Teresa J. BUDZYN, Appellant v. CITIBANK (SOUTH DAKOTA), N.A., Appellee.
After a trial to the bench, the trial court rendered judgment in favor of Citibank (South Dakota), N.A. (“Citibank”) on a suit to collect credit card debts. Teresa J. Budzyn brings this appeal. We affirm in part and reverse and remand in part.
Citibank is a national bank, and Budzyn had two credit card accounts with Citibank.
The 5153 account
In December 1990, Budzyn opened a credit card account with Associates National Bank (“Associates”). This account is referred to as the 5153 account based on the last four digits of the account. In 2002, Citibank merged with Associates. Citibank notified Budzyn of the merger, and Budzyn continued to use the card after the merger. In May 2003, Citibank sent Budzyn a new plastic credit card for the 5153 account, including a cardmember agreement that set out the terms and conditions of the card and described how the interest on the account would be calculated. Budzyn activated the card and continued to use the account to make purchases and cash advances. At trial, Citibank introduced monthly statements from as far back as April 1998 showing all activity on the account. Budzyn made her last payment on the 5153 account on August 11, 2003. The statement of March 23, 2004-the last statement on the account-shows a balance due of $7,351.57.
The 3226 Account
In October 1989, Budzyn opened an account with Citibank that had the last four digits of 4389. In 2001, the account number was changed to a number ending in 3226. At this time, Citibank sent a new plastic card to Budzyn, including a cardmember agreement that set out the terms and conditions of the card and described how the interest on the account would be calculated. Again, Budzyn activated the card and continued to use the account to make purchases and cash advances. At trial, Citibank introduced at least 6 years of monthly statements from the 3226 account showing all activity on the account. Budzyn made her last payment on the 3226 account on August 11, 2003, the same date as her last payment on the 5153 account. The statement of August 22, 2003-the last statement on the account-shows a balance due of $13,626.95.
Citibank filed suit against Budzyn to collect the amount due under the two accounts. Citibank did not seek to recover any interest accruing after the final statement on each account.
Early in the lawsuit, Citibank moved to disqualify Kimberly Soard as counsel for Budzyn, which motion the trial court granted. Budzyn filed a petition for mandamus in this Court seeking mandamus relief from the trial court's order. This Court denied Budzyn's petition for writ of mandamus. In re Budzyn, 206 S.W.3d 721 (Tex.App.-Houston [1st Dist.] 2006, orig. proceeding).
After a bench trial, the trial court rendered judgment in Citibank's favor and awarded it $7,351.57 on amounts due on account 5153 and $13,626.95 for amounts due on account 3226. The trial court also awarded Citibank $10,083.56 for attorney's fees incurred by Hirsch & Westhaimer, P.C. for the trial of the case and $60,000 for attorney's fees incurred by Fulbright & Jaworski, Citibank's prior counsel. Most of Fulbright & Jaworkis's fees were incurred in the course of the proceedings that ultimately resulted in the disqualification of Kimberly Soard as Budzyn's counsel. Finally, the trial court awarded Citibank prejudgment interest and costs and ordered that Budzyn take nothing on her counterclaims against Citibank. This appeal followed.
In her first five issues on appeal, Budzyn contends that there is legally and factually insufficient evidence to support the trial court's findings regarding Citibank's breach-of-contract claims. Specifically, Budzyn argues that Citibank did not prove that, under the contracts, (1) the applicability of South Dakota law, (2) the amount owed on each account, or (3) the applicable interest rate on each account. Citibank responds that we need not reach the breach-of-contract issues because it also recovered on its account stated claims and there is sufficient evidence to uphold the judgment on those claims.
Thus, we will first address Budzyn's seventh issue on appeal, in which she argues that Citibank cannot recover on its account stated claims. Citing Rule 185 of the Texas Rules of Civil Procedure, Budzyn argues that a suit to recover a credit card debt cannot be recovered by way of a suit on a sworn account. We agree. This Court has held that a suit on a sworn account is not a proper mechanism for collecting a credit card debt. See Resurgence Fin., L.L.C. v. Lawrence, No.2009 WL 3248285, at *3 (Tex.App.-Houston [1st Dist.] October 8, 2009, no pet.) (memo op.) (holding that suit on “sworn account” by credit-card debt collection company was inappropriate because collection company was not provider of purchased goods or services).
However, Citibank's cause of action is not a suit on a sworn account-it is a suit for account stated. A claim for account stated “is a proper cause of action for a credit card collection suit because no title to personal property or services passes from the bank to the credit card holder.” McFarland v. Citibank (South Dakota), N.A., 293 S.W.3d 759, 764 (Tex.App.-Waco 2009, no pet.); see also Dulong v. Citibank (South Dakota) N.A., 261 S.W.3d 890, 893 n. 3 (Tex.App.-Dallas 2008, no pet.) (applying account stated to credit card collection case); Butler v. Hudson & Keyse, L.L.C., No. 14-07-00534-CV, at *2, 2009 WL 402329 (Tex.App.-Houston [14th Dist.] Feb. 19, 2009, no pet.) (memo op.) (“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”).
Having decided that Citibank's suit for account stated is a proper vehicle to bring its credit card collection case, we next determine whether Citibank presented legally sufficient evidence to support the judgment on this claim.1
Standard of Review
In an appeal from a bench trial, a trial court's findings of fact have the same weight as a jury's verdict. Amador v. Berrospe, 961 S.W.2d 205, 207 (Tex.App.-Houston [1st Dist.] 1996, writ denied). Such findings, if challenged, are reviewable for sufficiency of the evidence by the same standards applicable in reviewing the sufficiency of the evidence supporting a jury's findings. City of Pasadena v. Gennedy, 125 S.W.3d 687, 691 (Tex.App.-Houston [1st Dist.] 2003, pet. denied).
If the complaining party challenges the legal sufficiency of the evidence underlying an adverse finding on which the party did not have the burden of proof, then the party must demonstrate on appeal that there is no evidence to support the finding. Gennedy, 125 S.W.3d at 691. In such a review, we consider all of the evidence in the light most favorable to the prevailing party, indulging every reasonable inference in that party's favor, and disregard all evidence and inferences to the contrary. Id. at 692. We do not disregard contrary evidence if there is no favorable evidence, or if contrary evidence renders supporting evidence incompetent or conclusively establishes the opposite. City of Keller v. Wilson, 168 S.W.3d 802, 810-11 (Tex.2005). If more than a scintilla of evidence supports the finding, the no-evidence challenge fails. Gennedy, 125 S.W.3d at 692.
We review de novo a trial court's conclusions of law and uphold them on appeal if the judgment can be sustained on any legal theory supported by the evidence. BMC Software Belgium v. Marchand, 83 S.W.3d 789, 794 (Tex.2002); In re Moers, 104 S.W.3d 609, 611 (Tex.App.-Houston [1st Dist.] 2003, no pet.). An appellant may not challenge a trial court's conclusions of law for lack of factual sufficiency, but we review the legal conclusions drawn from the facts to determine their correctness. BMC Software Belgium, 83 S.W.3d at 794.
A party is entitled to relief under the common-law cause of action for “account stated” if the party proves that (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 Tex., 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.)).
Transactions giving rise to indebtedness
The first element of account stated is not disputed. The evidence showed that Budzin held two credit card accounts with Citibank, whereby Citibank would extend her credit for purchases and cash advances, which Budzin would repay with interest, and that there was an indebtedness on each of these two accounts. Specifically, Ramona Aragon, an employee of Citicorp Credit Services, Inc., testified as custodian of Citibank's record on the two accounts that the unpaid balance on the 5153 account was $7,351.57 and on the 3226 account was $13,626.95. Aragon also produced the monthly statements for each account in support of her testimony. As such, Citicorp presented some evidence of transactions between it and Budzyn giving rise to her indebtedness.
Agreement fixing the amount due and implied promise to pay
Even though Citibank produced a Cardholder Agreement dated 2003, which it contended applied to account 5153, Budzin argues that there was no proof of an agreement between the parties as to the 5153 account because Citibank did not produce the Cardholder Agreement originally issued by Associates National Bank before its merger with Citibank. Both the Waco and Dallas courts of appeals have considered and rejected this argument. In Dulong and McFarland, the cardholders argued that Citibank failed to prove the existence of an agreement because it did not include the cardholder agreements in its summary judgment proof. McFarland, 293 S.W.3d at 759, Dulong, 261 S.W.3d at 894. “Because an agreement on which an account stated claim is based can be express or implied, Citibank did not have to produce a written contract as long as it could produce other evidence of the agreement between the parties to meet its burden of proof.” McFarland, 293 S.W.3d at 759, Dulong, 261 S.W.3d at 894. In both cases, the courts held that Citibank met its burden of proof by submitting billing statements showing the amounts due. McFarland, 293 S.W.3d at 759, Dulong, 261 S.W.3d at 894.
And here, as in McFarland and Dulong, Citibank's billing statements showed that they were sent to the cardholder, and there is no evidence suggesting that they were not received. See McFarland, 293 S.W.3d at 759, Dulong, 261 S.W.3d at 894. The statements also showed that when credit was available, charges were made on the cards. See McFarland, 293 S.W.3d at 759, Dulong, 261 S.W.3d at 894. The statements also reflect when payments were made. See McFarland, 293 S.W.3d at 759, Dulong, 261 S.W.3d at 894. Aragon also testified that the monthly statements showed the interest charged and how that interest would be calculated. See McFarland, 293 S.W.3d at 759, Dulong, 261 S.W.3d at 894 (noting that Citibank employee's affidavit provided that monthly statement set out initial interest rate and subsequent financial terms). We also note that Budzyn disputed a charge only one time and that Citibank removed the disputed charge from her account in response. Budzyn never disputed any other charges. Finally, we note that upon receiving the monthly statements with the account information contained therein, Budzyn continued to make purchases on each account.
Based on the series of transactions shown on the monthly statements and Budzyn's continued use of both accounts to make purchases and to receive cash advances, we conclude that there was some evidence to show that Budzyn agreed to the amount shown on the statements and impliedly promised to pay the indebtedness to Citibank. See McFarland, 293 S.W.3d at 759 and Dulong, 261 S.W.3d at 894 (holding same under almost identical facts); see also Butler, 2009 WL 402329, at *3 (“Given the [cardholders'] 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.”).
As such, there was legally sufficient evidence to support the trial court's judgment in favor of Citibank on its account stated claim. We overrule issue seven. In light of our disposition of issue seven, we need not address issues one through five relating to Citibank's breach-of-contract claims.
Budzyn filed a counterclaim urging that “[Citibank] is liable for usury for unilaterally charging the Defendant an excessive rate of interest, late fees and penalties in excess of the amount allowed under the State of Texas.” The trial court's judgment ordered that Budzyn take nothing on this claim. In her sixth issue on appeal, Budzyn contends the trial court improperly denied her state law claim for usury.
However, the National Bank Act [“NBA”] pre-empts state usury laws. Marquette Nat'l Bank v. First Omaha Serv. Corp., 439 U.S. 299, 313, 99 S.Ct. 540, 58 L.Ed.2d 534(1978); see Smiley v. Citibank, 517 U.S. 735, 744, 116 S.Ct. 1730, 135, 135 L.Ed.2d 25, ---- (1996) (holding that late fees were interest under the NBA). “Because §§ 85 and 86 [of the NBA] provide the exclusive cause of action for such claims, there is, in short, no such thing as a state-law claim of usury against a national bank.” Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 11, 123 S.Ct. 2058, 2064, 156 L.Ed.2d 1 (2003). The NBA provides that national banks may charge interest “at the rate allowed by the laws of the State ․ where the bank is located[.]” 12 U.S.C.A. § 85 (West 2001).
Citibank is a national bank. Thus, Citibank has proven as a matter of law that Texas usury law is pre-empted. Because Budzyn's usury claim did not invoke the NBA, but specifically invoked Texas law, the trial court did not err in rendering a judgment against her on her usury counterclaim.
We overrule issue six.
Here, Citibank pleaded an account stated cause of action and a breach of contract. Alternatively, Citibank requested recovery in quantum meruit. In her eighth issue on appeal, Budzyn claims that the trial court erred in awarding Citibank attorney's fees because “Citibank failed to segregate between time incurred on fee-recoverable and non-fee-recoverable matters.” Essentially, Budzyn argues that attorney's fees are not available for quantum meruit and that “a suit on account” will not lie, thus it cannot support an award of attorney's fees.
“[I]f any attorney's fees relate solely to a claim for which such fees are unrecoverable, a claimant must segregate recoverable from unrecoverable fees.” Tony Gullo Motors v. Chapa, 212 S.W.3d 299, 313-14 (Tex.2006). “It is only when discrete legal services advance both a recoverable claim and unrecoverable claim that they are so intertwined that they need not be segregated.” Id.
Thus, we must decide whether attorney's fees are recoverable for Citibank's causes of action. Section 38.001 of the Texas Civil Practices and Remedies Code provides:
A person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for:
(1) rendered services;
(2) performed labor;
(3) furnished material;
(4) freight or express overcharges;
(5) lost or damaged freight or express;
(6) killed or injured stock;
(7) a sworn account; or
(8) an oral or written contract.
Tex. Civ. Prac. & Rem.Code Ann. § 38.001 (Vernon 2008).
Attorney's fees are clearly recoverable for Citibank's breach-of-contract claim under section 38.001(8).
As we noted above, an account stated claim is not the same as a suit on a sworn account. Thus, section 38.001(7) will not support an award of attorney's fees on Citibank's account stated claim. Nevertheless, Citibank argues that its attorney's fees are recoverable under section 38.001(8) because an account stated claim is based on an oral or written contract. We agree. The elements of an account stated claim are (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, 693 S.W.2d at 605 “Transactions” giving rise to an “agreement” as to indebtedness and a “promise” to pay show a relationship that is contractual in nature. Thus, we hold that attorney's fees are recoverable under section 38.001(8) for an account stated claim. See Butler, 2009 WL 402329 at *4 (awarding attorney's fees on account stated cause of action).
Attorneys fees are recoverable on a quantum meruit claim if such claims fall within section 38.001(1)-(6), which authorizes the recovery of attorney's fees “for: (1) rendered services; (2) performed labor; [or] (3) furnished material․” Tex. Civ. Prac. & Rem.Code Ann. § 38.001. See Ferrous Prods. Co., Inc. v. Gulf States Trading Co., 160 Tex. 399, 332 S.W.2d 310, 313 (1960) (involving furnished materials); see Angroson, Inc. v. Indep. Communications, Inc., 711 S.W.2d 268, 274 (Tex.App.-Dallas 1986, writ ref'd n.r.e .) (involving services and labor); see also Burditt v. Sisk, 710 S.W.2d 114, 116 (Tex.App.-Corpus Christi 1986, no pet.) (involving labor). However, Citibank cites no authority to show that attorney's fees should be awarded based on a quantum meruit claim that involves the extension of credit. Therefore, we conclude that attorney's fees would not be recoverable on Citibank's quantum meruit claim.
Nevertheless, Citibank argues, and the trial court found, that its three claims were “inextricably intertwined” and could not be segregated. We disagree. Citibank's attorneys could have testified as to the percentage of time spent on the quantum meruit claim, and this Court could have then reviewed the sufficiency of the evidence in light of that testimony. See Chapa, 212 S.W.3d at 314 (“[W]hen Chapa's attorneys were drafting her pleadings or the jury charge relating to fraud, there is no question those fees were not recoverable.”).
But Citibank's failure to segregate its attorney's fees does not mean that it cannot recover any. Id. “Unsegregated attorney's fees for the entire case are some evidence of what the segregated amount should be.” Id. Thus, a remand is required. Id.
We also note that, in issue eight, Budzyn mentions that Citibank “sought attorney's fees for removing Budzyn's prior counsel.” However, she provides no argument or authority for excluding the amounts that Citibank incurred in having Soard disqualified. Thus, any issue relating to fees incurred in having Soard disqualified is waived. Tex.R.App. P. 38.1(i). Similarly, in issue eight, Budzyn also states that findings of fact 20 & 57 are irreconcilable, but, again, provides no argument or authority. Again, the issue is waived. Tex.R.App. P. 38.1(i).
We sustain issue eight only to the extent that it relates to Citibank's failure to segregate the attorney's fees on its quantum meruit cause of action. We overrule issue eight in all other respects.
We reverse the judgment as it relates to attorney's fees and remand the case to the trial court so that it can hear evidence regarding the segregation of Citibank's attorney's fees as they relate to Citibank's quantum meruit cause of action and render judgment on attorney's fees accordingly. We affirm the judgment in all other respects.
1. We note that Budzyn's seventh issue on appeal does not specifically address the legal sufficiency of the evidence to support Citibank's account stated claim, but argues only that such a cause of action is not available to Citibank. However, in an abundance of caution, we also address the legal sufficiency of the evidence to support the judgment on the account stated claim.
SHERRY RADACK, Chief Justice.