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

MEMORANDUM OPINION

After a bench trial, the trial court rendered a take-nothing judgment against appellant, Resurgence Financial,
L.L.C. ("Resurgence"), in its suit against appellee, James T. Lawrence, individually and d/b/a Gulf States
Communications, Inc. ("Lawrence"), to collect unpaid credit-card debt.

In its sole issue, Resurgence contends that the trial court erred in doing so because its suit was properly
brought as a suit on account under Texas Rule of Civil Procedure 185. See Tex. R. Civ. P. 185.

We affirm.

BACKGROUND

Resurgence sued appellee Lawrence for the balance due on a credit-card account that it alleged had been
acquired from Wells Fargo Bank. Resurgence alleged claims for breach of contract and for quantum meruit.
Resurgence attached to its petition the affidavit of John H. Over, Resurgence's "designated agent." The
affidavit tracked the requirements of Rule 185 for a suit on account and attached a one-page "statement of
account," but not the credit-card contract. Lawrence answered with an unsworn general denial, which also
asserted that a plaintiff seeking recovery of credit-card debt was "not entitled to proceed on a sworn account
theory," i.e., that such suits were not those for which the procedures of Rule 185 were available.

The case was tried to the court. The trial court admitted into evidence Lawrence's answer and his responses
to requests for disclosure and requests for admissions, in the last of which he admitted to "breach[ing] the
contract made a basis of" Resurgence's petition, but not to the amount due and owing or to the interest rate.
The court excluded, however, a "business records affidavit and business records," which were records from
Wells Fargo Bank concerning the account. Resurgence declined the trial court's offer for it to nonsuit to "redo
the affidavit," indicating that it would prefer to proceed to trial, and offered no further evidence. After the trial
court had taken judicial notice of its file, it announced "judgment for the defendant" because Lawrence's
admissions were not sufficient to prove up the amount owed.

The trial court rendered a take-nothing judgment against Resurgence and signed findings of fact and
conclusions of law, which included the following:

a finding that the only evidence admitted (the answer and discovery responses) did not establish the amount
of damages;

a finding and conclusion that the court properly denied admission of Resurgence's business records affidavit
and attachments;

a conclusion that "the credit card account at issue was not subject to a sworn account theory under Rule
185"; and

a conclusion that "[g]iven the absence of any presumption under [Texas Rule of Civil Procedure] 93(10) and
the sustaining of the objection to the affidavit . . . and related documents, Plaintiff presented no admissible
evidence as to the amount of its damages."

The trial court denied Resurgence's motion for new trial.

ANALYSIS

In its sole issue, Resurgence contends that the trial court erred in rendering a take-nothing judgment,
asserting that because appellee did not file a verified denial, it was entitled to judgment based on Rule 185.

A. Standard of Review

When, as here, the only issue under review involves a pure question of law, the standard of review is de
novo. In re Humphreys, 880 S.W.2d 402, 404 (Tex. 1994); City of Pasadena v. Gennedy, 125 S.W.3d 687,
691 (Tex. App.--Houston [1st Dist.] 2003, pet. denied).

B. 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.).

C. 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.

Sherry Radack

Chief Justice

Panel consists of Chief Justice Radack and Justices Bland and Massengale.

1. See Facility Ins. Corp. v. Employers Ins. Of Wausau, 357 F.3d 508, 513 (5th Cir. 2004) (considering term "open account" in
context of limitations statute); Livingston Ford Mercury, Inc v. Haley, 997 S.W.2d 425, 427 (Tex. App.--Beaumont 1999, no pet.)
(same).

2. See Rowlands v. Unifund CCR, No. 14-05-01122-CV, 2007 WL 1395101, at *2, 3 (Tex. App.--Houston [14th Dist.] 2007, no
pet.) ("Thus, it was not necessary for Unifund to rely upon the evidentiary effect of the pleaded sworn account; the admissions
alone established Unifund's entitlement to prevail based on Rowland's breach of the Account Agreement."); Haley, 997 S.W.2d
at 427 ("The dealership does not contend, either below or on appeal, that the account alleged by KETX does not fall within the
confines of Tex. R. Civ. P. 185. Consequently, we do not address that issue.").

3. See Larcon Petroleum Inc. v. Autotronic Sys., Inc., 576 S.W.2d 873, 875-76 (Tex. Civ. App.--Houston [14th Dist.] 1979, no writ);
Seisdata, Inc. v. Compagnie Generale de Geophysique, 598 S.W.2d 690, 691 (Tex. Civ. App.--Houston [14th Dist.] 1980, writ
ref'd n.r.e.).