Quantum Meruit theory for credit card debt collection?

IS QUANTUM MERUIT A VALID LEGAL THEORY IN A DEBT SUITS SEEKING A JUDGMENT FOR A CREDIT CARD DEBT?

Quantum meruit is an equitable theory that allows someone who has furnished valuable materials or services without a contract to sue the recipient who did not pay for them. 

The definitional elements in the applicable case law clearly require provision of goods or services.

But that has not stopped credit card debt plaintiffs from invoking this theory as an alternative to breach of contract. One court of appeals, oddly, even agreed, and went against the weight of established precedent.

But the services that credit card companies provide are financial in nature, and the compensation they receive for these services are (1) discount fees paid by the merchants (usually indirectly); and (2) interest paid by cardholders who carry a balance.  Interest however, is compensation for the use of money, and not considered a payment for a service. The cardholder can typically even avoid interest charges altogether by paying the full balance each month, rather than merely the minimum payment amount. Additionally, the charging of interest has its own regulatory framework, which, at the state level, is found in the Texas Finance Code. Even if the “financial service” is deemed a compensable service, the only charges for account administration would be annual or monthly “membership” or “service” fees that accrue whether or not the card is actually used, and whether or not the account has a revolving balance.  And most credit card issuers do not even assess them, or routinely waive them if the underlying cardmember provides for such fees.  

Most importantly, however, a quantum meruit claim is only viable if there is no contract. And credit card accounts are always based on a contract because the business of banking is highly regulated by state and federal governments, and a contract (i.e. express written statement of the terms of credit to the consumer) is a regulatory requirement at both the federal and state level.  

DEFENSES TO QUANTUM MERUIT CLAIM BY DEBT COLLECTORS SUING ON CREDIT CARD DEBT

CONTRACT PRECLUDES QUANTUM MERUIT CLAIM

The Truth in Lending Act (TILA) requires written contract terms. When a credit card issuer (or its assignee) sues, the claim necessarily involves an underlying contract (whether in evidence or not), and the existence of a contract bars recovery under quantum meruit.

 CREDITOR DID NOT SELL GOODS OR PROVIDE COMPENSABLE SERVICES

A quantum meruit claim requires, at a minimum, that the claimant have furnished valuable materials or services to the party from whom it is seeking recovery. Credit card issuers do not sell goods;  nor did they provide services that meet the definition of quantum meruit under longstanding  appellate precedents.

THE CARDMEMBER/ACCOUNT AGREEMENT GOVERNS THE RELATIONSHIP BETWEEN BANK AND CUSTOMER

In general, a party may recover under the doctrine of quantum meruit only in the absence of an express contract covering the services or materials furnished. The existence of an express contract does not preclude recovery in quantum meruit for the reasonable value of services rendered and accepted which are not covered by the contract, but this exception has no application in the context of credit cards, -- at least not credit cards issued by banks which have no business dealings with their customers that would not be based on, and governed by, the applicable account agreement.  

EXCERPT FROM LEADING APPELLATE CASE:

[B]ecause Citibank proved the existence of an express contract, Citibank cannot recover under the theory of quantum meruit. "Quantum meruit is an equitable theory of recovery which is based on an implied agreement to pay for benefits received." Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex.1992). The doctrine of quantum meruit requires the plaintiff to establish: "1) valuable services and/or materials were furnished, 2) to the party sought to be charged, 3) which were accepted by the party sought to be charged, and 4) under such circumstances as reasonably notified the recipient that the plaintiff, in performing, expected to be paid by the recipient." Id. However, the summary judgment evidence establishes the existence of a contract between the parties. In general, recovery under quantum meruit is limited to only when there is no express contract covering the services or materials furnished. Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex.1990); Academy Corp. v. Interior Buildout & Turnkey Constr., Inc., 21 S.W.3d 732, 741 (Tex.App.-Houston [14th Dist.] 2000, no pet.). Because the summary judgment evidence established the existence of a contract as a matter of law, Citibank cannot recover under the theory of quantum meruit.