Numerous appellate opinions can be cited for the proposition that recovery on an express contract and on quantum meruit are inconsistent. When an express contract exists and covers the subject matter in dispute in the lawsuit, there can be no implied contract. Nor can there be recovery on an equitable theory, such as quantum meruit or unjust enrichment. The same applies to promissory estoppel.
The express contract bars the quantum meruit claim and other non-contract theories of recovery. But that does not mean that credit card debt plaintiffs will not plead the theory and try to get away with it. A number of law firms engaged in the business of debt collection do so routinely when they file suit.
Defendants are well-advised to lodge objections should a creditor move for summary judgment on such a theory, or try the case on a nonviable theory as a back-up for the breach of contract claim. To be on the safe side, it may be a good idea to raise objections to inappropriate legal theories in the defendant’s answer, along with the general denial and any applicable affirmative defenses.
Through their counsel, creditors may claim that an equitable theory is okay as long as the contract is not in evidence, but whether the contract has been produced and admitted is an evidentiary matter that does not alter the fundamental nature of the debt claim and its origin. Credit card debt suits are necessarily based on an express contract because federal law (TILA) requires that the creditor disclose the credit terms in writing at the time the account is set up. State law has corresponding requirements, typically in the form of detailed rules about the nature of the required contract. In Texas, the Texas Finance Code regulates extensions of credits, but major credit card issuers do not operate under Texas law and national banks need not be licensed by Texas authorities by virtue of their federal charters. Regardless, whether under federal law and state law (whichever state it may be) terms governing the transactions involving the card-holder and the issuing banks are necessarily express because this is a feature of the regulatory environment.
Additionally, even beyond the area of consumer credit extended by banks, assessment of interest is regulated by statute (Texas Constitution and Texas Finance Code) which set limits on the rate that may be contracted for, and provides for a default rate if there is an agreement for payment of interest, but a specific rate was not agreed by the parties.
Most credit card issuers, however, do not call Texas their home state, and thus operate under the law of some other state, which is reflected in the the choice of law provisions in their standard account agreements, whatever they may be called: Customer Agreement, Cardmember Agreement, or Card Member Agreement (CMA). But Texas law nevertheless comes into play when neither side in the lawsuit invokes the law of the creditor's home state, which could be done with a motion for judicial notice of the other state's law.
EXPRESS CONTRACT PRECLUDES RECOVERY IN QUANTUM MERUIT OR FOR UNJUST ENRICHMENT
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| No recovery under equitable theory when the dispute is controlled by an express contract |
Page last updated: 12/9/2018
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