Tuesday, October 13, 2009

TRCP 185: Credit Card Debt Claim Not Viable as Sworn Account Suit


Expedited Procedure for Suits on Sworn Account [Under Rule 185] Not Available to Collect Credit Card Debt



First Court of Appeals, in a panel opinion by its Chief Justice, Sherry Radack, adds yet another appellate case to the line of cases from Texas appeals courts, holding that a credit card debt collection suit cannot be brought as a suit on (sworn) account under rule 185 of the Texas Rules of Civil Procedure. Tex. R. Civ. P. 185

Credit card issuers typically do not sell goods or services to the consumer (third parties do), wherefore they do not have a viable suit-on-account claim, but instead a claim for breach of credit card agreement.

Debt collectors nevertheless keep trying suit-of-account theories because they often cannot come up with the underlying contract and other adequate account documentation, attempting instead to take advantage of the evidentiary benefits of the Rule 185 for proper sworn accounts, such as those brought by venders, merchants, contractors and other businesses.


Resurgence Financial, LLC v. Lawrence (Tex.App.- Houston [1st Dist.] Oct. 8, 2009)(Radack) (credit card debt suit not properly brought as sworn account suit under Rule 185, damages not proven)

HOUSTON COURT OF APPEALS EXPLAINS WHY SWORN ACCOUNT SUIT IS IMPROPER IN CREDIT CARD DEBT COLLECTION SUIT AGAINST CARDHOLDER

Applicable Law

Rule 185 provides:

When any action or defense is founded upon an open account or other claim for goods, wares and merchandise, including any claim for a liquidated money demand based upon written contract or founded on business dealings between the parties, or is for personal service rendered, or labor done or labor or materials furnished, on which a systematic record has been kept, and is supported by the affidavit of the party, his agent or attorney taken before some officer authorized to administer oaths, to the effect that such claim is, within the knowledge of the affiant, just and true, that it is due, and that all just and lawful offsets, payments and credits have been allowed, the same shall be taken as prima facie evidence thereof, unless the party resisting such claim shall file a written denial, under oath. A party resisting such a sworn claim shall comply with the rules of pleading as are required in any other kind of suit, provided, however, that if he does not timely file a written denial, under oath, he shall not be permitted to deny the claim, or any item therein, as the case may be. No particularization or description of the nature of the component parts of the account or claim is necessary unless the trial court sustains special exceptions to the pleadings.

Tex. R. Civ. P. 185 (emphasis added). "Rule 185 is a procedural tool that limits the evidence necessary to establish a prima facie right to recovery on certain types of accounts." Williams v. Unifund CCR Partners, 264 S.W.3d 231, 234 (Tex. App.--Houston [1st Dist.] 2008, no pet.).

Analysis

Five courts of appeals, including this Court, have held that suits for collection of credit-card debt, when the card's issuer is not also the provider of the purchased goods or services, are not suits on account under Rule 185. See, e.g., id. at 234-35. A sixth court of appeals has noted the same rule. See Dulong v. Citibank (South Dakota), N.A., 261 S.W.3d 890, 893 n.3 (Tex. App.--Dallas 2008, no pet.) (noting that suit on sworn account is not proper for credit-card collection suit).

In Williams, we reasoned that "[r]ule 185 applies only 'to transactions between persons, in which there is a sale upon one side and a purchase upon the other, whereby title to personal property passes from one to the other, and the relation of debtor and creditor is thereby created by general course of dealing. . . .'" Williams, 264 S.W.3d at 234 (quoting Meaders v. Biskamp, 316 S.W.2d 75, 78 (Tex. 1958)). Because "no title to personal property passes from the bank to the cardholder," we concluded that "[a]n unpaid bank credit card account . . . creates a cause of action for the bank's money or credit advanced as a loan, but not for goods or services sold or delivered to the cardholder," rendering Rule 185 inapposite. Id. at 234-35.

Resurgence recognizes this authority, but contends that it was wrongly decided, urging us to overrule Williams and to depart from the holdings of our sister courts of appeals. We decline to do so. We generally do not overrule precedent absent a compelling reason, especially when, as here, doing so would cause a split of authority between our sister court with which we exercise concurrent appellate jurisdiction. See Howeth Investments, Inc. v. City of Hedwig Village, 259 S.W.3d 877, 901 (Tex. App.--Houston [1 Dist.] 2008, pet. denied) (declining to overturn 33-year-old precedent interpreting statute that would result in split with the Fourteenth Court of Appeals, when no compelling reason existed to do so).

Moreover, abrogating this holding of Williams would put into doubt far older precedent of this Court, in which we applied the same reasoning from Meaders to hold that a suit for breach of a lease for realty is not covered by Rule 185. See Meineke Discount Muffler Shops, Inc. v. Coldwell Banker Prop. Mgmt. Co., 635 S.W.2d 135, 138 (Tex. App.--Houston [1st Dist.] 1982, writ ref'd n.r.e.); accord Schorer v. Box Serv. Co., 927 S.W.2d 132, 134-35 (Tex. App.--Houston [1st Dist.] 1996, writ denied) (following this holding of Meineke, despite concurring opinion arguing that Meaders did not limit Rule 185's application).

Resurgence contends that a compelling reason to overrule Williams exists. The parties agree that the Texas Supreme Court's decision in Meaders was the ultimate source for the line of authority concerning credit-card debt and Rule 185. Accordingly, Resurgence contends that the common-law definition of a "sworn account" adopted in Meaders should not have been applied to Rule 185 because the Meaders court was not interpreting Rule 185; rather, it was interpreting an attorney's fees statute that at that time contained the term--whereas Rule 185 does not contain the term in its text, although its title at the time was "Suit on a Sworn Account." Ignoring Meaders, Resurgence then argues that the plain language of the rule is broad enough to cover credit-card suits. Specifically, it argues that a credit-card-collection suit is either an "open account" or a "claim for a liquidated money demand based upon written contract."

Resurgence ignores the language modifying these terms: the rule describes an "open account or other claim for goods, wares and merchandise, including any claim for a liquidated money demand based upon written contract or founded on business dealings between the parties . . . ." Tex. R. Civ. P. 185. Thus, a reading of the entire rule is not inconsistent with Meaders's holding.

Much of the authority on which Resurgence relies either considered statutes with language materially different from that in Rule 185 (1) or did not base the holding on Rule 185. (2) And the remaining authority on which Resurgence relies did not concern credit-card-collection suits and has not been followed by the courts considering the rule's application in that context. (3)

We conclude that Resurgence has offered no compelling reason to overrule Williams, to put into question Meineke or Schorer, or to depart from our sister courts' well-established interpretation of Meaders and Rule 185. Accordingly, we overrule Resurgence's sole issue.

CONCLUSION

We affirm the judgment of the trial court.

[footnotes omitted] Click case style to read the full text of the opinion

AFFIRM TC JUDGMENT: Opinion by
Chief Justice Radack
Before Chief Justice Radack, Justices Bland and Massengale
01-08-00341-CV Resurgence Financial, L.L.C. v. James T. Lawrence
Appeal from County Civil Court at Law No 2 of Harris County
Trial Court Judge:
Hon. Jacqueline Lucci Smith

Paternity (Disestablishment & Establishment) Suit Time-Barred


Now who is the Daddy and who is going to pay child support? When there is a presumed father, by virtue of marriage or otherwise, the law does not always follow the genetic facts or even provide an opportunity for the evidence to be considered. In Texas, there is a statute of limitations on assertion of claims that the presumed biological father is not, and strict requirements must be met to take advantage of a loophole for claims to be asserted after the statute has run, as seen in this case:

In Interest of G.T.S. (Tex.App.- Houston [1st Dist.] Oct. 8, 2009) (Jennings)
(
paternity proceedings to rebut presumption of paternity and establish other man's paternity barred by
limitations,
equitable estoppel theory not properly presented)

EXCERPT FROM THE OPINION BY JUSTICE TERRY JENNINGS

Statute of Limitations

In her sole issue, Gardner argues that the trial court erred in granting summary judgment because her suit to establish Kirby's parentage of G.T.S. is not time-barred.

To obtain summary judgment on the ground that the proceeding to adjudicate the parentage of a child with a presumed father is barred by limitations, the movant must show, as a matter of law, that suit to adjudicate parentage was not commenced before the fourth anniversary of the date of the birth of the child. Tex. Fam. Code Ann. § 160.607(a) (Vernon 2008).

Once the movant establishes as a matter of law that the suit to adjudicate the parentage of a child with a presumed father was not commenced by the child's fourth birthday, the non-movant must then raise a fact issue on the avoidance of limitations. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999) ("If the movant establishes that the statute of limitations bars the action, the nonmovant must then adduce summary judgment proof raising a fact issue in avoidance of the statute of limitations"). The Family Code provides an exception to the four-year limitations as follows:A proceeding seeking to disprove the father-child relationship between a child and the child's presumed father may be maintained at any time if the court determines that:

(1) the presumed father and the mother of the child did not live together or engage in sexual intercourse with each other during the probable time of conception; and

(2) the presumed father never represented to others that the child was his own.

Tex. Fam. Code Ann. 160.607(b) (emphasis added).

A presumption of paternity exists if a man is married to the mother of the child and the child is born during the marriage. Id. § 160.204(a) (Vernon 2008). This presumption legally establishes the father-child relationship between the man and child. Id. § 160.201(b)(1) (Vernon 2008). Here, it is undisputed that Hawkins is G.T.S.'s presumed father because Gardner and Kirby agree that Hawkins and Gardner were married when G.T.S. was born (8) on March 17, 1992. It is also undisputed that Gardner filed her petition in the underlying proceedings in August 2007, more than ten years after she was required to file her petition under section 160.607(a). Therefore, Kirby established his affirmative defense of limitations as a matter of law.

Gardner was then required to raise a fact issue on the exception defined in section 160.607(b). KPMG Peat Marwick, 988 S.W.2d at 748. Merely pleading the exception is not enough. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679 (Tex. 1979) ("the non-movant must expressly present to the trial court any reasons seeking to avoid movant's entitlement. . . and he must present summary judgment proof when necessary to establish a fact issue"). Thus, Gardner had to produce summary judgment evidence, not merely plead the 160.607(b) exception, to raise a fact issue that she and Hawkins did not live together or engage in sexual intercourse with each other during the probable time of G.T.S.'s conception and that Hawkins never represented to others that the G.T.S. was his own.

Gardner asserts that she established that she and Hawkins "separated on August 20, 1990" and "G.T.S. was born on March 17, 1992, some 19 months after the separation." In her brief, Gardner points to no summary judgment evidence in the record to support her assertion. Gardner did plead that she and Hawkins did not live together during the probable time of G.T.S.'s conception, asserting that on August 20, 1990 she and Hawkins had separated. Although she attached her June 17, 1992 petition for divorce to her summary judgment response, such a pleading is not evidence. Clear Creek Basin Auth., 589 S.W.2d at 678. Moreover, even if August 20, 1990 is the date that Gardner and Hawkins actually ceased living together, Gardner presented no evidence that she and Hawkins did not engage in sexual intercourse during the probable time of G.T.S.'s conception. Although Gardner did produce her own affidavit as summary judgment evidence, she did not testify as to the date on which she and Hawkins separated or that she and Hawkins did not engage in sexual intercourse during the probable time of G.T.S.'s conception. Because there is no evidence in the record to support her assertion regarding subsection (b)(1) of section 160.607 of the Family Code, Gardner has not raised a fact issue precluding summary judgment.

Gardner also asserts that Hawkins never represented to others that G.T.S. is his child. She argues that because the "whereabouts of Wesley [Hawkins] were and still are unknown, the 'holding out' element of subsection (b)(2) is met." However, in her brief, Gardner does not point to any summary judgment evidence regarding Hawkins's representations about G.T.S. In her affidavit attached to her summary judgment response, Gardner testified only that Kirby had represented that G.T.S. is his child. She did not testify about Hawkins at all. Gardner's assertions in her summary judgment response that Hawkins's whereabouts were unknown still do not raise a fact issue as to whether he has ever represented to others that G.T.S. is his child. Because there is no evidence in the record to support her arguments under subsection (b)(2) of section 160.607, Gardner has not raised a fact issue precluding summary judgment. In sum, because Gardner has not raised a fact issue regarding the exception to limitations defined in section 160.607(b), her suit is time-barred under section 160.607(a). KPMG Peat Marwick, 988 S.W.2d at 748. Alternatively, Gardner argues that Kirby is equitably estopped from denying that he is G.T.S.'s father because he has established a relationship with G.T.S. and is G.T.S.'s biological father. In an appeal from a summary judgment, issues to be reviewed by the appellate court must have been actually presented to and considered by the trial court. Tex. R. Civ. P. 166a©. Rule 166a© provides that "[i]ssues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal." Id. (emphasis added). Here, Gardner did not expressly raise the equitable estoppel issue in her response to Kirby's summary judgment motion. (9) Gardner only attacked the limitations provision of section 106.607(a) via the exception found in section 160.607(b). Consequently, never having presented this issue to the trial court, the question cannot now be urged on appeal as a ground for reversing the summary judgment.

Accordingly, we hold that the trial court did not err in granting summary judgment on the ground that Gardner's suit is barred by limitations.

We overrule Gardner's sole issue.

AFFIRM TC JUDGMENT IN PART, REVERSE TC JUDGMENT IN PART, AND REMAND CASE TO TRIAL COURT FOR FURTHER PROCEEDINGS [with respect to attorney's fees]: Opinion by
Justice Jennings
Before Justices Jennings, Higley and Sharp
01-09-00212-CV In the Interest of G. T. S., a child
Appeal from 173rd District Court of Henderson County
Trial Court Judge: Judge Dan Moore

Nonsuit Moots Pending Interlocutory Appeal, Panel Says


Following Texas Supreme Court precedent, Houston's First Court of Appeals, in a panel opinion written by its Chief Justice, dismisses interlocutory appeal, holding that the controversy was mooted when the underlying proceeding was nonsuited in the trial court. (As an aside, one of the Plaintiffs in the case involving a condominium dispute happens to be a Harris County Family Court Judge).



FROM THE MEMORANDUM OPINION BY THE CHIEF JUSTICE:

In this case we consider whether an appeal challenging an interlocutory order is rendered moot after all parties non-suit their claims in the trial court. We grant appellees' motion to dismiss the appeal for lack of a justiciable controversy.


BACKGROUND

Appellees are homeowners who own units in the Royalton at River Oaks Condominium in Houston, Texas. The appellants are the developers of the condominium complex.

The homeowners sought a declaratory judgment that the developer-controlled board of administrators of the condominium complex was illegitimate and that a new election for the board of administrators must be held. The homeowners also sought an injunction preventing an improper election and ordering a proper election. Both sides agreed to a temporary restraining order so that a temporary-injunction hearing could be held.

The developers then filed a plea to the jurisdiction, arguing that the trial court lacked subject matter jurisdiction until all of the condominium owners were joined in the suit and served. The trial court denied the developers' plea to the jurisdiction and then ordered an election for the board of the condominium complex to occur. The developers did not file an interlocutory appeal from this ruling. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(4) (Vernon 2008).

In compliance with the temporary injunction order, an election was held and a new board was elected. On that same date, the developers filed an amended answer and asserted a claim seeking a declaratory judgment that provisions of the Texas Uniform Condominium Act control over the language of the condominium declarations.

The homeowners nonsuited all of their remaining claims against the developers, and the trial court entered an order dismissing the homeowners' claims against the developers.

The developers then nonsuited their claims against the homeowners. The trial court signed an order dismissing the developers' claims against the homeowners. No live claims remained in the case. The developers filed a notice of appeal indicating that they wished to challenge the trial court's denial of their plea to the jurisdiction.

MOOTNESS

The homeowners filed a motion to dismiss the appeal as moot, arguing that the nonsuit of all live claims deprives this Court of a justiciable issue. We agree.

In University of Texas Medical Branch at Galveston v. Blackmon, 195, S.W.3d 98, 100 (Tex. 2008) [Tex. 2006], the daughter of an inmate who died at UTMB filed suit against the medical facility. UTMB filed a plea to the jurisdiction, which the trial court denied. Id. UTMB then filed an interlocutory appeal. Id. While the appeal was pending, the plaintiff non-suited her claim against UTMB. The supreme court held that, because the plaintiff non-suited her case in the trial court, the court of appeals lacked jurisdiction to consider trial court's ruling on the plea to the jurisdiction. Id. at 101. The plaintiffs' nonsuit vitiated the trial court's interlocutory order denying UTMB's plea to the jurisdiction, thus there was nothing for the appellate court to review. Id.

The developers argue that Blackmon is distinguishable because they had filed claims for affirmative relief, and Blackmon noted that a nonsuit cannot "prejudice the right of an adverse party to be heard on a pending claim for affirmative relief[.]" See Id. at 100. However, the developers nonsuited their own claims for affirmative relief before filing the notice of appeal. Therefore, the developers do not have any pending claim for affirmative relief in the trial court.

By dismissing their affirmative claims for relief rather than pursuing them to final judgment, the developers have rendered moot the trial court's interlocutory ruling on their plea to the jurisdiction.

CONCLUSION

Accordingly, we grant the appellees' motion and dismiss the appeal because of the lack of a justiciable controversy.

Sherry Radack


Royalton Condominium, LP v. Albright (Tex.App.- Houston [1st Dist.] Oct. 8, 2009) (Radack) (effect of nonsuit in the trial court on pending appellate proceeding) (pending interlocutory appeal mooted by nonsuit in the trial court)(mootness doctrine)
DISMISS APPEAL: Opinion by
Chief Justice Radack
Before Chief Justice Radack, Justices Bland and Massengale
01-09-00139-CV Royalton Condominiums, L.P. and The Royalton Management, Inc. v. Gerry Albright, Vivian Leong, Ronald Gensburg, Hal Kuntz, Annette Kuntz, Lucky Chopra and Alvin Thomas
Appeal from 61st District Court of Harris County
Trial Court Judge:
Hon. Al Bennett

No Mandamus Jurisdiction over Judge of Small Claims Court


Fourteenth Court of Appeals rejects petition seeking mandamus relief against judge of the small claims court (Justice of the Peace doing double duty as small claims court judge) on jurisdictional grounds.


M E M O R A N D U M O P I N I O N

On September 25, 2009, Relator, Arcadio D. Rodriguez, filed a petition for writ of mandamus in this Court. See Tex. Gov’t Code Ann §22.221 (Vernon 2004); see also Tex. R. App. P. 52.1. In his petition, relator asks this court to compel the Honorable Russ Ridgway, judge of the Small Claims Court Harris County Precinct 5, to vacate his orders of October 27, 2008, and July 31, 2009.

This Court’s mandamus jurisdiction is governed by section 22.221 of the Texas Government Code. Section 22.221 expressly limits the mandamus jurisdiction of the courts of appeals to: (1) writs against a district court judge or county court judge in the court of appeals’ district, and (2) all writs necessary to enforce the jurisdiction of the court of appeals. Tex. Gov’t Code Ann. § 22.221 (Vernon 2004).

This court does not have jurisdiction to issue writ of mandamus against a small claims court judge. See Tex. Gov’t Code Ann. § 22.221(a), (b) (Vernon 2004). Neither does the court have jurisdiction over appeals originally filed in small claims court. See Sultan v. Mathew, 178 S.W.3d 747, 748 (Tex. 2005). Therefore, jurisdiction does not lie for enforcement of this court’s jurisdiction.

Accordingly, the petition for writ of mandamus is ordered dismissed.

PER CURIAM

Panel consists of Justices Yates, Frost, and Brown.

In Re Rodriguez (Tex.App.- Houston [14th Dist.] Oct. 13, 2009)(per curiam dismissal)
(
no jurisdiction to issue mandamus against judge of small claims court, appeal by mandamus petition dismissed for want of jurisdiction)
DISMISSED: Per Curiam
Before Justices Brock Yates, Frost and Brown
14-09-00824-CV In Re Arcadio D. Rodgriguez
Appeal from County Civil Court at Law No 3 of Harris County
Trial Court
Judge: Linda Storey

Also see related blog post: No Mandmamus Jurisdiction over JP Court Judge (Justice of the Peace)