Unpublished Disposition, 918 F.2d 181 (9th Cir. 1989)

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U.S. Court of Appeals for the Ninth Circuit - 918 F.2d 181 (9th Cir. 1989)

AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, Plaintiff-Appellee,v.Milo MARCHETTI, Jr. and Joy Marchetti, Defendants-Appellants.

No. 89-55933.

United States Court of Appeals, Ninth Circuit.

Submitted Nov. 8, 1990.* Decided Nov. 13, 1990.



Milo and Joy Marchetti appeal the district court's summary judgment in favor of American Express's claims of breach of contract and dismissing appellants' claims of fraud and harassment. We affirm and grant fees and costs to appellee.


Milo Marchetti, Jr. (Marchetti) obtained an American Express Gold Card in 1982. From 1982 until 1988, he charged an average of less than $1,000 a year with the card, paying promptly with checks drawn on a United States bank. In March 1988, however, his purchasing habits dramatically changed. Between then and August 1988 when his card was cancelled, Marchetti purchased nearly $400,000 worth of goods and services. In addition, rather than continuing to pay with domestic checks, Marchetti began to pay his credit card bills with purported certified "drafts" to be drawn on an entity called "Global Credit Reserve".

Upon receipt of these drafts, American Express temporarily credited Marchetti's account while it presented the drafts for payment. The drafts turned out to be fraudulent, however, and American Express reversed the credit and demanded full payment. Marchetti refused, and American Express brought suit on August 4, 1988 for breach of written contract and fraud against both Marchetti and his wife Joy, who had received an additional card in June 1988. After American Express obtained a preliminary injunction, the Marchettis filed two counterclaims. First, they accused American Express of fraud. Second, they alleged abuse of process, intentional infliction of emotional distress, invasion of personal and financial privacy and interference with economic advantage ("the harassment claim").

At a hearing on July 17, 1989, the district court granted summary judgment in favor of American Express's claims of interference with contract and against the Marchettis' counterclaims. American Express was awarded $381,724.32 against Milo Marchetti and $7,798.18 against Joy Marchetti. The Marchettis timely appealed.


The district court's grant of summary judgment is reviewed de novo. Pope v. Savings Bank of Puget Sound, 850 F.2d 1345, 1356-57 (9th Cir. 1988). Summary judgment is appropriate if there are no genuine issues as to material facts and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c).

The Marchettis first challenge the grant of summary judgment on American Express's claims on interference with contract. They argue that summary judgment was inappropriate because a dispute exists as to whether Marchetti received a copy of the Gold Cardmember Agreement. This dispute does not appear to be genuine.

Although Marchetti claims he never received the Agreement, the facts are undisputed that he signed a Gold Card application and the card itself, both of which referred to the Agreement. Furthermore, American Express produced evidence that its policy is to send the Agreement to cardholders whenever a new card is issued and whenever the Agreement is revised. Marchetti received a card in 1982, the Agreement was revised in 1985 and Joy Marchetti received an additional card in June 1988. Given this evidence, the judge properly discounted Marchetti's claim that he never saw a copy of the Agreement until after the complaint was filed in August 1988. " [I]f the factual context makes the non-moving party's claim implausible [, that party] must come forward with more persuasive evidence ..." Matsushita Electrical Industry Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

It also is unclear how this dispute is material. The summary judgment was on the breach of contract claim, not American Express's claim of fraud. Clearly a contract existed. Marchetti signed a Gold Card application which stated that he would be bound by the Agreement unless he returned the card to American Express. The Gold Card itself stated " [u]se of this card constitutes acceptance ... of the terms and conditions of the Card Member Agreement ...." Even if Marchetti had not read the contract, he can hardly argue that it allowed him to pay off his undisputed debt to American Express with fraudulent instruments.

The Marchettis also claim defenses of discharge by payment, estoppel, novation and accord and satisfaction. The thrust of these defenses is that once American Express accepted payment, even as a temporary credit, it lost its right to complain when the payment turned out to be illusory. The absurdity of this can be seen by analogizing this case to one involving a bad check. The merchant who unknowingly accepts a check drawn on insufficient funds obviously is not barred by that acceptance from pursuing payment when the check bounces. These defenses are totally meritless and summary judgment was properly granted.

The Marchettis next challenge the dismissal of their counterclaims. They fail, however, to point to any disputed issues of fact. Nor do they point to any specific errors in the district court's legal reasoning. This is not surprising, since the district court was clearly correct to dismiss these claims.

The essence of the Marchettis' fraud claim is that because American Express failed to inform the Marchettis that their payments, which they represented to be valid, were actually fraudulent, American Express committed fraud. In order to recover for intentional misrepresentation, the plaintiff must prove: (1) a misrepresentation; (2) knowledge by the defendant of its falsity; (3) intent by the defendant to induce reliance; (4) justifiable reliance by the plaintiff; and (5) resulting damages. Stone v. Foster, 106 Cal. App. 3d 334, 344, 164 Cal. Rptr. 901, 906 (1980). The only "misrepresentation" was American Express's acceptance of the Marchettis' representations that the drafts were valid. As soon as American Express realized the drafts were invalid, it demanded payment. The only "reliance" by the Marchettis was their continuing to make huge credit card purchases, and the only "damages" are the unpaid charges on goods and services that the Marchettis clearly enjoyed.

Equally meritless is the harassment claim. American Express discovered that the Marchettis' payments on nearly $400,000 worth of credit card bills were invalid. It then took legal action to protect its interests. These undisputed facts fail to support any cause of action. Summary judgment dismissing both counterclaims was proper.

The Marchettis' final argument is that because the ultimate judgment against Joy Marchetti was less than $10,000, the court lacked jurisdiction. American Express filed more than one claim against Joy Marchetti, however, and the aggregate was well over the jurisdictional requirement. The amount in controversy is determined as of the time the action is commenced. Sellers v. O'Connell, 701 F.2d 575, 578 (6th Cir. 1983). There is no evidence that damages were claimed solely to invoke federal jurisdiction. American Express was entitled to aggregate its claims, Hunter v. United Van Lines, 746 F.2d 635, 650 (9th Cir. 1984), cert. denied, 474 U.S. 863 (1985), so the district court properly had jurisdiction.

American Express has asked for attorney's fees due to the Marchettis filing a frivolous appeal. "An appeal is considered frivolous in this circuit when the result is obvious or the appellant's arguments are wholly without merit." McConnell v. Critchlow, 661 F.2d 116, 118 (9th Cir. 1987). This definition perfectly fits this case. The Marchettis have failed to raise an issue that is even debatable. The result is a waste of American Express's time and this court's time. Fees and costs are granted to American Express.



The panel finds this case appropriate for submission without oral argument pursuant to Ninth Circuit Rule 34-4 and Fed. R. App. P. 34(a)


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3