## Facts

- DBI Architects, P.C. maintained a corporate American Express credit card account used by employees for business expenses.
- DBI hired Kathy Moore as accounting manager with control over accounts payable/receivable, corporate checks, corporate credit cards, and receipt and payment of AMEX invoices.
- Without DBI’s knowledge, Moore contacted AMEX and had herself added as a cardholder on DBI’s corporate account.
- Over roughly ten months, Moore made substantial personal charges on the corporate account and paid AMEX using DBI corporate checks, including checks signed with the company president’s name; she also used DBI checks to pay personal charges on her separate personal AMEX account.
- AMEX mailed monthly statements to DBI identifying cardholders (including Moore) and itemizing charges by cardholder.
- Moore received and processed the statements and payments, and DBI did not detect the fraud for months.
- After discovery, DBI demanded that AMEX refund Moore’s personal charges on the corporate account; AMEX refused.
- The parties agreed Moore lacked actual or implied authority to make personal charges; the dispute concerned whether DBI’s conduct created apparent authority as to AMEX.

## Issues

1. Whether DBI’s failure to review monthly billing statements listing Moore as a cardholder and itemizing her charges, by itself, created apparent authority that barred treating the charges as “unauthorized use” under TILA.
2. Whether DBI’s repeated payment of the statement balances, after receiving statements showing Moore’s cardholder status and charges, created apparent authority for some or all of Moore’s use, limiting DBI’s TILA protection.

## Decision

- The court held that failure to inspect the monthly statements, standing alone, did not constitute a manifestation by DBI sufficient to create apparent authority.
- The court held that DBI’s repeated payment of Moore’s charges after notice from the statements could constitute a manifestation creating apparent authority, because it reasonably led AMEX to believe Moore was authorized.
- The court affirmed the judgment for AMEX in part, but remanded for the district court to determine how many payments were required to establish apparent authority and which charges were therefore outside TILA’s “unauthorized use” protection.

## Legal Principles

- TILA limits cardholder liability for “unauthorized use,” defined to exclude use made with actual, implied, or apparent authority and from which the cardholder receives no benefit.
- Apparent authority turns on the principal’s manifestations to the third party and the third party’s reasonable reliance; an agent’s unilateral fraud does not create apparent authority absent the principal’s conduct.
- Mere inaction or negligence (such as not reviewing statements) is not, without more, a manifestation conferring apparent authority.
- A course of dealing may create apparent authority: repeated payment of itemized charges after notice can reasonably signal authorization to the issuer, potentially cutting off TILA protection from that point forward.

## Conclusion

The court rejected the view that DBI’s nonreview of statements alone made Moore an apparent agent for credit-card use, but held that DBI’s repeated payments after receiving statements could create apparent authority as to AMEX; the case was remanded to determine when that authority arose and which charges remained “unauthorized use” under TILA.


DBI Architects, P.C. v. Am. Express Travel-Related Servs. Co., 388 F.3d 886 (D.C. Cir. 2004)