Paul A. Butler and Afton J. Butler v. Hudson & Keyse, L.L.C

• Court: Court of Appeals of Texas
• Decided: February 19, 2009
• Docket: 14-07-00534-CV
• Status: Published

Opinion

Affirmed and Memorandum Opinion filed February 19, 2009

Affirmed and Memorandum Opinion filed February 19, 2009.

In The

Fourteenth Court of Appeals

____________

NO. 14-07-00534-CV

PAUL A. BUTLER AND AFTON J. BUTLER, Appellants

v.

HUDSON & KEYSE, L.L.C., Appellees

On Appeal from the County Civil Court at Law No. 1

Harris County, Texas

Trial Court Cause No. 878599

M E M O R A N D U M   O P I N I O N

This is an appeal from a judgment entered against appellants Paul and Afton Butler in a credit card debt collection suit.  Hudson & Keyse, L.L.C. (AHudson@) sued the Butlers to recover the $21,803.54 balance owed on a credit card, as well as $6,541.06 in attorney=s fees.  Hudson moved for summary judgment on its claim, and the trial court granted the motion.  On appeal, the Butlers contend there is  insufficient evidence to support summary judgment, and that genuine issues of material fact exist.  We affirm. 

Background

Chase Manhattan Bank (AChase@), Hudson=s assignor, issued the credit card to the Butlers, who used it for purchases and cash advances.  The Butlers, it is claimed, incurred $21,803.54 in credit card debt.  After acquiring the right to collect on the debt from Chase, Hudson brought suit against the Butlers.  Hudson then moved for summary judgment, supported by affidavits from Nancy Quere, Hudson=s legal account manager, and its attorney, Dan G. Young.  Quere=s affidavit provides that the Butlers are obligated to pay the amount of $21,803.54 to Hudson, as Chase=s assignee.  Young=s affidavit sets forth the amount of attorney=s fees incurred as $6,541.06, and in it Young explains the basis for the claimed amount.

The Butlers filed a verified response to the motion for summary judgment claiming genuine issues of material fact had not been resolved.  They argued they did not owe Hudson a debt, and they raised the affirmative defenses of lack of privity of contract, statute of limitations, failure and/or lack of consideration, illegality, payment, unenforceability, usury, laches, and estoppel.  They asserted Quere=s affidavit did not establish a basis for Hudson=s allegations, and that the allegations made were conclusory.  Finally, the Butlers contended Hudson had failed to produce documentary evidence showing it was entitled to collect on the debt as Chase=s assignee.

The only summary-judgment evidence provided by the Butlers was a complaint and notice of a class action suit filed in federal court against Hudson.  The complaint alleged violations of the Fair Debt Collection Practices Act and the Texas Debt Collection Act.  Mr. Butler received notice of the class action as a potential class member.  Appellants argued Mrs. Butler should have been dismissed as a defendant from this credit-card case because she was not served with notice as a member of the class action.  They also claimed, because Mrs. Butler was not given notice of the class action, no contractual relationship existed between her and Hudson.  The trial court granted summary judgment, and the Butlers have appealed.

Standard of Review

The standard for reviewing the granting of a motion for summary judgment is well established.  A plaintiff moving for summary judgment has the burden of proving there is no genuine issue of material fact and that it is entitled to judgment as a matter of law on each element of the cause of action.  See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985); Gibbs v. Gen. Motors Corp., 450 S.W.2d 827, 828 (Tex. 1970).  Evidence favorable to the non-movant will be taken as true in deciding whether there is a disputed material fact issue that precludes summary judgment.  Nixon, 690 S.W.2d at 548B49.  We make all reasonable inferences in the non-movant=s favor.  See KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999).  If the movant=s motion and summary judgment proof facially establish its right to judgment as a matter of law, the burden shifts to the non-movant to raise a material fact issue sufficient to defeat summary judgment.  See HBO, A Div. of Time Warner Entm=t Co. v. Harrison, 983 S.W.2d 31, 35 (Tex. App.CHouston [14th Dist.] 1998, no pet.).  However, a non-movant is not required to respond with evidence if deficiencies in the movant=s own proof or legal theories will defeat the movant=s right to judgment as a matter of law.  See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979).

Analysis

A.  Summary Judgment Evidence

A party is entitled to relief under the common-law cause of action for Aaccount stated@ if the party proves (1) transactions between the parties give rise to indebtedness of one to the other; (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.  Neil v. Agris, 693 S.W.2d 604, 605 (Tex. App.CHouston [14th Dist.] 1985, no writ); Cont=l Cas. Co. v. Dr Pepper Bottling Co. of Texas, 416 F. Supp. 2d 497, 504 (N.D. Tex. 2006) (citing Arnold D. Kamen & Co. v. Young, 466 S.W.2d 381, 388 (Tex. App.CDallas 1971, writ ref'd n.r.e.)).  A claim for account stated differs from a suit on a sworn account, which requires personal property or services be provided by the creditor to the debtor.^[1]  See Tex. R. Civ. P. 185; see also Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212, 216 (Tex. App.CTexarkana 2005, no pet.).  Account stated, and not a suit on a sworn account, is the proper cause of action for a credit card collection because no title to personal property or services pass from the bank to the credit card holder.  Tully, 173 S.W.3d at 216; Bird v. First Deposit Nat=l Bank, 994 S.W.2d 280, 282 (Tex. App.CEl Paso 1999, pet. denied).

1.  Transactions Giving Rise to Indebtedness

Hudson provided summary-judgment evidence showing that transactions between the parties gave rise to the indebtedness.  Specifically, Quere=s affidavit provides the indebtedness arose from a credit card issued to the Butlers by Chase.  The affidavit also explains that Chase assigned the right to collect on the debt to Hudson.  The Butlers argue that Quere=s affidavit is not based on personal knowledge of the books and records of Chase.  See Tex. R. Civ. P. 166a(f).  However, an objection that the affiant does not have personal knowledge is an objection to the form of the affidavit and must be preserved in the trial court.  Grand Prairie Indep. Sch. Dist. v. Vaughan, 792 S.W.2d 944, 945 (Tex. 1990).  Nothing in the record shows the trial court ruled on the Butlers= objections before rendering judgment.  Therefore, the objection to Quere=s personal knowledge has been waived.  See id.

Next, appellants contend the statements made in the affidavit are conclusory, but do not identify the complained-of statements.  An objection regarding the conclusory nature of an affidavit is an objection to the substance of the affidavit that can be raised for the first time on appeal.  Skelton v. Comm=n for Lawyer Discipline, 56 S.W.3d 687, 692 (Tex. App.CHouston [14th Dist.] 2001, no pet.).  Affidavits which contain conclusory statements that fail to provide the underlying facts to support the conclusion are not proper summary judgment evidence.  Dolcefino v. Randolph, 19 S.W.3d 906, 930 (Tex. App.CHouston [14th Dist.] 2000, pet. denied).  However, Quere=s affidavit is not conclusory.  The affidavit states that plaintiff purchased the debt from Chase.  It also contains assertions supporting Hudson=s motion and it is based on the affiant=s personal knowledge derived from her work as Hudson=s legal account manager.  We conclude Quere=s affidavit is not conclusory and the trial court did not err in considering it.  Thus, Hudson effectively established the first element of its account stated claim.

2.  Implied Agreement Fixing Amount Due, and Implied Promise to Pay

Appellants argue Hudson=s summary-judgment evidence failed to establish the Butlers had a contractual agreement with Chase or Hudson.  Because an account stated claim can be based on an express or implied agreement, Hudson does not have to produce a written contract as long as it provides other evidence of the agreement between the parties to meet its burden of proof.  See Neil, 693 S.W.2d at 605.  An implied agreement can arise from the acts and conduct of the parties.  Harrison v. Williams Dental Group, P.C., 140 S.W.3d 912, 916 (Tex. App.CDallas 2004, no pet.).  Given the Butlers= acceptance and use of the credit card to make purchases, it is reasonable to infer that they understood and accepted the obligation, and impliedly promised to pay the indebtedness.  See Hinojosa v. Citibank (South Dakota), N.A., No. 05-07-00059-CV, 2008 WL 570601, at *3 (Tex. App.CDallas March 4, 2008, pet. denied) (mem. op.). 

The Butlers contend Hudson failed to prove a fixed amount owed on the credit card account.  However, Quere attested that the Butlers owe a balance of $14,931.13, with  $6,872.41 interest, for a total of $21,803.54.  Again, based on appellants= usage of the credit card, we may reasonably infer that they impliedly agreed to pay a fixed amount equal to the purchases and cash advances they made, plus interest.  See Dulong v. Citibank (South Dakota), N.A., 261 S.W.3d 890, 894 (Tex. App.CDallas 2008, no pet.).  The Butlers have not presented any evidence suggesting a different amount is owed.  Thus, the evidence presented by Hudson established that the Butlers agreed to pay the fixed amount of indebtedness arising out of their credit-card transactions.

Appellants also claim they are not obligated to pay Hudson on the indebtedness because it failed to show it was entitled to bring suit as Chase=s assignee.  Hudson=s  summary-judgment evidence shows Hudson has the right to bring suit on the debt.  The Butlers did not attach any evidence to their verified response in support of their assertion.  The Butlers failed to raise an issue of material fact on this point.

Further contesting the existence of contractual relationship, the Butlers attached a class-action complaint against Hudson to their supplemental response, as well as a copy of the notice Mr. Butler received as a potential class member.  The Butlers claim this evidence proves that Mrs. Butler had not entered into a contractual relationship with Chase because she was not personally served with notice and a copy of the complaint.  However, because appellant's brief cites no authority and provides no argument in support of this contention, it presents nothing for our review and is waived.  See Tex. R. App. P. 38.1(i); San Saba Energy, L.P. v. Crawford, 171 S.W.3d 323, 338 (Tex. App.CHouston [14th Dist.] 2005, no pet.).          

Appellants also assert Hudson represented to the federal court that its net worth was only $76,055.05.  The Butlers argue that it is inconceivable they owe Hudson one-third of its net worth.  Were we to construe this non-sequitur as a challenge to the amount of the debt, the argument still fails because appellants misread their own summary-judgment evidence.  According to the record, $76,055.05 represents only one percent of Hudson=s net worth which, according to the complaint, is the maximum amount of statutory damages recoverable in the class-action suit.  The second and third elements of the account stated claim are satisfied by Hudson=s summary judgment evidence and appellants have not raised a material fact issue.

3. Appellants= Affirmative Defenses

In support of their claim that material fact issues remain unresolved by the trial court, the Butlers contend they raised affirmative defenses that have not been addressed.  However, the mere pleading of an affirmative defense will not, without proof, defeat a motion for summary judgment.  American Petrofina, Inc. v. Allen, 887 S.W.2d 829, 830 (Tex. 1994); Kehoe v. Lambert, 633 S.W.2d 576, 578 (Tex. App.CHouston [14th Dist.] 1982, writ ref=d n.r.e.).  A defendant must go beyond the allegations of an affirmative defense and present summary judgment evidence that establishes the defense.  See Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984).  If the affirmative defense has more than one element, then summary judgment evidence must be presented on each element necessary to such defense.  Rucker v. Bank One Texas, N.A., 36 S.W.3d 649, 653 (Tex. App.CWaco 2000, pet. denied).  The Butlers failed to produce evidence in support of the affirmative defenses asserted.  Therefore, the trial court properly disregarded such affirmative defenses.

We conclude Hudson established the elements of the account-stated claim as a matter of law.  The Butlers had an implied agreement with Chase fixing an amount due, and, as Chase=s assignee, Hudson is entitled to recover the unpaid sums. Once Hudson established the elements of its claim, the burden shifted to the Butlers to raise a material fact issue sufficient to defeat the motion for summary judgment.  The Butlers did not meet this burden because they did not offer any evidence giving rise to a material fact issue.

B. Attorney=s Fees

The trial court awarded Hudson $6,541.06 in attorney=s fees, plus conditional attorney=s fees of $1,500 in the event of appeal to the Texas Court of Appeals, and $2,500 in the event a petition for review is filed with the Texas Supreme Court.  Hudson=s attorney, Dan G. Young, filed an affidavit explaining that the amount of attorney=s fees requested by Hudson is reasonable considering the services rendered and the contingency fee nature of the suit.  On appeal, the Butlers argue Hudson failed to establish the attorney=s fees awarded are just and reasonable.  Specifically, they point out the affidavit did not provide an hourly fee and it did not provide a basis in law for the collection of fees from the Butlers. 

AThe award of attorney's fees in a summary judgment is improper unless the evidence of the reasonableness of those fees is uncontroverted.@  Guity v. C.C.I. Enter., Co., 54 S.W.3d 526, 528 (Tex. App.CHouston [1st Dist.] 2001, no pet.).  Uncontroverted testimony of an interested witness will establish attorney=s fees sought are reasonable and necessary as a matter of law if the following conditions exist: (1) the testimony could readily be contradicted if untrue; (2) the testimony is clear, direct, and positive; and (3) there are no circumstances tending to discredit or impeach the testimony.  Rosenblatt v. Freedom Life Ins. Co. of Am., 240 S.W.3d 315, 321 (Tex. App.CHouston [1 Dist.] 2007, no pet.) (citing Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990).  Young=s affidavit clearly and directly states the amount of attorney=s fees sought.  Because the Butlers did not present a conflicting affidavit or any other evidence challenging the reasonableness of the attorney=s fees, it was uncontroverted.  Thus, the attorney=s fees were properly awarded to Hudson. 

Conclusion

After considering the arguments presented, we overrule the points raised and affirm the trial court=s summary judgment.

/s/      J. Harvey Hudson

Senior Justice

Panel consists of Justices Anderson and Frost, and Senior Justice Hudson.^*

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^[1]  Appellants note in their brief that Hudson=s petition was not verified.  A plaintiff's petition on sworn account must contain a systematic, itemized statement of the services rendered, reveal offsets made to the account, and be supported by an affidavit stating the claim is within the affiant's knowledge and that it is Ajust and true.@ Tex. R. Civ. P. 185; see also Andrews v. E. Tex. Med. Ctr.-Athens, 885 S.W.2d 264, 267 (Tex. App.CTyler 1994, no writ).  If there is a deficiency in the plaintiff's sworn account, the account will not constitute prima facie evidence of the debt. See Enernational Corp. v. Exploitation Eng'rs, Inc., 705 S.W.2d 749, 750 (Tex. App.CHouston [1st Dist.] 1986, writ ref'd n.r.e.).  Given that Hudson did not file a petition on sworn account, its failure to attach an affidavit to the petition is immaterial to our review.

^*  Senior Justice Harvey Hudson sitting by assignment.