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A Nassau County, N.Y., Supreme Court justice has refused to throw out an action against a major credit card issuer arising from what he called “the relatively new and profound problem” of identity theft. Plaintiff Todd B. Fritzhand has accused Discover Financial Services of negligence in connection with $14,000 in unauthorized charges that eventually resulted in a reduction of his credit rating. Justice William R. LaMarca, in Fritzhand v. Discover Financial Services Inc., No. 002165-2005, denied a motion by Discover to dismiss the case on statute of limitations grounds even though the judge acknowledged that Fritzhand’s action had been commenced after the applicable period had passed. According to LaMarca’s decision, Fritzhand claims that he received a series of calls during the winter of 2000-2001 from collection agents who said that he owed $14,000 for Discover credit card purchases. According to Fritzhand, he responded that he did not have a Discover card, and the calls eventually stopped. Fritzhand maintains that the matter rested there until 2004 when he and his wife applied for a new home mortgage. At that point, Fritzhand claims he learned that four credit cards had been surreptitiously issued in his name but with a billing address not known to him. Soon after learning of the problem, he filed a police report. Fritzhand then contacted the card issuers. When told of the apparent case of identity theft, three of the companies agreed to cancel the outstanding balances and to notify the appropriate credit reporting agencies. However, Discover placed the matter under investigation. Fritzhand sued Discover seeking a declaratory judgment that the $14,000 debt was not his. Claiming that the company’s negligence damaged his credit rating and forced him to pay too high an interest rate for his mortgage, Fritzhand also demanded $10,000 in compensatory damages and an additional $500,000 in punitive damages. Discover did not counterclaim for the unpaid balance due on the card, but it did ask the court to throw out Fritzhand’s suit because more than three years had elapsed between the time he first learned of the debt and his suit. LaMarca agreed with Discover’s attorney that the applicable limitations time for negligence claims is three years from the injury date — when the card was issued and Fritzhand received the first dunning phone calls. He expressly rejected Fritzhand’s argument that the date should be computed from when the injury was discovered. Nonetheless, LaMarca denied the Discover’s motion. Citing the Appellate Division, 2nd Department’s 1993 ruling in Green v. Albert, 199 AD2d 465, the judge wrote, “a defendant may be estopped from pleading the statute of limitations as a defense where, by fraud, misrepresentation or deception, it has induced plaintiff from filing a timely action.” LaMarca suggested that Discover’s failure to act on the debt may have lulled Fritzhand into believing that the matter had been dealt with in his conversations with the company’s collectors. “It is reasonable to conclude that a lay person in such a position could assume that because [Discover] never took any further action or sued plaintiff for the alleged debt, that they had corrected their records and that the problem, as against him, was resolved.” Defense attorney Andrew P. Saulitis of Manhattan said that a preliminary investigation of Fritzhand’s claim revealed that the Discover card balance was not accrued through retail purchases, but through a February 2001 balance transfer from an extant American Express card account. Fritzhand avers that the American Express card too was fraudulently issued, that the identity thief was responsible for the balance transfer and that Discover was negligent in accepting that transfer without first contacting him to ascertain that it was correct. Saulitis said that his client is unlikely to appeal LaMarca’s denial of its motion to dismiss. Instead he will try to learn more about Fritzhand’s suit through discovery. “The curious aspect of the case,” the attorney said, “is why would an impostor effect a balance transfer of any account?” Identity theft issues are a major problem, Saulitis said. But, he added, “it is asking too much for a private organization to do something that the Secret Service, FBI and all kinds of law enforcement agencies have struggled with themselves.”

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