Martin

Plaintiffs Jack N. Martin and Anita L. Martin (the Martins), appeal from a judgment of dismissal entered upon an order sustaining the demurrer of defendant Wells Fargo Bank (the bank) to their first amended complaint.

The bank issued business credit cards to the Law Offices of Jack Martin, one in the name of plaintiff Jack N. Martin, and one in the name of plaintiff Anita L. Martin, which they used for personal and household expenses. The bank exercised a right of setoff for amounts due on Anita’s card by debiting the Martins’ joint checking account.

The Martins, as credit card debtors and depositors, sued the bank to recover damages caused by a claimed improper exercise of the setoff. The validity of the action turns on the applicability of Financial Code section 864 to the Martins’ debt. The section limits a bank’s right to setoff a matured debt “arising from an extension of credit to a natural person primarily for personal, family, or household purposes” (hereafter consumer goods). (§ 864, subd. (a)(2).)

The Martins claim an extension of credit occurs when a debt is created by the use of a credit card. The bank claims an extension of credit occurs when the bank…