Tuesday, August 13, 2013

Motions for Summary Judgment (MSJ) filed by Plaintiffs and Defendants in Credit Card Debt Collection Cases


Motions for Summary Judgment in Debt Collection Cases

WHAT IS A MOTION FOR SUMMARY JUDGMENT?

A summary judgment is a disposition of case without trial that ends the case either for good (final summary judgment) or disposes of some issues but not all ends the case only with respect to one defendant if there are several defendants (partial summary judgment, also called "interlocutory"). The vehicle to obtain such a disposition is a motion for summary judgment. 

MOTION FOR FINAL SUMMARY JUDGMENT VS. MOTION SEEKING PARTIAL RELIEF

A summary judgment motion may seek partial relief only, or target one defendant where two or more are being sued, but the more common scenario in debt collection cases is a motion that ask the court to resolve the case in its entirety. Such a motion is called a motion for final summary judgment, although it may not be titled as such. The way the motion is names does not control; the substance is more important.   

TRADITIONAL MSJ VS. NO-EVIDENCE MOTION

Motions for summary judgment can be filed by the Plaintiff or by the Defendant. Under the Texas Rules of Civil Procedure, there are two types of summary judgment motions: traditional motions for summary judgment (sometimes called matter-of-law motions) and no-evidence motions.

A motion for no-evidence summary judgment is filed by the opponent of the party that seeks affirmative relief (in the form of a money judgment) or the opponent of the party that seeks to win with an affirmative defense. Stated differently, a no-evidence motion is filed against the party that has the burden of proof on an issue. Defendants may file such a motion to challenge the evidentiary basis of the Plaintiff’s causes of action while the plaintiff may file such a motion to dispose an affirmative defense the defendant has asserted in his or her answer.

The motion is called no-evidence motion for a reason. When filing such a motion, the movant avers that the other party has no evidence on one or more elements on which that party has the burden of proof, thereby forcing the nonmovant to show otherwise. It is essential that the element (or elements) be expressly identified in the motion. It is not enough to merely reference the Plaintiff’s theory or theories of recovery

If the party against whom the no-evidence motion is filed does not come forth with competent evidence on the challenged element, the motion must be granted.  If the nonmovant does not respond at all, the movant wins by default. The traditional motion, by contrast, cannot be granted by default. This is a key difference between the two types of motions. Other aspects of the summary judgment procedure, however, are identical.

TIME TABLE FOR ALL MOTIONS FOR SUMMARY JUDGMENT

All motions for summary judgment must be served at least 21 days before the hearing or submission date so as to give the nonmovant adequate time to prepare a response. Depending on the method of service, three day may have to be added. As a practical matter, at least 30 days should be allowed.

Some attorneys file and serve the motion with a hearing notice, others do not. In courts or counties in which a fiat (order) is required to set a hearing, it may not be possible for the hearing notice to be served at the same time, because the date may not be immediately known.

A motion for summary judgment may simply be filed without notice of hearing, but in order to obtain a ruling on it, the movant must set it for hearing, or request that the clerk or judge do so.  If such a motion is not set for a hearing, the non-movant has no duty to respond, although it may still be wise to do so. 

A summary judgment motion does not necessarily have to be set for an oral hearing. It may be ruled upon by submission if the particular court, or the local rules, provide for this option. But in the case of submission without oral hearing,  a notice of the date of submission is still required because the date set for the hearing or submission controls the deadline for filing a response. If there were no such notice, the opponent would not know when such response is due.

Under the Texas rules, responses to motions for summary judgment are due seven (7) days prior to date of the hearing (or “hearing by submission”). If the deadline is missed, a motion for leave to file late should be filed if the nonmovant wants the court to consider the belated response and any accompanying evidence.  

Alternatively, the nonmovant could move for a continuance (--> motion for continuance) or a reset of the hearing.

A motion for continuance would also be appropriate if the nonmovant needs additional time to procure documents or if an affidavit is needed to oppose the summary judgment motion that cannot be timely obtained. Generally, the movant for a continuance or reset should be prepared to show that the missing affidavit or materials could not be procured earlier despite reasonable diligence, or that the other party stonewalled and failed to produce documents in the course of discovery even though they were specifically requested and no valid objection was asserted in the first instance, or that the objection was not sustained by the court.  

TRADITIONAL MOTION FOR SUMMARY JUDGMENT

MSJ Filed By the Plaintiff

Attorneys of original creditors and other debt plaintiffs typically file motions for summary judgment, hoping to avoid the need for trial and live witnesses. Such motions may not even require a court appearance by attorney if the court in which the case is pending entertains such motions upon submission.

A traditional motion must expressly state the cause of action on which money damages are sought, or the grounds for attacking a specific affirmative defense, or several such defenses. A plaintiff moving for summary judgment on its own claims must establish all elements of a valid cause of action as a matter of law. This is a higher standard than the preponderance-of-the-evidence standard that applies at trial. Additionally, the court is not supposed to make credibility determinations, weigh evidence, or resolve contradictions in the evidence before it.

The evidence for summary judgment purposes comes in the form of summary judgment affidavits and documentary exhibits, for the most part. Occasionally, the motion will be based on deemed admissions, or will invoke the deemed admissions rule in addition to being supported by documentary exhibits attached to an affidavits.    

MSJ Filed By Defendants

Defendants in debt suits can file motions for summary judgment, (click link to subsequent post on this topic) but this is not a very common practice. Some consumer attorneys file no-evidence motions, but in light of the huge number of debt collection cases on court dockets, this practice as also relatively rare, statistically speaking. 

Pro se defendants generally do not know how to file such summary judgment motions, and attorneys for Defendants will calculate the chances of such a motion being successful and will likely conclude that the likelihood of prevailing is low, or that such a motion would be frivolous altogether. Under Rule 11, a baseless motion can result in sanctions, in addition to making the attorney look bad. 
  
There are, nevertheless some obvious exceptions.

If the debt claim is stale and appears to be barred by the statute of limitations, a traditional motion seeking to prove that the plaintiff’s claim is time-barred may be warranted. (--  > Defendant’s motion for traditional summary judgment on affirmative defense).

If suit was brought by a debt buyer, and the contract shows a different financial institution as card issuer than the one alleged in the plaintiff’s pleadings or identified as assignor in the assignment proof, it may make sense to challenge the plaintiff’s right to sue based on (want of) privity of contract and standing to sue. Since an assignee has the burden of proof with respect to the alleged assignment of the debt, the lack of privity and want of standing could also be raised by a no-evidence motion.  

TRADITIONAL SJ MOTION VS. TRIAL

There are several important differences between a summary judgment proceeding  and a trial on the merits (which in debt collection cases is almost always a bench trial, i.e. one without jury).  

The most obvious one is that a trial provides occasion for live witness testimony whereas no testimony at all can be received at a summary judgment hearing (with the exception of testimony set forth in timely filed affidavits). That said, many trials of debt collection cases are a very brief affair and either involve no witness testimony, or testimony by the defendant only if called as a witness by the plaintiff’s attorney for the purpose 
of eliciting admissions. Pro se litigants will often volunteer to give testimony "to tell their side of the story", and make themselves subject to cross-examination and impeachment, even if they were not subpoenaed as trial witnesses. Some judges will swear them in as a matter of routine without any questions asked about a subpoena. 

The other exception is attorney testimony about reasonable attorney fees (if any are sought in the case). A plaintiff’s attorney may offer testimony on such fees as an expert witness, and will be subject to cross-examination. Most pro-se litigants have no clue about how to cross-examine a witness, not to mention the plaintiff's attorney, and are not qualified to opine on attorney's fees unless they have the requisite expertise.  

In the vast majority of debt collection cases that go to trial, the debt plaintiff will rely on business records filed under a business records affidavit rather than having a live witness show up to testify on behalf of the bank (or the debt buyer) in court. Most will not bother to subpoena the defendant. Many default anyhow, assuming they even filed an answer in the first place. 

But there is an important difference with respect to affidavits too. 

At trial, the plaintiff cannot adduce facts through a summary judgment affidavit because the rule permitting summary judgment affidavits does not apply at trial, and any testimony by the affiant that goes beyond the scope of laying the predicate for admission of business records would constitute excludable hearsay because the witness’s out-of-court statements are not subject to cross-examination. Hearsay objections may, of course, be waived by failing to make them. Therefore, attorneys for banks and debt buyers may still try to use them when the defendant does not show up for trial, or when the defendant shows up, but is not represented by attorney and does not know which objections are available. 

The other major difference between summary judgment motions and trials is the applicable standard of proof. At trial, the standard is lower, and the court may weigh conflicting evidence and accord some evidence more weight than other. The judge may also pass judgment on the credibility of live witnesses if there are any. In other words, the trial judge gets to decide who to believe if conflicting stories are being told. A judge is also likely not to believe a witness who contradicts himself, or makes statements that conflict with what appear to be authentic documents, such as account statements with the defendant's name and address on them, particularly when those documents are filed as attachments to a business record affidavit.   

Finally, the purpose of a trial is a final resolution of the case, meaning that all issues are resolved and that the defendant wins if the plaintiff fails to prove its entitlement to judgment under the lower standard of proof that applies to trials.  An unsuccessful motion for traditional summary judgment, by contrast, does not mean that the non-movant wins the case. An order denying such a motion does not preclude a second, improved motion (if still timely) or a similar motion accompanied by better evidence and/or a different affidavit  Even a debt plaintiff who fails to succeed with multiple successive motions for summary judgment will still have a chance to makes its case at trial.

RELATED TOPICS AND BLOG POSTS:

Can a defendant in a debt collection suit file a motion for summary judgment? - Yes, but ...
Motions for summary judgment by debt plaintiffs
The summary judgment rule in Texas courts
The summary judgment standards







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