the number below.” On the reverse side of the mailer was the advice: “Sears Gold MasterCard. It automatically replaces your Sears Card.” Spengler’s wife received the mailer and activated the new Sears Gold MasterCard. Subsequently, she transferred a balance of $4,446.50 from another credit card. 4 The Sears Gold MasterCard account statement of April 20, 2001, reflects an outstanding balance due of $5,638.43.

In some manner, not abundantly clear from the record, Spengler became aware of that statement. Having learned of the balance, Spengler promptly contacted Sears and did the following: advised Sears of his new address, directed Sears to terminate Mrs. Spengler’s “authorized user” status, and requested that Sears cancel the Sears Gold MasterCard. Sears complied by cancelling the account and removing Mrs. Spengler’s status as an “authorized” user. On August 24, 2001, Spengler notified Sears in writing of his refusal to repay the amount on the account.

On January 18, ²³³ 2002, Sears responded, advising Spengler that it had investigated the charges, determined them to be “authorized”, and, consequently, reinstated Spengler’s liability for the balance. From April 2001, until April 24, 2003, 5 Spengler and Sears exchanged numerous communications, but failed to resolve the issue of the charges. Because of Spengler’s failure to pay the account, Sears reported the delinquency to three credit rating agencies (Ex-perian, Equifax, and TransUnion). Spengler claims that from July 2001, to September 2003, he was repeatedly refused credit. 6 We shall address additional relevant facts as necessary.

PROCEDURAL HISTORY Spengler commenced the instant litigation against Sears on April 24, 2003, when he filed the complaint to which we have referred, supra, seeking both compensatory and punitive damages. Sears raised several affirmative defenses, including federal preemption of Spengler’s state law tort claims. Trial commenced, and was concluded, on May 27, 2004. Spengler called five witnesses — himself, his two daughters, Jai Holtz (a Sears representative), and Evan Hendricks.

The latter was qualified as an expert in the field of “credit scores, credit reports, how the [credit] system works, how to read and interpret credit reports, Fair Credit Reporting Act issues, including consumers’ rights and duties on credit grantors reporting data.” 7 The testimony was brief — Spengler described his surprise at learning of the account balance and his efforts to avoid the responsibility for the account. Holtz described the dispute ²³⁴ from the Sears perspective. Spengler’s daughters testified as to the emotional upset suffered by their father as a result of the dispute. Hendricks’s testimony, although more substantial than that of other witnesses, offered, as a matter of fact, what is not disputed — that, as a result of the delinquency, Spengler’s credit rating had been seriously impaired. 8 He offered no opinion that Sears had conducted the transactions contrary to established standards in the industry, or that Sears had singled Spengler for extraordinary treatment.

At the conclusion of Spengler’s case, Sears moved for judgment on all four counts and the punitive damages claim. The circuit court granted the motion as to the punitive damage claim and breach of contract count, but reserved its ruling on the defamation and interference with business relations counts. At that time, Spengler dismissed his declaratory judgment count. Sears called no witnesses and renewed its motion to the remaining counts.

The court granted the motion as to the defamation count, but reserved its ruling as to the interference count, and permitted the jury to consider that count. The jury returned a verdict for Spengler on the interference count, awarding $45,000 in economic damages and $100,000 in non-economic damages. Pursuant to Md. Rule 2-532, Sears moved for judgment notwithstanding the verdict. The court convened a hearing on May 28, 2004, and, on June 3, 2004, in a -written opinion and order, granted the motion.

DISCUSSION I. Whether the circuit court erred in granting Sears’ motion for judgment on the breach of contract and defamation counts. We conclude that the circuit court appropriately granted Sears’ motion for judgment as it relates to the count of breach ²³⁵ of contract and defamation. We address each count in turn, infra. Standard of Review Md. Rule 2-519 provides: (a) Generally.

A party may move for judgment on any or all of the issues in any action at the close of the evidence offered by an opposing party, and in a jury trial at the close of all the evidence ... (b) Disposition. When a defendant moves for judgment at the close of the evidence offered by the plaintiff in an action tried by the court, the court may proceed, as the trier of fact, to determine the facts and render judgment against the plaintiff or may decline to render judgment until the close of all the evidence. When a motion for judgment is made under any other circumstances, the court shall consider all evidence and inferences in the light most favorable to the party against whom the motion is made.

Md. Rule 2-519(a), (b) (2005) (alterations added). In reviewing the grant of a motion for judgment, we “assume the truth of all credible evidence on the issue, and all fairly deducible inferences therefrom, in the light most favorable to the party against whom the motion is made.” Orwick v. Moldawer, 150 Md.App. 528, 531 , 822 A.2d 506 (2003) (citing Nissan Motor Co. Ltd. v. Nave, 129 Md.App. 90, 116-17 , 740 A.2d 102 (1999)). Consequently, we “may affirm the grant of the motion for judgment only if ... we conclude that there was insufficient evidence to create a jury question.” Wilbur v. Suter, 126 Md.App. 518, 528 , 730 A.2d 693 (1999) (alterations added) (citing Nationwide Mut. Fire Ins.

Co. v. Tufts, 118 Md.App. 180, 189 , 702 A.2d 422 (1997)). Breach of Contract The essence of a credit card account is the facility of payment for purchases made by the cardholder. Businesses need not maintain numerous customer accounts as in times past; rather, all charges flow through the credit card company ²³⁶ to the cardholder. The vendor is paid on a timely and regular basis by the card issuer, less a commission to the issuer for its collection services.

The cardholder and the card issuer, in turn, contract regarding use of the credit card and terms of payment. Sears and Spengler contracted in 1989. Sears offered to extend credit to Spengler, subject to his credit level and maintenance of timely payment. Spengler accepted that offer.

Subsequently, Spengler expanded the terms of the contract by adding his wife to the account as an “authorized user.” 9 Sears accepted the expanded terms. Spengler later sought unilaterally to terminate the agreement; however, he did not do so in compliance with the terms of the contract. The facts relevant to that issue are undisputed. In 1997, Spengler destroyed the credit cards, paid the balance then due, and requested that his wife notify Sears that he wished to terminate the account.

She did not do so. In 2001, as we have seen, Spengler moved out of the marital residence. Mrs. Spengler remained in the marital home. To his ultimate detriment, Spengler did not advise Sears of his change of address, believing that he had terminated the credit card contract some years before. 10 The events that led to Spengler’s subsequent liability on the account occurred some time in 2001, when Sears mailed, unsolicited, and apparently in bulk, to Sears credit card holders, offers for the “new Sears Gold MasterCard.” One of the offers was mailed to Spengler at the address that Sears had ²³⁷ for him — what had been his residence before the separation.

The notice provided: “Your upgrade is automatic — there’s nothing you need to do. Your Sears Gold MasterCard automatically replaces your Sears Card ... [l]f you choose not to be upgraded to the Sears Gold MasterCard, you must call us at the number below.” Thus, the burden, and the ability, to reject the offer was on the cardholder. The reverse side of the mailer stated: “Sears Gold MasterCard. It automatically replaces your Sears Card.” The new Sears Gold MasterCard permitted an account holder to use the card anywhere that MasterCard was accepted, thereby permitting greater purchasing options in the form of non-Sears purchases and transfers of existing non-Sears’ card balances. 11 Spengler, no longer living at his former home, and not having advised Sears of his new address, did not receive the offer. 12 Mrs. Spengler did receive the offer and, as an “authorized user,” accepted by activating the new Sears Gold MasterCard.

She subsequently accrued significant debt on the Sears Gold MasterCard, by both transferring a balance from another card and making new purchases. 13 Spengler argues that the facts constitute sufficient evidence to generate a jury question as to a breach of contract. He posits that the jury could find that: (1) the Sears Gold MasterCard account was a new product and not simply an upgrade of an existing account; (2) Spengler had validly terminated the Sears account in 1997 and, therefore, there existed no account to upgrade; and (3) Sears allowed the ²³⁸ authorized user to exceed the powers, if any, conferred upon her by him as the primary account holder. 14 In the breach of contract count of his complaint, Spengler asserts: • 13. [Sears] breached its obligations to [Spengler] under the Sears Card by allowing Joyce Spengler to make retail purchases from merchants other than [Sears] and to obtain extensions of credit, including transfers of her individual debt to [Spengler’s] account---- 14. [Sears] breached its obligations to [Spengler] under the Sears Card by failing and refusing to reverse and to otherwise nullify the unauthorized extensions of credit under the ... MasterCard account established in [Spengler’s] name. By the terms of the 1996 agreement, Spengler, as the cardholder, agreed, inter alia, to be responsible for charges made by authorized users.

He also agreed to notify Sears of a change of address. Those promises were ratified in the 1997 amendments to the contract. The 1999 amendments to the account contract provided, for the first time, that an account could be terminated by the card-holder by (1) payment of the balance due and (2) destruction of the cards. That is, of course, what Spengler had done in 1997, thinking, mistakenly, that he had terminated the account.

Spengler argues that the 1999 amendments to the contract were not relevant to his account, maintaining that he had no account after 1997 when he destroyed his Sears cards. That position, we conclude, lacks merit. As we have explained, having done nothing under the terms of the contract to terminate the account, or to remove his wife as an authorized user, the account remained active, although unused for some period of time. Each of the agreements authorized Sears to amend the terms of the credit card use, providing ²³⁹ notice was given to the cardholder.

In each instance, Sears gave the requisite notice. It is difficult to view the instant record without concluding that Spengler’s own inaction resulted in the continuation of the account. Spengler, in 1997, both failed to notify Sears that he intended to terminate the account, and to verify that Mrs. Spengler had notified Sears of the termination, as he had requested of her. Sears had no reason to be aware that the account was other than viable. 15 “The interpretation of a written contract is ordinarily a question of law for the court and, therefore, is subject to de novo review by an appellate court.” Wells v. Chevy Chase Bank, F.S.B., 363 Md. 232, 250 , 768 A.2d 620 (2001). “Where the language of the contract is unambiguous, its plain meaning will be given effect.

There is no need for further construction.” Aetna Cas. & Sur. Co. v. Ins. Com'r, 293 Md. 409, 420 , 445 A.2d 14 (1982). We concur in the trial court’s implicit finding that the contracts were unambiguous and thus susceptible to its ruling as a matter of law.

Defamation Spengler’s complaint in defamation stated: 17. [Sears] has made false statement to divers [sic] persons and entities concerning the credit history of the credit account which [Spengler] established with [Sears]. The falsity of the statements was known to [Sears], and, with malice and with the intention of causing harm to [Spengler], the false statements regarding [Spengler’s] credit history were published in such a manner as to maximize the damage to [his] credit reputation. 18. [Sears] made ... statements [about Spengler’s late payment history] with actual malice and with knowledge of ²⁴⁰ their falsity and for the purpose of discouraging others to extend credit to or to otherwise have business dealings with [Spengler]. At the conclusion of plaintiffs evidence, Sears moved for judgment on the defamation count. The trial court reserved its ruling at that time but, by granting the motion at the close of all the evidence, effectively ruled that, there having been no breach of contract, the reports by Sears were not untruthful.

Spengler asserts in his brief that “there was an abundance of evidence from which a rational mind could have found the requisite intent to harm” in the reports by Sears to the three credit rating agencies. 16 With respect to defamation, the Court of Appeals iterated: Under Maryland law, to present a prima facie case for defamation, a plaintiff must ordinarily establish that the defendant made a defamatory statement to a third person; that the statement was false; that the defendant was