Friday, July 12, 2013

What is a cause of action for lawsuit purposes?

What is a cause of action, legally speaking?

Definition for laymen and laywomen:

Causes of action are magic words in litigation: two to four words strung together (often in Latin, sometimes weird-sounding phrases in English) which plaintiffs' lawyers use to characterize the nature of the complaint against the Defendant, and to invoke well-recognized reasons why the court should grant a judgment in the Plaintiff’s favor.
A cause of action is not a random choice of words, of course, as each cause of action is either defined by statute or has a pedigree of published judicial decisions. Many causes of action have elements of both because courts of appeals interpret statutes when they are not clear, and thus create “case law”, and because common-law causes of actions (which were established through judicial precedents in the first instance) may have requirements, rules, or restrictions added by legislative action, if they are not altogether replaced by a statute (--> preemption, exclusive statutory remedy).    

Causes of actions also function as a classification device for lawsuits based on the law, although the implications reach much further.

But it is not the only classification system used to group lawsuit by common characteristics. Court clerks use a different classification system with different categories for administrative purposes. Although their categories may overlap with inventory of causes of actions in the law books and litigation guides, they typically assigns a case to just one category (e.g., premises liability, defamation, malpractice-medical, malpractice-legal) or one major category and or more additional subsidiary ones.  The criteria not always clear. In the docket management system of the Harris County District Clerk, for example, debt collection suits are categorized interchangeably either as “CONTRACT” or “DEBT” even though the promulgation of state-wide civil filing sheets was meant to create a more reliable and uniform system for statistical purposes. Administrative categories used to classify lawsuits by type
often cover multiple legal causes of action, and typically have a residual, catch-all, category (“OTHER” or “OTHER CIVIL”) to include anything that does not fit into the types of civil action that have their own name.      

The choice of the cause of action in a lawsuit is the plaintiff’s. It is important because it determines the proof requirements.
Although the amount and quality of proof depends on the manner in which the plaintiff’s complain is presented to the judge (by motion for default judgment, motion for summary judgment, or trial on the merits), the cause of action determines what type of proof is needed. A breach of contract case, for example, requires proof of a contract and proof of its breach, among other requirements. A negligence claim requires proof of a duty that was neglected. Some causes of action are more self-explanatory than other, but typically not all essential elements of a cause of action are reflected in its name or label. Breach of contract, for example, also requires performance by the Plaintiff and consideration, and – as all other theories employed for debt collection – proof of damages, not to mention proof of a causal connection between breach and such damages. 

In debt collection suits, the plaintiff’s cause of action is not “debt”, but the plaintiff’s theory of how the debt came to be owed and why the court should order the defendant to pay a defined amount of money to retire the debt. Interestingly, some courts of appeals have approved the practice of invoking more than one cause of action (legal theory) based on the very same facts.

The obvious cause of action in a suit to collect a credit card debt is breach of contract. It is obvious because issuance of a credit card always involves the creation of an account governed by a contract, usually called cardmember agreement or account agreement, though it is rarely signed (--> contract-formation without signature). A contract is always involved as a matter of practical business necessity (large number of customers and typically no personal relationship between creditor and borrower), and because the extension of credit is regulated by laws that require disclosure of interest rate and other terms and the other party’s agreement thereto.

But lawyers filing suits to collect credit card debt also plead other causes of action, although their applicability is dubious, or even clearly foreclosed. The most common ones are: Account Stated, Suit on Account (SwornAccount, Open Account), and Quantum Meruit. Legal theories such as UnjustEnrichment, Money Had and Received and Promissory Estoppel, are less commonly seen.
Unjust Enrichment” is not even clearly recognized as a cause of action, and is misleadingly named. It essentially refers to a plea to the judge to prevent or reverse unjust enrichment by the Defendant, and may be argued in conjunction with other theories that support a claim against the Defendant, such a quantum meruit. The argument goes like this: The defendant accepted goods or services, did not pay, and would be unjustly enriched if he were allowed to retain the goods or benefits without ever paying for them. Therefore, the court should award a judgment for the price of the goods provided to the defendant, or for the value to the services rendered to the defendant. This is a request for the judge to “do justice” (provide equitable relief) in the absence a contract that specifies the goods and price or the nature of the service and fee for it. Because there is no agreement on the price (or the exact nature of the service performed or expected to be performed), the matter of proving such a claim is generally more difficult, at least in theory.
To the extent alternative theories are permitted in credit card debt collection suits, however, the documentation offered is typically the same as in breach-of-contract cases: copies of monthly account statements, or the modern-day equivalent of a ledger in the form of a printout from a spreadsheet or electronic database, typically an excerpt. 


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