Consumer Debt Litigation (mostly Texas): Sample Appellate Briefs (Texas)

Sample Appellate Briefs (Texas)

Examples of Appellant's Opening Brief in (1) Appeal from summary judgment in Wells Fargo credit card debt suit; (2) Appeal of summary judgment granted in favor of Discover Bank in credit card suit; (3) Appeal from default judgment in favor of National Collegiate Student Loan Trust [coming soon]. Briefs based on PROBONOPROSE [beta] template. Standard variable data-fields for populating template with case-specific facts are shown in color or as blank lines.

Note that procedural background facts and quantity and characteristics of summary judgment evidence may vary from case to case. Also see -- > Caveats and common mistakes in pro se appeals.

No. ____________

IN THE COURT OF APPEALS

FOR THE SIXTEENTH DISTRICT

WEIMAR, TEXAS

_________

Elsbeth Unmut,

Appellant

vs.

WELLS FARGO BANK, N.A.,

Appellee.

_________

On Appeal from

Trial Court: 512^TH District Court, Schiller County, Texas

Trial Court Cause No: 2013-DC-1307

_________

BRIEF OF APPELLANT

ELSBETH UNMUT

_________

December _ _, 2018

Identity of Parties and Counsel

Appellant / Defendant below: Elsbeth Unmut

Address of Appellant: 1307 Hohle Gasse

New Immensee, TX 79079

Email Address: __________ @ ________

Tel. No: ( ) ____ ________

Appellee / Plaintiff below: WELLS FARGO BANK, N.A.

Lead Attorney on Appeal: Edgar Quijada Mendez

Attorneys in Trial Court: Mark A. Rechner

Whitney Abbott

Thomas M. Sellers

Edgar Quijada

VINCENT SERAFINO GEARY

WADDELL JENEVEIN, P.C.

1601 Elm Street, Suite 4100

Dallas, Texas 75201

TABLE OF CONTENTS

Identity of Parties and Counsel

Table of Contents

Index of Authorities

Statement of the Case

Issues Presented of Appeal: Legal Sufficiency

1. Does the summary judgment evidence support a judgment

for $7,214.43 in breach-of-contract damages?

2. Did the creditor comply with the notice requirements

for acceleration of maturity under Texas law?

Statement of Facts

A. Procedural Background

B. Wells Fargo’s Summary Judgment Evidence

Scope of Appellate Issues in this Brief

Summary of the Argument on the Merits

Summary Judgment Standard and Elements of Proof

Argument and Authorities

A. To be viable, a cause of action for breach of loan agreement

requires proof of the cost-of-credit terms

B. Under Texas law, acceleration of maturity requires two notices

C. There is no notice of intent to accelerate here; nor is there any

evidence that notice of acceleration was given to the defendant

D. There is no convincing rationale to draw a distinction

between secured and unsecured loans

E. Wells Fargo’s last account statement reflects non-acceleration

and a total amount due of only $1,346.00

F. The two nonconsecutive account statements would be insufficient to
prove the alleged debt for reasons unrelated to acceleration

Conclusion and Prayer

Certificates of Compliance with Length Limitations and Service

Appendix

Tab A: Final Summary Judgment signed on August, 7, 201
awarding Wells Fargo Bank $7,214.43 in damages.

Tab B: WELLS FARGO BANK, N.A.’s Motion for Summary Judgment

Tab C: Affidavit of Plaintiff, signed by Jarrad M. Emanian on June 7, 2018 in Iowa
before Notary Lance D Becker (3 pages)
Tab D: Last Account Statement dated February 15, 2016 (closing date)

Tab E: Additional Account Statement dated October 16, 2015 (closing date)
Tab F: Credit Card Agreement titled
CONSUMER CREDIT CARD CUSTOMER AGREEMENT & DISCLOSURE STATEMENT

Version Code: M-112110 / LS 8767 (shown at the bottom of Page 12)

Index of Authorities

Cases

Allen Sales & Servicenter, Inc. v. Ryan, 525 S.W.2d 863 (Tex. 1975)..…………….19, 20

Am. Express Travel Related Servs. v. Harris,

831 S.W.2d 531 (Tex. App.-Houston [14th Dist.] 1992, no writ) ………….……23

Amedisys, Inc. v. Kingwood Home Health Care, LLC,

437 S.W.3d 507, 512 (Tex. 2014)……………………………………………………………….12

APM Enters., LLC v. Nat'l Loan Acquisitions Co.,

357 S.W.3d 405 (Tex. App.-Texarkana 2012, no pet.)………………………………..19

Ayers v. Target Nat'l Bank, No. 14-11-00574-CV, 2012 WL 3043043

(Tex. App.-Houston [14th Dist.] July 26, 2012, no pet.) (mem. op.)……….…..18

Brownlee v. Brownlee, 665 S.W.2d 111 (Tex. 1984) …………………………………………....20

Brown v. Hewitt, 143 S.W.2d 223 (Tex.Civ.App.—Galveston 1940, writ ref'd)……..19

Barlow v. Lane, 745 S.W.2d 451 (Tex. App.-Waco 1988, writ denied)………………....23

City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671 (Tex. 1979)………………12

Eurecat US, Inc. v. Marklund, No. 14-15-00418-CV, 2017 WL 2367545

(Tex. App.-Houston [14th Dist.] May 31, 2017, no pet.) ……………………………25

Faulk v. Futch, 147 Tex. 253, S.W.2d 614 (1948) …………………………………………... …..19

Fitzpatrick v. Leasecomm Corporation,

No. 12-07-00487-CV (Tex.App. – Tylor, 2008, pet. denied) …………………. …..24

Hiller v. Prosper Tex. Inc.,

437 S.W.2d 412 (Tex.Civ. App.—Houston [1st] 1969, no writ) ………………….30

Hooper v. Generations Cmty. Fed. Credit Union, No. 04-12-00080-CV,

2013 WL 2645111 (Tex. App.-San Antonio June 12, 2013, no pet.)……………29

Hussong v. Schwan's Sales Enterprises, Inc.,

896 S.W.2d 320 (Tex.App.-Houston [1^st Dist.] 1995)………………………………….17

Jaramillo v. Portfolio Acquisitions, LLC, No. 14-08-00938-CV, 2010 WL 1197669

(Tex. App.-Houston [14th Dist.] March 30, 2010, no pet.) (mem. op.)……….18

Jarvis v. Peltier, 400 S.W.3d 644 (Tex. App.-Tyler 2013, pet. denied)……………………25

Jordan v. Geigy Pharms., 848 S.W.2d 176 (Tex. App.-Fort Worth 1992, no writ)…...21

Keever v. Hall & Northway Advertising, Inc.,

727 S.W.2d 704 (Tex. App.—Dallas 1987, no writ)……………………………………….21

Lee v. Emerson-Brantingham Implement Co., 222 S.W. 283

(Tex. Civ. App.-Dallas 1920, no writ)…………………………………………………………….23

McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337 (Tex. 1993)…………………..12

Merriman v. XTO Energy, Inc., 407 S.W.3d 244 (Tex. 2013)……………………………………12

Mockv. Nat'l Collegiate Student Loan Tr. 2007-4,

No. 01-17-00216-CV, 2018 WL 3352913

(Tex. App.-Houston [1st Dist.] July 10, 2018, no pet.) (mem. op.) ……………..24

Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985)……………………………15, 16

Ogden v. Gibraltar Sav. Ass'n., 640 S.W.2d 232 (Tex. 1982)……………………………22, 26

Ogletree v. Crates, 363 S.W.2d 431, 435 (Tex. 1963)……………………………………………16

Outdoor Sys., Inc. v. BBE, L.L.C., 105 S.W.3d 66

(Tex.App.-Eastland 2003, pet. denied) ………………………………………………………21

Ortega-Carter v. Am. Int'l Adjustment Co.,

834 S.W.2d 439 (Tex. App.-Dallas 1992, writ denied)…………………………………16

Ramirez v. Transcon. Ins. Co.,

881 S.W.2d 818 (Tex.App.-Houston [14th Dist.] 1994, writ denied)……………20

Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640 (Tex. 1995)……………………….15

Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217 (Tex. 1999).……………………………………12

Preston State Bank v. Jordan, 692 S.W.2d 740 (Tex.App.-Fort Worth 1985)……17, 28

Shumway v. Horizon Credit Corp., 801 S.W.2d 890 (Tex. 1991)………………… 22, 26, 30

Sloan v. Douglass,

713 S.W.2d 436 (Tex. App.-Fort Worth 1986, writ ref'd n.r.e.) ………….………23

T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218 (Tex.1992) ……….………..17

Tullyv. Citibank (South Dakota), N.A.,

173 S.W.3d 212 (Tex.App.-Texarkana 2005, no pet. )……………………………16, 29

Wande v. Pharia, No. 01-10-00481-CV, 2011 WL 3820774

(Tex. App.-Houston [1st Dist.] Aug. 25, 2011, no pet.) …………………………18, 30

Woodhaven Partners, Ltd. v. Shamoun & Norman, LLP,

422 S.W.3d 821 (Tex. App.-Dallas 2014, no pet.)………………………………….16, 25

Rules

Tex. R. Civ. P. 166a(c).....…………………………………………………………………………………12, 15

Other Authorities

Acceleration, Black's Law Dictionary (10th ed. 2014) …………………………………………..11

Statement of the Case

This is a debt collection case wherein the creditor obtained a summary judgment for breach of a written contract in the form of an unsigned credit card agreement. The Defendant/Appellant appeals the summary judgment in the creditor’s favor in the amount of $7,214.43.

Issues Presented on Appeal: Legal Sufficiency

1. Has WELLS FARGO BANK, N.A. established conclusively, as required to warrant the entry of summary judgment and affirmance thereof on appeal, that it sustained $7,214.43 in damages caused by breach of contractual duties by Defendant Elsbeth Unmut?

2. Did the Bank comply with the notice requirements for acceleration of maturity under Texas law?

Statement of Facts

A. Procedural Background

Wells Fargo Bank, N.A. (“Wells Fargo” of “the Bank”) brought suit in Galveston County to collect a credit card debt. In its Original Petition, Wells Fargo alleged that “[a]s the result of Defendant’s default, there is now due, owing and unpaid from Defendant to Plaintiff the amount of $7,214.43.” CR 5.[1]

Wells Fargo also pleaded an alternative theory for the same debt claim and requested an award for attorney’s fees under section 38 of the Texas Civil Practice and Remedies Code. CR 6.[2]

Defendant Elsbeth Unmut filed a pro se answer on June 12, 2018, thereby precluding entry of a no-answer default judgment. CR 11.

On June 29, 2018, Wells Fargo filed a motion for summary judgment with a certificate of service certifying service on the Defendant on the same day by mail.[3] CR 15. The motion seeks judgment on the breach-of-contract cause of action, but not on the account stated theory, which the Bank had pleaded in the alternative.

On July 11, 2018 WELLS FARGO BANK, N.A. filed a Notice of Hearing by Submission on its Motion for Summary Judgment and set it for August 3, 2018, 4:00 PM. CR 47.[4]

On August 7, 2018, the trial court considered the Bank’s motion and signed an order granting it. CR 49. The summary judgment awards $7,214.43, the exact amount pleaded for in the Bank’s petition.

Defendant Unmut filed a post-judgment motion on August 24, 2018, thereby extending the appellate timetable. CR 53. She complains that she was sued twice on the same debt and contends that she did not have proper notice of the summary judgment hearing.

Unmut timely filed her pro-se notice of appeal by hand-delivery to the clerk on September 5, 2018. CR 56.

B. Wells Fargo’s Summary Judgment Evidence

Wells Fargo moved for summary judgment with two exhibits: Exhibit 1 consists of an untitled affidavit signed by a “Loan Adjuster” plus three exhibits marked A, B, and C, which are referenced within the affidavit. Exhibit 2 is an attorney fee affidavit signed by the Bank’s counsel. The complete summary judgment submission comprises 32 pages. CR 15-46.

As for the substantive import of the documentary evidence, one exhibit is offered to prove the contract (“Agreement”) while the two remaining exhibits are offered to support the remaining elements of a cause of action for breach of contract.

Exhibit A purports to prove the terms governing the account. The affiant identifies the account as a CORE PLATINUM account and avers disjunctively that the terms were accepted “by either signing the agreement or using the account.” Affidavit, ¶4. The customer agreement does not contain the Defendant’s name and is not signed by her.

Exhibit B is a billing statement that reports account status data as of billing cycle closing date October 16, 2015. The financial information shown on it contains a credit for a payment, which is also referenced with particularity (by date and amount) in paragraph 5 of the Affidavit. This billing statement does not include any evidence of charges having being made during the preceding billing cycle (excepting finance charges assessed by the Bank). This billing statement reports the account’s status as past-due.

Exhibit C is the final account statement with closing date February 15, 2016. It reports the “New Balance” as $7,214.43, a “Minimum Payment” amount of $1,346.00, a “Total Amount Due” of $1,560.43, and indicates that the Total Amount Due is to be paid by March 11, 2016. The identical payment-due information also appears on the payment coupon to be detached from the statement and mailed to WELLS FARGO CARD SERVICES at a post office box in Los Angeles, California.

Like the October 16, 2015 billing statement marked Exhibit B, the February 15, 2016 statement indicates that the account is past due, but does not threaten acceleration.[5]

Payment Coupon portion of last account statement with February 15, 2016 closing date

The Affidavit of Jarrad M. Emanian states that the information contained within it “is taken from Wells Fargo’s business records” (¶3) and discusses the exhibits. It specifically references and identifies Exhibit A as the Agreement that governs the account (¶4); references Exhibit B as evidence of the last payment (¶5), and asserts that the sum matching the “New Balance” on the last statement marked Exhibit C is “due and owing” (¶7) because “the balance has been accelerated.” (¶7). Exhibit C does report the account as past-due, but shows that a total minimum payment of $1,560.43 was required, rather than payment of the statement ending balance in the amount of $7,214.43. There is no other evidence in the summary judgment record addressing acceleration of maturity, or showing that payment of the statement balance was required or demanded, as alleged in Wells Fargo’s pleading and motion for summary judgment. These contentions are accordingly unsupported and therefore unproven.

Scope of Appellate Issues in this Brief

Because the Defendant did not preserve evidentiary objections for appeal, this brief focuses exclusively on whether the Bank’s summary judgment evidence was sufficient under the summary judgment standard.

On appeal, traditional summary judgments are reviewed de novo under the same standard that applies in the trial court.[6] A legal sufficiency challenge does not require any error preservation, wherefore waiver in the trial court is not an issue in this appeal.[7] To be entitled to summary judgment in the first instance, and to be entitled to having it affirmed on appeal, Wells Fargo must have met the summary judgment standard on each essential element of its cause of action regardless of whether a response to its motion was filed or not.[8]

Summary of the Argument on the Merits

To prove its breach-of-contract claim, WELLS FARGO BANK, N.A. relies on a particular version of a generic card member agreement that applies to a sub-set of customers (identified as M-112110 / LS 8767), but it did not attach the separate “Important Terms” document, which contains the account-specific cost-of-credit terms, which is mandated by the Truth in Lending Act, and is incorporated by reference.

Because the Important Terms document is absent from the summary judgment record, the contractual basis for the account at issue in this lawsuit, and the parties’ agreement on credit terms, is insufficiently proven. The summary judgment should be reversed, and the case remanded to the trial court, because the Bank has failed to prove the first element of a viable breach of contact cause of action: mutual assent to the contract and its terms.

Even if the Important Terms had not been omitted from Exhibit A, however, there would still be insufficient evidence of a mutual agreement on the terms in the summary judgment record provided in this case. This deficiency is due to Wells Fargo’s failure to produce any billing statement that actually reflects that the credit card linked to the account was used to make purchases or obtain cash advances. Wells Fargo needed to adduce this type of evidence as a substitute for establishing offer and acceptance for contract-formation purposes in the absence of a signed/executed contract.

The absence of proof of an agreement on material credit terms goes to liability. Therefore, the case must be remanded in its entirety without a need to first examine the sufficiency of the proof on the remaining elements on which Wells Fargo has the burden of proof also.

Alternatively, the judgment is reversible as to damages irrespective of proof of contract terms for two separate and distinct reasons:

First, the award of $7,214.43 in this case constitutes error because the Bank moved for summary judgment with just two non-consecutive billing statements, which do not suffice to demonstrate how the revolving balance was arrived at.

Second, there is a failure to show proper acceleration of the revolving balance on the account. This failure consists of two components, both of which are dispositive independently: (1) absence of any documentary evidence that the outstanding balance was accelerated to support the affiant’s unsupported and conclusory testimony to that effect, and (2) absence of any evidence that notice of intent to accelerate and opportunity to cure was provided to the cardholder/defendant as alleged in the Bank’s pleadings. Pleading are not evidence and cannot fill voids in the movant’s proof.

The latter omission would defeat Wells Fargo’s bid for a summary judgment for the entire outstanding balance even if the bank had accelerated maturity as a factual matter prior to bringing the lawsuit, 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, Wells Fargo can at best substantiate a claim for $1,113.00 because that is the highest amount actually shown as “past due” on any account statement attached to its summary judgment affidavit.

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. As noted, there was no proper acceleration in adherence with the applicable notice requirements under Texas law.

At best, Wells Fargo has shown that a total minimum payment of $1,560.43 was due by March 11, 2016. The judgment can only be based on the evidence properly before the trial court when judgment was granted. Exhibit C is the most recent statement in the record. At best it would support the contention that $1,560.43 was subject to breach by future nonpayment, and that prior breaches of the obligation to make payments had resulted in a total amount of damages of no more than $1,113.00 because that is the amount shown as “past due” on the last statement with closing date February 15, 2016.

In the event the Court does not reverse the judgment based on Wells Fargo’s failure to prove the predicate contract and a mutual agreement to its terms, the Court should reform the judgment to the largest amount shown as both due and not paid (i.e. the amount quoted as “past-due” on the last account statement) or offer WELLS FARGO BANK, N.A. an opportunity to accept a commensurate remittitur in lieu of reversal and remand of the judgment rendered by the trial court.

Summary Judgment Standard and Elements of Proof

This is an appeal of a summary judgment in the Plaintiff’s favor.

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 as movant for summary judgment on its cause of action against the Defendant, WELLS FARGO BANK, N.A. had the burden to show that it 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

Wells Fargo did not argue 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.[9]

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 Customer Agreement that sets for the general terms and conditions of the account, and (2) the account-specific Important Terms document, 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 Customer Agreement incorporates

“the Important Terms of Your Credit Card Account” by reference

In this case, the former is attached to Wells Fargo’s summary judgment affidavit as Exhibit A, 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). Ayers v. Target Nat'l Bank, No. 14-11-00574-CV, 2012 WL 3043043, at **2-4 (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 credit-card application was illegible, and the form language was in Spanish); Wande v. Pharia, No. 01-10-00481-CV, 2011 WL 3820774, at *5 (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. 14-08-00938-CV, 2010 WL 1197669, at **5-6 (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 its material terms were missing.").

The summary judgment should accordingly be reversed because WELLS FARGO BANK, N.A. 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 accelerate here; nor is there any evidence that notice of acceleration was given to the Defendant.

Wells Fargo attempts to prove its pleaded-for damages with a final account statements attached to a summary judgment affidavit as Exhibit C. The testimony in the affidavit makes express reference to this account statement as the source of the attested-to facts and must therefore be consistent with the testimony. But it does not square with it on a key fact: Acceleration of maturity and amount due.

The last account statement reflects a “New Balance” amount of $7,214.43 and a “Total Minimum Amount Due” of $1,560.43. It also states a due date for the “Total Amount Due”, that being March 11, 2016. Clearly, the numerical data reflects that the entire “New Balance” amount was not due, and that only a partial payment was required, albeit a larger one than merely the minimum amortization amount computed for the current billing cycle.

Generally, absent an effective acceleration of the note, a payee who sues based on a debtor's failure to make a required payment under an installment note is entitled to recover only the past due payments. See Williamson v. Dunlap, 693 S.W.2d 373, 374 (Tex. 1985) (per curiam) (citing Allen Sales & Servicenter, Inc. v. Ryan, 525 S.W.2d 863, 866 (Tex. 1975)).

The Bank’s summary judgment affiant avers that the maturity of the outstanding balance was accelerated (Affidavit, p. 2, ¶7), but there is no documentary support for this assertion. The averment that the revolving balance was due and owing is nothing more than a legal conclusion. See Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984) ("By stating that his contractual obligation had been modified, Michael asserted nothing more than a legal conclusion."). This type of defect in a summary judgment affidavit is considered so grave that it does not even require an evidentiary complaint in the trial court. See Ramirez v. Transcon. Ins. Co., 881 S.W.2d 818, 829 (Tex.App.-Houston [14th Dist.] 1994, writ denied) (holding that an objection that the summary judgment evidence states a legal conclusion is a defect of substance that may be raised for the first time on appeal).

Additionally, the conclusory testimony about the entire balance being due violates the summary judgment rule, which permits testimony by affidavit (which would otherwise be hearsay) only on the condition that the documents relied upon to support the testimony be attached to the affidavit. Tex. R. Civ. P. 166a(f). Here, there is no written notice of acceleration and the final account statement attached as Exhibit C clearly shows that the entire revolving balance was not due because it shows a smaller amount as due. The same is true of Exhibit B.

No other document supports the affiant’s averments to the contrary. The affiant’s testimony is not only unsupported; it is contrary to the Bank’s own best financial evidence of the account on which it sues. Further, if the unsupported testimony were accorded evidentiary weight despite its conclusory character, it would merely create a fact issue because the affiant’s assertion that the full amount is “due and owing” expressly references Exhibit C as supporting this assertion; something it does not do. Much rather, Exhibit C negates the assertion that the amount shown as owing (i.e., the New Balance) is also due for payment in full. Instead, it shows the Total Amount Due as $1,560.43. The conflict between testimony and Exhibit C would itself create fact and credibility issues precluding summary judgment.[10]

The award of summary judgment for $7,214.43 in contract damages for failure to make payments as agreed was accordingly in error and should be reversed.

Account Status Information on the Last Account Statement

(Bank’s MSJ Exhibit C)

D. There is no convincing rationale to draw a distinction between secured and unsecured loans

Much of the caselaw on the notice requirements regarding acceleration of maturity 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 Tyler 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 (Tex.App. – Tyler, 2008). 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 judgment creditor. This practice may even result in public assistance being tapped as a last resort, and would thus undermine public policy and 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 had thus mitigated their risk exposure prospectively.

In any event, the comparison of the mortgage loans and nonmortgage loans is by now probably moot. The First Court of Appeals recently held that the two notices are required to accelerate an unsecured private student loan. See Mock v. Nat'l Collegiate Student Loan Tr. 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. Wells Fargo’s final account statement reflects non-acceleration and a total amount due of only $1,560.43.

The Bank’s best evidence of the status of the credit card account at issue in this lawsuit comes in the form of copies of periodic account statements. The final such statement, with a February 15, 2016 closing date, reflects a total amount due of only $1,560.43, which is much less than the amount awarded in the summary judgment ($7,214.43). The statement reports the past-due portion of the amount due as $1,113.00. Based on the Bank’s own evidence, all other amounts were not yet due except for an over-limit charge. There are no other business records that add anything further. Specifically, there is no documentary evidence to support the affiant’s claim that the account balance was accelerated, and that payment in full was required. Nor is there any mention of proper notice having been given to the cardholder prior to acceleration.

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 Wells Fargo’s favor by the trial court.

Indeed, the last account statement upon which Wells Fargo 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 (February 15, 2016), and there is no competent extrinsic or additional evidence that acceleration occurred after the statement closing date. The affiant expressly references and relies on an exhibit that does not support his testimony, which is therefore unsupported and conclusory. Conclusory testimony is not competent summary judgment evidence.

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. This evidentiary void cannot be filled with mere allegations in pleadings because pleadings are not evidence.

Acceleration is a harsh remedy with draconian consequences for the debtor and Texas courts look with disfavor upon the exercise of this power because great inequity may result. See e.g., Davis v. Pletcher, 727 S.W.2d 29, 35 (Tex.App.—San Antonio 1987, writ ref'd n.r.e.) (exercise of the power of acceleration is a harsh remedy and deserves close scrutiny). When a creditor has the option to accelerate a debt upon the debtor's default, equity demands notice be given of the intent to exercise the option. Ogden v. Gibraltar Sav. Assoc., 640 S.W.2d 232, 233 (Tex. 1982); see also Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 895 (Mauzy, J., concurring) (Tex. 1991) (noting that Supreme Court has long recognized the harshness of the remedy of acceleration and has sought to mitigate its effects by imposing equitable requirements on the holder of a promissory note).

Without a valid acceleration of maturity, Wells Fargo can at best be entitled to breach-of-contract damages in the amount of $1,113.00 or $1,346.00 based on the summary judgment proof before the court, assuming, of course, that it is admissible for the truth of what is set forth on it in the absence of evidentiary objections that have properly been preserved for appeal.

F. The two nonconsecutive billing statements would be insufficient to prove the alleged debt for reasons unrelated to acceleration

Wells Fargo’s suit is not a suit to enforce a promissory note stating a face amount as evidence of the obligation. Nor is it a suit based on an integrated loan agreement that within its four corners contains all of the material terms.

Not only does the generic Customer Agreement attached as Exhibit A lack any information on cost terms; it does not show the amount of credit available, nor does it give any clue as to the amount of credit to be extended, and the amount actually extended. All such information must therefore come from other documents extrinsic to Exhibit A. In this lawsuit, Wells Fargo offers only two other documents concerning account activity: a billing statement dated October 16, 2015 and a final billing statement dated February 15, 2016.

As shown in a preceding section, the final statement does not support the amount for which the trial court granted summary judgment. But this is not the only shortcoming with respect to the essential element of the Bank’s claim, and the problem goes beyond the issue of quantifying the amount that was due and not paid.

The crux of the matter is that neither one of the two billing statements marked as Exhibit B and Exhibit C reflects that Wells Fargo actually performed its part under the alleged account agreement,[11] because neither statement contains any evidence that purchases were made on the credit account for which Wells Fargo paid merchants.[12] Nor is there any evidence of transactions in the form of cash advances or convenience checks drawn on the credit account.

The “New Balance” amount on the final billing statement is $7,214.43. Even when considered together, the two statement reveal very little about the origin or derivation of that amount. A large share of it -- a total of $6,636.78 -- consists of the previous balance shown as carried forward from a prior billing cycle on the October 16, 2015 Statement. The $6,636.78 dollar figure is conclusory because no additional details are provided to shed light on how it was calculated.

The only additional information that may be gleaned from the scant account-level documentation in this case are the year-to-date figures for accrued interest and account fees, which were presumably added to the revolving balance. The remainder of the balance carried forward is unaccounted for and not supported by any evidence.

The bottom line here is that Wells Fargo failed to make a sufficient showing that it advanced funds by paying merchants for credit card charges incurred by the cardholder, or that it made cash advances directly to the cardholder. This failure in the evidence goes to the performance element of the Bank’s breach-of-contract claim, which is likewise a critical component of its burden of proof. See Hooper v. Generations Cmty. Fed. Credit Union, No. 04-12-00080-CV, 2013 WL 2645111, at *3 (Tex. App.-San Antonio June 12, 2013, no pet.) (mem. op.) (reversing judgment in favor credit union, which had focused on the first element, upon concluding that there was no evidence to support the third element of its of contract claim).

Additionally, because Wells Fargo has failed to adduce any competent evidence that it made cash advances or reimbursed third parties for charges to the account incurred by the account holder (or by some other authorized user), it has not shown its entitlement to assess and collect interest either. Although the two account statements marked as Exhibits B and C contain some evidence concerning how much Wells Fargo assessed in periodic interests and account fees, its claim for those portions of its alleged damages fails for substantive legal reasons even in the presence of relevant financial information in dollar terms in the record.

It should be pointed out that the Bank’s failure to show itself entitled to judgment for accrued interest is twofold: (1) Wells Fargo has not proven the net amount of loans made or indebtedness incurred (i.e. the base amount for the calculation of interest), and (2) Wells Fargo has neglected to provide proof of mutual assent to the APRs and other finance-charge terms because it omitted the “Important Terms” document from Exhibit A. Interest rates and YTD-summaries are printed on the statements, but billing statements cannot prove an underlying agreement on those rates. See Tully v. Citibank (S.D.), N.A., 173 S.W.3d 212, 216-17 (Tex. App.-Texarkana 2005, no pet.) (holding evidence insufficient to show that interest rate charged was agreed on where the only evidence was the rates printed on monthly statements); see also Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 235-36 (Tex. App.-Houston [1st Dist.] 2008, no pet.); Wande v. Pharia, No. 01-10-00481-CV, 2011 WL 3820774, at *5 (Tex. App.-Houston [1st Dist.] Aug. 25, 2011, no pet.) (mem. op.); Uribe v. Pharia, LLC, No. 13-13-00551-CV, 2014 WL 3555529 (Tex. App.-Corpus Christi July 17, 2014) (mem. op.).

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 WELLS FARGO BANK, N.A. in this case does not contain the two required notices, and the Bank’s own documentary evidence of the account reflects non-acceleration. The Bank’s final account statement at best supports the proposition that $1,346.00 was subject to breach by nonpayment, and that past failures to make required payments resulted in a sum total of $1,113.00 in damages because that is the amount that the Bank’s account-specific evidence reports as “past due.” The Bank’s two non-consecutive account statements, however, do not adduce sufficiently detailed data to establish the correct calculation of the cumulative past-due amount, which—as a result—is conclusory. The same criticism applies to the balance carried over from the previous billing cycles and shown as the Previous Balance on the October 16, 2015 statement. The origin of a large portion of the revolving balance is accordingly insufficiently documented and this evidentiary void flouts the requirements of the summary judgment rule.

Nor are there any subsequent account statements in the summary judgment record that would support the contention that WELLS FARGO BANK, N.A. resorted to the remedy of acceleration of maturity. Indeed, there is no competent evidence of whether the Total Minimum Amount Due was paid or was not paid on or by the stated due date. Suffice to reiterate that the movant for traditional summary judgment has the burden of proof on the amount of damages caused by a breach.

If the February 15, 2016 account statement supports 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 statement closing date, i.e. prospectively, relative to the statement.

Even more importantly, 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 Wells Fargo lawfully 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.[13]

Upon de novo review of the scant summary judgment record in this case, this Court should either reform the judgment to $1,113.00 (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 in its entirety and remand the case for re-trial in the court below based on Wells Fargo’s failure to prove the parties’ agreement on interest rates and other contract terms specific to the account on which the lawsuit was predicated.

Respectfully submitted,

Date: December ____, 2018

/s/ __________________________

Elsbeth Unmut

Appellant

Certificate of Compliance with Length Limitations

The undersigned hereby certifies that this brief consists of ______ [fewer than 15,000] _ words, as calculated by the word count function of the Microsoft Word program.

/s/ __________________________

Elsbeth Unmut

Appellant

Certificate of Service

On this date, ______________________, 201__, the Appellee is being served with an electronic or paper copy of this brief by the indicated method:

___ through the Texas eFile system https://efile.txcourts.gov/ofsweb

___ by direct email to the Bank’s counsel at _____________@____________

___ by U.S. mail to the Bank’s counsel at the mailing address on record.

/s/ __________________________

Elsbeth Unmut

Appellant

APPENDIX

[1] Plaintiff’s Original Petition, p. 2, ¶9.

[2] Plaintiff’s Original Petition, p. 3, ¶10.

[3] Plaintiff’s Motion for Summary Judgment, p. 5.

[4] This document is titled Notice of Submission, but is denominated “Notice of Hearing” in the Index on Appeal. CR 2.

[5] Acceleration is "[t]he advancing of a loan agreement's maturity date so that payment of the entire debt is due immediately." Acceleration, Black's Law Dictionary (10th ed. 2014).

[6] See Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). A movant seeking a traditional summary judgment must show "there is no genuine issue as to any material fact" and that it is "entitled to judgment as a matter of law." TEX. R. CIV. P. 166a(c); see Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 512 (Tex. 2014).

[7] Because the movant must prove conclusively that he is entitled to summary judgment, a trial court may not grant a traditional motion for summary judgment based on the nonmovant's failure to respond. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). "The nonmovant has no burden to respond to a summary judgment motion unless the movant conclusively establishes its cause of action or defense." Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222-23 (Tex. 1999).

[8] "Summary judgments must stand on their own merits, and the non-movant's failure to answer or respond cannot supply by default the summary judgment proof necessary to establish the movant's right." Clear Creek Basin Auth., 589 S.W.2d at 678; see McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 343 (Tex. 1993).

[9] See Ogletree v. Crates, 363 S.W.2d 431, 435 (Tex. 1963) (When no proof of another state's law is introduced to the trial court and no request is made to take judicial notice of that law, the other state's law is presumed to be the same as the law in this state.)

[10] See Jordan v. Geigy Pharms., 848 S.W.2d 176, 181 (Tex. App.-Fort Worth 1992, no writ) (nonmovant may rely on movant's summary-judgment evidence); Keever v. Hall & Northway Advertising, Inc., 727 S.W.2d 704, 706 (Tex. App.—Dallas 1987, no writ) (movant's own exhibit created a fact question that required reversal summary judgment in its favor).

[11] To prove that it performed or tendered performance of its own contractual obligations, a plaintiff must demonstrate that it complied with the contract's provisions. Preston State Bank v. Jordan, 692 S.W.2d 740, 744 (Tex. App.-Fort Worth 1985, no writ).

[12] Id, at. 740 (explaining how bank credit card is a three-party, three-part agreement between the bank, the consumer and the merchant.)

[13] When it moved for summary judgment, Wells Fargo did not request judicial notice and application of the law of the jurisdiction specified in the choice-of-law clause in the Customer Agreement, which is SOUTH DAKOTA, to the extent state, rather than federal law, applies. See Customer Agreement, p. 8 of 12, ¶30 (Governing Law).

-- NB: Appellant de-identified by pseudonym; brief republished with permission of copyright holder -

[PROBONOPROSE APPELLATE BRIEF TEMPLATE]

No. _____________

IN THE COURT OF APPEALS

FOR THE FIFTEENTH DISTRICT

WEIMAR, TEXAS

_________

Binni A Schuldner,

Appellant

vs.

DISCOVER BANK,

Appellee.

_________

On Appeal from

Trial Court: County Civil Court at Law No. __

Desperado County, Texas

Trial Court Cause No. 2013-DC-1307

_________

BRIEF OF APPELLANT

Binni A Schuldner

_________

November ____ 201__

Identity of Parties and Counsel

Appellant / Defendant below: Binni A Schuldner

1307 Hohle Gasse

New Immensee, TX 79079

Tel.: ( )

Email: @

Appellee / Plaintiff below: Discover Bank

Lead Attorney on Appeal: [See COA Docket for this case]

Attorney in Trial Court: Elise Manchester

Matthew Jirkovsky

Leslie L. Sun

Christopher Mundt

Onyinychi Anaele

Laura L. Bedford

Ambreen Dharani

ZWICKER & ASSOCIATES, P.C.

Old Town Square, 1 Chisholm Trail, Ste 301

Tel.: (512) 218-0488

Email: ZATXAttorneys@zwickerpc.com

Table of Contents

Identity of Parties and Counsel ……………………………………………………………………… 4

Index of Authorities ………………………………………………………………………………………. 4

Statement of the Case …………………………………………………………………………………... 8

Issues Presented by this Case…………………………………………………………………......... 8

Statement of Facts ……………………………………………………………………….………………… 8

Scope of Appellate Issues in the Amicus Brief ………………………………………………….9

Summary of the Argument on the Merits ……………………………………………………….10

Summary Judgment Standard and Standard of Review on Appeal ………………….11

Argument and Authorities ……………………………………………………………………………….12

A. To be viable, a cause of action for breach of loan agreement

requires proof of the cost-of-credit terms …………………………………………12

B. Under Texas law, acceleration of maturity requires two notices ……….14

C. There is no notice of intent to acceleration here; nor is there a

notice that acceleration had otherwise occurred….15

D. There is no convincing rationale to draw a distinction

between secured and unsecured loans ……………………………………………..16

E. Discover Bank’s final account statement reflects non-acceleration

and a total amount due of only $LASTMINDUE ………………………………… 19

Conclusion and Prayer …………....………………………………………………………………………. 20

Certificates of Compliance with Length Limitations and Service.………………………. 23

Amicus Curiae Statement, Copyright Notice, and Limited License …………………….24

Appendix ………………………………………………………………………………………………………….25

Tab A: Final Summary Judgment signed on JUDGMENTDATE awarding Discover Bank $JUDGMENT in damages “minus any payments received after filing this litigation.”

Tab B: Discover Bank’s Motion for Summary Judgment

Tab C: Untitled Affidavit of Hop Gschwurn, signed ___ __, 2017 in Ohio before Notary Dee Stemplarin (2 pages)

Index of Authorities

Cases

Allen Sales & Servicenter, Inc. v. Ryan, 525 S.W.2d 863 (Tex. 1975)..…………….. 15

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

Ayers v. Target Nat'l Bank, No. 14-11-00574-CV, 2012 WL 3043043

(Tex. App.-Houston [14th Dist.] July 26, 2012, no pet.) (mem. op.)……….14

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) …………………………………………. .14

Barlow v. Lane, 745 S.W.2d 451 (Tex. App.-Waco 1988, writ denied)………………17

Ekpe v. CACH, LLC, No. 03-10-00274-CV, 2011 WL 1005379

(Tex. App.-Austin Mar. 16, 2011, no pet.) (mem. op.)…………………………….20

Eurecat US, Inc. v. Marklund, No. 14-15-00418-CV, 2017 WL 2367545

(Tex. App.-Houston [14th Dist.] May 31, 2017, no pet.) …………………………19

Faulk v. Futch, 147 Tex. 253, S.W.2d 614 (1948) …………………………………………... ..15

Fitzpatrick v. Leasecomm Corporation,

No. 12-07-00487-CV (Tex.App. – Tylor, 2008, pet. denied) …………………. ..18

Hiller v. Prosper Tex. Inc.,

437 S.W.2d 412 (Tex.Civ. App.—Houston [1st] 1969, no writ) ……………….20

Hussong v. Schwan's Sales Enterprises, Inc.,

896 S.W.2d 320 (Tex.App.-Houston [1^st Dist.] 1995)……………………………….13

Intermedics, Inc. v. Grady, 683 S.W.2d 842

(Tex.App.-Houston [1st Dist.] 1984, writ ref'd n.r.e.)…………………………………15

Jaramillo v. Portfolio Acquisitions, LLC, No. 14-08-00938-CV, 2010 WL 1197669

(Tex. App.-Houston [14th Dist.] March 30, 2010, no pet.) (mem. op.)……….14

Jarvis v. Peltier, 400 S.W.3d 644 (Tex. App.-Tyler 2013, pet. denied)……………………20

Lee v. Emerson-Brantingham Implement Co., 222 S.W. 283

(Tex. Civ. App.-Dallas 1920, no writ)…………………………………………………… 18, 20

Mockv. National 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.) ……………..19

Ogden v. Gibraltar Sav. Ass'n., 640 S.W.2d 232 (Tex. 1982)………………………………….16

Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640 (Tex. 1995) ………………………11

Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985)…………………………………..12

Outdoor Sys., Inc. v. BBE, L.L.C., 105 S.W.3d 66

(Tex.App.-Eastland 2003, pet. denied) ………………………………………………………17

Ortega-Carter v. Am. Int'l Adjustment Co.,

834 S.W.2d 439 (Tex. App.-Dallas 1992, writ denied)…………………………………12

Preston State Bank v. Jordan, 692 S.W.2d 740 (Tex.App.-Fort Worth 1985)…………13

Shumway v. Horizon Credit Corp., 801 S.W.2d 890 (Tex. 1991)……………………… 17, 20

Sloan v. Douglass,

713 S.W.2d 436 (Tex. App.-Fort Worth 1986, writ ref'd n.r.e.) ………….………17

T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218 (Tex.1992) ……….….…….13

Tully v. Citibank (South Dakota), N.A.,

173 S.W.3d 212 (Tex.App.-Texarkana 2005, no pet. )…………………………………12

Wande v. Pharia, No. 01-10-00481-CV, 2011 WL 3820774

(Tex. App.-Houston [1st Dist.] Aug. 25, 2011, no pet.) …………………………….14

Woodhaven Partners, Ltd. v. Shamoun & Norman, LLP,

422 S.W.3d 821 (Tex. App.-Dallas 2014, no pet.)………………………………..12, 19

Rules

Tex. R. Civ. P. 166a(c) ………………………………………………………………………………………..11

Other Authorities

Barbee, The Lessor's Remedies for Nonpayment of Royalty,

45 Tex. L. Rev. 132, 161 (1966) ……………………………………………………………….17

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 $JUDGMENT.

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 $JUDGMENT in damages caused by breach of contractual duties by Defendant Schuldner?

Statement of Facts

Discover Bank filed the underlying collection suit on _____________, 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 $JUDGMENT.”[1] CR __.

Defendant Binni A Schuldner filed a pro se answer on ________________, 2017, thereby precluding a no-answer default judgment against him. CR__.

On ____________, 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.[2] CR __.

On _______ __, 2017 Discover Bank file a Notice of Oral Hearing for a hearing on its summary judgment motion on ________________2017 at ______, with a purported certificate of service attached that does not state any date of service upon the Defendant.[3] CR__.

On JUDGMENTDATE, the trial court heard the Bank’s motion and signed an order granting it. CR__. The summary judgment awards $JUDGMENT, the exact amount pleaded for in the Bank’s petition, and characterizes this amount as “principal damages.”

Defendant Schuldner contends that he did not have proper notice of the summary judgment hearing. CR__.

Schuldner did not file a post-judgment motion.

Schuldner timely filed his pro-se motion of appeal on _______________, 2017. CR__.

Scope of Appellate Issues in this Brief

This brief focuses on whether the Bank’s summary judgment evidence was sufficient under the summary judgment standard and whether the Bank has shown itself entitled to the full amount of damages it pleaded for in its Original Petition.

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 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 $JUDGMENT 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 $LASTPASTDUE because that is the highest amount actually shown as “past due” on any of the account statements attached to its summary judgment affidavit.

Discover Bank has shown that a minimum payment of $LASTMINDUE was due by LASTMINDUEDATE. Assuming that no further payments were made, the summary judgment evidence at best supports the contention that $LASTMINDUE 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 $LASTPASTDUE because that is the amount shown as “past due” on the last statement with closing date LASTSTMTDATE.

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.

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.).

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). Ayers v. Target Nat'l Bank, No. 14-11-00574-CV, 2012 WL 3043043, at **2-4 (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 credit-card application was illegible, and the form language was in Spanish); Wande v. Pharia, No. 01-10-00481-CV, 2011 WL 3820774, at *5 (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. 14-08-00938-CV, 2010 WL 1197669, at **5-6 (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 its material terms were missing.").

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

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).

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 final of 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 $LASTSTMT and a “Total Minimum Amount Due” of $LASTMINDUE. It also states a due date for the “Total Amount Due,” that being LASTMINDUEDATE. 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)

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).

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, No. 12-07-00487-CV (Tex.App. – Tylor, 2008), the Tyler 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.” 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 Tr.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 $LASTMINDUE.

In this case, Discover Bank endeavored to prove the amount of damages that it attributes to the Defendant’s breach with the LASTSTMTDATE account statement, but this statement reflects that the total amount due was only $LASTMINDUE, which is much less than the amount awarded in the summary judgment ($JUDGMENT). The statement reports the past-due portion of the amount due as $LASTPASTDUE. Based on the current 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.

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 (LASTSTMTDATE), 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 $LASTPASTDUE or $LASTMINDUE based on the summary judgment proof proffered, assuming it is admissibility for the truth of what is set forth on it in the absence of evidentiary objects 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 $LASTMINDUE was subject to breach by nonpayment, and that past failures to make required monthly installment payments caused a sum total of $LASTPASTDUE 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 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 of whether the minimum amount due was paid by the due date. 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 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.[4]

This Court should accordingly either reform the judgment to $LASTPASTDUE (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 in its entirety and remand the case for re-trial in the court below based on Discover Bank’s failure to prove the entire contractual basis for the account, i.e. the parties’ agreement on interest rates and other account-specific cost terms.

Respectfully submitted,

Date: _________ ___, 201__

/s/ _________________

Binni A Schuldner

Certificate of Compliance with Length Limitations

The undersigned hereby certifies that this brief consists of _ [fewer than 15,000] _ words, as calculated by the word count function of the Microsoft Word program. The type face is ________ Calibri, 14-point size for text and 12-point for footnotes, proportionately spaced.

/s/ _________________

Binni A Schuldner

Certificate of Service

On __________________, 2018 all parties to this appeal are being served with an electronic copy of this brief through the Texas eFile system, 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/ _________________

Binni A Schuldner

APPENDIX

Tab A: Summary Judgment signed on JUDGMENTDATE awarding Discover Bank $JUDGMENT in damages “minus any payments received after filing this litigation.”

Tab B: Discover Bank’s Motion for Summary Judgment (without exhibits)

Tab C: Untitled Affidavit of Hop Gschwurn, signed ___ __, 201__ in Ohio before Notary Dee Stemplarin (2 pages)

Tab D: Last Account Statement dated LASTSTMTDATE (closing date)

[1] Plaintiff’s Original Petition, p. 2, ¶7.

[2] Plaintiff’s Motion for Summary Judgment, p. 5.

[3] [Plaintiff’s] Notice of Oral Hearing.

[4] When it moved for summary judgment, Discover Bank did not request judicial notice and application of the law of the jurisdiction specified in the choice-of-law clause in the Cardmember Agreement, which is Delaware.

-- NB: Appellant deidentified by pseudonym; brief republished with permission of copyright holder -

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Consumer Debt Litigation (mostly Texas)

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