Amex Credit Card collection suits run the gamut

CREDITOR PROFILE

Credit and Charge Card Collection Suits on Amex Accounts

AMERICAN EXPRESS: TWO BANKS, A VARIETY OF CARD AND ACCOUNT TYPES

American Express cards come in several varieties. Not only are there personal cards and business cards, and several branded products (Green, Blue for Business, Gold, Rewards, etc), there are also two different issuing banks: American Express Centurion Bank, and American Express Bank, FSB.

Amex Centurion is a state-chartered Utah bank while American Express Bank, FSB is a federal savings bank, albeit one whose home state is Utah also. Affidavits filed on behalf of either Amex entity, however, typically come from the East Coast (New York or New Jersey) or from the West Coast (Ventura County), and some affiants even do them for both entities, claiming in both cases to be an assistant custodian of record of the financial institution appearing as plaintiff. American Express affiants whose signatures appear on summary judgment affidavits may be robosigners, but the affidavits are more difficult to challenge than those by debt buyers. Many contain much greater factual detail and also address the nature of the records and their reproduction from a data archive. The specific form and content of summary judgment affidavits apparently depends on which law firm handles the case. Amex uses several law firms in Texas, and they do not all litigate in the same manner.   

   

MULTIPLE LAW FIRMS THAT LITIGATE ON BEHALF OF AMERICAN EXPRESS IN TEXAS

Amex employs several different law firms to pursue collection of credit card debt through the courts in Texas: Among them:  MICHAEL J. ADAMS P.C.; JOHNSON & SILVER, LLP; DeGRASSE & ROLNICK; HENRY MCDONALD & JAMES, P.C.; SCHEINTHAL & KOUTS, L.L.P.;  ZWICKER &ASSOCIATES, P.C.. 

The most significant distinctions among these firms in their handling of Amex debt suits are (1) the quality of the summary judgment affidavits; (2) the  amount of documentation they attach to their motions for summary judgment (ranging from a single final statement to copies of statements running into hundreds of pages); and (3) whether they seek application of Utah law. (Adams routinely does so; Zwicker attorneys and most others typically do not; DeGrasse cites Utah law for the proposition that under that a credit card agreement need not be signed by the card holder (under that state's credit card exception in the statute of frauds that covers credit agreements generally).   
   
VOLUME OF CASES FILED BY AMERICAN EXPRESS

From August 2012 to August 2013 American Express entities (American Express Centurion Bank and American Express Bank, FSB) filed 385 cases in Harris County District Courts. Some of them are garnishment actions rather than original debt suit.
 
For the civil county courts at law of Harris County (of which there are four), a similar search yields 258 for the same time period (it includes 14 cases in which turnover relief was sought after Amex obtained a judgment).

   

TIMING OF AMEX LAWSUITS

  

It no longer takes very long after default for Amex to assign the account for litigation, and for a lawsuit to be actually filed.  At times, the last account statement will only be a few months older than the lawsuit itself, and sometimes the last statement has date printed on it that falls past the date the lawsuit was initiated. 

AMEX CARDMEMBER AGREEMENTS ARE DISTINCT

American Express form contracts are titled Cardmember Agreement, but they now look different from those of other creditors, and also differ in other respects. In the past, they were more similar to those from other issuers except for long and unwieldy titles such as Agreement Between One From American Express Cardmember and American Express Bank, FSB; or Agreement Between American Express Credit Cardmember and American Express Centurion Bank.”

 This is what Amex Centurion Bank Cardmember Agreements used to look like;

more recent versions are dated and have the account holder's name printed on them.

The more recent specimen of American Express Cardmember Agreements are no longer completely generic. They have the cardmember’s name, partial account number, and a date printed in the top margin. They consist of two components: Part 1 of 2 and Part 2 of 2.  All pages are consecutively numbered. There may also be a version code in fine print in the border of the pages, but since the cardmember’s name is printed on the first page, this is of lesser significance.

Business accounts often list two customers: an individual and a business, whether incorporated or not. When it files a collection suit, Amex may or may not name the business as a separate defendant. If the business is a sole proprietorship, there would be no reason under Texas law to do so, since such an entity is legally not separate from the owner. But sometimes the business is a business entity that has a legal existence separate and apart from the individual defendant, which raises the issue of who is liable and on what basis. 

When Amex sues both a natural person and a business, it will seek a judgment holding both liable for all amounts jointly and severally. It may be easier to mount a defense when there are two defendants, because it complicates the issue of proving contract formation without signature and may create an issue as to individual versus corporate liability (i.e., there may be an issue as to whether the natural person defendant is liable for business debt if it is clear that the business is a corporation, a PC, LLC, or PLLC). American Express attorneys will typically point to the cardmember agreement as the basis for contractual liability for both, rather than claiming that the individual is liable as a guarantor, a claim that would require compliance with the statute of frauds (at least under Texas law). 

In one case that made it all the way to the Texas Supreme Court, Amex filed a motion for default judgment against the corporate defendant, but made the mistake of drafting a proposed order that denied all other relief, including relief against the individual names as a defendant. The trial court signed the order. Amex did not mean to non-suit the second defendant, but by the time it discovered the drafting error, it was too late to correct the trial court's order nunc pro tunc, the highest court held in subsequent mandamus proceeding. 

CHOICE OF LAW AND ARBITRATION

All American Express cardmember agreements, whether old or new, have Utah choice of law clauses. They also contain arbitration provisions. Even though it may be more difficult to defend against an Amex debt suit, given that Amex sues as an original creditor and has its own business records available to make its case, arbitration can still be invoked as a defense to litigation. It may delay the inevitable, or facilitate settlement if Amex or its counsel is in no mood to go to arbitration.

Under the Federal Arbitration Act (FAA), arbitration agreements need not be signed as a condition for validity and enforceability, but under the Utah statute of frauds, the debt plaintiff suing on an unsigned credit contract must satisfy certain requirements to take advantage of the statutory exception for credit cards. This presumes that the court is asked to take judicial notice of, and asked to  apply, Utah law. It requires a motion under the applicable Texas rule. Some debt collection lawfirms (e.g. Adams) files such motions, others do not. But the option to ask for application of Utah law is not limited to attorneys for the plaintiff. 

Sample Utah choice of law clause (2008 Cardmember Agreement for Optima Card) 

Defense attorneys typically do not move for judicial notice and application of Utah law, but it can be done.  If neither party requests application of Utah law, the case will by default be resolved under Texas law (or the court will presume that Utah law is no different). In at least one respect, however, Utah law does differ somewhat, the applicability of the statute of frauds to loan contracts generally, and the specific requirements to take credit card account out of its reach. 

MODIFICATION OF TERMS

American Express often announces changes in terms by including notices to that effect on monthly statements, rather than in separate mailings that might later get lost. This puts its lawyers in a better position to argue that the terms were effectively changed (that an increase in the interest rate to 27.24% for example was properly implemented), at least in cases where the change-in-terms notification on a monthly statement was followed by account use in subsequent billing cycles, and thereby accepted by the cardholder -- > Modification of the terms of credit as an issue in defense of debt collection suits. 

THE UTAH STATUTE OF FRAUDS  

Texas only subjects certain loans to the statute of frauds. Credit card accounts are not covered even if the credit line exceeds $50,000. Utah, by contrast, has a statute of frauds for all loans, but it also created a work-around for credit card accounts. 

The exception under the Utah statue of frauds governing loans essentially codifies the common-law principles of contract-formation without a signature by requiring that the cardmember agreement be delivered to the consumer, that it contain language to the effect that card use will signify acceptance, and that it become binding upon such account use.

Therefore, the debt plaintiff cannot merely rely on the final account statement to support a credit card debt claim if that statement does not reflect account use, but merely carries forward a balance from the prior billing cycle. (Arguably such a sole statement would also be insufficient as proof of the balance because it is conclusory, given that it does not reveal – standing by itself – the derivation of the revolving balance).
 

To satisfy the first element of the credit card exception under the Utah statute of frauds, Amex would also have to present a summary judgment affidavit that adduces competent testimony that the attached Cardmember Agreement was mailed to the defendant when the account was opened. If the attached Cardmember Agreement is a superseding agreement on an older account, the Defendant’s counsel may argue – based on the discrepancy in dates – that it could not have been the original agreement when there is either a much earlier date quoted of account origination in the affidavit itself, or when the attached series of account statements (sometimes covering many billing cycles and running into more than 100 or 200 pages) reflects that the account is older than the date printed on the Cardmember Agreement.

In the latter scenario, summary judgment should be precluded either because of a fact issue as to the applicable agreement or for failure to prove up the original agreement and its subsequent modification by a superseding agreement that may contain different terms. If the original Agreement went missing, it cannot be known what terms it contained and which ones were modified. Additionally, if the date printed on the Agreement offered by Amex as the sole contract exhibit falls after the date of default, the default would have occurred under the terms of the agreement then in force, not the later agreement that Amex offers as an exhibit. Stated differently, the cardmember could not have breached an agreement that did not yet govern the account, and may not even have been finalized by Amex’s legal department yet.

Nor would an account history that evidences a prior default support the proposition that the post-dated agreement was accepted by account use. Indeed, the account may already have been closed at that time, and the last statement(s) may contain a notation to that effect. Occasionally, final statements surface as exhibits in Amex litigation that also contain other interesting messages: How about a bill that says it is not a bill?  

“This is not a bill” Disclaimers and their implications

 

Some final account statements filed in American Express credit card debt suits carry a note expressly stating that “This is not a bill.” Additional language typically refers the reader to a debt collection agent or agency for up-to-date account information. When this is the case, Defendant’s counsel may wish to make the following arguments: (1) that the purported statement should not be treated as a bill evidencing the status of the account because of the express disclaimer says it is not; and (2) that it should not be considered a demand for payment of the minimum payment due amount printed on the payment coupon, not to mention the entire revolving balance. If the statement does not qualify as a demand, it should not qualify as a presentment for attorney fee recovery purposes under Chapter 38 of the CPRC either. This is of course only of import when the Plaintiff seeks attorney’s fees. Not all of the above-mentioned law firms do.

OTHER MAJOR CREDIT CARD ISSUERS THAT SUE AS ORIGINAL CREDITORS

Bank of America (through FIA Card Services N.A., a wholly owned subsidiary headquartered in Delaware) 
Capital One Bank
Citibank, N.A. previously CitiBank (South Dakota) N.A. (prior to corporate reorganization) 
Discover Bank 
Wells Fargo Bank, National Association 
Target National Bank, now TD Bank, N.A. 

JENKINS, WAGNON & YOUNG, P.C. - Creditors' Law Firm (reviewed)

DEBT COLLECTORS WHO-IS-WHO 

JENKINS, WAGNON & YOUNG, P.C - LAW FIRM PROFILE 

JENKINS, WAGNON & YOUNG, P.C. is debt collection firm operating out of Lubbock, Texas with a state-wide practice. This law firm also represents debt buyers who sue as assignees of banks, not merely banks that originated accounts. Among its clients, all with vast litigation dockets, are Cach, LLC; Equable Ascent Financial, LLC; and Midland Funding, LLC. Many of the assigned accounts are from Chase Bank USA, N.A., more commonly known as "CHASE". 

Attorneys listed on letterhead of Jenkins, Wagnon & Young law firm (2013):

Jody D. Jenkins (who is licensed in New Mexico in addition to Texas)

Dan G. Young (who is also licensed in Oklahoma)

J. Mark Wagnon (who is also a CPA and does mostly transactional work, such as negotiating and drafting contracts)
Brian Benitez (and freshly-minted lawyer who joined JWYLAW recently)
Ian Van Reenen (who also has an MBA)

Two of the attorneys practicing with the lawfirm are also licensed in other states: Jody D. Jenkins in New Mexico, and Dan G. Young in Oklahoma. Jenkins and Young are the attorneys whose names appear on the firm's address block on pleadings filed in debt suits filed in Texas courts. Although the first name implies otherwise, Jody Jenkins is a guy. His middle name is Dewayne.

You can view photos of Attorneys Jenkins, Young, and Wagner on the firm's website.

Both Jody D. Jenkins and Dan G. Young were previously associated with McCLESKEY, HARRIGER, BRAZILL & GRAF, L.L.P.  The same is true of Wagner.

Mailing address: P.O. Box 420 Lubbock, Texas 79408-0420
Street address: 1623 10th Street, Lubbock, Texas 79401
Fax: (806) 771-8755

TYPICAL MOTION FOR SUMMARY JUDGMENT FILED IN CREDIT CARD DEBT SUITS

Traditional motions for summary judgment filed by Jody Jenkins seek judgment on two alternative theories - breach of contract and account stated; they do not state the amount of damages, even though they contain a factual background section. The damages are instead set forth in a summary judgment affidavit that does double duty as a business records affidavit.

SUMMARY JUDGMENT AFFIANTS AND AFFIDAVITS

In suits by debt buyers/assignees the witness testifying by affidavit is typically a representative of the assignee or the assignee's servicer (e.g. "Legal Specialist" for Midland Credit Management), rather than a custodian of record from the original creditor. 

  

The debt buyer's employees who perform affidavit duty will often have dubious credentials as sponsoring witnesses for business records that were not created by their employer, but by the bank that issued the card. e.g. Chase, Citibank, Bank of America, or HSBC (--> business records affidavit and third-party records). 

  

Sometimes, there is even confusion as to who the issuing bank was, particularly when the account originated with Washington Mutual Bank (“WaMu”) or Providian National Bank (“PNB”). PNB was absorbed into WaMu, but WaMu subsequently failed and the FDIC liquidated its assets. Affiants are low-level employees whose affidavits often not even reflect awareness that WaMu is a failed bank. The correct cardmember agreement is often not included among the summary judgment or trial exhibits.

ATTORNEY FEES

Jenkins and Young routinely plead for attorneys fees. Therefore, their summary judgment motions contain an additional affidavit by the attorney that signed the pleadings. The fee affidavit is marked EXHIBIT B. 
  
Exhibit A is the summary judgment affidavit with all attachments (typically copies account statements, cardmember agreement, and bill of sale and/or other from assignment proof, such as a second affidavit signed by the representative of a bank attesting to the sale and disclaiming any interest in the account at issue).

  

The typical amount of fees attested as reasonable by Jenkins attorneys for work at the trial-court level is $1,500 (hourly rate of $200 x 7.5 hours) (--> Sample attorney fee affidavit of Jody D. Jenkins;  Sample attorney fee affidavit of Dan G.Young).

Attorney Jody Jenkins also requests contingent fees in the amount of $5,000 for the first level of appeal, and $3,500 if a petition for review is filed in the Texas Supreme Court. Not surprisingly, the proposed judgments contain matching dollar figures for the three categories of attorneys' fees. This firm has appellate litigation capability and experience, including appeals from debt collection suits. 

FEE AMOUNT COMPARED TO OTHER DEBT COLLECTION LAW FIRMS

Other attorneys testify that $400-$500 a case is a reasonable amount of fees in routine credit card debt collection cases of similar nature (sometimes involving the same original creditors), or do not seek fees at all. 


LAWFIRM - CORPORATE ENTITY REGISTRATION INFORMATION 

EDITORIAL NOTE: This profile page on the lawfirm of JENKINS, WAGNON, & YOUNG was last revised or updated:  January 23, 2014. 

Weinstein & Riley P.S. debt collection suits

DEBT COLLECTORS WHO-IS-WHO

Dec. 2013 UPDATE: It appears this lawfirm was reorganized: Weinstein Pinson & Riley, PLLC is now listed as the lawfirm affiliation of Josh Harrison, one of the attorneys that handles debt collection suits in Texas.

WEINSTEIN & RILEY, P.S. 

WEINSTEIN & RILEY, P.S. is a debt collection law firm based in Seattle, Washington, that files and litigates debt collection suits for Discover Bank through attorneys licensed in Texas: Josh Harrison (taking over from Jason D. Alexander) and Cody Moorse. Weinstein attorneys have also handled litigation on behalf of Dodeka, LLL, a debt buyer, in Texas. 

PLEADINGS AND DISCOVERY 

A typical petition filed by Weinstein attorneys is five pages long, invokes two theories of recovery - breach of contract and account stated, which are denominated "Count 1" and "Count 2", respectively -- and seeks attorney's fees in addition to the amount alleged to be owed on the card. 

The pleading includes a battery of requests for admissions as one of the numbered paragraphs, although this is not proper pleading practice under the rule the governs discovery. A typical petition filed by attorneys of the law firm of Weinstein & Riley does not have any attachments.  

MOTIONS FOR SUMMARY JUDGMENT

A typical motion for traditional summary judgment is based on breach of contract, and contains section citing cases on the various elements of breach of contract under Texas law and cases supporting the viability of that theory without a signed (executed) contract for purposes of collection of a debt involving a credit card account. The evidence offered in support of the motion consists of an affidavit signed by a representative of the plaintiff (or, in the case of Discover Bank, a representative of its servicer); the underlying credit card agreement (or what is being represented to constitute the applicable contract); a series of account statements; and sometimes a copy of an application for credit or "acceptance form" (which is not always legible). 

Summary judgment motions on behalf of Discover Bank often have numerous statements attached, covering the time span of several years. The affidavit typically does to contain any information or specifics regarding the contract and contract-formation. A version of a cardmember agreement from Discover Bank (or from the original credit in a debt buyer suit) is simply included among the other exhibits.

ATTORNEY FEES AFFIDAVITS

Weinstein's attorneys typically testify in their fee affidavits that $400 is a reasonable fee in the debt collection suit, regardless of whether suit is brought on behalf of an original creditor (Discover Bank) or a debt buyer (e.g. DODEKA, LLC). See  --> Sample fee affidavit in Discover Bank suit; Sample fee affidavit in Pharia suit

WEINSTEIN ATTORNEYS' ADDRESS IN TEXAS

Josh Harrison

Cody Moorse

WEINSTEIN & RILEY, P.S.

701 Highlander Blvd., Suite 270

Arlington, TX 76015

Tel.: (817) 622-9010

Josh Allen Harrison
Bar Card Number: 24071819
Work Address:

Josh Harrison's Texas Bar Number is 24071819. He previously practiced in California and obtained his Texas law license in April 2010. The address on his SBOT profile has a different suite number:

701 Highlander Blvd., Ste. 200 
Arlington, TX 76015
Work Phone Number: 817-821-4872

                                    

WEINSTEIN AND RILEY LAW OFFICE ADDRESS IN WASHINGTON STATE 

Discover Bank's pleadings filed through Weinstein in Texas course contain a disclosure of Discover Bank's address (for law suit purposes) as follows:

            c/o Weinstein & Riley, P.S.

            2001 Western Avenue, Suite 400

            Seattle, WA 98121

JOSH HARRISON AND CODY MOORSE ADDRESS BLOCK FROM PLEADING

Discover Bank - Original Creditor as Plaintiff (profile)

DISCOVER CREDIT CARD COLLECTION SUITS IN TEXAS COURTS

NAME OF CARD ISSUER AND ENTITY TYPE

Discover Bank is a bank operating out of Delaware and a leading issuer of credit cards nationwide. It is not a national bank under the National Banking Act, but it is insured by the FDIC. Discover Bank appears as plaintiff in debt collection suits, but other entities are also involved. 

SERVICERS AND SUBSIDIARIES

March  2015 UPDATE: DB SERVICING CORPORATION DOES NOT EXIST ANY MORE. See image of record from Ohio Secretary of State: 

The new servicer is DISCOVER PRODUCTS INC, a UTAH corporation. Also see list of Discover Financial Services family of companies (image added to bottom of this post) 

Discover Bank relies on servicers to handle part of its operations. Two affiliated entities' names appear in summary judgment affidavits:  DB Servicing Corporation and DFS Services LLC.

The numerous people who execute summary judgment affidavits for Discover Bank in debt collection suits (see partial list below) are employees of the servicers. Some identify themselves as employee of one servicer on some affidavits, and as employee of the other entity on others. They may be full-time affidavit signers, but their job titles are typically given as “Legal Placement Account Managers” or “Litigation Support Specialist”.

LAWFIRMS AND LAWYERS THAT SUE ON DISCOVER BANK'S CREDIT CARD ACCOUNTS IN TEXAS 

Discover Bank has many customers in Texas and sues on defaulted accounts in its own name. For that purpose, it employs more than one law firm in Texas. The debt collection firms used by Discover include ZWICKER& ASSOCIATES; RAUSCH, STURM, ISRAEL, ENERSON & HORNIK, LLC ("RSIEH"); and SCHEINTHAL & KOUTS, L.L.P.

Additionally, Discover Bank debt suits are also brought by WEINSTEIN & RILEY, P.S. a law firm with offices in Seattle, Washington. Because it is a legal requirement, WEINSTEIN utilizes Texas-licensed attorneys to handle cases in Texas court (Josh Harrison, Jason D. Anderson, Cody Moorse).

VOLUME OF LITIGATION 

From August 2012 to August 2013 Discover Bank filed 454 cases in Harris County District Courts. The total for the four civil county courts at law for the same time span was 66.
  

DISCOVER CARD AGREEMENTS

Discover Bank’s form contracts are typically more than two dozen pages long and have a table of content, with page references. The bank’s standard agreements come in many versions, which are identified by Copyright Year and by versions codes consisting of numbers and a letter in the footer of the first page. 

For Example: TL20A.0508 from 2008, and  TL22H.0210 from 2010 

  
The iterations of agreements appear to be consecutively numbered. Assuming Discover Bank started with TL01, there are now more than twenty successive versions, not counting version distinguished by the letter designations ("A" and "H" in the examples above).  

Arbitration Clause 

Like most other CMAs, Discover Bank CardmemberAgreements contain arbitration provisions. The choice of law is Delaware, which reflects its home state and that state’s requirement that all banks located there operate under Delaware law.

Usury Avoidance Clause 

Unlike most other CMAs, Discover card agreements also contain a usury savings clause. That clause is designed to avoid usury liability in the event a variable interest rate exceeds the legal limit in a particular jurisdiction. It provides for a credit for all overcharges resulting from the application of an excessive interest rate.

MONTHLY ACCOUNT STATEMENTS

Finance Charges

Monthly Discover Card statements contain two or three balance categories, depending on whether a balance transfer offer was made and utilized. The standard balance categories are Purchases and Cash Advances. Different interest rates may apply to different balance categories. The interest rate for the balance transfer category will typically be a low rate (e.g  3 for 4 percent) for a limited time.

Interest rates on Discover Card account statements run as high as 29.99%. This is legal under Delaware law, but could be challenged as usurious if the Plaintiff does not invoke Delaware law or other basis for exemption from Texas interest rate limits (-- > usury under Texas law). 

Payment address and address for correspondence 

Discover Bank statements have either one of two addresses printed on payment coupons: a post office box in Phoenix Arizona ZIP Code 85038 or one in Carol Stream, Illinois with ZIP Code 60197.

Interestingly, Discover Bank requests that correspondence be sent to an address in Utah: P.O. Box 30943 Salt Lake City, UT 84130. This is presumably the address where complaints (billing disputes) should also be sent. Implication: If an affiant testifies about no dispute having been received, the affiant should show a connection to the Utah office to be in a position to do so based on personal knowledge and familiarity with mail received and documents created at that location.  

Purported “duplicates” of monthly statements for use in litigation

For litigation purposes, Discover Bank (or an affiliated company) re-generates statements from a database; oftentimes a whole stack of them (but the volume of documentation appears to vary among attorneys). They are not necessarily true and accurate copies of the statements that were actually mailed near the date shown as the billing cycle closing dates. On occasion the statements created for use as litigation exhibits differ from the originals. They may even have a different mailing address on them.  

Additional documentation produced by Discover as Plaintiff in debt collection suits 

Unlike most other credit card issuers, Discover Bank produces (and uses as exhibits) images of checks signed by card members and sent with payments, along with the corresponding payment coupons torn off from the monthly statements and enclosed in the envelope in which the payment is sent. At least in a subset of debt collection cases this type of evidence appears as part of the summary judgment submission. Unlike the re-generated monthly statements, these exhibits appear to be genuine copies (or images) of the originals as indicated by the presence of handwriting on them.  

  

AFFIDAVIT SIGNERS IN RECENT CASES  

Danielle Laughrey, identified as "employee and custodian of records for DB Servicing Corporation, the servicing affiliate for Discover Bank". Her affidavit states that DB Servicing Corporation is a wholly-owned subsidiary of Discover Bank.  Like other affiants, Laughrey also signs affidavits in Franklin County in the State of Ohio. She also acts as a notary for other affiants. 

Patrick Sayers, identified as "Litigation Support Specialist" for DB SERVICING CORPORATION, signs affidavits in Franklin County, Ohio (Notary: Phyllis A. Scholey)

James Ball, Litigation Support Manager for DB Servicing Corporation

Natasha Szcyzgiel, Legal Placement Account Manager, signing affidavits in the State of Ohio, County of Franklin.

Additional affiants whose affidavits have appeared in lawsuits by Discover Bank in Texas courts: 
Heidi Leo, with Abigail Fried as notary
Joshua Frazier, with Bethany Stark as notary 
Janice Dorr, with Schloley as notary
Bethany Stark, Robert Adkins, Stacey Holmes, Stefanie Watkins, Tiffany Adair, Stephen Ball, Erin Marmol

   

WHAT’S UNIQUE OR NOTEWORTHY IN SUITS ON DISCOVER BANK ACCOUNTS?

The usury-avoidance clause that is a feature of all Discover Bank cardmember agreements.

DISCOVER FINANCIAL SERVICES & DISCOVER BANK: RELATED ENTITIES

Discover Financial Services - List of Subsidiaries incl. Discover Bank (2015)

OTHER CARD ISSUERS THAT BRING THEIR OWN LAWSUITS AGAINST CONSUMERS / CARD-HOLDERS

American Express Centurion Bank
American Express Bank, FSB
Bank of America (through FIA Card Services N.A.) 
Capital One Bank
Citibank, N.A.
Target National Bank

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, such as a limitations defense. 

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 date may have to be requested from the clerk, sometimes by phone or by mail. 

A motion for summary judgment may simply be filed without notice of hearing accompanying it, 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.

Notices relating to summary judgments can be confusing to unrepresented litigants who have filed an answer. They may not appreciate the difference between trial and summary judgment, and may end up disregarding a notice relating to a summary judgment motion because they believe their case will be called on the day of trial. Sometimes creditors' attorneys file to give proper notice altogether. 

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”). Make that eight (8) to avoid any argument as to how the days should be counted backwards from the hearing or setting date. 

If the deadline is missed, a motion for leave to file late should be filed if the non-movant wants the court to consider the belated response and any accompanying evidence. If the defendant misses the summary judgment proceeding altogether, it may be time to figure out how to move for reconsideration or prepare an appeal from a summary judgment. 

A traditional summary judgment (money judgment for the creditor) can be appealed on the basis that the summary judgment evidence was insufficient even if no response was filed. But see -- > Pitfalls and traps when appealing pro se --> Sample appellate briefs. 

If lack of notice was an issue, however, if may be necessary to file a motion for new trial because the defendant will have to prove that there was no notice, and that will generally require an evidentiary hearing. ---> Motion for New Trial  

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 the hassle of having to show up with 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 or on a walk-in basis. 

A traditional motion for summary judgment must expressly state the cause of action on which moneydamages are sought, or the grounds for attacking a specific affirmative defense, or several such defenses. --> Creditor causes of action in Texas. 

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. If those a present, the motion should be denied and the case should go to trial. 

The evidence for summary judgment purposes comes in the form of summary judgment affidavits and documentary exhibits, for the most part. The exhibits will typically be attached to an affidavit. Sometimes they marked with letters (Exhibit A, Exhibit B, Exhibit C), other times with numbers; or a combination of letters and numerals;  sometimes they are not marked at all. 

Occasionally, the motion for summary judgment 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 and the incidence of attorney representation, a Defendant's Motion for Summary Judgment (DMSJ) is a rare animal, 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, such as the applicable statute of limitations).

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. Some creditors' attorneys are quite unreasonable when they swear to what is reasonable in their own self-serving expert opinion. Others do not seek attorneys fees at all as a matter of policy, or don't insist on them at trial. 

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 defendants do not show up 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 an 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 does 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. If a defendants contests correctness, it would be helpful to have documentary proof to back up the testimony. But if the defendant is pro se, he should make sure to study up on predicates for admissibility of documents and evidentiary objections because the attorney for the creditor will surely make objections.     

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 under the scheduling order or similar case management plan) 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


Last revision: 12/8/2018

Plaintiff's affidavits in debt-collection cases: Summary Judgment Affidavits, Affidavit of Claim, Attorney Fee Affidavits

Affidavits Filed by Debt Collection Attorneys in Credit Card Suits  

WHAT IS AN AFFIDAVIT?

An affidavit is a sworn written statement signed by the person making it (affiant) and by a notary public or other official authorized to administer oaths. The notary’s certification appears at the bottom of the page, or on the last page, and is called the jurat.

DIFFERENT TYPES OF AFFIDAVITS

In debt suits, three types of affidavits are commonly encountered: Affidavits that contain some facts about the case (or purport to do so); business records affidavits, whose purpose is to make documents admissible; and attorney fee affidavits. The first two categories may be combined into a hybrid affidavit.  

Other affidavits may be filed under specific circumstances, such as to establish the process server’s inability to effect service, and to support a motion other than a motion for summary judgment, such as a motion for continuance, or a motion for new trial. Some motions must be sworn (“verified”) or have an affidavit attached. 

An affidavit is always required for a motion for summary judgment, and for default judgment motions that are not set for an oral hearing. If a debt plaintiff seeks attorney’s fees, a fee affidavit must also be filed to support the reasonableness of the amount of fees being sought. Attorney’s fees are not liquidated damages.  

SUMMARY JUDGMENT AFFIDAVITS 

Summary judgment affidavits are governed by the summary judgment rule. They may be used to present testimony to the court that would otherwise constitute hearsay because the witness will not be present and available for cross-examination at the hearing. Such affidavits may not be used for trial, to which the summary judgment rules do not apply. They are specifically authorized for summary judgment proceedings, in which there will be no opportunity for presentation of live witness testimony because an oral hearing is only for attorney argument, assuming an oral hearing takes place at all. Many courts rule on summary judgment motions by submission.  

The quality of affidavits, of course, varies and specific affidavits may not be admissible for summary judgment purposes either, but this will in most cases require a specific objection to the affiant’s qualification, or a challenge on some other basis. Affidavits of assignee’s (debt buyers) are notorious for poor quality (-- > robosigners).

Summary judgment affidavits often do double duty as business records affidavits, even though they are not so titled. Conversely, affidavits can be found that are denominated “BUSINESS RECORDS AFFIDAVIT”, but contain factual averments in addition to the standard predicate language to make business records admissible as an exception to the hearsay rule. One-page affidavits filed by RAUSCH in Target and Capital One debt suits, for example, contain a line indicating when the account was established. 

Affidavits filed in debt collection suits are typically signed by a representative of the Plaintiff, whether that is the original creditor or a debt buyer. In some cases, several affidavits are attached to motions for summary judgment. The additional ones are typically limited-purpose affidavits that provide information on assignment or sale of an individual account or of a portfolio of accounts (“Affidavit of Sale”) or authenticate specific documents (such as a bill of sale or a document regarding a financial institution’s merger or name change).  

AFFIDAVITS ATTACHED TO PLEADINGS 

Leaving aside suits on sworn account and bill-of-review suits, a plaintiff is not required to attach an affidavit to the original pleadings. A number of debt collection plaintiffs nevertheless do so, presumably in aid of default judgment, should the defendant fail to answer after being served with the citation.
 

Occasionally a petition in a credit card debt suits invokes the sworn account rule, which requires that sworn proof be attached. But sworn account is not a proper theory of recovery in a debt collection suits involving a bank debt, and should be challenged on that basis, either by motion for summary judgment, or by special exceptions. 

Affidavits attached to pleadings are typically titled “Affidavit of Claim” or some variation thereof.  In some cases, the plaintiff’s attorney will try to make the affidavit a part of the summary judgment submission by referring to it in the motion and incorporating it by reference. In such case, the affidavit should be dealt with in the defendant’s response, in addition to any affidavit and exhibits attached to the motion for summary judgment itself.

ATTORNEY FEE AFFIDAVITS 

Attorney fee affidavits are limited-purposes affidavits, as the name implies. They also constitute an exception to affidavits for summary judgment generally in that the Plaintiff’s attorney is allowed to sign such an affidavit, and thus appears as a witness. When the attorney testifies on fees incurred in the lawsuit, he or she acts as an expert witness (with respect to reasonableness of fees in the relevant legal market), but also as a fact witness with respect to the efforts made in the specific case, such as time expended, and attorney qualifications and experience, which are relevant to the hourly rate. 

Many law firms representing creditors in mass debt collection litigation do not seek fees, or no longer do so, even though attorney’s fees are authorized by statute (Chapter 38 of the CPRC) in breach of contract cases.
 

Any one attorney’s involvement in such a case is bound to be minimal because the firms that specialize in litigating on behalf of leading card issuers and their assignees all use automated document production systems to generate pleadings, motions, affidavits, and other documents. 

If there is an oral hearing or bench trial, an attorney will have to appear (and incur billable time), but in many instances it will not even be the attorney of record whose signature appeared on the pleading.

AMOUNTS OF FEES IN DEBT COLLECTION CASES 

Among the debt collection attorneys who seek fees, the amounts vary widely, starting with $400 or $500 at the low end up to thousands of dollars at the other end of the scale. The higher amounts are typically seen in cases involving high balances (-- > amount in controversy). Some debt collection attorneys will simply divide the amount by 3 and claim the resulting amount as a reasonable fee for a case of this nature. 

The Texas Supreme Court has set some guidelines for the determination of what is a reasonable amount of fees (-- > Arthur Andersen fee factors), but the criteria are numerous, and vague.  Given such ambiguity, the trial courts have considerable discretion on the matter, and may also take into account variation in the cost of legal services among urban and rural counties. Because there is no hard and fast rule for computing attorney’s fees comparable to the federal “loadstar”, there is also a considerable amount of case law resulting from appellate litigation over the fee factors and their relative weight, fee segregation, and other issues.