American Express National Bank v. Christopher Sherwood A/K/A Christopher J. Sherwood A/K/A Chris Sherwood

• Court: Court of Appeals of Texas
• Decided: January 27, 2022
• Docket: 05-20-00153-CV
• Status: Published

Opinion

Affirmed and Opinion Filed January 27, 2022

In The Court of Appeals Fifth District of Texas at Dallas No. 05-20-00153-CV

AMERICAN EXPRESS NATIONAL BANK, Appellant V. CHRISTOPHER SHERWOOD A/K/A CHRISTOPHER J. SHERWOOD A/K/A CHRIS SHERWOOD, Appellee

On Appeal from the 101st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-14540

MEMORANDUM OPINION Before Justices Osborne, Reichek, and Carlyle Opinion by Justice Osborne American Express National Bank (“Bank”) filed suit against Christopher

Sherwood to collect amounts it alleged were due on two credit card accounts. After

a bench trial, the trial court rendered judgment that the Bank take nothing from

Sherwood. The trial court also made findings of fact and conclusions of law that the

Bank lacked standing to recover on its claims. Because the Bank did not conclusively

prove its right to recover on the accounts, we affirm the trial court’s judgment. BACKGROUND

The Bank sued Sherwood for breach of contract on two credit cards, an

American Express EveryDay card with a balance of $17,613.25 (“the EveryDay

card”), and an American Express Hilton Honors card with a balance of $9,190.22

(“the Hilton Honors card”). Sherwood filed a verified denial that the Bank owned

the accounts. The case proceeded to trial before the court.

William McCarter, the Bank’s assistant custodian of records, testified that

Sherwood applied for and was approved for a credit card account from “American

Express” with an account number ending in 62009. Exhibit 1A, a card member

agreement dated October 14, 2015, was admitted into evidence showing “American

Express Centurion Bank” as the issuer and “Christophe Sherwood” as the card

member for an Amex EveryDay card.

Exhibit 1A reflected an account number ending in 61001, not 62009.

McCarter explained that the account number on the EveryDay account changed from

61001 to 62009 on July 7, 2017. He attributed this change to a change in the card

number, and testified that the card number could have changed “[f]or various

different reasons; lost, stolen, the card member could request a new card.” On cross-

examination, McCarter testified that despite the different account numbers, the

accounts were the same “[d]ue to all the other information, the card member’s name,

the card member’s address that are listed on all the statements, whether it says 61001

or the 62009.” He conceded that there was no documentation in the file showing the

–2– reason for the change, but testified he is “[o]ne hundred percent” confident that “this

is the same card.”

The Bank offered monthly statements beginning in February 2016 and ending

in May 2017 for the EveryDay account number ending in 61001, and monthly

statements beginning in June 2017 and ending in October 2018 for the EveryDay

account number ending in 62009. These statements were admitted into evidence as

Exhibit 2A. The February 9, 2018 statement includes a note that “American Express

Centurion Bank (“AECB”) will undergo a legal entity change and be known as

American Express National Bank (“AENB”) as of April 1, 2018. Following that

date, AENB will become the issuer of your Account.” The October 12, 2018

statement shows a balance due of $17,613.25 on the account number ending in

62009, and McCarter testified that this amount was the balance due on the EveryDay

card.

The Bank also offered Exhibit 1B, a card member agreement dated December

28, 2017 showing “Christophe Sherwood” as the card member on a Hilton Honors

card issued by “American Express Bank, FSB” with an account number ending in

71001. McCarter explained that the account “originated with Citibank,” but

“American Express took over the Citibank Hilton portfolio.” The Bank did not offer

any documentation of the transfer or assignment. McCarter testified there was a

balance due in 2016 when the account was transferred from Citibank to American

Express, but all of the statements for 2017 were missing. The February 19, 2018

–3– statement included a note that “American Express Bank, FSB (“FSB”) will undergo

a legal entity change and be known as American Express National Bank (“AENB”)

as of April 1, 2018. Following that date, AENB will become the issuer of your

Account.” Based on monthly statements from February through October 2018 that

were admitted into evidence as Exhibit 2B, McCarter testified that $9,190.22 was

due on the Hilton Honors card.

The Bank then called Sherwood as an adverse witness. He testified that he had

one American Express card and that “[t]he Citi Hilton became Amex.” He denied

familiarity with Exhibits 1A and 1B, but admitted that his name and his previous

address were on some of the Bank’s documents. He testified he used the EveryDay

card in the past and did not pay the balance in full. He also testified that he had two

Citibank credit cards, one of which “transferred to American Express,” but he did

not “remember when or being told about it.” He did not recall “ever calling American

Express or indicating to them that [his] card was lost or stolen.” He was not asked,

and did not testify, about specific amounts due on either card.

The Bank concluded its case by requesting a judgment of $26,803.64, the total

amount it contended was due on the cards.

The trial court made findings of fact and conclusions of law. Among its

findings were that the Bank “lacked proof that it owned the account upon which the

charges were made,” and “Hilton Honors account statements were admitted into

evidence but with no assignment to [the Bank].” The trial court concluded that the

–4– Bank “lacks standing as it failed to show that it owned the original claim on the date

of the filing of this lawsuit.”

The trial court rendered judgment that the Bank take nothing from Sherwood.

This appeal followed.

ISSUE AND STANDARD OF REVIEW

In one issue, the Bank challenges the legal and factual sufficiency of the

evidence to support the trial court’s judgment. We review findings of fact entered in

a bench trial for legal and factual sufficiency of the evidence by the same standards

used to review jury findings. Smith-Gilbard v. Perry, 332 S.W.3d 709, 713 (Tex.

App.—Dallas 2011, no pet.). Because the Bank bore the burden of proof at trial and

the trial court rendered judgment for Sherwood, on appeal the Bank must

conclusively prove its right to judgment:

When a party attacks the legal sufficiency of an adverse finding on an issue on which she has the burden of proof, she must demonstrate on appeal that the evidence establishes, as a matter of law, all vital facts in support of the issue. In reviewing a “matter of law” challenge, the reviewing court must first examine the record for evidence that supports the finding, while ignoring all evidence to the contrary. If there is no evidence to support the finding, the reviewing court will then examine the entire record to determine if the contrary proposition is established as a matter of law. The point of error should be sustained only if the contrary proposition is conclusively established. . . .

When a party attacks the factual sufficiency of an adverse finding on an issue on which she has the burden of proof, she must demonstrate on appeal that the adverse finding is against the great weight and preponderance of the evidence. The court of appeals must consider and weigh all of the evidence, and can set aside a verdict only if the evidence is so weak or if the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. –5– Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241–42 (Tex. 2001) (per curiam)

(citations omitted). In a bench trial, the trial court is the sole judge of the credibility

of the witnesses and the weight to be given their testimony. Anderton v. Green, 555

S.W.3d 361, 371 (Tex. App.—Dallas 2018, no pet.).

DISCUSSION

The Bank contends it conclusively proved its ownership of the accounts1 and

the amounts due. We consider the Bank’s arguments for each account.

1. The Hilton Honors card

The Bank sought to prove that “American Express” became the issuer of

Sherwood’s Hilton Honors card although the account originated at Citibank.

McCarter testified that “American Express took over the Citibank Hilton portfolio”

and the accounts were assigned to American Express. The Bank argues Sherwood

conceded that American Express acquired his Hilton Honors account from Citibank

when he testified that “The Citi Hilton became Amex.”

The Bank contends it also notified Sherwood of the subsequent “legal entity

change” from “American Express Bank, FSB” to “American Express National

1 We note at the outset that both the trial court and the parties referred to the dispositive issue as the Bank’s “standing” to sue Sherwood. But the question here “is not truly a standing issue because it does not affect the jurisdiction of the court.” See John C. Flood of DC, Inc. v. SuperMedia, L.L.C., 408 S.W.3d 645, 651 (Tex. App.—Dallas 2013, pet. denied). Instead, Sherwood specifically denies that the Bank owns the claims or is a party to any agreement with him. This is a question of the Bank’s capacity. See id. “A plaintiff has standing when it is personally aggrieved, regardless of whether it is acting with legal authority; a party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy.” Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 775 (Tex. 2020) (internal quotations omitted). –6– Bank” (the plaintiff and appellant here) on the February 2018 Hilton Honors card

statement, thus establishing its ownership of the account. The Bank cites Sherwood’s

use of the card and payments on the account after he had notice of the assignment as

conclusive proof of the Bank’s ownership.

The Bank concedes it did not introduce any written assignment instrument

into evidence. The Bank argues, however, that McCarter’s testimony was sufficient

to establish the Bank’s ownership of the account. The Bank contends that ownership

of a credit card account can be established conclusively by testimony alone, citing

among other authority Ranjbar v. Citibank, N.A., No. 07-14-00275-CV, 2016 WL

303832 (Tex. App.—Amarillo Jan. 25, 2016, no pet.) (mem. op.).2 In Ranjbar,

however, the trial court’s judgment was for the bank, and the court of appeals was

required to imply all necessary findings and conclusions in support of that judgment.

2 None of the other cases cited by the Bank for this proposition involved appellate review of a trial court’s findings and conclusions after a bench trial. See Nguyen v. Citibank, N.A., 403 S.W.3d 927, 930–31 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (summary judgment affidavit testimony without supporting documentation was sufficient to establish ownership of account where there was no controverting summary judgment evidence); First Gibraltar Bank, FSB v. Farley, 895 S.W.2d 425, 428– 29 (Tex. App.—San Antonio 1995, writ denied) (citing cases holding that affidavit testimony is sufficient to conclusively establish ownership of promissory note even in absence of supporting documentation if there is no controverting summary judgment evidence, but concluding the rule did not apply where an internally inconsistent affidavit created a fact issue on ownership of note); Hou-Tex Printers, Inc. v. Marbach, 862 S.W.2d 188, 190–91 (Tex. App.—Houston [14th Dist.] 1993, no writ) (“mere allegation” in summary judgment motion that plaintiffs were owners and holders of promissory note was not evidence, and “[f]ailure to supply this essential proof [was] fatal”), and NCNB Tex. Nat’l Bank v. Johnson, 11 F.3d 1260, 1265 (5th Cir. 1994) (summary judgment affidavit with additional evidence of bank’s ownership of promissory note was sufficient). Consequently, in contrast to this appeal, these cases did not require the creditors to conclusively prove their ownership of the accounts. See Dow Chem. Co., 46 S.W.3d at 241–42. The creditors were required only to show there was no genuine issue of material fact regarding their ownership, see TEX. R. CIV. P. 166a(c), and the trial courts were not required to judge witness credibility. See Palestine Herald-Press Co. v. Zimmer, 257 S.W.3d 504, 508 (Tex. App.—Tyler 2008, pet. denied) (courts do not make credibility or weight determinations of summary judgment evidence). –7– Id. at *1–3. Here, the Bank bears the opposite appellate burden, to conclusively

establish the “contrary proposition” to the trial court’s finding that the Bank “lacked

proof that it owned the account upon which the charges were made” and its

conclusion that the Bank “failed to show that it owned the original claim on the date

of the filing of this lawsuit.” See Dow Chem. Co., 46 S.W.3d at 241–42. Further,

because the trial court was the sole judge of credibility of the evidence and the weight

to be given the witnesses’ testimony, “we will not substitute our judgment for that

of the fact finder” in our review on appeal. See Fenlon v. Harris Cty., 569 S.W.3d

783, 791 (Tex. App.—Houston [1st Dist.] 2018, no pet.).

When cross-examined on whether there was a written assignment from

Citibank to American Express, McCarter testified that “I don’t know what written

assignment means.” He explained that “American Express purchased the Citibank

Hilton entire portfolio,” but gave no further specific information about the

“portfolio” or the inclusion of Sherwood’s Hilton Honors account in it. During direct

examination, the court asked McCarter:

THE COURT: . . . [I]s there any documentation indicating Citibank, we’re transferring everything over to American Express and it includes Mr. Sher[wood]’s account? A. So there’s a memo on the account for Mr. Sher[wood]’s account that this was a transferred account.

THE COURT: Do you have that document?

MR. DEGRASSE [attorney for the Bank]: No, Judge.

–8– Although the Bank argues that we must credit “conclusive evidence” that “allows of

only one logical inference,” see City of Keller v. Wilson, 168 S.W.3d 802, 814 (Tex.

2005) (internal quotation omitted), we disagree that McCarter’s testimony

conclusively proved the Bank’s ownership of the Hilton Honors account. Cf.

Ranjbar, 2016 WL 303832, at *2 (bank’s evidence included testimony of witness

with personal knowledge of bank’s merger and ownership of account as well as

properly-authenticated business records supporting same).

Assuming the Bank proved its ownership of the Hilton Honors account, it was

also required to establish the elements of its breach of contract claim for the amount

it alleged to be due. The Bank argues it conclusively proved the amount due, relying

on McCarter’s testimony and on Exhibit 2B, consisting of 2018 statements on the

Hilton Honors account. The first Hilton Honors account statement in Exhibit 2B is

dated February 19, 2018. It shows a “previous balance” of $8,908.50, with “$0.00”

in “new charges.” None of the subsequent statements show any charges on the card.

The Bank’s total claim of $9,190.22 on the account results from 2018 interest

charges on the previous balance.

There is no documentation supporting the “previous balance,” nor could

McCarter testify to it. McCarter explained that all of the 2017 account statements

for the card are missing. He also testified that any charges from 2016 were “made

under Citibank. They weren’t our charges. They were taking those charges from

Citibank in the transfer over.” Consequently, McCarter did not provide evidence that

–9– Sherwood’s use of the Hilton Honors card resulted in the $8,908.50 “previous

balance” shown on the February 19, 2018 statement. Although as the Bank argues,

Sherwood “said nothing” to dispute that $9,190.22 was due on the card, Sherwood’s

silence does not provide affirmative evidence that was otherwise lacking. We

conclude that the Bank did not conclusively prove its right to judgment on the Hilton

Honors account, and we decide this portion of the Bank’s issue against it. See Dow

Chem. Co., 46 S.W.3d at 241–42 (no-evidence complaint should be sustained only

“if the contrary proposition is established as a matter of law”).

2. The EveryDay card

The Bank again relies on McCarter’s testimony, the card member agreement,

and the account statements that were admitted into evidence as conclusive proof of

the Bank’s ownership of the EveryDay card account and the amounts allegedly due.

The Bank argues the card member agreement lists American Express Centurion

Bank as issuer of the card, and a subsequent statement informed Sherwood of the

issuer’s legal entity change to American Express National Bank. It contends there is

evidence that the Bank issued the card to Sherwood, Sherwood admitting using the

card, and Sherwood made payments to the Bank.

Sherwood responds that the Bank brought suit on account number 62009 but

at trial sought to prove a $17,613.25 balance due on account number 61001.

Although McCarter testified that an account number may change “because of lost or

stolen cards, because the card member requests it, [or] because the card number has

–10– been compromised,” Sherwood testified that to his recollection, none of these events

occurred. Further, although Sherwood admitted using the card “[i]n the past,”

identified a “previous address” on some of the statements, and answered “No” when

asked if he had paid “the balance in full,” he did not admit to any specific balance

due on either account number 62009 or account number 61001.

We conclude the Bank did not offer conclusive proof of its claim that

Sherwood owed $17,613.25 on account number 62009. See Dow Chem. Co., 46

S.W.3d at 241–42. We decide this portion of the Bank’s issue against it.

CONCLUSION

The trial court’s judgment is affirmed.

/Leslie Osborne// 200153f.p05 LESLIE OSBORNE JUSTICE

–11– Court of Appeals Fifth District of Texas at Dallas JUDGMENT

AMERICAN EXPRESS On Appeal from the 101st Judicial NATIONAL BANK, Appellant District Court, Dallas County, Texas Trial Court Cause No. DC-18-14540. No. 05-20-00153-CV V. Opinion delivered by Justice Osborne. Justices Reichek and CHRISTOPHER SHERWOOD Carlyle participating. A/K/A CHRISTOPHER J. SHERWOOD A/K/A CHRIS SHERWOOD, Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED.

It is ORDERED that appellee Christopher Sherwood a/k/a Christopher J. Sherwood a/k/a Chris Sherwood recover his costs of this appeal from appellant American Express National Bank.

Judgment entered this 27th day of January, 2022.

–12–