Question: Does a bank that enters into an agreement with a company to issue a business charge card have a duty to disclose to the card owner, before issuing a card to another person authorized to use the card, that the bank's affiliate had previously obtained a default judgment against that person for not paying his own charge card bill? Answer: No, according to the Second District Court of Appeal in American Express Bank, FSB v. Kayatta, No. B223686 (decided Nov. 29, 2010).
In this case, American Express Bank entered into an agreement with a business to issue a business charge card. Plaintiff Kayatta, as the company's "Authorizing Officer," agreed to pay for all amounts charged on the card. Kayatta paid all charges he personally incurred but declined to pay for charges incurred by employee Robert Francis, who also used the card. The Bank filed suit.
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