Hyland v. First USA Bank

While vacationing in Greece, the Hylands (plaintiffs) purchased an expensive oriental rug from Aris Evangelinos, a Greek shop owner, using a Gold Visa Card issued from First USA Bank (First USA) (defendant). Evangelinos expressly warranted to the Hylands that the carpet was an authentic antique made from pure silk and cotton. The Hylands returned to the United States and were informed by an expert that Evangelinos’s warranties about the carpet were untrue. The Hylands notified First USA of the issue, and First USA told the Hylands to return the carpet to the merchant. Upon arrival in Greece, Greek Customs (Customs) assessed a $1,240 tax on the carpet. The Hylands refused to pay the tax, and the carpet was seized by Customs. Even though First USA promised numerous times to help resolve the matter while knowing that the transaction occurred in Greece, First USA ultimately denied liability for the cost of the carpet, citing domestic geographical limits on consumer protections. The Hylands filed suit against First USA, arguing that First USA, as the card issuer, could be held liable for Evangelinos’s breaches of express warranty under § 170 of the Truth in Lending Act (TILA) and Regulation Z, 12 C.F.R. § 226. First USA filed a motion to dismiss and invoked TILA § 170(a)(3), which provided that a card issuer could not be held liable for a loss stemming from a transaction that did not occur in the same state as, or within 100 miles of, the purchaser’s mailing address. The Hylands contended that First USA had waived its right to assert a geographical-limit defense through repeated assurances to the Hylands that First USA would assist in the resolution of a transaction known to take place in Greece.