Claim accrual for SOL purposes in a credit card collection case: Date of last payment?

Matkin v. American Express Centurion Bank, No. 05-17-01438-CV (Tex.App. - Dallas, Nov. 7, 2018, no pet.) (sent to publisher 1/3/2019) (holding that the accrual date of the bank's claim is the date of the cardholder's last payment, not the dates the charges were made) 

WAS A PORTION OF THE CREDIT CARD ACCOUNT BALANCE 

BARRED BY LIMITATIONS? 

In Matkin v. Amex, the Dallas Court of Appeals rejected the proposition that the application of the statute of limitations is governed by the date specific charges on the credit card were made, and that--based the dates the card was used and charges were incurred--part of the balance sought to be collected by the Bank was time-barred under the four-years statute of limitations that governs debt claims in Texas.

The statute of limitations on a claim for debt based on breach of contract is four years after the date the cause of action accrues. TEX. CIV. PRAC. & REM. CODE ANN. § 16.004; Dodeka, L.L.C. v. Campos, 377 S.W.3d 726, 730 (Tex. App.-San Antonio 2012, no pet.). A claim for breach of contract based on credit card debt accrues on the date the last payment on the account is made. See Dodeka, 377 S.W.3d at 731. The summary judgment evidence submitted by Matkin showed he made his last payment on the account in September 2015. The bank filed suit in June 2017 which was well within the four-year limitations period.

The Dallas Court was indisputably correct in rejecting the proposition that the instances of card use/extension of credit were the controlling events for limitations accrual purposes, but it nevertheless erred in holding that the Bank's claim accrued on the date of the last payment.

Here is why:

A breach-of-contract cause of action accrues when the contract is breached and the nonbreaching party may avail itself of a legal remedy for the breach. Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002) (statute of limitations for breach of contract is four years and breach of contract claim accrues when contract is breached). A party asserting a breach of contract claim must sue no later than four years after the day the claim accrues. Tex. Civ. Prac. & Rem.Code § 16.051. It is well-settled law that a breach of contract claim accrues when the contract is breached. See Smith v. Fairbanks, Morse & Co., 101 Tex. 24, 102 S.W. 908, 909 (1907).

Any and all credit card agreements provide for repayment of the revolving balance in monthly installments (or similar time period, given that the length of months vary). The due date and the minimum payment amount are shown on the billing statements and is computed based on a formula spelled out in the applicable cardmember agreement.

Leaving aside other forms of default, a credit card contract is breached when a required installment payment is not made at all, is not made in a timely fashion, or is not made in an amount equal to the required minimum payment amount. If a required monthly payment is merely made late, but in the amount shown as due on the prior billing statement, the Bank will normally charge a late fee, but will not have a viable claim for breach-of-contract damages because the delinquency would have been cured (unless the Bank were to sue solely for the purpose of obtaining a quick judgment on the full accelerated balance on the account). Additionally, the Bank would not normally cancel the account (terminate the contract) upon the occurrence of a single late payment, but will assess a late fee contemplated by the credit card agreement, thereby continuing to act under the contract even if it had the right to declare the account cancelled and the contract as terminated. Card issuers will typically continue to charge late fees and interest as long as they may avoid treating the account as nonperforming under the Fed's uniform chargeoff policy.

Regardless, the last timely payment by the cardholder in the required minimum payment amount constitute performance under the credit card agreement, not breach, and cannot therefore give rise to a claim for breach. Much rather, it would be the failure to make the next payment, i.e. the payment due after the last payment that would constitute the event of breach, which would normally be approximately a month later (although it may be more if the last payment was made before it was due).

Matkin v. American Express Centurion Bank,
No. 05-17-01438-CV (Tex.App. - Dallas, Nov. 7, 2018, no pet.) (

The difference in timing may not have been case-dispositive in this case, but it may be in others when the card issuer sues approximately four years after the last payment.

(This rarely happens these days. Amex typically sues within a year of default).

The Dallas Court got the accrual rule wrong, but this case now stands for the proposition that (the last act of) performance under the contract by the cardholder amounts to breach. Another example of nonsense established by judicial fiat.  -- > How creditor-friendly appellate justices hand down nonsense rulings, then cite them as legal authority.

But the irony here is that the use of the date of last installment payment that was actually made--as opposed to the date of the subsequent payment that was due and not made--could operate in the debtor's favor, rather than the creditor's. Not in this case, of course, but another one in the future where the creditor (or a debt buyer suing as assignee) did not bring the collection lawsuit against the debtor until a few years later.

Case Number: 05-17-01438-CV
Mike Matkin vs American Express Centurion Bank. 
http://search.txcourts.gov/Case.aspx?cn=05-17-01438-CV
Issue addressed: Claim accrual date for statute-of-limitations purposes in a credit card collection case

MIKE MATKIN, Appellant,
v.
AMERICAN EXPRESS CENTURION BANK, Appellee.

No. 05-17-01438-CV.

Court of Appeals of Texas, Fifth District, Dallas.

Opinion Filed November 7, 2018.   

Elise Manchester, Erin M. Mitchell, Laura L. Bedford, Leslie L. Sun, for American Express Centurion Bank, Appellee.

Joe Putnam, for Mike Matkin, Appellant.

On Appeal from the County Court at Law No. 2 Dallas County, Texas, Trial Court Cause No. CC-17-03442-B.

AFFIRMED.

Before Justices Bridges, Francis, and Lang-Miers.

MEMORANDUM OPINION

Opinion by Justice MOLLY FRANCIS.

Mike Matkin appeals a summary judgment rendered against him in this breach of contract suit brought by American Express Centurion Bank. Matkin contends the judgment was improper because the summary judgment evidence created an issue of fact as to whether some portion of the bank's claim was barred by the statute of limitations. Matkin additionally argues the evidence is insufficient to support the judgment because the bank failed to present an itemized statement of his account.

We affirm the trial court's judgment.

The bank filed this suit on June 27, 2017 seeking to recover $7,964.93 in unpaid credit card debt. Matkin filed a general denial and asserted the affirmative defense of limitations. In August, the bank moved for a traditional summary judgment. As supporting evidence for its claim, the bank submitted the affidavit of Vivian Hinds, an assistant custodian of records for American Express. Attached to the affidavit were a copy of Matkin's cardmember agreement and a statement showing the balance due on his account.

Hinds stated the account was closed after Matkin stopped making payments. Hinds further testified there was no record of Matkin asserting a valid, unresolved objection to the balance shown on the statement.

In response to the motion, Matkin argued that many of the charges on the account were made outside the limitations period and the bank had the burden to present evidence that its claim was not time barred. In support of his response, Matkin submitted the affidavit of his attorney which included a summary of his account showing he made payments until September 2015. The trial court granted the bank's motion for summary judgment and awarded the full amount claimed together with costs of the proceeding. 

Matkin brought this appeal.

In a single issue, Matkin asserts two overlapping arguments. He contends (1) the summary judgment was improper because the bank failed to present evidence of when the individual charges on the account were made and (2) there is a question of fact regarding whether recovery on some of those charges was barred by limitations. We apply well known standards in our review of a traditional summary judgment. See Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). The movant has the burden to demonstrate that no genuine issue of material fact exists as to the essential elements of his claim and he is entitled to judgment as a matter of law. Id. at 548-49. If the party opposing the motion relies on an affirmative defense to avoid summary judgment, that party has the burden to present evidence sufficient to raise a fact issue on each element of the defense. See Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984).

Merely raising an affirmative defense will not, by itself, defeat a motion for summary judgment. See Nicholson v. Mem'l Hosp. Sys., 722 S.W.2d 746, 749 (Tex. App.-Houston [14th Dist.] 1986, writ ref'd n.r.e.). A plaintiff is under no initial obligation to negate affirmative defenses when moving for summary judgment and the mere pleading of an affirmative defense will not prevent summary judgment in favor of a plaintiff who establishes an absence of fact issues on his claim for relief. See Holmes v. First Gibralter Bank, FSB, No. 05-93-01632-CV, 1994 WL 370078, at *2 (Tex. App.-Dallas July 7, 1994, no writ) (not designated for publication). In this case, Matkin had the burden to present evidence sufficient to raise a fact issue on his limitations defense to defeat the bank's motion. See Nicholson, 722 S.W.2d at 749; Holmes, 1994 WL 370078, at *2.

The statute of limitations on a claim for debt based on breach of contract is four years after the date the cause of action accrues. TEX. CIV. PRAC. & REM. CODE ANN. § 16.004; Dodeka, L.L.C. v. Campos, 377 S.W.3d 726, 730 (Tex. App.-San Antonio 2012, no pet.). A claim for breach of contract based on credit card debt accrues on the date the last payment on the account is made. See Dodeka, 377 S.W.3d at 731. The summary judgment evidence submitted by Matkin showed he made his last payment on the account in September 2015. The bank filed suit in June 2017 which was well within the four-year limitations period.

Matkin's argument that the judgment is not supported by sufficient evidence is based on his assertion the bank had the burden to submit an itemized statement to show when the individual charges on the account were made to determine when the limitations period on each charge began. As discussed above, however, the accrual date of the bank's claim is the date of Matkin's last payment, not the dates the charges were made. See Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 234 (Tex. App.-Houston [1st Dist.] 2008, no pet.). The bank had no burden to negate Matkin's limitations defense unless he came forward with evidence to create a fact issue on each element of that defense. See Nicholson, 722 S.W.2d at 749. 

Matkin's own evidence showed the bank's suit was brought timely. The account statement submitted by the bank showing the balance owed was sufficient evidence of the amount of the debt, and an itemized statement was not required. See Ghia v. Am. Express Travel Related Servs.,No. 14-06-00653-CV, 2007 WL 2990295, at *3 (Tex. App.-Houston [14th Dist.] Oct. 11, 2007, no pet.) (mem. op.). 

We resolve Matkin's sole issue against him.

We affirm the trial court's judgment.

JUDGMENT

In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.

It is ORDERED that appellee AMERICAN EXPRESS CENTURION BANK recover its costs of this appeal from appellant MIKE MATKIN.