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Mertola, LLC v. Santos

Supreme Court of Arizona

July 27, 2018

Mertola, LLC, Plaintiff/Apellant,
v.
Alberto J. Santos, et al., Defendants/Appellees.

          Appeal from the Superior Court in Maricopa County The Honorable Aimee L. Anderson, Judge No. CV2014-051213

          Opinion of the Court of Appeals, Division One 241 Ariz. 572 (App. 2017)

          James R. Vaughan (argued), Brian K. Partridge, Law Office of James R. Vaughan, P.C., Scottsdale, Attorneys for Mertola, LLC

          Beth K. Findsen, Law Offices of Beth K. Findsen, Scottsdale; Veronika Fabian (argued), Hyung S. Choi, Choi & Fabian, PLC, Chandler, Attorneys for Alberto Santos and Arlene Santos

          Susan Mary Rotkis, Consumer Litigation Associates West, PLLC, Tucson, Attorneys for Amicus Curiae Arizona Chapter of the National Association of Consumer Advocates

          Ellen Sue Katz, Lisa Moore, William E. Morris Institute for Justice, Phoenix, Attorneys for Amicus Curiae Community Legal Services, Southern Arizona Legal Aid and the William E. Morris Institute for Justice

          Gary J. Cohen, Mesch Clark Rothschild, Tucson, Attorneys for Amicus Curiae The National Creditor Bar Association and the Arizona Creditor Bar Association

          BRUTINEL JUSTICE authored the opinion of the Court, in which BALES CHIEF JUSTICE, PELANDER VICE CHIEF JUSTICE, and TIMMER, BOLICK, GOULD and LOPEZ JUSTICES joined.

          BRUTINEL JUSTICE, opinion of the Court.

         ¶1 Mertola, LLC, sued Alberto Santos and his wife Arlene Santos (collectively, "Santos") to collect an outstanding credit-card debt. Although the credit-card agreement gave the creditor the option of declaring the debt immediately due and payable upon default, we hold that even if that option was not exercised, the cause of action to collect the entire debt accrued as of the date of Santos's first uncured missed payment. Mertola's claim was barred by the statute of limitations six years after that date pursuant to A.R.S. § 12-548(A)(2).

         I. BACKGROUND

         ¶2 Santos acquired a credit card from Washington Mutual Bank ("the Bank"). The card was issued with a $25, 000 credit limit under the terms of the Bank's Account Agreement, which required monthly minimum payments with interest. Under the Account Agreement, if Santos "fail[ed] to pay any amount due," the Bank had the right to "declare [the] Account balance immediately due and payable." The Account Agreement further stated that Santos waived any right to notice of acceleration.

         ¶3 From August 2007 to January 2008, Santos repeatedly made late minimum payments, and pursuant to the Account Agreement the Bank increased its finance charges and began charging late fees. Santos missed the February 2008 payment completely and never made another minimum payment, although he made a $50 payment - below the minimum due - in August 2008.

         ¶4 The account continued to accrue interest until the Bank charged it off (i.e., treated it as a bad debt) later in 2008, at which point the unpaid balance was $17, 066.91. Eventually, Mertola acquired Santos's debt and, on July 18, 2014, sued ...


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