law-cc-sworn-account
Credit Card Debt Collection Suit Cannot Be Brought as Sworn Account Suit Under
Rule 185
Resurgence Financial, LLC v. Lawrence (Tex.App.- Houston [1st Dist.] Oct. 8, 2009)(Radack)
(credit card debt suit not properly prosecuted as sworn account suit under Texas Rule of Civil Procedure 185,
damages not proven)
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
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.
TRCP 185 SWORN ACCOUNT PROCEDURE
Texas Rule of Civil Procedure 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 a claim is, within the knowledge of 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 a claim shall file a written denial, under oath." Tex. R. Civ. P. 185.
Sworn Account not available to collect credit card debt in court - incorrect theory
In his fifth issue, Williams argues that the trial court erred in granting summary judgment on Unifund's claim for a
sworn account pursuant to Texas Rule of Civil Procedure 185. (1) Rule 185 is a procedural tool that limits the
evidence necessary to establish a prima facie right to recovery on certain types of accounts. (2) Tex. R. Civ. P.
185. Rule 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. . . ." Meaders v. Biskamp, 316 S.W.2d 75, 78
(Tex. 1958) (emphasis in original); Bird v. First Deposit Nat'l Bank, 994 S.W.2d 280, 282 (Tex. App.--El Paso
1999, pet. denied); Hou-Tex Printers, Inc. v. Marbach, 862 S.W.2d 188, 190 (Tex. App.--Houston [14th Dist.]
1993, no writ). It does not apply to transactions between parties resting upon a special contract. Meaders, 316 S.
W.2d at 78; Bird, 994 S.W.2d at 282. A credit card issued by a financial institution is a special contract that does
not create the sort of debtor-creditor relationship to bring a claim within the scope of Rule 185. See Bird, 994 S.W.
2d at 282; see also Sherman Acquisition II LP v. Garcia, 229 S.W.3d 802, 807 (Tex. App.--Waco 2007, no pet.);
Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212, 216 (Tex. App.--Texarkana 2005, no pet.). The Bird court
reasoned:
We reach this conclusion because no title to personal property passes from the bank to the cardholder; rather,
the card evidences a line of credit extended by the bank which the cardholder may use to purchase goods and
services from a third party. And where the transaction in question is a cash advance, there is no good or service
involved at all, but a pure loan of money.
An unpaid bank credit card account, therefore, 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. Bird, 994 S.W.2d at 282. Therefore,
Rule 185 is not available in a suit to recover credit card debt. The trial court erred to the extent it granted
summary judgment on Unifund's claim on a sworn account.
We sustain Williams's fifth issue and hold that Unifund is not entitled to summary judgment on a sworn account
under Rule 185. Although Unifund cannot prevail under Rule 185, it is important to remember that Rule 185 is
merely a procedural tool that is unavailable here under established law. Williams also argues that Unifund was not
entitled to summary judgment on its breach of contract theory. (3)
Williams v. Unifund CCR Partners Assignee of Citibank, — SW3d —, 2008 WL 339855, at *4 (Tex.App.—Houston
[1st Dist.] Feb. 7, 2008, no pet. h.)(Keyes) (Plaintiff failed to produce the Card Agreement or any document that
established the agreed terms, including the applicable interest rate or the method for determining the applicability
and amount of finance charges.)
Sworn Account vs. Suit on Account
A party is entitled to relief under the common-law cause of action for “account 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.- Houston [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.- Dallas 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.- Texarkana 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.
- El Paso 1999, pet. denied).
[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 “just 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.- Houston [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.
Butler v. Hudson & Keyse (Tex.App.- Houston [14th Dist.] Feb. 19, 2009)(Hudson)
(credit card debt suit, account stated theory)
AFFIRMED: Opinion by Justice Hudson
Before Justices Anderson, Hudson and Frost
14-07-00534-CV Paul A. Butler and Afton J. Butler v. Hudson & Keyse, L.L.C
Appeal from County Civil Court at Law No 1 of Harris County
Trial Court Judge: R. Jack Cagle
Sworn Denial required to sworn account suit, but not when inapplicable given nature of cause
of action
Texas Rule of Civil Procedure 185 requires a defendant to file a verified denial in response to a plaintiff's sworn
suit on an account. Tex. R. Civ. P. 185. We have previously held that a sworn account, as intended in Rule 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." Hou-Tex Printers, Inc. v. Marbach, 862 S.W.2d 188, 190 (Tex.
App.- Houston [14th Dist.] 1993, no writ).
Landaverde v. Centurion Capital Corporation (Tex.App.- Houston [14th Dist.] Jun. 28, 2007)(Hedges)(credit card
debt suit)(Hedges)
After evaluating Centurion's original petition, it does not appear that the account subject of this suit involves such
a transaction. Centurion's petition states that Centurion and/or its predecessor “extended credit to Defendant for
the Defendant to purchase of (sic) one or more items of goods, wares, merchandise, or services, or for cash
advances. Defendant accepted the credit extended by making charges on said credit card account, or by
authorizing another person to make said charges on this account."
Additionally, Centurion was assigned this account from “Discover."[1] It thus appears that this account was a
credit card account extended to Landaverde for his general use by a financial institution that was not the seller of
the goods or services purchased with the credit card. Rule 185 is therefore unavailable to Centurion. See Bird v.
First Deposit Nat'l Bank, 994 S.W.2d 280, 282 (Tex. App.- El Paso 1999, pet. denied) (holding that - a credit card
issued by a financial institution does not create the sort of debtor‑creditor relationship required in order to bring
suit under Texas Rule of Civil Procedure 185"); Marbach, 862 S.W.2d at 190 (finding that a suit on a promissory
note is not included in Rule 185's definition of a sworn account); Dunham v. Providian Nat. Bank, No.
14‑01‑00027‑CV, 2002 WL 192336, at *1 (Tex. App.- Houston [14th Dist.] Feb. 7, 2002, no pet.) (not designated
for publication) (noting that Rule 185 does not apply to a credit card account which involves only an advance of
money).