Goddamn v. Discover Bank:
Pro Bono meets the Grinch, or was it Ebenezer Scrooge? Shylock?
PROSAIC PEDESTRIAN PROSE & JUDGE POSNER
2018 WL 6334674 (Tex.App.-Dallas) (Appellate Brief)
Appealing from summary judgment against him, Discover Bank credit card judgment debtor filed
tale-of-woe brief in all-Republican state Court of Appeals in Dallas (the Other Fifth Court of Appeals) and had it duly found fault with for formal deficiencies.
Pro Se litigants cannot, after all, be treated differently. Appropriately monickered TRAPs (Texas Rules of Appellate Procedure) must be complied with. If unrepresented litigants were cut a slack, duly licensed Texas lawyers would suffer an unfair disadvantage, and litigants would be encouraged to forgo their precious right to retain an attorney of their choice (that they cannot afford anyhow).
NOT A SCINTILLA OF SYMPATHY
Gleefully, Discover Bank's Texas-licensed lawyers then filed a
motion to dismiss the pro se appeal with prejudice (whatever that means when there is no chance of refiling a notice of appeal anyhow) because debtor Goddamn had not figured out how to file a compliant brief and had gone silent after having requested oral argument together with his defective submission:
Actual face time with appellate judges is an obvious no-go for a
pro se on appeal. A self-represented litigant, of course, wouldn't know that.
In the meantime, an amicus curiae out of nowhere [identity redacted to protect protagonists in the no-good-deed-must-go-unpunished serial] had filed what purports to be a compliant brief in support of the Appellant, and had included in his TRAP 11 Statement (Amicus Curiae Disclosure) a provision that the
pro se appellant was free to adopt the amicus brief or any portion of it as his own if he wised to do so.
Discover Bank's lawyers then filed a motion to strike the amicus brief based on the argument that (1) the amicus had no stake in the matter (i.e., no standing), as if that mattered in a charity case, and (2) that the amicus was just duplicating what the appellants' arguments
would be (which was sort of the point, since the appellant had obvious difficulty in putting together a proper brief of his own).
To further fill the kitchen sink, Discover Bank averred that the amicus effort appeared to be just an academic exercise, and that it amounted to an improper bid to evade the word limit. Duh! If the court of appeals was not going to consider the pro se brief at all because it was not in proper legalese and wasn't properly formatted, the word count would be a clean and tidy 0. And the amicus brief came in at about 1/2 of the 15K limit. Not to mention that the word limit for an amicus under the Texas appellate rules is also 15,000 (like for any party), and is not charged to either party's limit.
The ultimate irony is this: Discover Bank invoked the authority of Judge Posner in its bid to quash the amicus brief. The very same Judge Posner who just happened to write a book (actually several) on the plight of pro-se litigants, after stepping down from the federal bench, not to mention having opened a center which he calls
Hopefully, one day Discover Bank will discover whose aid it sought in its unworthy effort to suppress an appeal on the merits by an out-of-luck defendant who couldn't afford a lawyer.
Here is the Dallas COA's diagnosis of how pro-se Appellant Goddamn failed to measure up under the Court's defect-in-form checklist:
RE: Court of Appeals Number: 05-17-01442-CV
Trial Court Case Number: CC-17-00971-B
The appellant's brief filed in the above referenced cause does not satisfy the requirements
of Rule 38 of the Texas Rules of Appellate Procedure. Specifically, the brief is deficient as
follows:
_____ It does not contain a complete list of all parties to the trial courts’ judgment or appealable
order with the names and addresses of all trial and appellate counsel. TEX. R. APP. P.
38.1(a).
__X__ It does not contain a table of contents with references to the pages of the brief. TEX. R.
APP. P. 38.1(b).
__X__ The table of contents does not indicate the subject matter of each issue or point, or group
of issues or points. TEX. R. APP. P. 38.1(b).
__X__ It does not contain an index of authorities arranged alphabetically and indicating the
pages of the brief where the authorities are cited. TEX. R. APP. P. 38.1(c).
__X__ It does not contain a concise statement of the case, the course of proceedings, and the trial
court’s disposition of the case supported by record references. TEX. R. APP. P. 38.1(d).
__X__ It does not concisely state all issues or points presented for review. TEX. R. APP. P.
38.1(f).
__X__ It does not contain a concise statement of the facts supported by record references. TEX.
R. APP. P. 38.1(g).
__X__ It does not contain a succinct, clear, and accurate statement of the arguments made in the
body of the brief. TEX. R. APP. P. 38.1(h).
__X__ The argument does not contain appropriate citations to authorities. TEX R. APP. P. 38.1(i).
__X__ The argument does not contain appropriate citations to the record. TEX. R. APP. P. 38.1(i).
_____ It does not contain a short conclusion that clearly states the nature of the relief sought.
TEX. R. APP. P. 38.1(j).
_____ Text of brief is not double spaced. TEX. R. APP. P. 9.4(d).
_____ Text of brief is not proper size. TEX. R. APP. P. 9.4(e).
__X__ It does not contain a proper certificate of compliance. TEX. R. APP. P. 9.4(i)(3).
__X__ It does not contain a proper certificate of service. TEX. R. APP. P. 9.5(e)(2)(3).
_____ Documents in appendix must be redacted to remove name of child. TEX. R. APP. P.
9.8(b).
_____ Documents in appendix must be redacted to remove name of parent. TEX. R. APP. P.
9.8(b).
_____ Documents contain sensitive data. TEX. R. APP. P. 9.9 or 9.10.
__X__ One or more of the following is omitted from the appendix. Tex. R. App. P. 38.1(k).
__X__ The trial court’s judgment. Tex. R. App. P. 38.1(k)(1)(A).
__X__ The jury charge and verdict, if any, or the trial court’s findings of fact and
conclusions of law, if any. Tex. R. App. P. 38.1(k)(1)(B).
__X__ The text of any rule, regulation, ordinance, statute, constitutional provision, or
other law (excluding case law) on which the argument is based. Tex. R. App. P.
38.1(k)(1)(C).
__X__ The text of any contract or other document that is central to the argument. Tex. R.
App. P. 38.1(k)(1)(C).
Failure to file an amended brief that complies with the Texas Rules of Appellate
Procedure within 10 days of the date of this letter may result in dismissal of this appeal
without further notice from the Court. See Tex. R. App. P. 38.8(a)(1), 42.3(b),(c)
Respectfully,
/s/ Lisa Matz, Clerk of the Court
cc: Elise Manchester (DELIVERED VIA E-MAIL)
FILE COPY
BELOW: POSNER PRO-SE CENTER PRESS RELEASE VERBATIM
FOR IMMEDIATE RELEASE
April 15, 2018
Contact Person:
Richard A. Posner
President, The Posner Center of Justice for Pro Se’s
Tel.: 773-702-9608
E-mail: rposner@justice-for-pro-ses.org
The Renamed “Posner Center of Justice for Pro Se’s” is Open for Business
CHICAGO, Illinois —Richard A. Posner has announced the renaming of his nationwide pro bono legal-services organization for assisting pro se litigants. Formerly named “Justice for Pro Se’s,” and before that “Team Posner,” it now goes by the name “The Posner Center of Justice for Pro Se’s.”
On September 2, 2017, Judge Posner retired after almost 36 years as a judge of the Court of Appeals for the Seventh Circuit (including 7 years as its chief judge) because, as he says: “I believed, and still believe, that pro se’s, which is to say litigants without lawyers, are not receiving a fair shake from the courts.” Actually, it is even worse than that, as Judge Posner further explains: “Many judges are hostile to pro se’s, seeing them as a kind of ‘trash’ not even worth the courts’ time.”
Ever the prolific writer, since his retirement Judge Posner has published four books explaining the pro se's need for legal assistance and setting out the framework for a legal-services organization that would provide that assistance free of charge. He then created what is now called the Posner Center of Justice for Pro Se’s, a nationwide organization of lawyers and non-lawyers who assist deserving pro se litigants free of charge with their cases. The Center now has some 80 lawyers and non-lawyer advisors distributed across 27 states, but expects eventually to have representatives in all 50 states plus the nation’s offshore possessions, such as the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, and the U.S. Virgin Islands.
Although individuals have been representing themselves in court since the beginning of the Republic, it is only recently that the courts and the bar associations have begun to make accommodations for them—a trend that the Posner Center of Justice for Pro Se’s is building upon. As Judge Posner points out: “The need of pro se litigants for legal assistance is obvious. Few people can afford to pay an attorney for the years that a lawsuit often takes to get resolved. Also, the U.S. legal system is so complicated and confusing that no layperson can successfully get through its maze unaided by expert legal assistance.”
A unique aspect of the Center is that while its lawyers will sometimes take over the pro se’s cases and represent the pro se’s in court, equally or even more often it will assist the pro se’s behind the scenes to enable them to successfully represent themselves—to be in effect their own courtroom lawyers. For, as Judge Posner has explained, “Representing oneself in court is often the best way for a pro se to obtain justice. Unlike judges, juries tend to be impressed by a lone litigant standing up against a gaggle of lawyers.”
At present none of the Center’s representatives is paid (although that may change). But not for Judge Posner, who has announced “This work is a labor of love and I will not accept even a single penny for my work on behalf of pro se’s.”
A few of the legal luminaries from academia who have joined the Center are law professors Lawrence Lessig (Harvard), Abbe Gluck (Yale), Rebecca Stone (UCLA), Daniel Klerman (USC), Shon Hopwood (Georgetown), Sandra Aistars (George Mason University), Christopher Ogolla (Savannah Law School), as well as Eric Posner, Alison Siegler, Thomas Miles, Joshua Avratin, David Zarfes, and William Landes (all from the University of Chicago).
Although the Posner Center (which dates back to September 2017 though it has evolved over time) has already helped many pro se’s, as Judge Posner notes, “We are just touching the surface, for there are reliably believed to be at least a million pro se’s in the United States. Many of those pro se’s, however, don’t realize they can obtain legal assistance. Therefore, I will continue to work to get the message out that our organization exists, and then try to assist as many deserving pro se's as possible.”
-- the end --
[Comment: It's not the end; it's just the beginning]
BELOW: THE IMPERILED AMICUS BRIEF
[pseudonyms in use for web-posting]
[Click on Cause number to see original documents on court's website]
IN THE COURT OF APPEALS
FOR THE FIFTH DISTRICT
DALLAS, TEXAS
_________
ADAM SCHULDENBERGER,
Appellant
vs.
DISCOVER BANK,
Appellee.
_________
On Appeal from the County Civil
Court at Law No. 2
Dallas County, Texas
Hon. King Fifer
Trial Court Cause No. CC-17-00971-B
BRIEF IN SUPPORT OF APPELLANT
ADAM SCHULDENBERGER
BY
AMICUS CURIAE
_________
November 21, 2018
Identity of Parties and Counsel
Appellant / Defendant below: ADAM
SCHULDENBERGER
[pro se]
Appellee / Plaintiff below: Discover Bank
Lead Attorney on Appeal: Matthew
Jirkovsky
Attorney in Trial Court: Leslie
L. Sun
Ambreen
Dharani
Elise
Manchester
ZWICKER
& ASSOCIATES, P.C.
Old
Town Square, 1 Chisholm Trail, Ste 301
Tel.:
(512) 218-0488
Fax:
(512) 218-0477
TABLE OF CONTENTS
Identity of Parties and Counsel. pdf p. 4
Index of Authorities. pdf p. 4
Statement of the Case. pdf p. 8
Issues Presented by this Case. pdf p. 8
Statement of Facts. pdf p. 8
Scope of Appellate Issues in the Amicus Brief. pdf p. 9
Summary of the Argument on the Merits. pdf p. 10
Summary Judgment Standard and Standard of Review on Appeal. pdf p. 11
Argument and Authorities. pdf p. 12
A.
To be viable,
a cause of action for breach of loan agreement
requires proof of the cost-of-credit terms. pdf p. 12
B.
Under Texas law, acceleration of maturity requires two notices. pdf p. 14
C.
There is no
notice of intent to acceleration here; nor is there a notice that acceleration
had been undertaken, or had otherwise occurred. pdf p. 15
D.
There is no
convincing rationale to draw a distinction
between secured and unsecured loans. pdf p. 16
E.
Discover Bank’s final account statement reflects non-acceleration
and a total amount due of only $3,064.45. pdf p. 19
Conclusion and Prayer. pdf p. 20
Certificates of Compliance with Length Limitations and Service. pdf p. 23
Amicus Curiae Statement, Copyright Notice, and Limited License. pdf p. 24
Appendix. pdf p. 25
Tab A: Summary Judgment signed on November 16, 2017 awarding Discovery
Bank $10,909.45 in damages “minus any payments received after filing this
litigation.”
Tab
B: Notice of Hearing without date in the
Certificate of Service
Tab
C: Discover Bank’s Motion for Summary Judgment (without exhibits)
Tab D: Untitled Affidavit of Janice Dorr, signed July 14, 2017 in Ohio
before Notary Franklin T. Akers (2 pages)
Tab E: Last Account Statement with March
15, 2016 closing date (p. 1 of 6)
INDEX OF AUTHORITIES
Cases
Am.
Express Travel Related Servs. v. Harris, 831 S.W.2d
531 (Tex. App.-Houston [14th Dist.] 1992, no writ) 17
APM
Enters., LLC v. Nat'l Loan Acquisitions Co., 357 S.W.3d
405 (Tex. App.-Texarkana 2012, no pet.)15
Brown
v. Hewitt, 143 S.W.2d 223 (Tex.Civ.App.—Galveston
1940, writ ref'd).
Browning
v. Prostok, 165 S.W.3d 336 (Tex. 2005) Barlow
v. Lane, 745 S.W.2d 451 (Tex. App.-Waco
1988, writ denied)
Eurecat
US, Inc. v. Marklund, No. 14-15-00418-CV, 2017 WL 2367545 (Tex.
App.-Houston [14th Dist.] May 31, 2017, no pet.)
Faulk v. Futch, 147 Tex.
253, S.W.2d 614 (1948)
Fitzpatrick
v. Leasecomm Corporation, No. 12-07-00487-CV (Tex.App. – Tylor,
2008, pet. denied)
Hiller v. Prosper Tex. Inc., 437
S.W.2d 412 (Tex.Civ. App.—Houston [1st] 1969, no writ)
Hussong v. Schwan's Sales Enterprises, Inc., 896
S.W.2d 320 (Tex.App.-Houston [1st Dist.]1995)
Intermedics, Inc. v. Grady,
683 S.W.2d 842 (Tex.App.-Houston
[1st Dist.] 1984, writ ref'd n.r.e.)
Jarvis v. Peltier,
400 S.W.3d 644 (Tex. App.-Tyler 2013, pet. denied)
Lee v. Emerson-Brantingham Implement Co., 222 S.W. 283 (Tex.
Civ. App.-Dallas 1920, no writ)
Nixon v. Mr. Prop. Mgmt. Co.,
690 S.W.2d 546 (Tex. 1985)
Ogden
v. Gibraltar Sav. Ass'n., 640 S.W.2d
232 (Tex. 1982)
Outdoor Sys., Inc. v. BBE, L.L.C., 105 S.W.3d 66 (Tex.App.-Eastland
2003, pet. denied)
Ortega-Carter
v. Am. Int'l Adjustment Co., 834 S.W.2d 439
(Tex. App.-Dallas 1992, writ denied)
Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640 (Tex. 1995)
Sloan
v. Douglass, 713 S.W.2d
436 (Tex. App.-Fort Worth 1986, writ ref'd n.r.e.)
Stephens
v. Dyck O’Neal, Inc., No. 01-10-00512-CV
(Tex.App.- Houston, Feb. 16, 2012, no pet.)
T.O.
Stanley Boot Co. v. Bank of El Paso,
847 S.W.2d 218 (Tex.1992)
Wande v. Pharia, No. 01-10-00481-CV,,
2011 WL 3820774 (Tex.
App.-Houston [1st Dist.] Aug. 25, 2011, no pet.)
Woodhaven
Partners, Ltd. v. Shamoun & Norman, LLP, 422
S.W.3d 821 (Tex. App.-Dallas 2014, no pet.)
Rules
Tex. R. Civ. P. 166a(c)
Other Authorities
Barbee, The
Lessor's Remedies for Nonpayment of Royalty, 45
Tex. L. Rev. 132, 161 (1966)
STATEMENT OF THE CASE
This is a debt collection case
wherein the creditor seeks to recover for breach of a written contract in the
form of an unsigned credit card agreement.
The Defendant/Appellant appeals a
summary judgment in the Bank’s favor in the amount of $10,909.45.
ISSUES PRESENTED BY THIS CASE: LEGAL SUFFICIENCY
Has Discover Bank established conclusively,
as required to warrant the entry of summary judgment and affirmance thereof on
appeal, that it sustained $10,909.45 in damages caused by breach of contractual
duties by Defendant ADAM SCHULDENBERGER?
STATEMENT OF FACTS
Discover Bank filed the underlying
collection suit on February 23, 2017, and asserted breach of written contract
as its sole theory of recovery. CR__.
In its petition, the Bank alleged
that “[t]he current balance due, owing and unpaid under the Agreement, after
allowing all just and lawful payments, credits and offsets, is $10,909.45.” CR __.
Defendant ADAM SCHULDENBERGER filed
a pro se answer on May 25, 2017, thereby precluding a no-answer default
judgment against him. CR__.
On September 12, 2017, the Bank
filed a motion for summary judgment with a certificate of service certifying
service on the Defendant on the same day by mail. CR __. Appendix,
Tab C.
On October 13, 2017 Discover Bank file a Notice of Oral Hearing for
a hearing on its summary judgment motion on November 16, 2017 at 10:30AM, with
a purported certificate of service attached that does not state any date of
service upon the Defendant. CR__.
Appendix, Tab B.
On November 16, 2017, the trial
court heard the Bank’s motion and signed an order granting it. CR__. The
summary judgment awards $10,909.45, the exact amount pleaded for in the Bank’s
petition. It characterizes this amount as “principal damages” but qualifies the
award to allow credit for any payments that may have been made during the
pendency of the lawsuit. Id., Appendix,
Tab A.
Defendant Schuldenberger contends
that he did not have proper notice of the summary judgment hearing. CR__.
Schuldenberger did not file a
post-judgment motion.
Schuldenberger timely filed his
pro-se notice of appeal on December 16, 2017. CR__.
SCOPE OF APPELLATE ISSUES IN THE AMICUS BRIEF
This
brief does not address Schuldenberger’s lack-of-notice (or insufficient notice)
argument, but instead focuses on whether the Bank’s summary judgment evidence
was sufficient under the summary judgment standard to require affirmance.
On
appeal, traditional summary judgments are reviewed under the same standard that
applies in the trial court. A legal sufficiency challenge does not require any
error preservation, wherefore waiver of evidentiary objections in the trial
court is not an issue in this appeal.
SUMMARY OF THE ARGUMENT ON THE MERITS
To
prove its breach-of-contract claim, Discover Bank relies on a particular
version of a generic card member agreement that applies to a sub-set of
customers (terms level “24J”), but it did not attach the separate pricing schedule
that contains the account-specific cost-of-credit terms, which the generic
cardmember agreement incorporates by reference. The contractual basis for the
specific account, and the parties’ agreement on credit terms, is therefore
insufficiently proven, and the summary judgment should be reversed and remanded
for failure to prove the first element of a viable breach-of-contact cause of
action. Because the absence of proof of an agreement on material credit terms
goes to liability, the case would have to be remanded in its entirety, without
a need to first examine the sufficiency of the proof on the remaining elements
on which Discover Bank had the burden of proof.
Alternatively,
the judgment is reversible as to damages irrespective of proof of contract
terms. The award of $10,909.45 in this case constitutes error because the Bank
has not established proper acceleration of the revolving balance on the
account. This failure consists of two components: (1) absence of any evidence
that the outstanding balance was accelerated in fact, and (2) absence of any
evidence that notice of intent to accelerate and opportunity to cure was
provided to the cardholder/defendant. The latter omission would defeat Discover
Bank’s bid for a summary judgment for the entire outstanding balance even if it
had accelerated maturity as a factual matter, and even if it had furnished
competent evidence of such acceleration-in-fact for summary judgment purposes.
Based
on the summary judgment record before the court in this case, Discover Bank can
at best substantiate a claim for $2,857.45 because that is the highest amount
actually shown as “past due” on any of the account statements attached to its
summary judgment affidavit of Janice Dorr. CR __. See Appendix, Tab D (Untitled
Affidavit); CR__. Tab E (Page 1 of March 15, 2016 Account Statement).
By
contrast, amounts not yet due (i.e. future installment payments) cannot form
the basis for a claim of breach because a breach must occur before a claim can
accrue, and the damages sought must have been caused by a breach to be
recoverable in a lawsuit.
Discover
Bank has shown that a minimum payment of $3,064.45 was due by April 14, 2016.
Assuming that no further payments were made, the summary judgment evidence at
best supports the contention that $3,064.45 was subject to breach by future
nonpayment, and that prior breaches of the obligation to make installment
payments had resulted in damages of no more than $2,857.45 because that is the
amount shown as “past due” on the last statement with closing date March 15,
2016. CR__. Appendix, Tab E.
In
the event the Court does not reverse the judgment based on Discover Bank’s
failure to prove the predicate contract, the Court should reform the judgment
to the largest amount shown as both due and not paid (i.e. the amount shown as “past-due”
on the last account statement) or offer Discover Bank an opportunity to accept
a commensurate remittitur in lieu of reversal and remand.
SUMMARY JUDGMENT STANDARD
AND STANDARD OF REVIEW ON APPEAL
This
is an appeal of a summary judgment in favor of a creditor.
To
obtain a traditional summary judgment, a party moving for summary judgment must
show that no genuine issue of material fact exists and that the party is
entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Randall's Food Mkts., Inc. v. Johnson,
891 S.W.2d 640, 644 (Tex. 1995); Nixon v.
Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985).
As
plaintiff and movant for summary judgment on its sole cause of action against
the Defendant, Discover Bank had the burden to show that he was entitled to
prevail on each and every element of his breach of contract claim. See Ortega-Carter v. Am. Int'l Adjustment Co.,
834 S.W.2d 439, 441 (Tex. App.-Dallas 1992, writ denied). The elements of a
breach of contract claim are (1) the existence of a valid contract; (2)
performance or tendered performance by the plaintiff; (3) breach of the
contract by the defendant; and (4) damages to the plaintiff resulting from that
breach. Woodhaven Partners, Ltd. v.
Shamoun & Norman, LLP, 422 S.W.3d 821, 837 (Tex. App.-Dallas 2014, no
pet.).
In
reviewing the grant of a summary judgment, the reviewing court must indulge
every reasonable inference and resolve any doubts in favor of the respondent. Johnson, 891 S.W.2d at 644; Nixon, 690 S.W.2d at 549.
ARGUMENT AND AUTHORITIES
A.
To be viable, a cause of action for breach of loan agreement
requires proof of the cost-of-credit terms
Discover
Bank has apparently not argued that the law of its home state governs its
claim. In the absence of a motion for judicial notice of another state’s law,
Texas law applies by default to a case filed in a Texas court.
Under
Texas law, collection of the amount due under a credit card agreement is
treated as a claim for breach of a written contract. Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212, 215-220 (Tex.App.-Texarkana 2005, no pet.). The essential elements in a suit for breach of contract are: (1) the existence of a valid contract; (2) that the plaintiff performed or tendered performance; (3) that the defendant breached the contract; and (4) that the plaintiff was damaged as a result of the breach. Hussong v. Schwan's Sales Enterprises, Inc., 896 S.W.2d 320, 326 (Tex.App.-Houston [1st Dist.] 1995). A credit card creditor has the burden at trial to establish the existence of the contract and compliance with its provisions. Preston State Bank v. Jordan, 692 S.W.2d 740, 743-744 (Tex.App.-Fort Worth 1985).
To
be enforceable, a contract must be sufficiently certain to enable a court to determine the rights and responsibilities of the parties. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex.1992). The material terms of a contract must be agreed upon before a court can enforce the contract, and the interest rate is a material term.
Here,
the relevant contract consists of two documents: (1) a document titled Cardmember Agreement that sets for the
general terms and conditions of the account, and (2) the account-specific Pricing Schedule, which sets forth the
interest rate and other cost terms that vary among cardholders and their accounts
reflecting differences in creditworthiness, usage patterns, and other
variables.
|
|
The
“Pricing Schedule” is incorporated into the Cardmember Agreement by reference
|
In
this case, the former is attached to Discover Bank’s summary judgment affidavit,
but not the latter. This failure is fatal because the cost-terms are essential
credit terms. See T.O. Stanley Boot,
847 S.W.2d at 221 (holding that the interest rate is a material term in the context
of contract to loan money). Ayersv. Target Nat'l Bank, No.
14-11-00574-CV, 2012 WL 3043043 (Tex. App.-Houston [14th Dist.] July
26, 2012, no pet.) (mem. op.) (reversing summary judgment for the creditor
where the creditor failed to present the cardholder agreement, a portion of the
form language on the application was illegible, and the form was in a language
other than English); Wande v. Pharia, No. 01-10-00481-CV, 2011 WL 3820774 (Tex. App.-Houston
[1st Dist.] Aug. 25, 2011, no pet.) (mem. op.) (reversing summary judgment for the
creditor where parts of the cardholder agreement were illegible, including a
section entitled "Finance Charges," and creditor presented no
evidence regarding the calculations it used to arrive at the outstanding
balance it claimed); Jaramillo v.
Portfolio Acquisitions, LLC, No. 14-08-00939-CV,
2010 WL 1197669 (Tex. App.-Houston [14th Dist.] March 30, 2010, no pet.) (mem.
op.) (holding evidence was insufficient to establish a valid contract where
cardmember agreement was admitted in evidence but many of the essential terms
of the contract were left out).
The
summary judgment should accordingly be reversed because Discover Bank has
failed to prove the parties’ agreement on essential credit terms that govern
the specific credit card account at issue in this case.
B.
Under Texas law, acceleration of maturity requires two notices
Where
the holder of a promissory note has the option to accelerate maturity of the
note upon the maker's default, equity demands that notice be given of the
intent to exercise the option. Brown v. Hewitt, 143 S.W.2d 223 (Tex.Civ.App.—Galveston 1940, writ
ref'd). Thus, in the absence of a waiver, the holder of a delinquent
installment note must present the note and demand payment of the past due
installments prior to exercising his right to accelerate. Allen Sales & Servicenter, Inc. v. Ryan, 525 S.W.2d 863 (Tex.
1975).
Acceleration
of a loan requires two separate notices: (1) clear notice of intent to exercise
acceleration rights followed by (2) a clear notice of actual acceleration. See APM Enters., LLC
v. Nat'l Loan Acquisitions Co.,
357 S.W.3d 405, 408-09 (Tex. App.-Texarkana 2012, no pet.). Notice that
the debt has been accelerated is ineffective unless preceded by proper notice
of intent to accelerate. Allen Sales& Servicenter, Inc. v. Ryan, 525 S.W.2d 863 (Tex. 1975).
Notice
of intent to accelerate is necessary in order to provide the debtor an
opportunity to cure his default prior to harsh consequences in the nature of
acceleration and foreclosure. Proper notice that the debt has been accelerated,
in the absence of a contrary agreement or waiver, cuts off the debtor's right
to cure his default and gives notice that the entire debt is due and payable. See Faulk v. Futch, 147 Tex. 253, 214
S.W.2d 614 (1948).
C.
There is no notice of intent to acceleration here; nor is there a
notice that acceleration had been undertaken, or had otherwise occurred
Discover
Bank attempts to prove its damages with the a series of account statements
attached to a summary judgment affidavit that does not itself contain any
specific testimony on default, acceleration, and damages. CR__.
The
last account statement reflects a “New Balance” amount of $10,909.45 and a
“Total Minimum Amount Due” of $3,064.45. It also states a due date for the
“Total Amount Due,” which is April 14, 2016. Clearly, the numerical data
reflects that the entire “New Balance” amount was not due, and that only a partial payment was required. See Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex.App.-Houston [1st Dist.] 1984, writ
ref'd n.r.e.) (stating that when recovery is sought on an obligation
payable in installments, the statute of limitations runs against each
installment from the time it becomes due).
|
|
Account Status Information on Last
Account Statement
(Bank’s PMSJ Exhibit A). Appendix, Tab E
|
D.
There is no convincing rationale to draw a distinction between
secured and unsecured loans
Most
of caselaw on the notice requirements regarding acceleration involves mortgage
loans or other contracts affecting real estate. See Ogden v. Gibraltar Sav. Ass'n, 640 S.W.2d 232, 233-34 (Tex.
1982) (holding that equity demands clear and unequivocal notice be given of a
party's intent to exercise such harsh consequences as acceleration or
foreclosure); see also Shumway v. Horizon
Credit Corp., 801 S.W.2d 890, 891-92 (Tex.1991) (holding harshness of
option of accelerating maturity of extended indebtedness requires both strict
reading of terms of option and notice to debtor, and notice of intent and
notice of acceleration must be clear and unambiguous); Outdoor Sys., Inc. v. BBE, L.L.C., 105 S.W.3d 66, 71 (Tex.App.-Eastland 2003, pet. denied) ("The cases in
this State hold that a landlord cannot forfeit the lease of his tenant for
failure to comply with the provisions without first making demand upon the
tenant for performance."); Barbee,
The Lessor's Remedies for Nonpayment of Royalty, 45 Tex. L. Rev. 132, 161
(1966) (stating terms of a claim for forfeiture of an oil and gas lease must be
clear and unambiguous and lessor is held to strict proof of compliance with
notice and demand requirements).
There is no convincing reason why
the same equitable and public policy concerns should not also govern other
forms of credit, including closed-end installment loans and open-end credit
agreements, such as credit cards and charge cards. This is so because judgments
obtained by creditors on unsecured consumer credit can be enforced against the
debtor’s earnings notwithstanding the long-standing constitutional protection
of wages from garnishment.
Under
Texas law, wages cease to be current and are no longer exempt immediately upon
their being paid to and received by the wage earner. Am. Express Travel Related Servs. v. Harris, 831 S.W.2d 531, 532-33 (Tex. App.-Houston [14th Dist.] 1992, no writ); Barlow
v. Lane, 745 S.W.2d 451, 453 (Tex. App.-Waco 1988, writ denied). The
exemption continues only until (1) the wages are due and in the possession of
the debtor, or (2) upon the debtor's demand, could be in his possession. Sloan v. Douglass, 713 S.W.2d 436, 440
(Tex. App.-Fort Worth 1986, writ ref'd n.r.e.). The exemption continues only
until such time when the employee can collect his wages in the exercise of due
diligence. Lee v. Emerson-Brantingham Implement Co., 222 S.W. 283, 284 (Tex. Civ. App.-Dallas 1920, no writ).
Texas
courts still adhere to the nation that the protection enjoyed by current wages
is lost once the wages are direct-deposited into a bank account, even though
this practice is nowadays ubiquitous and is the norm, rather than the
exception. In Fitzpatrick v. Leasecomm
Corporation, the court of appeals rejected the argument that “when her
paycheck was electronically deposited in her account, she had not ‘received’
it, because it was immediately trapped by the writ of garnishment and she had
had no opportunity to spend it on her daily living expenses.” No. 12-07-00487-CV 2008 WL 4225973, at *3 (Tex.App. – Tylor, 2008, pet. denied); also see Stephens v. Dyck O’Neal, Inc., No. 01-10-00512-CV (Tex.App.- Houston, Feb. 16, 2012, no pet.) (overruling contention that wages retained their exempt status on deposit into credit union account, and affirming judgment of garnishment).
The
state constitutional protection of wages has thus been effectively rendered
inoperative unless and until the State’s jurisprudence catches up with the new
realities of e-commerce and electronic payroll systems.
Based on existing precedents, a judgment
on unsecured consumer debt is thus as ominous as an impending foreclosure
because it may result in judgment-debtor being deprived of the means to meet
daily living expenses by having their entire bank account balance frozen and
seized by a writ of garnishment procured by a creditor. This practice may even
result in public assistance being tapped as a last resort, and would thus
undermine public policy and public fiscal interests for the private benefit of
unsecured creditors who had already priced the risk of default into the cost of
credit (i.e. interest rate) when they extended it, and thus mitigated their
risk exposure prospectively.
In any event, the comparison of the
mortgage loans and nonmortgage loans may already be moot. A Houston Court of
Appeals panel has recently held that the two notices are required to accelerate
an unsecured private student loan. See
Mock v. Nat'l Collegiate Student Loan Trust 2007-4, No. 01-17-00216-CV,
2018 WL 3352913 (Tex. App.-Houston [1st Dist.] July 10, 2018, no pet.) (mem.
op.). Because there was no evidence of a valid acceleration of maturity by the
creditor, the damages awarded in the trial court’s judgment were pared down on
appeal.
E.
Discover Bank’s final account statement reflects non-acceleration
and a total amount due of only $3,064.45.
In
this case, Discover Bank endeavored to prove the amount of damages that it
attributes to the Defendant’s breach with the March 15, 2016 account statement,
but this statement reflects that the total amount due was only $3,064.45,
which is much less than the amount awarded in the summary judgment ($10,909.45).
The statement reports the past-due portion of the amount due
as $2,857.45. CR__. Appendix, Tab E.
Based
on the billing cycle closing date on the face of the account statement, all
other amounts were not yet due. There is no affidavit testimony to add anything
further. Specifically, there is no affidavit testimony or documentary evidence on
whether additional payments were made or not made after the statement closing
date. The judgment itself expressly contemplates the possibility of additional
payments having been made between file date and entry. CR__. Tab A.
A
breach-of-contract plaintiff must prove, inter
alia, damages sustained as a result of the breach. Eurecat US, Inc. v. Marklund, No. 14-15-00418-CV, 2017 WL 2367545,
at *16 (Tex. App.-Houston [14th Dist.] May 31, 2017, no pet.) (reciting
elements). The existence and amount of damages resulting from the alleged
breach an essential element of a breach-of-contract claim. See Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P.,422
S.W.3d 821, 837 (Tex. App.-Dallas 2014, no pet.); Jarvis v. Peltier, 400 S.W.3d 644, 653 (Tex. App.-Tyler 2013, pet. denied).
Amounts
that have not yet accrued for payment cannot be subject to breach. The summary
judgment record in this case accordingly does not support the full amount of damages
awarded in Discover Bank’s favor by the trial court.
Indeed,
the last account statement upon which Discover Bank relies in its bid for a
final summary judgment effectively controverts the proposition that
acceleration had already occurred as of the closing date of the statement (March
15, 2016), and there is no competent extrinsic or additional evidence that
acceleration occurred after the statement closing date.
Nor
is there any indication, not to mention competent summary judgment evidence, that
proper notice was given to the account holder of such an action by the Bank.
Without valid acceleration, the Bank can at best be entitled to
breach-of-contract damages in the amount of $2,857.45 or $3,064.45 based on the
summary judgment proof proffered, assuming it is admissible for the truth of
what is set forth on it in the absence of evidentiary objections preserved for
appeal.
CONCLUSION AND PRAYER
Texas
courts of appeals have long held that “[t]he exercise of the power of
acceleration is a harsh remedy and deserves close scrutiny." Hiller v. Prosper Tex. Inc., 437 S.W.2d
412, 415 (Tex.Civ. App.—Houston [1st] 1969, no writ). It is well-settled that
effective acceleration of maturity under Texas law requires both a notice of
intent to accelerate and a notice of acceleration. Shumway v Horizon Credit Corp., 801
S.W.2d 890, 892 (Tex. 1991).
The
summary judgment evidence offered by Discover Bank in this case does not
contain the two required notices, and the Bank’s own evidence of the account
reflects non-acceleration. At best, the Bank’s final account statement supports
the proposition that $3,064.45 was subject to breach by nonpayment, and that
past failures to make required monthly installment payments caused a sum total
of $2,857.45 in damages because that is the amount that the Bank’s account-level
documentary evidence reports as “past due.”
There
are no subsequent account statements or other dated business records in the summary
judgment record offered in this case that would indicate that Discover Bank
resorted to the remedy of acceleration of maturity. There is no evidence on the
matter of whether the minimum amount due was paid by the due date, was paid in
part, or was not paid. If the account statements support a judgment for the
Bank, the amount of the judgment would have to be based on the past-due amount,
rather than the amount shown as due at a point in time after the March 15, 2016
statement closing date, i.e. prospectively, relative to the statement.
Critically,
there is no separate notice of acceleration of maturity in the record of this
case, not to mention a notice of intent to do so that would provide the
cardholder an opportunity to cure the delinquency and avoid being sued.
Because
the summary judgment record is devoid of evidence that Discover Bank properly
accelerated the revolving balance on the account by sending both notices
required by Texas decisional law, the Bank has failed to meet its summary
judgment burden with respect to the claimed outstanding balance that it sought
to collect in its entirety.
This
Court should accordingly either reform the judgment to $2,857.45 (which represents
the matured portion of the revolving
balance) or suggest a remittitur to accomplish the same, should the Court not
reverse the summary judgment and remand the case for re-trial in the court
below based on Discover Bank’s failure to prove the contractual basis for the
account, i.e. the parties’ agreement on interest rates and other
account-specific cost terms.
Respectfully submitted,
Date:
November _21_, 2018
/s/
__[Amicus
Signature]__
Amicus Name and Acad. Credential
Amicus Curiae for Appellant-Defendant
ADAM SCHULDENBERGER
Certificate of Compliance with Length Limitations
The
undersigned hereby certifies that this brief consists of a total of _5,292_ words,
as calculated by the word-count function of the Microsoft Word program.
The type face is Calibri (light), 14-point size for text and 12-point for
footnotes, proportionately spaced. The pdf-searchable documents in the merged Appendix
at Tabs A through E are not included in the word count. Cited cases not
published in the Southwestern Reporter are hot-linked to appellate docket
sheets and online opinions in pdf.
/s/ __[Amicus Signature]__
Amicus Name and Acad. Credential
Certificate of Service
All
parties to this appeal are being served with an electronic copy of this brief
through the Texas eFile system on Nov. 21, 2018, provided they are registered
users, or alternatively via email through the courtesy notification facility of
Texas eFile, or alternatively by U.S. mail, should electronic service fail.
/s/ __[Amicus Signature]__
Amicus Name and Acad. Credential
Amicus Curiae Statement
Copyright Notice and Limited License
The
author is a researcher and writer, and is currently working on a scholarly
article on private student loan origination, securitization and collection, along
with other writing projects on related topics concerning law and courts. No
payment was received for the preparation of this amicus curiae brief, none has
been promised, and none is expected from any party to this appeal. Tex. R. App.
P. 11. The author asserts and shall retain the copyright to the original content
of this brief. Re-publication beyond fair use by individuals or non-state
entities shall only be with the author’s permission. Permission is hereby
granted on a pro bono basis for the
Appellant to re-use and/or adopt any portion of this brief for his own use in
this appeal without warranties of any kind, provided Appellant remains unable
to afford or is otherwise unable to obtain legal representation by
Texas-licensed counsel to file a merits brief in this appeal on his behalf.
The
parties/attorneys are being served electronically through https://efile.txcourts.gov/ofsweb
contemporaneously with the e-filing of this amicus curiae brief on November 21,
2018.
/s/ __ [Amicus Signature]__
Amicus Name and Acad. Credentials
IN THE COURT OF APPEALS
FOR THE FIFTH DISTRICT
DALLAS, TEXAS
_________
ADAM SCHULDENBERGER,
Appellant
vs.
DISCOVER BANK,
Appellee.
_________
On Appeal from the County Civil
Court at Law No. 2
Dallas County, Texas
Hon. King Fifer
Trial Court Cause No.
CC-17-00971-B
_________
APPENDIX TO BRIEF IN SUPPORT OF APPELLANT
ADAM SCHULDENBERGER
_________
November 21, 2018
APPENDIX
TABLE
OF CONTENTS
Tab A: Summary Judgment signed on November 16, 2017 awarding Discovery
Bank $10,909.45 in damages “minus any payments received after filing this
litigation.”
Tab
B: Notice of Hearing without date of
service in the Certificate of Service
Tab
C: Discover Bank’s Motion for Summary Judgment (without exhibits)
Tab D: Untitled Affidavit of Janice Dorr, signed July 14, 2017 in Ohio
before Notary Franklin T. Akers (2 pages)
Tab E: Last Account Statement with March
15, 2016 closing date (p. 1 of 6)
NOTA BENE:
Pseudonyms in use. Visit the Dallas Court of Appeals to view original documents by clicking appellate cause number 05-17-01442-CV. Direct links to documents in pdf: ---> Appellate Brief in Discover Bank v. Cardholder (11/21/2018); Discover Bank's Motion to Reject the Amicus Brief submitted in Support of Pro Se Appellant (12/19/2018); Discover Bank's Motion to Dismiss Appeal based on Pro Se Appellants Failure to File TRAP-Compliant Brief (11/13/2018).
