Monday, November 9, 2009

Sworn Account Suit for Electricity Service Fails

Reversing a county court judgment in favor of a power company, the First Court of Appeals finds that invoices alone are insufficient to support summary judgment in sworn account suit where there was no evidence that the amounts charged for electricity at two stores were either in accordance with a contract, or usual, customary, and reasonable. The Court also rejects the power company's alternative quantum meruit claim - for the same reason. Sworn evidence of the amount alleged to be due and owing is simply not sufficient by itself to prove up an account. Summary judgment was thus improper.


Andy's Sunmart #352, Inc. v. Reliant Energy Retail Services

Sworn Account

In their third issue, the Sunmarts argue that the trial court erred in granting summary judgment in favor of Reliant on either its sworn account or quantum meruit claim because Reliant’s summary judgment evidence did not “affirmatively evidence the delivery of electricity to any of [the Sunmarts] or the acceptance of electricity by any of [the Sunmarts]” or “an agreement regarding the price charged or that the price was usual, customary and reasonable.”

“A defendant’s verified denial of the correctness of a plaintiff’s sworn account, in the form required by Rule 185, destroys the evidentiary effect of the itemized account and forces the plaintiff to put on proof of its claim.” Site Work Group, Inc. v. Chem. Lime Ltd., 171 S.W.3d 512, 513 (Tex. App.—Waco 2005, no pet.) (citing Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex. 1979)). However, even when a defendant verifies its sworn denial to a suit on a sworn account, a plaintiff may properly obtain a summary judgment on its sworn account claim by filing “legal and competent summary judgment evidence establishing the validity of its claim as a matter of law.” PennWell Corp. v. Ken Assocs., Inc., 123 S.W.3d 756, 765 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (citing United Bus. Machs. v. Entm’t Mktg., Inc., 792 S.W.2d 262, 264 (Tex. App.—Houston [1st Dist.] 1990, no writ)). The elements of a cause of action on a sworn account are (1) a sale and delivery of the goods; (2) that the amount of the account is just, that is, that the prices are charged in accordance with an agreement or, in the absence of an agreement, they are the usual customary and reasonable prices for those goods; and (3) that the amount is unpaid. See Site Work Group, Inc., 171 S.W.3d at 513–14; PennWell Corp., 123 S.W.3d at 766.

Reliant primarily relies upon Mena’s affidavit in arguing that it established its sworn account claim as a matter of law. In her affidavit, Mena testified that Reliant provided the Sunmarts with electrical services and that the Sunmarts have outstanding balances for these electrical services. Mena stated that the attached invoices accurately set forth the services, dates, quantities, and prices and that the outstanding amounts were calculated after applying “all just and lawful offsets and credits.” Mena testified that Reliant had performed all conditions precedent and was “entitled to collect the indebtedness arising thereunder.” Mena also testified that the Sunmarts “were in default under the terms” of their accounts. The attached account summaries and invoices contained information reflecting the current and past balances, the amount of electrical usage, and the applicable rates.

However, as the Sunmarts emphasize, Mena did not provide any testimony that the amounts charged and the outstanding account were just, i.e., that the actual prices charged by Reliant for the electrical services were in accordance with an agreement or, in the absence of an agreement, were the usual, customary, and reasonable prices for those services. See PennWell Corp., 123 S.W.3d at 766 (reciting testimony that rates charged were in accordance with rates previously charged and were usual, customary, and reasonable); Livingston Ford Mercury, Inc. v. Haley, 997 S.W.2d 425, 430 (Tex. App.—Beaumont 1999, no pet.) (reciting testimony that “account is just and true,” but reversing and remanding case for material fact issue presented by conflicting summary judgment evidence). Texas courts that have reviewed and affirmed the granting of a summary judgment on a sworn account claim have noted that the movant in those cases provided clear, undisputed testimony as to the justness of the outstanding accounts. See, e.g., Site Work Group, Inc., 171 S.W.3d at 514 (stating that affidavit provided evidence “that the sales prices of the materials were reasonable, and the usual and customary prices for such materials”); United Bus. Machs., 792 S.W.2d at 264 (“The reasonableness of the prices charged, and the fact that appellant agreed to pay the prices charged, was proven by affidavit.”). Here, Mena did not testify in her affidavit that the rates for the electrical services were charged in accordance with an agreement or were usual, reasonable, or customary.

Addressing this point, Reliant, in its briefing, concedes that it did not present in the summary judgment record an actual agreement, which could have conclusively established the justness of the account. Instead, Reliant contends that there is at least some evidence in the record that would sustain a finding by the trial court that the parties had an ongoing business relationship and, thus, a further implied finding that either the prices charged were usual, customary, and reasonable or there was some sort of ongoing business agreement regarding the prices charged. Specifically, Reliant states in its briefing that previous payments made by the Sunmarts “would reflect that there was evidence before the trial [court] to sustain its finding that there was an agreement related to the price of the electrical services charged.”

The invoices and summaries attached to Mena’s affidavit reflect that Sunmart # 139 had paid Reliant for electrical services based upon terms and prices that, in some cases, were very similar to, or even more favorable than, the terms and prices applying to the outstanding amounts on which the Sunmarts defaulted. However, other fluctuations in the terms of the invoices defeat Reliant’s claim that these documents established, as a matter of law, the justness of the account, that there was some sort of implicit agreement to pay all the charges, or that the prices were reasonable, usual, or customary. In regard to Sunmart # 352, there is no evidence showing that the Sunmarts ever made payments on this account. Additionally, one of the invoices for this account also included charges for multiple-usage periods, and Reliant does not provide any evidence or explanation that such charges were in accordance with an agreement or were customary or usual. Footnote We conclude that Reliant failed to conclusively establish that the amounts of the outstanding accounts were just, and, thus, that Reliant failed to establish its sworn account claim as a matter of law.

In regard to Reliant’s quantum meruit claim, Reliant, in its briefing, repeats its suggestion that the evidence before the trial court allowed the court to make certain “reasonable inferences” as a basis for granting the summary judgment. If the trial court had entered its final judgment following a brief bench trial, Reliant’s arguments would be more relevant. However, to obtain a summary judgment on its quantum meruit claim, Reliant was required to conclusively prove, as a matter of law, that (1) valuable services were rendered or materials furnished; (2) for the person sought to be charged; (3) which services and materials were accepted by the person sought to be charged, used and enjoyed by him; (4) under such circumstances as reasonably notified the person sought to be charged that the plaintiff in performing such services was expecting to be paid by the person sought to be charged. Speck v. First Evangelical Lutheran Church of Houston, 235 S.W.3d 811, 815 (Tex. App.—Houston [1st Dist.] 2007, no pet.). The measure of damages for a quantum meruit claim is the reasonable value of the work performed. Johnston v. Kruse, 261 S.W.3d 895, 902 (Tex. App.—Dallas 2008, no pet.) (setting forth affidavit testimony regarding “reasonable pay” for services).

Reasonable value may be established through lay testimony. See id. However, as noted above, Mena, in her affidavit, did not testify that the invoices and account records presented by Reliant contain reasonable and customary charges for Reliant’s electrical services. Rather, Mena simply stated that the invoices accurately reflected Reliant’s charges and that all lawful credits were made. Mena did not provide testimony establishing, as a matter of law, that Reliant may recover through its quantum meruit claim the amounts set forth in the outstanding invoices. Footnote

Accordingly, we hold that the trial court erred in granting summary judgment in favor of Reliant on either its sworn account or quantum meruit claims.

We sustain the Sunmarts’ third issue. Footnote


We reverse the judgment of the trial court and remand for further proceedings consistent with our opinion.

Andy's Sunmart #352, Inc. v. Reliant Energy Retail Services (Tex.App.- Houston [1st Dist.] Nov. 5, 2009) (Jennings) (sworn account judgment reversed, reasonableness of charges not established) (quantum meruit claim also fails)
Opinion by
Justice Jennings
Before Justices Jennings, Higley and Sharp
01-08-00890-CV Andy's Sunmart #352, Inc., Holcombe Sunmart Inc., aka Sunmart #139 and Adnan A. Najm, Individually v. Reliant Energy Retail Services
Appeal from County Civil Court at Law No 4 of Harris County
Trial Court Judge:
Hon. Roberta A. Lloyd

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