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finding similar evidence sufficient to show assignee held credit card account
Summary of this case from Ranjbar v. Citibank, N.A.Opinion
No. 14-08-00939-CV
Opinion filed March 30, 2010.
On Appeal from the County Court at Law Number 1 Fort Bend County, Texas, Trial Court Cause No. 07-CCV-033789.
MEMORANDUM OPINION
Appellant, Jesus Jaramillo, Sr., appeals a judgment in favor of appellee, Portfolio Acquisitions, LLC, for an unpaid credit card debt. On appeal, appellant argues: (1) the trial court erred in issuing untimely findings of fact and conclusions of law; (2) the evidence is insufficient to support appellee's standing as an assignee of the credit card account; (3) the evidence is insufficient to establish the existence of a valid contract; (4) the trial court erred in granting judgment on causes of action not allowed by law; (5) the trial court erred in granting attorney's fees; and (6) the trial court erred in denying appellant's counterclaims based on the Fair Debt Collection Practices Act. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Appellee sued appellant to recover unpaid debt on a credit card account. The account was originally issued by HSBC bank and later acquired by appellee by assignment. Appellee pleaded suit on an open and stated account, breach of contract, and quantum meruit. Appellant responded with a general denial and asserted counterclaims based on violations of the Fair Debt Collection Practices Act. The lawsuit was tried to the court.
The evidence shows appellant opened a credit card account with HSBC in October 2003. According to the affidavit of HSBC's records custodian, appellant applied for the account online and, consequently, there is no physical copy of appellant's application. Appellant testified he used the credit card to purchase personal and family items. Appellant explained he stopped paying on the account because he could not afford to pay the debt he owed on the account.
At the bench trial, Kim Jordan testified that she is a senior client service manager for OSI Collection Services (OSI). She explained OSI purchased appellee Portfolio Acquisitions, LLC, and that the two are sister companies. According to Jordan, OSI purchased appellant's account from HSBC and, on the same day, sold the account to appellee. In addition to Jordan's testimony, these transactions were also established at trial by two bills of sale: one from HSBC to OSI and another from OSI to appellee. Jordan confirmed these bills of sale represented the sale of appellant's account to appellee.
Additionally, during the bench trial, appellee entered into evidence, over appellant's objection, a credit card agreement alleged to control appellant's account. Jordan testified the agreement provided by appellee is the agreement controlling appellant's credit card. Appellee also entered into evidence account statements that had been issued to appellant. These statements reflect purchases and payments appellant made on the account. The statements contain the daily periodic rate, finance charges at the periodic rate, and the nominal annual percentage rate — these rates varied widely from statement to statement. In an affidavit, HSBC's records custodian, Latrese Walker, attested to the validity of some the account statements.
The trial court signed a judgment in favor of appellee for $1,258.45, plus interest and $6,000.00 in attorney's fees, plus interest. Appellant submitted proposed findings of fact and conclusions of law, which the judge signed. Months later, after appellee submitted proposed findings, the trial court vacated its original findings (the ones originally submitted by appellant) and signed appellee's proposed findings. Appellant timely appealed.
DISCUSSION
I. Findings of Fact and Conclusions of Law
In his first issue, appellant contends the trial court erred by filing findings of fact and conclusions of law more than twenty days after filing the original findings. The trial court signed its final judgment on September 10, 2008. Appellant submitted proposed findings of fact and conclusions of law on September 29, 2008. On October 6, 2008, the trial court signed appellant's proposed findings of fact and conclusions of law. On October 24, 2008, appellee filed proposed findings of fact and conclusions of law. On January 5, 2009, the trial court vacated the October 6 findings and signed appellee's October 24 proposed findings of fact and conclusions of law. Appellant contends the trial court signed appellee's findings of fact and conclusions of law in violation of Texas Rule of Civil Procedure 298, which provides:
[a]fter the court files original findings of fact and conclusions of law, any party may file with the clerk of the court a request for specified additional or amended findings or conclusion. The request for these findings shall be made within ten days after the filing of the original findings and conclusions by the court. . . .The court shall file any additional or amended findings and conclusions that are appropriate within ten days after such request is filed[.]
Tex. R. Civ. P. 298. Appellant contends appellee was required to file his request no later than October 16, 2008 and that the court had to file any additional or amended findings no later than October 26, 2008. Consequently, appellant argues, the trial court signed appellee's findings in error and, therefore, they must be disregarded.
Rule 298 does not preclude the trial court from issuing belated findings and conclusions; rather, it sets time limits for requesting and filing so that a litigant or trial judge may avoid the consequences of noncompliance. Morrison v. Morrison, 713 S.W.2d 377, 380-81 (Tex. App.-Dallas 1986, writ dism'd). These consequences are: (1) if a litigant fails to timely request additional findings in compliance with rule 298, he waives his right to complain of the trial court's refusal to make designated findings and conclusions, and (2) if a judge files belated findings and the litigant can show injury, such as not being able to adequately present his appeal, then the appellate court may abate the appeal and order the judge to consider the required additional findings. Id. at 381. Thus, when a court files belated findings the only issue that arises is the injury to the appellant, not the trial court's jurisdiction to make the findings. Jefferson Cty. Drainage Dist. v. Lower Neches Valley Auth., 876 S.W.2d 940, 959 (Tex. App.-Beaumont 1994, writ denied). Furthermore, the expiration of the trial court's plenary power does not affect or diminish the trial court's ability to make and file amended findings of fact and conclusions of law. In re Gillespie, 124 S.W.3d 699, 703 (Tex. App.[14th Dist.] 2003, no pet.).
Appellant failed to demonstrate injury suffered from the belated findings. Consequently, we hold the findings of fact and conclusions of law signed on January 5, 2009 are valid. See Jefferson Cty. Drainage Dist., 876 S.W.2d at 959-60 (holding the trial court's untimely findings and conclusions remained valid where appellant failed to demonstrate harm). Appellant's first issue is overruled.
II. Legal Sufficiency
In issues two through six, appellant challenges the legal sufficiency of the evidence. In his second issue, appellant contends the evidence is insufficient to support appellee's standing to bring suit. In issues three through six, appellant contends the evidence is insufficient to establish the existence of a valid contract.
A. Standard of Review
When reviewing a no evidence or legal sufficiency challenge, we review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We credit favorable evidence if a reasonable fact finder could, and disregard contrary evidence unless a reasonable fact finder could not. Id. The evidence is legally sufficient if it would enable fair-minded people to reach the same verdict under review. Id. at 827. The trier of fact is the sole judge of the witnesses' credibility and the weight to be given their testimony. Id. at 819. This court cannot substitute its judgment for that of the jury, so long as the evidence falls within the zone of reasonable disagreement. Id. at 822. But if the evidence allows only one inference, neither jurors nor the reviewing court may disregard it. Id. 1. Standing
Appellant contends there is no evidence that appellee owns appellant's HSBC account or debt originating from such account. We construe this as a challenge to the legal sufficiency of the evidence supporting appellee's standing to bring suit against appellant based on the account at issue.
a. Applicable Law
Standing, a necessary component of subject-matter jurisdiction, is a constitutional prerequisite to maintaining a suit under Texas law. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444-45 (Tex. 1993). Standing cannot be waived and can, therefore, be raised for the first time on appeal. Id. at 445-46. Whether a party has standing to pursue a claim is a question of law reviewed de novo. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).
Standing is a party's justiciable interest in a controversy. See Nootsie, Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661-62 (Tex. 1996). Only the party whose primary legal right has been breached may seek redress for an injury. Nauslar v. Coors Brewing Co., 170 S.W.3d 242, 249 (Tex. App.-Dallas 2005, no pet.). Without a breach of a legal right belonging to that party, that party has no standing to litigate. Cadle Co. v. Lobingier, 50 S.W.3d 662, 669-70 (Tex. App.-Fort Worth 2001, pet. denied). In reviewing standing on appeal, we construe the petition in favor of the plaintiff, and if necessary, review the entire record to determine if any evidence supports standing. See Air Control, 852 S.W.2d at 446.
b. Analysis
It is undisputed appellant had a credit card account with HSBC. In its original petition, appellee alleged that it is the owner of the indebtedness arising from the credit extension. During trial, Kim Jordan testified she worked for OSI Collection Services, the company that purchased appellee. Jordan confirmed two bills of sale entered into evidence represented the sale of appellant's HSBC account from HSBC to OSI and subsequently to appellee. The bill of sale from OSI to appellee referenced the account subject to the sale as being described in the attached "Appendix A". The bill of sale entered into evidence did not contain an attached "Appendix A". Following the two bills of sale entered into evidence was a spreadsheet displaying appellant's name, contact information, HSBC account number, account information, and the amount owed on the account. Appellant contends because there is no document titled "Appendix A" attached to the bills of sale, the evidence is insufficient to prove his account was assigned to appellee. We disagree.
Jordan's testimony served to link the bills of sale to the attached spreadsheet referencing appellant's account. Viewing the evidence in the light most favorable to the challenged finding, we hold the bills of sale combined with Jordan's testimony sufficient evidence that appellee owns the account at issue. See Eaves v. Unifund CCR Partners, 301 S.W.3d 402, 405 (Tex. App.-El Paso 2009, no pet.). Because appellee owns the account at issue, it is the party with the right to seek redress for appellant's alleged failure to pay his debt on the account. Therefore, appellee has standing to bring suit on such account against appellant. See Nauslar, 170 S.W.3d at 429. Appellant's second issue is overruled.
2. Existence of a Valid Contract
In four issues, appellant contends there is no evidence supporting the existence of an agreement between appellee's predecessor, HSBC, and appellant. Appellant argues there is no evidence of a contract, no evidence of definite terms and conditions of the alleged contract, no evidence of agreed upon finance charges or interest rates in the alleged contract, no evidence of agreed upon late fees or over-the-limit fees in the alleged contract, and no evidence as to how the finance charges and final balance were calculated under the alleged contract. Without evidence of the contract and its terms, appellant contends, there can be no breach of the alleged contract. We review appellant's no evidence challenge as a challenge to the legal sufficiency of the evidence.
a. Applicable Law
Parties form a binding contract when the following elements are present: (1) an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) meeting of the minds, (4) each party's mutual consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Prime Products, Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App. [1st Dist.] 2002, pet. denied). To be enforceable, a contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the parties. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992).
b. Analysis
The evidence shows appellant applied for an account online with HSBC, used the account to purchase goods and services, made payments on the account, but failed to pay off his final balance. The evidence offered by appellee to prove the existence of a contract consists of: (1) an affidavit of HSBC's records custodian Latrese Walker, attesting to the validity of billing statements sent to appellant from June 24, 2004 through August 25, 2004; (2) billing statements mailed to appellant between April 2004 and November 2005 reflecting widely varying interest rates; (3) an unsigned and undated "Generic Cardmember Agreement and Disclosure Statement"; (4) a check written by appellant to make a payment on his credit card account; (5) a printout of a computer screen displaying appellant's account information; and (6) the testimony of OSI representative Kim Jordan stating the generic card member agreement entered into evidence is the contract that controls appellant's particular credit card.
In McElroy v. Unifund CCR, a similar credit card debt collection case, this court held the evidence was insufficient to support the existence of a valid contract. McElroy v. Unifund CCR Partners, 2008 WL 4355276 (Tex. App.[14th Dist.] Aug. 26, 2008, no pet.) (mem. op.). In McElroy, the creditor's evidence supporting a contract consisted of: (1) an affidavit of an employee of the creditor; (2) a signature card for the account; (3) an affidavit of an employee of the assignor of the account; and (4) more than a dozen monthly account statements. Id. at *2. This court likened the evidence in McElroy to that in Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231 (Tex. App. [1st Dist.] 2008, no pet.). In Williams, the First Court of Appeals held that a creditor failed to establish the existence of a contract when it failed to produce the actual agreement or any other document that established the agreed terms, including the applicable interest rate or method for determining the applicability and amount of finance charges. Id. at 237. This court distinguished McElroy from Winchek v. American Express Travel Related Svcs. Co., Inc., 232 S.W.3d 197, 202-03 (Tex. App. [1st Dist.] 2007, no pet.). In Winchek, the First Court of Appeals found the creditor met his burden to establish the existence of a contract. Id. at 204. In that case, the creditor admitted into evidence a copy of the creditor's "Personal Card Member Agreement", billing statements, and an affidavit from the creditor's Manager of Credit Operations. Id. at 203-04. The "Personal Card Member Agreement" expressly stated that retention or use of the card demonstrated the cardholder's agreement to the terms of the "Personal Card Member Agreement". Id. at 203. The First Court held that the cardholder's demonstrated use of the card manifested her intent that the contract become effective. Id. at 204. This court and its sister court have drawn a distinction between cases where a card member agreement is entered into evidence and where there is no card member agreement.
In the case at bar, there was a card member agreement entered into evidence; however, this agreement contained multiple blanks and referenced outside documents (not included in evidence) to define terms. The agreement provided the cardholder would be bound by the agreement upon his first transaction. The agreement stated the cardholder promised to pay according to the terms of the agreement for all credit he was extended, all finance charges, late charges, over-limit charges, administrative charges he incurred, and for all collection costs and attorney's fees to the extent permitted by applicable law. The agreement defined "Annual Percentage Rates and Periodic Rates" as follows:
The Daily Periodic Rate used to determine your periodic Finance Charges will be a variable rate which may change. The Spread, Annual Percentage Rate ("APR"), Daily Periodic Rate, and minimum rate of Finance Charge for the variable Customary APR for credit card purchases, cash advances, and the variable Default APR are indicated on the enclosed document entitled "Important Information Regarding Your Account." We calculate the APR by adding the Index (explained on the enclosed document entitled "Important Information Regarding Your Account") to the applicable Spread. Different types of transactions may have different APRs.
The agreement provided did not contain a document entitled "Important Information Regarding Your Account". Additionally, there were blanks left where the "Late Charge/Late Payment Fee", "Returned Check Charge/Returned Payment Fee", "Annual Maintenance Fee", "Replacement Fee", "Reinstatement Fee", and "Stop Payment Fee" amounts should have been filled in by HSBC. OSI representative Kim Jordan testified that generally these fields would be populated upon the issuance of the borrower's first statement.
The card member agreement provided by appellee does not sufficiently establish the terms of a contract. Although there was in fact a card member agreement entered into evidence, many of the essential terms of the contract were left out. See McElroy, 2008 WL 4355276 at *4 (stating an applicable interest rate is a material term) (citing T.O. Stanley Boot Co., 847 S.W.2d at 221). In Winchek, the agreement entered into evidence reflected the late fees, minimum payments under a deferred billing feature, and the method for calculating finance charges. Winchek, 232 S.W.3d at 203. The El Paso Court of Appeals found evidence sufficient to support the existence of a contract where the card member agreement entered into evidence noted the terms, interest rates, and other charges. Eaves, 301 S.W.3d at 407. Unlike Eaves and Winchek, the card member agreement in the case at bar fails to evidence material terms of the contract. Even viewing the evidence in a light that tends to support the finding of the disputed fact, we hold there is not sufficient evidence of a valid contract. See McElory, 2008 WL 4355276 at *5; see also T.O. Stanley Boot Co., 847 S.W.2d at 221. Appellant's issues three through six are sustained; however this is not dispositive of the appeal as there are potential alternative grounds upon which the trial court's judgment could be affirmed.
III. Account Stated and Quantum Meruit
In his seventh issue, appellant contends the trial court erred in granting judgment for appellee based on an open account, account stated, or quantum meruit because such causes of action are not applicable where the underlying debt arises from a credit card account.
A. Account Stated
A claim for an account stated differs from a suit on a sworn account, which requires that personal property or services be provided by the creditor to the debtor. McFarland v. Citibank (South Dakota) N.A., 293 S.W.3d 759, 764 (Tex. App.-Waco 2009, no pet.). A suit on a sworn account is not a proper tool for credit card collection. Dulong v. Citibank (South Dakota) N.A., 261 S.W.3d 890, 893 n. 3 (Tex. App.-Dallas 2008, no pet.). In contrast, a cause of action for an account stated is the proper tool for credit card collection. See id at 893.
A party is entitled to relief under the common law cause of action for account stated where (1) transactions between the parties give rise to indebtedness of one another, (2) an agreement, express or implied, between the parties fixes an amount due, and (3) the one to be charged makes a promise, express or implied to pay the indebtedness. McFarland, 293 S.W.3d at 763. Because an agreement on which an account stated claim is based can be express or implied, unlike a breach of contract claim, appellee did not have to produce a written contract as long as it could produce other evidence of the agreement between the parties. See McFarland, 293 S.W.3d at 763.
An implied agreement can arise from the acts and conduct of the parties. Id. In McFarland, a credit card debt collection case, the court found there was sufficient evidence to support a cause of action for an account stated where there was no agreement entered into evidence. Id. at 763-64. In that case, over sixty pages of credit card statements showing various interest rates, late fees, and payments were entered into evidence. Id. at 763. The court reasoned that based on evidence of usage of the credit card it could reasonably infer that the debtor impliedly agreed to pay a fixed amount equal to the purchases and cash advances he made, plus interest. Id. In the case at bar, appellee has entered similar evidence of an implied agreement between the parties, such as statements reflecting appellant's purchases and payments on the credit card. Therefore, we hold an implied agreement between the parties may be reasonably inferred from the credit card statements entered into evidence. See Dulong, 261 S.W.3d at 894. Accordingly, the trial court did not err in granting judgment for appellee based on an account stated cause of action. See McFarland, 293 S.W.3d at 764.
B. Quantum Meruit
Quantum Meruit is an equitable remedy independent of a particular contract. Vortt Exploration Co., v. Chevron U.S.A., 787 S.W.2d 942, 944 (Tex. 1990). This theory rests on an implied agreement to pay for benefits received. Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). To recover under quantum meruit, appellee must prove that (1) valuable services were rendered or materials furnished; (2) to appellant; (3) which appellant accepted, used, and enjoyed; (4) under such circumstances as to reasonably notify appellant that appellee (by assignment), in performing, expected to be paid by as to reasonably notify appellant. See Vortt Exploration Co., Inc., 787 S.W.2d at 944; Heldenfels Bros., Inc., 832 S.W.2d at 41. A party may recover under quantum meruit only when there is no express contract covering the services or materials furnished. Vortt Exploration Co., 787 S.W.2d at 944. In McElroy, this court held, a quantum meruit claim was proper in a credit card debt collection case where the evidence did not support the existence of a valid contract. McElroy, 2008 WL 4355276 at *6. This court stated that the extension of credit met the services rendered element of a quantum meruit claim where the borrower did not dispute the existence or use of the account. Id. Thus, in light of this court's decision in McElroy and the fact that appellant did not dispute the existence or use of the account, we hold it was not improper for the trial court to grant judgment in favor of appellee on a quantum meruit claim.
Accordingly, we overrule appellant's seventh issue.
IV. Attorney's Fees
In his eighth issue, appellant contends the trial court erred in awarding attorney's fees to appellee because there is no valid contract. Specifically, appellant argues the "presentment" requirement for attorney's fees has not been met because there is no valid contract. Section 38.001(1) of the Texas Civil Practices and Remedies Code authorizes attorney's fees to the prevailing party in a claim for services rendered. Tex. Civ. Prac. Rem. Code Ann. § 38.001(8) (Vernon 2008). Because appellee's valid quantum meruit claim is based on the rendition of services to appellant, section 38.001(1) authorizes the award of attorney's fees in this case. See McElroy, 2008 WL 4355276 at *6. However, section 38.002 has three perquisites to the award of attorney's fees: (1) the claimant be represented by an attorney; (2) the claimant must present the claim to the opposing party or to a duly authorized agent of the opposing party; and (3) payment for the just amount owed must not have been tendered before the expiration of the 30th day after the claim is presented. Tex. Civ. Prac. Rem. Code Ann. § 38.002 (Vernon 2008). Presentment of a claim under section 38.002 is required to allow the person against whom it is asserted an opportunity to pay before incurring an obligation for attorney's fees. Jones v. Kelley, 614 S.W.2d 95, 100 (Tex. 1981). No particular form of presentment is required. Id. All that is necessary is an assertion of a debt or claim and a request for compliance made to the opposing party, and the party's refusal to pay. Panzio v. Young Men's Christian Ass'n of Greater Houston Area, 938 S.W.2d 163, 168 (Tex. App. [1st Dist.] 1996, no writ).
During the bench trial, appellee entered into evidence appellant's responses to appellee's requests for production. In his responses, appellant provided two demand letters sent to him from appellee's law firm. These letters served to inform appellant about the debt owed to appellee. The letters stated appellant had thirty days to either pay or dispute the debt owed before appellee would pursue legal action. We hold that the demand letters appellee sent to appellant suffice to meet the presentment requirement imposed on appellee. For the above reasons, the trial court did not err in granting appellee attorney's fees. We overrule appellant's eighth issue.
V. Counterclaims
In issues nine through thirteen, appellant contends the trial court erred by denying his counterclaims based on violations of the Fair Debt Collection Practices Act (FDCPA). The issues integral to the resolution of the alleged violations of the FDCPA have already been addressed in this opinion. However, we will briefly address appellant's contentions.
15 U.S.C. § 1692 et seq.
A. Appellee is the assignee of the HSBC account.
In his ninth issue, appellant contends appellee's allegation that appellee is the assignee of the HSBC account is a violation of the FDCPA under section 1692e (10). See 15 U.S.C. § 1692e (10). This section prohibits: "The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." Id. Appellant argues that because appellee is not an assignee of the HSBC account, it violated this section by making a false representation that it was an assignee. In the above section regarding appellee's standing, we addressed this issue. We determined there is sufficient evidence appellee is the assignee of the HSBC account. Therefore, appellant's contention regarding section 1692e (10) of the FDCPA is without merit. We overrule appellant's ninth issue.
B. Appellee did not threaten to take legal action that could not legally be taken.
In his tenth and eleventh issues, appellant contends appellee violated the FDCPA by attempting to collect interest, late fees, over-limit fees, and attorney's fees when there was no valid contract to support such fees. Appellant alleges this is a violation of section 1692e (5), which prohibits "threats to take any action that cannot legally be taken or that is not intended to be taken." 15. U.S.C. § 1692e (5). Because we held appellee had a valid cause of action under account stated and quantum meruit, appellee did not threaten to take an action that could not legally be taken. We overrule appellant's tenth and eleventh issues.
C. Appellee did not assert any causes of action not allowed by Texas law.
In his twelfth issue, appellant contends appellee violated the FDCPA by alleging causes of action not allowed by law. Appellant contends appellee violated section 1692e (10) by asserting open account, account stated, and quantum meruit causes of action. See 15 U.S.C. § 1692e (10). As discussed above, a cause of action for account stated and/or quantum meruit is proper in a credit card debt collection case. See Eaves, 301 S.W.3d at 407-08; McElroy, 2008 WL 4355276 at *6. Accordingly, we hold appellee has not alleged a cause of action not allowed under Texas law. Therefore, there has been no violation of the FDCPA. We overrule appellant's twelfth issue.
D. Appellant is not entitled to damages or attorney's fees under the FDCPA.
Because we hold that the trial court properly denied all of appellant's FDCPA counterclaims, we further hold the trial court did not err in denying appellant damages and attorney's fees under the FDCPA. Appellant's thirteenth issue is overruled.
CONCLUSION
We affirm the judgment of the trial court.