## Facts

- Discover Bank sued Ruth M. Owens in Cleveland Municipal Court for breach of a credit-card agreement after she stopped making minimum monthly payments.
- Discover sought $5,564.28, asserting it was entitled to judgment for the entire account balance.
- Discover introduced a written cardmember agreement setting out minimum payments, finance charges, and fees, including late and over-limit fees.
- At trial, Discover produced monthly account statements from January 1996 through May 2003, when the account was sent for collection.
- Owens, proceeding pro se, did not dispute that she had the account or that the statements reflected the claimed balance, but asserted she lacked the financial ability to pay due to disability and limited income.
- Owens also indicated she had made payments over several years and wanted assurance those payments were properly credited.
- The court found the balance had grown substantially through accumulated finance charges and repeated late and over-limit fees, rather than from new purchases.

## Issues

1. Whether enforcing the cardmember agreement to award the full claimed balance, largely driven by recurring fees and finance charges, was unconscionable or contrary to public policy under the circumstances.
2. If liability existed, whether Discover was entitled to judgment for the entire $5,564.28 balance or only for a reduced amount reflecting the underlying obligation and reasonable charges.

## Decision

- The court declined to enter judgment for the full $5,564.28 sought by Discover.
- The court held that enforcing the agreement to the extent it permitted the debt to balloon through repeated penalty fees and compounding charges was unconscionable and unenforceable in part.
- The court limited Discover’s recovery to a lesser amount tied to the underlying debt and more modest finance charges, effectively disallowing a substantial portion of the fee-inflated balance.

## Legal Principles

- Courts may refuse to enforce all or part of a consumer credit contract when its operation produces an unconscionable result, including a grossly disproportionate obligation driven primarily by penalty fees and cumulative finance charges.
- Even where a debtor used the credit account and the creditor proves account documentation, the creditor’s recovery may be limited if enforcement of penalty provisions is substantively unfair in light of the debtor’s circumstances.
- A trial court in a collection action may distinguish between enforcing the core repayment obligation and declining to enforce excessive fee provisions that transform a modest debt into a practically unpayable balance.

## Conclusion

The court found a valid credit-card relationship but limited recovery because strict enforcement of fee and charge provisions that caused the balance to balloon was unconscionable; Discover could recover only a reduced amount reflecting the underlying obligation and reasonable charges, not the full claimed balance.


Discover Bank v. Owens, 129 Ohio Misc. 2d 71, 822 N.E.2d 869 (Cleveland Mun. Ct. 2004)