DODEKA, L.L.C., Appellant v. Irma CAMPOS, Appellee.
Appellant, Dodeka, L.L.C., sued appellee, Irma Campos, for breach of contract based on an unpaid credit card account issued by Chase Bank to Campos. Campos filed an answer and verified denial to the lawsuit. Campos also filed a counterclaim alleging Dodeka violated the federal Fair Debt Collections Practices Act (hereinafter “FDCPA”) by threatening to and actually filing a suit time-barred by the four-year statute of limitations. Following a bench trial, the trial court rendered a take-nothing judgment against Dodeka. The trial court found in favor of Campos on her counterclaim. Dodeka appeals the trial court's judgment. We reverse and render in part, and reverse and remand in part.
STATUTE OF LIMITATIONS
Dodeka contends the trial court erred in concluding it filed suit beyond the four-year statute of limitations. Dodeka challenges many of the trial court's findings of fact and conclusions of law pertaining to Campos's counterclaim under the FDCPA. For example, Finding of Fact 8 states the trial court found Dodeka filed suit “more than four (4) years after the breach.” Conclusion of Law 12 states that “Plaintiff's suit was time barred ․ and violated the [FDCPA]”
If a trial court makes findings of fact and conclusions of law, we may review the fact findings for legal and factual sufficiency. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002). If there is more than a scintilla of evidence to support the finding, the no-evidence challenge fails. Id. at 795. We reverse the ruling for factual insufficiency of the evidence only if the ruling is so against the great weight and preponderance of the evidence as to be manifestly erroneous or unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). We review de novo the trial court's legal conclusions based on the findings of fact to determine their correctness. BMC Software, 83 S.W.3d at 794. If we determine a conclusion of law is erroneous but the trial court nevertheless rendered a proper judgment, the erroneous conclusion does not require reversal. Id.
Prior to Dodeka's lawsuit, Campos had a credit card account with Chase Bank. On December 23, 2005, Campos made her last payment on the account in the required minimum amount; however, she continued to make charges on the account. On April 7, 2006, Campos resumed making payments for several months, but these payments were less than the minimum monthly amount required by Chase. She made her final payment on September 15, 2006. After purchasing the account from Chase Bank, Dodeka did not file suit on this account until March 15, 2010. The trial court found Campos breached her contract with Chase on January 22, 2006 (thirty days after her last minimum monthly payment on December 23, 2005), when she failed to make her next minimum monthly payment. Accordingly, the trial court concluded Dodeka filed suit outside the four-year statute of limitations. Dodeka asserts its lawsuit was timely-filed because the breach did not occur until sometime after Campos made her final payment on September 15, 2006.
A. Breach of Contract vs. Open Account
Dodeka filed suit against Campos alleging breach of contract, and this was the only claim against Campos at trial. However, on appeal, Dodeka urges this court to treat the action as a suit on an open account. Dodeka argues that although it did not include an open account claim in its pleadings, it was nevertheless tried as an open account because Campos impliedly consented to that action.
Whether a claim is brought as an open account or as a breach of contract action determines when the statute of limitations begins to run for an action on credit card debt. If an action is brought as a claim for debt based on breach of contract, the statute of limitations is “four years after the day the cause of action accrues.” Tex. Civ. Prac. & Rem.Code Ann. § 16.004(a)(3) (West 2002); Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 234 (Tex. App–Houston [1st Dist.] 2008, no pet.). On the other hand, if a claim for debt is brought as an open account, then the applicable statute of limitations is also “four years after the day that the cause of action accrues”; however, the day the cause of action accrues for an open account is “the day that the dealings in which the parties were interested together cease.” Tex. Civ. Prac. & Rem.Code § 16.004(c); Capital One Bank (USA), N.A. v. Conti, 345 S.W.3d 490, 492 (Tex.App.-San Antonio 2011, no pet.).
Here, we find nothing in the record to suggest the suit was tried by consent as a suit on an open account. Additionally, Dodeka did not bring this action as an open account in any of the pleadings to the trial court. Cf. LTD Acquisitions, LLC v. Cook, No. 04–10–00296–CV, 2011 WL 61634, at *2 (Tex.App.-San Antonio Jan.5, 2011, no pet.) (determining that although LTD did not originally plead the claim as an open account, it did so in its motion to reconsider filed with the trial court, thus allowing appellate review on the open account claim). As a result, we must next consider whether the statute of limitations had already expired by the time Dodeka brought its breach of contract claim.
B. Statute of Limitations
It is undisputed that the last payment in the required minimum amount was made on December 23, 2005. However, Campos continued to make periodic payments, although in amounts less than the required minimum, until September 15, 2006, which was the date of her final payment. Campos also continued to use the line of credit extended to her by Chase until September 15, 2006. Consequently, it is clear Chase had not yet closed Campos's account prior to September 15, 2006 because she continued to make charges on her account even after her missed payments. On the other hand, even if Chase had declared her in default prior to September 15, 2006, Campos continued making payments on her account. See Williams, 264 S.W.3d at 232–34 (determining date of final payment date controlled when statute of limitations began to accrue, even though creditor closed debtor's credit account prior to this date). Thus, we cannot say as a matter of law that the statute of limitations ran on December 23, 2005. Instead, we conclude that, at the earliest, the date of the breach was September 15, 2006. Because this action commenced on March 15, 2010, Dodeka brought suit within the four-year statute of limitations. Accordingly the trial court erred in concluding Dodeka violated the FDCPA.
EVIDENTIARY CHALLENGE TO BUSINESS RECORDS AFFIDAVIT UNDER TEXAS RULE OF EVIDENCE 803(6)
In support of its claim against Campos, Dodeka offered into evidence an Affidavit of Assignment, Damages, and Business Records signed by Holly Chaffin. Attached to the affidavit were business records obtained by Dodeka from Chase.1 Campos raised a hearsay objection and argued that the documents attached to Chaffin's affidavit were not admissible because both the affidavit and the documents were untrustworthy. The trial court found Dodeka did not lay a sufficient predicate to admit the documents into evidence under the Texas Rules of Evidence and excluded the affidavit and attached records. As a result, with no evidence to support Dodeka's claim, the trial court rendered a take-nothing judgment against Dodeka. On appeal, Dodeka contends the trial court abused its discretion by failing to admit these records into evidence.
We review the exclusion of evidence under an abuse of discretion standard. McEwen v. Wal–Mart Stores, Inc., 975 S.W.2d 25, 27 (Tex.App.-San Antonio 1998, pet. denied). Abuse of discretion is found when a trial court acts without reference to any guiding rules or principles. Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex.1999). We will uphold the trial court's ruling on the exclusion of evidence if there is any legitimate basis for the ruling. Owens–Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.1998). If the ruling of the trial court was in error, we will only reverse if the error probably caused the rendition of an improper judgment. Tex.R.App. P. 44.1(a)(1); Bay Area Healthcare Grp., Ltd. v. McShane, 239 S.W.3d 231, 234 (Tex.2007). In order to show harm from an evidentiary ruling, the complaining party must demonstrate the judgment turns on the particular evidence denied by the trial court. See McShane, 239 S.W.3d at 234.
A proponent of hearsay must bear the burden of showing that testimony fits within an exception to the general rule prohibiting admission of the hearsay evidence. Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 908 n. 5 (Tex.2004); see also Tex.R. Evid. 802. A business record that contains information concerning activity that is regularly conducted is one exception. Tex.R. Evid. 803(6) (stating that “[a] ․ record ․ made at or near the time by, ․ a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the ․ record ․” is not excluded as hearsay). The business records may also be “admissible in evidence in any court in this state upon the affidavit of [a] person” that can satisfy the requirements Rule 803(6). Id. R. 902(10), 803(6).
Additionally, a business record created by one entity that later becomes another entity's primary record is still admissible as a record of regularly conducted activity under Rule 803(6). Martinez v. Midland Credit Mgmt., Inc., 250 S.W.3d 481, 485 (Tex.App.-El Paso 2008, no pet.). However, documents received from another entity are not admissible under Rule 803(6), if the sponsoring witness is not qualified to testify about the other entity's record keeping. Id. A witness is qualified to testify about the documents of another entity if it can be established the documents were kept in the ordinary course of business and the documents formed the basis for the ongoing transactions. Abrego v. Harvest Credit Mgmt. VII, LLC, No. 13–09–00026–CV, 2010 WL 1718953, at *3 (Tex. App–Corpus Christi–Edinburg Apr. 29, 2010, no pet.) (mem.op.).
Campos contends Chaffin did not have sufficient personal knowledge to attest to Chase's business records because Dodeka is a third party who purchased the account and was not the original author of the documents. Further, Campos argues that Chaffin is not qualified to testify about Chase's documents because she did not indicate that she or anyone from Dodeka knew of the events or conditions recorded in Chase's records or had knowledge of the manner in which Chase prepared the documents. But, “a record may be ‘made’ by a business although it was initially authored by a different business.” Simien v. Unifund CCR Partners, 321 S.W.3d 235, 244 (Tex.App.-Houston [1st Dist.] 2010, no pet.). Personal knowledge by a third party of the procedures used in preparing the original documents is not required when the documents are incorporated into the business of the third party, are relied upon by the third party, and there are other indicators of reliability. Id. (citing Air Land Forwarders, Inc. v. United States, 172 F.3d 1338, 1343 (Fed.Cir.1999)).
Thus, in order to introduce business records authored or created by a third party, the proponent must establish three factors: (a) the document is incorporated and kept in the course of the testifying witness's business; (b) that business typically relies upon the accuracy of the contents of the document; and (c) the circumstances otherwise indicate the trustworthiness of the document. Id. at 240–41.
In her affidavit, Chaffin recited she was “personally acquainted with the facts” stated in the affidavit and that they are “true and correct.” Her affidavit further states she is the custodian of Dodeka's records, and that she is familiar with how these records are prepared and maintained. She states that she reviewed the file, that she is the designated agent for the records, she has personal knowledge of Campos's account concerning this claim, she has maintained these files under her control and supervision, and that Campos's account remains unpaid. The affidavit explains how Dodeka acquired Campos's account, and the affidavit indicates Dodeka's records, which include Campos's credit account, were “made at or near the time or reasonably soon after the act” by an employee “with knowledge of the act [or] event.” In referencing the numerous pages of records attached to her affidavit, Chaffin states Dodeka acquired the records from Chase Bank, USA, N.A. Further, Chaffin's affidavit states the documents are kept “in the regular course of business” and incorporated into Dodeka's business practices. Dodeka produced evidence that it reasonably relied on the accuracy of the documents to determine the existence and value of Campos's debt that is now due to Dodeka. Chaffin attests to Dodeka's reliance on the accuracy of the records created by Chase in her affidavit. We conclude Chaffin's affidavit sufficiently shows Dodeka incorporated the Chase records into its regular and daily business use, and Dodeka reasonably relied upon the accuracy of the documents it received from Chase in order to determine the existence and value of Campos's debt that is now due to Dodeka.
Finally, Campos contends the records themselves are untrustworthy. However, we note that the creator of the documents, Chase, must keep careful records of its customer's accounts, otherwise its “business would greatly suffer or even fail.” Id. at 244 (quoting Harris v. State, 846 S.W.2d 960, 963 (Tex. App–Houston [1st Dist.] 1993, writ ref'd)). Furthermore, if Chase failed to keep accurate records, it could face criminal or civil penalties. Id.; see also Tex. Fin.Code Ann. § 392.304(a)(8) (West 2006) (prohibiting consumer debt misrepresentation); Tex. Fin.Code Ann. § 392.402 (providing criminal penalties for violations of Chapter 392 of the Texas Finance Code). We believe these circumstances lend support to Dodeka's claim that the Chase documents are trustworthy.
For these reasons, we conclude the trial court erred when it sustained Campos's objection to Chaffin's affidavit and the attached records. As a result, Dodeka was prevented from presenting its case against Campos without the documents, demonstrating the judgment of the trial court turned on this particular piece of evidence. Therefore, the error probably caused the rendition of an improper judgment. See Tex.R.App. P. 44.1(a)(1).
Because the statute of limitations had not yet expired when Dodeka filed suit, we reverse the trial court's judgment on Campos's counterclaim under the FDCPA and render a take-nothing judgment in favor of Dodeka on that claim. Because we conclude the trial court erred by not admitting Dodeka's business records into evidence, we reverse the take-nothing judgment against Dodeka and remand this cause to the trial court for further proceedings as to Dodeka's claim for breach of contract.
1. The records attached to Chaffin's affidavit include: (1) the credit card member agreement between Chase and Campos; (2) a document indicating Dodeka purchased Campos's account; (3) eighteen monthly Chase statements, dating from August 2005 through January 2007; and (4) Dodeka's demand letter to Campos.
Opinion by SANDEE BRYAN MARION, Justice.