Lots of reasons. First and foremost, when they said it wasnt't their debt, they did so in an Affirmative Defense which is pretty much a boilerplate response to any suit of this nature. Using a [bad] analogy, if you were to go into a bar and unprovoked, punch someone in the face and got sued by the injured patron, your lawyers would 100% add an Affirmative Defense to the Answer that you file stating that you acted out of self-defense. It's just what lawyers do. So saying that this isn't their debt is a reflexive response and has to be given little weight.
Second, irrespective of fault, DUT is sued jointly and severally with Pete. That means that Amex can collect against either of them, and in so doing, Amex could make life miserable for DUT. They don't want that. The way this would typically play out is that Amex is blameless here, and as the blameless party, it is entitled to get paid by whomever from whatever source. So Amex gets its money from the entity most easily able of making payment. That would be DUT. If DUT then believes that it was done dirty by Pete, it would pursue what is called a "contribution action" against the joint tortfeasor (Pete) so that the debt ultimately rests with the person or persons most culpable. If DUT is actually without fault, it would win its contribution action against Pete and get reimbursed 100% for the money that it paid to Amex. So when the dust settles, Amex gets all its money back and DUT gets paid back from Pete the money it paid to settle the case. The big "if" in all of this is whether Pete has the funds to repay DUT. But that is not Amex's problem.
Now, all that said, DUT could have a complete defense to payment if it could show that it was completely defrauded by Pete but in financial transactions and suits, that is a very, very high bar. Bernie Madoff was a crook. But many other innocent people suffered financially because of what he did. With a small business like DUT where the spending is pretty much right in the open, DUT is going to have rough sledding proving that it didn't know ANYTHING about the card in question which was registered to Dreams, or of the spending patterns of the holder of that card. And if Amex issued multiple cards for that account such that John had one in his wallet as well as Pete, well then it is pretty much game over. Again, the law seeks to compensate the blameless. If Amex is blameless here, the law wants to compensate it and let the cardholders fight amongst themselves.
Bringing us back to why they would work our a payment plan. Even if you didn't think that you did anything wrong but your choices were to spend a solid 6 figures on lawyers fighting this with the risk of having your business ripped away from you, or save the legal fees, avoid the collapse of the business and work out some sort of payment plan to keep the business going, you'd have to seriously consider that. And remember, doing so does not terminate the contribution claim against the ultimate wrongdoer. DUT can work out a payment plan with Amex and still seek reimbursement from Pete. Or, perhaps more likely, it will triangulate the resolution by working out a payment plan with Amex with Pete being part of (or most of?) that solution whereby he liquidates some assets to make payments on a structured basis. I don't know the details, but I doubt Pete has $900k lying around to make a lump sum payment.
Hope that helps. (And I hope that you do not consider my reply to be "mansplaining" by a condescending poop.
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