Friday, December 13, 2013

Answering the plaintiff's petition in a debt collection lawsuit

Appearance by filing an answer & waiver of citation

What counts as an answer in a debt collection lawsuit and why it is important  

As a matter of due process, any lawsuit requires that the defendant be served with the lawsuit papers that tell him why he is being sued, unless the defendant waives service and appears voluntarily. In Texas state courts, the plaintiff's first pleading that is used to initiate the civil action against the defendant is called ORIGINAL PETITION rather than ORIGINAL COMPLAINT, and the instrument that directs the process server or peace officer (constable or sheriff) to serve it on the defendant is called a CITATION rather than a SUMMONS. A citation may also be served by certified mail, but not by the plaintiff's attorney directly. The latter method is rarely used in debt collection suits; except in combination with service by posting the lawsuit papers on the defendant's door pursuant to an order for substituted service under Texas Rule of Procedure 106 (Rule 106 Order).

The importance of the Defendant's answer 

Whether or not a lawsuit is answered in writing after service of citation and original petition has important legal consequences: If the debtor was properly served (usually in person; or, if such service is unsuccessful, by attachment of a copy of the citation and petition pursuant to an order for substituted service at the address that the plaintiff has for the debtor), but does not file an answer, the debt collection attorney may move for a no-answer default judgment for the creditor. A motion for this type of default judgment does not require any proof of liability, and the amount of damages (and attorneys fees, if any are sought) may be established by affidavit. -- > Motion for default judgment; -- > Affidavit in support of default judgment

But a no-default judgment cannot properly be entered against a defendant who has made an appearance in the lawsuit.

Filing an answer prevents default judgment (well, not literally, but at least it provides a valid ground for attacking a default judgment, if one is nevertheless entered)

Filing an answer counts as an appearance in the lawsuit. Making an appearance in person at a hearing or trial in the case may also be sufficient, but the safer thing to do is to file an answer with the court. Why? Because the Plaintiff is not required to let the defendant know of any hearing on a motion for default judgment; should there even be one; nor is the creditor required to send the debtor a copy of the motion for default judgment if the debtor was served, but did not file an answer. Notice must only be given to a defendant who has answered. The creditor's attorney may still send a notice of hearing, but the judge may grant a default judgment regardless, provided the other requirements for a default judgment are met, which includes a non-military affidavit. -- > When can the court grant a default judgment?

What counts as an answer? 

For pro se defendants, i.e. those who do not have a lawyer to handle their defense, the criteria are quite low. A letter to the judge may be sufficient.

The Texas Supreme Court has said that a defendant who timely files a pro se answer by a signed letter that identifies the parties, the case, and the defendant's current address, has sufficiently appeared by answer and deserves notice of any subsequent proceedings in the case.

That said, a letter by a family member of the defendant will likely not be sufficient because a lay person may not represent another person in court. The same goes for appearances in person at trial. This may seem unfair, especially when the family member has more education than the defendant, or just wants to be helpful, but neither the Supreme Court, nor the Texas Legislature, has seen fit to change the rule, at least not in county court and district courts (there is now an exception for JP court).

The rules would require the defendant's answer or letter to be sent to the attorney for the creditor also (at the address shown on the petition). If that was not done, the creditor may move for default judgment unawares that an answer is on file; but the fact that the defendant has answered should preclude default judgment even if the creditor's attorney did not know about it. The court, or clerk of the court, will typically examine the file to ascertain whether or not an answer is on file. Some counties even have a system in place that involves a default judgment check-list on which all items must be satisfied and checked off before the a motion for default judgment will go to the judge (or a judge sitting by assignment) for signing.

Unnecessary admissions in the answer 

Pro se defendants often make the mistake of making admissions in their answer, or explain their dire financial circumstances and plea for mercy. Trial court judges will generally ignore the sob stories, assuming they even read the defendant's letter. Why? Because the sob stories are not relevant, at least not at the default judgment stage. What counts at the point is whether the paper signed by the defendant is on file or not. The content is generally of marginal importance. But if the defendant makes admissions on element on which the Plaintiff's has the burden of proof, the creditor's attorney may used the admissions as a substitute for proof of its own. -- > Judicial admissions in pleadings.

The content of the debtor's responsive pleading will also acquire importance if the defendant hires an attorney, or wants to counter the plaintiff's claim with an affirmative defense, such as time-bar under the four-year statute of limitations. Affirmative defenses must be pleaded. As with a the "general denial", a short reference to the name of the affirmative defense will generally be sufficient; e.g. Plaintiff's claim is time-barred; or Defendant pleads the following affirmative defenses: statute of limitations; mandatory arbitration clause, etc.... Some defenses, however, require a sworn denial. The circumstance in which the need for a verified denial arises are rare (in credit card debt suits) and are not discussed here. -- > Verified denials; matter that require a sworn denial.

Effect of filing an answer 

Under Rule 121, an answer constitutes an appearance of the defendant so as to dispense with the necessity for the issuance or service of citation upon him.” Tex. R. Civ. P. 121. Thus, if the defendant files an answer after finding a note from a process server on the door, but before the citation is actually served in person, the service of process is no longer required. At least the defendant will have no valid complaint about not actually having been served with the citation.

Of course, the defendant will still need to know what is alleged in the petition, even if a general denial can be filed without having seen the pleading.

In Texas state courts, unlike federal district courts, the defendant does not have to respond to the allegations in the plaintiff's pleading point by point (and many collection lawyers don't provide may details to begin with). A general denial will put all of the allegations in issue, and only certain matters need to be raised expressly.
-- > affirmative defenses must be pleaded; -- > conditions precedent and specific denials.

Effect of a General Denial 

A general denial is just that: a general denial of what the plaintiff has alleged in its petition. It  constitutes a summary denial of each factual allegation and theory of recovery asserted by the plaintiff, accomplished with no more than two "magic" words. The effect of asserting a "general denial" is to require the plaintiff to prove its claim.

Pleadings are generally not evidence. Therefore, the creditor cannot be granted a judgment on the pleadings alone. There are two exceptions, however: (1) No-answer default judgment after proper service on the defendant; and (2) a properly pleaded Sworn Account Suit that has not been neutralized with a sworn denial.

A credit card debt suit should not be brought as a sworn account suit under Rule 185, however, because sworn account is not a proper legal theory for that type of debt. Such debt collection suits are rarely filed as a sworn accounts any more, but that does not mean in will never happen. When it does happen and the defendant does not answer or complain about the incorrect theory, the trial court may conclude that the error has been waived, assuming the judge even becomes aware of the error.

But if the default judgment is based on a sworn account only, there may still be grounds to attack it based on a defect in the pleadings. Even a default judgment on an otherwise valid legal theory under Texas law (breach of contract, account stated) may be attacked in a timely appeal or restricted appeal if the creditor's pleadings was defective, or arguably insufficient to meet the fair notice standard.


Service of lawsuit papers: Service in person by process server and substituted service
Sufficiency of pleadings to support default judgment
No-answer default judgment vs. post-answer default judgment
Different ways of attacking a default judgment
Bill of review petition to challenge a default judgment that is no longer appealable

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