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Slide Notes
My name is Luke Cerullo and today I will be presenting my Dennegar Liability Presentation.This presentation will serve to provide theories and factors which contributed to the final verdict of New Century Financial Services v. Dennegar, which concluded with Lee Dennegar being held liable for the credit card charges conducted under his name.
Dennegar Liability Presentation - Luke Cerullo
Published on Mar 10, 2020
Presentation of theories which demonstrate why Lee Dennegar is liable for the credit card charges assigned to New Century Financial Services.
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PRESENTATION OUTLINE
Dennegar Liability Presentation
Luke Cerullo
My name is Luke Cerullo and today I will be presenting my Dennegar Liability Presentation.This presentation will serve to provide theories and factors which contributed to the final verdict of New Century Financial Services v. Dennegar, which concluded with Lee Dennegar being held liable for the credit card charges conducted under his name.
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WHAT HAPPENED?
To begin, let us briefly review the scenario of Mr. Dennegar who, while the named charges were incurred, had been sharing his living space and specific duties of the household with Mr. Mark Knutson. These duties which had been delegated to and expected of Mr. Knutson included: financial management of the property’s affairs, handling of mail, and even check-writing privileges drawn off of Mr. Dennegar’s own accounts.
(New Century Financial Services Inc v. Dennegar, 2007)
(New Century Financial Services Inc v. Dennegar, 2007)
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Why was Lee Dennegar held liable?
- Mr. Knutson was deemed an agent
- Financial authority had been ceded to Mr. Knutson
- Credit card's usage was not "unauthorized"
- TILA provisions found Mr. Dennegar's oversight careless
- (New Century Financial Services Inc v. Dennegar, 2007)
Given these associations and Mr. Knutson’s believed usage of the card, why was Lee Dennegar held liable?
The heart of the case was built on Mr. Knutson having been deemed an agent of Mr. Dennegar . The trial judge found that the defendant had authorized Mr. Knutson to conduct the financial affairs of the household leading up to and during the period in which these charges were incurred. Mr. Dennegar also acknowledged that some of the charges on the account were the type of purchases that Mr. Knutson was authorized to make for the household equating to usage which does not qualify as unauthorized. And lastly, provisions under the Truth in Lending Act found Mr. Dennegar’s oversight of the situation and delegated authority to Mr. Knutson, as careless, negligent conduct thus voiding protections.
(New Century Financial Services Inc v. Dennegar, 2007)
The heart of the case was built on Mr. Knutson having been deemed an agent of Mr. Dennegar . The trial judge found that the defendant had authorized Mr. Knutson to conduct the financial affairs of the household leading up to and during the period in which these charges were incurred. Mr. Dennegar also acknowledged that some of the charges on the account were the type of purchases that Mr. Knutson was authorized to make for the household equating to usage which does not qualify as unauthorized. And lastly, provisions under the Truth in Lending Act found Mr. Dennegar’s oversight of the situation and delegated authority to Mr. Knutson, as careless, negligent conduct thus voiding protections.
(New Century Financial Services Inc v. Dennegar, 2007)
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Agency theory case
- Principal-agent relationship defined by delegation of tasks to agent w/ oversight performed by principal (Ciochina-Barbu, 2015)
- Mr. Dennegar demonstrated such a relationship with Mr. Knutson
- Financial affairs of property, mail duties, check-writing authority were all delegated
- Credit card usage was tied to the fulfillment of these tasks
- (New Century Financial Services Inc v. Dennegar, 2007)
Naturally, one may ask why Mr. Knutson was deemed an agent. To preface, a principal-agent relationship can be defined by:
“the existence of a report of subordination which has its basis on the agreement between them, a person entrusted to an individual a particular task. From this task it arises the first person or principal - to give instructions, to direct, guide and control the activity of the other person - the agent - with the latter having an obligation to follow these instructions.” (Ciochina-Barbu, 2015).
In Mr. Dennegar’s case it was found he had entrusted the financial affairs of his property to Mr. Knutson as supported by his delegation of mail duties and bordelrine reckless check-writing authority that allowed Mr.Knutson to even sign as Dennegar himself. Mr. Knutson’s usage of the credit card was deemed both acceptable and realistic to support his expected duties which evidence of house-related expenses on statements supports further.
(New Century Financial Services Inc v. Dennegar, 2007)
“the existence of a report of subordination which has its basis on the agreement between them, a person entrusted to an individual a particular task. From this task it arises the first person or principal - to give instructions, to direct, guide and control the activity of the other person - the agent - with the latter having an obligation to follow these instructions.” (Ciochina-Barbu, 2015).
In Mr. Dennegar’s case it was found he had entrusted the financial affairs of his property to Mr. Knutson as supported by his delegation of mail duties and bordelrine reckless check-writing authority that allowed Mr.Knutson to even sign as Dennegar himself. Mr. Knutson’s usage of the credit card was deemed both acceptable and realistic to support his expected duties which evidence of house-related expenses on statements supports further.
(New Century Financial Services Inc v. Dennegar, 2007)
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"unauthorized usE" case
- Mr. Dennegar claimed all charges were unauthorized
- Re-iterated the card was not willingly lent to Mr. Knutson which would otherwise leave him liable (Mercado, 2018)
- Benefits were nonetheless received voiding the definition of "unauthorized use" (Legal Information Institute, n.d.)
- Within context of Mr. Knutson's other duties, the usage was deemed not "unauthorized"
Despite evidence of the card’s usage including house-related expenses, Mr. Dennegar pleaded that the charges were still nonetheless unauthorized as he had not granted authority to Mr. Knutson to open the card or use it to fulfill his duties. Normally, cards which are willingly lent to other persons and are then abused are still liable to the cardholder (Mercado, 2018).
However, Mr. Dennegar stated this was not the case as there was no “willing” hand-off. And yet given the tasks Mr. Knutson had been actively fulfilling and the statement evidence, the definition of “unauthorized use” was breached—in that it must be conducted by a person other than the cardholder who does not have authority for such use and from which the cardholder receives no benefit (Legal Information Institute, n.d.).
Mr. Dennegar did receive benefit as necessary expenses were paid, and when viewing this activity within the context of Mr. Knutson’s other duties, the judge ruled the charges were not in fact not “unauthorized”.
(New Century Financial Services Inc v. Dennegar, 2007)
However, Mr. Dennegar stated this was not the case as there was no “willing” hand-off. And yet given the tasks Mr. Knutson had been actively fulfilling and the statement evidence, the definition of “unauthorized use” was breached—in that it must be conducted by a person other than the cardholder who does not have authority for such use and from which the cardholder receives no benefit (Legal Information Institute, n.d.).
Mr. Dennegar did receive benefit as necessary expenses were paid, and when viewing this activity within the context of Mr. Knutson’s other duties, the judge ruled the charges were not in fact not “unauthorized”.
(New Century Financial Services Inc v. Dennegar, 2007)
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Truth in lending & negligence case
- Provisions under the TILA require determinations of how debts in question were accrued (New Century Financial Services Inc v. Dennegar, 2007)
- Mr. Dennegar executed weak oversight over Mr. Knutson's actions
- Evidence of statement mailings and payments, albeit limited, provided sufficient reason for his awareness of the card
- Mr. Dennegar was guilty of contributory negligence as he failed to take care of his own financial well-being which was causally related to the damages/debts incurred (Goudkamp, 2015)
The final blow to Mr. Dennegar’s defense came about by the judge’s identification of his staggeringly weak oversight of Mr. Knutson’s actions. The Truth in Lending Act, which serves to protect borrowers, also demands a determination of how such debts are incurred. Given this weak oversight, the judge saw no reason that these protections impede the plaintiff’s claim. Mr. Dennegar, amidst the regular receival of bank statements and payments, albeit limited, made towards the credit card from his own account, had more than sufficient reason to be aware of the card and its usage.
(New Century Financial Services Inc v. Dennegar, 2007)
Conscious or not, Mr. Dennegar was also guilty of contributory negligence as he failed to take care of his own financial well-being in form of discretionary oversight, which due to its causal relation to the debts incurred, also rendered him liable (Goudkamp, 2015).
(New Century Financial Services Inc v. Dennegar, 2007)
Conscious or not, Mr. Dennegar was also guilty of contributory negligence as he failed to take care of his own financial well-being in form of discretionary oversight, which due to its causal relation to the debts incurred, also rendered him liable (Goudkamp, 2015).
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verdict
Mr. Dennegar’s failures were a culmination of an agent relationship gone wrong. Despite the likely initial success of Mr. Knutson to fulfill his appointed duties, Mr. Dennegar as the mortgage holder, and financial foundation of the household, had a duty to nonetheless review his finances and oversee the operations of Mr. Knutson. Whether the debts incurred were a product of willful ignorance or blatant negligence is irrelevant, in the end he paid the price for his careless delegation of matters of great importance.
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References
- Ciochina-Barbu, I. (2015). The principals' liability for their agents in regulating the new civil code. Acta Universitatis George Bacovia, (2), 67-79. Retrieved from https://search.proquest.com/docview/1787152394?accountid=33575.
- Fisher, J.A.D. (n.d.). NEW CENTURY FINANCIAL SERVICES INC v. DENNEGAR. Retrieved from http://caselaw.findlaw.com/nj-superior-court-appellate-division/1263011.htm....
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References
- Goudkamp, J. (2015). Apportionment of damages for contributory negligence: A fixed or discretionary approach? Legal Studies, 35(4), 621-647. doi:http://dx.doi.org/10.1111/lest.12083.
- Legal Information Institute. (n.d.). 15 U.S. Code § 1602.Definitions and rules of construction. Cornell Law School. Retrieved from https://www.law.cornell.edu/uscode/text/15/1602.
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References
- Mercado, D. (2018). Don’t trust family members with your credit card. CNBC – Personal Finance. Retrieved from https://www.cnbc.com/2018/03/07/lending-credit-cards-to-friends-and-family-....
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