John E. Bell v. The May Department Stores Company

By: Lelia Ortega & Brandon Hall

John Bell Background

Bell Purchased a Ceiling fan on 08/22/92, at Famous Barr and charged the purchase price of $132.16 to his Famous Barr credit card account.

A few weeks after the fan was installed, Bell Determined that the fan was defective because it made unacceptable level of noise at all speeds and he was unable to fix it.

9/23/92 Bell inform Famous Barr representative his fan was defective and he didn’t intend to pay it.

John Bell Background

In 9/27/92 Bell sent a letter to Famous Barr memorializing the conversation on 9/23 following the directives on the back of his Famous Barr billing statement and making a general reference to “Regulation Z”.

Again he notified Famous Barr in Nov. statement which contained a past due notice for the unpaid fan.

Famous Barr Background Billed Bell for the cost of the fan on 9/1/92 with payment due on 9/25. Famous Barr never inspected the fan to dispute Bell’s determination. Contacted Bell in November and agreed to locate a placement fan and

reimburse Bell for the installation cost. Details were not discussed, nor was payment agreement finalized. 05/03-10/03 Bell’s statement showed past due notices. 05/04/03 Bell received notice that these negative items would be

reported to the credit bureaus, which prompted him to contact Barr. Barr assured Bell that this would not occur and was an aberration due to the usage of their automated billing and reporting service.

08/03 Bar agrees to credit Bell’s account with all late and finance charges and reinstate his line of credit. Bell also agreed to pay for the fan if Bar sent him a letter allowing the “imminent buyer” of the Bell house to exchange the fan.

09/01/03 Bar asses more fees and finance charges for nonpayment, closes Bell’s account and reports negative information to the credit bureaus.

Famous Barr Background• 09/13/03 Bell sends Famous Bar a copy of their settlement

agreement which prompted Bar to send back written confirmation stating that they would “delete all derogatory information”.

• 10/04 Bell redates his Sept. letter with a check for the price of the fan.

• Later that month Bell finds his account closed due to poor payment history.

• Bell writes to Bar demanding removal of negative credit information, citing Regulation Z.

• Upon receipt, Bar reinstates Bell’s line of credit and faxed letters of correction to the credit agencies.

• It is later discovered that these letters contained the wrong acct. no.

• Summer ’04 Bell applies to the European American Bank and is refused credit based on the negative information reported by Bar.

• Bell finds out that Bar’s negative information was not removed, as well as, that Bar requested to have entirely (largely positive) 22 year credit history with them – removed. Upon this final straw, Bell files suit against Famous Bar.

Bell v. May Department Store Co.Trial History

Bell sued FB for violating Regulation Z of the Truth in Lending Act and not following required procedures when there was a bill dispute.

The case was dismissed at the Trial Court and then Bell appealed.

The case was then reversed at the appellate court.

Court Decision

A reasonable jury could find that a billing error existed and that Famous Barr violated TILA by closing Bells account and reporting it to the credit bureaus.

Bell also has an action against Famous Barr for damaging his credit expectancy.( It is reasonable to believe that Bell had valid credit expectancy because of a long clean credit history but for the derogatory information reported by Famous Barr).

Issues

Accord and satisfaction Application of Regulation Z of the

Federal Truth in Lending Act of 15 U.S.C. 1666 et seq.

Intentional Interference with Credit Expectancy

Argument/ Analysis Famous Bar intentionally caused damage to Bell’s credit. They did not honor their own policies on returning items. They initially agreed to replace to fan, but gave no

specifics of how this would be accomplished. They even after being corrected still reported negative

credit information to the credit bureaus, as well as, closed the credit line of a long time customer unjustly.

They failed to correct their errors with respect to replacing the fan and removing the inaccurate credit information, even after being paid.

Their negligent actions cause harm to Bell, causing him to be denied another line of credit directly due to the negative information provided erroneously by Bell

Plaintiff Cause of Action/ Defendants Answer

Violation of Regulation Z of the Federal Truth in Lending Act of 15 U.S.C. 1666 et seq.

Intentional Interference with Credit Expectancy

Plaintiff Rebuttal/ Defendant’s Response

Plaintiff never rejected the merchandise, he and the defendant mutually entered in accord and satisfaction

Bar had no knowledge of Plaintiff’s credit expectancy

Bar did not intentionally induce any interference

Conclusion

The initial trial was ruled based on summary judgment against Bell

Bell appealed to the Missouri Supreme Court.

The Missouri Supreme Court reversed and remanded back the case to the trial court.