Consumer Contracts at the Back-End: A Different Perspective on the (draft) Restatement of Consumer Law from Texas

CONSUMER CONTRACTS DON'T MATTER WHEN APPELLATE COURTS CREATE  CASELAW TO ALLOW CIRCUMVENTION 

Much of the discussion about the state of American consumer law, including the ongoing controversy over the Restatement of the Law of Consumer Contracts, and its reliance on quantitative surveys of caselaw of questionable quality, center on issues surrounding consumer contracts at the front end:

Questions such as the manner in which a contract is formed in the first instance, and how terms are later modified; whether the specific terms applicable to the transaction are disclosed to the consumer in a meaningful and understandable manner; and whether they are excessively one-sided, oppressive, or unconscionable.

CONSUMERS AS CLAIMANTS (PLAINTIFFS)

One major underlying concern is that consumers’ ability to bring claims against businesses may be jeopardized, that the scope of rights a consumer has under such a contract may be unduly limited, such as through mandatory arbitration and class-action waiver clauses, and that consumers may be prevented from vindicating their rights—including statutory rights that come into play based on the nature of the transaction--in an effective manner.

A related issue is whether consumer contracts are drafted to effectively preclude relief that could otherwise be obtained through class actions. This is obviously of great importance in instances of large-scale wrongful business conduct where the value of each claim any single consumer might have is too small to make it economically feasible to bring such claim in an individual action.

CONSUMER CONTRACTS AT THE BACK END – WHEN CONSUMERS BECOME LAWSUIT TARGETS 

Much more, however, is at stake for individuals at the back-end, when the business has a claim against a consumer, and takes the consumer to court.

And that’s where consumer contracts matter too. At least in theory.

A debt collection claim is, in essence, a breach of contract claim because the creditor’s complaint is that the consumer has defaulted, i.e. has not made periodic payments as promised, which takes two basic forms: (1) a failure to make regular installment payments as they become due under the amortization schedule of a retail installment contract or (2) a failure to make monthly minimum payments computed based on a formula contained an agreement governing open-end credit such as a credit card account. In the latter case, the minimum payment will typically consist of a percentage of the revolving balance and current finance charges, which may include other charges (such as a late fee or over-limit fee) in addition to the newly accrued interest and any past-due amount.

To prove such a breach-of-contract claim under Texas common law, a plaintiff must adduce sufficient evidence on a several essential elements: (1) a valid contract, (2) performance by the plaintiff or tender of performance, (3) breach by the defendant, and (4) damages caused by breach.

In order to obtain a judgment against a consumer, a creditor would, under long-standing caselaw, have to produce competent evidence on each element. If the creditor fails to do so, or if the proffered evidence is of questionable quality and therefore subject to evidentiary objections and exclusion, the consumer may have a viable defense to the lawsuit.

The reality, however, is different. At least in Texas, appellate courts have made it much easier for creditors to obtain judgments against former customers by relaxing conventional proof requirements in debt collection cases, and by allowing creditors to avoid the proof requirements applicable to a  breach-of-contract claim altogether, thus rendering the contract, and whatever terms it may contain, immaterial. 

CIRCUMVENTION OF PROOF REQUIREMENTS APPLICABLE TO BREACH OF CONTRACT

Starting in 2008 with an opinion issued by the Dallas Court of Appeals, Texas courts have allowed creditors to circumvent the proof requirements of a breach-of-contract claim by bringing the collection action as a common-law “account stated” claim instead, or in the alternative. See Dulong v. Citibank (South Dakota), N.A., 261 S.W.3d 890, 893 (Tex.App.-Dallas 2008, no pet.).  

"ACCOUNT STATED" ADAPTED FOR CREDIT CARD DEBT COLLECTION IN TEXAS 

  

When a creditor proceeds on an account-stated theory, it no longer has to provide even a copy of a boilerplate credit card agreement. Credit card statements alone will do.
See à The Account Stated Theory and the lowering of proof requirements in credit card debt collection cases; -->  Resurrection of account-stated for credit card debt collection in Texas.

Also see: Emanuel J. Turnbull, Account Stated Resurrected: The Fiction of Implied Assent in Consumer Debt Collection, 38 VT. L. REV. 339, 340 (2013) 

Several other courts of appeals have jumped on the bandwagon without re-examining the validity of the suit-on-account theory for collection of a bank debt that does not involve sale of goods or services, thus lowering the proof requirements for credit card debt plaintiffs, and depriving the defendants of any benefits that might accrue from the existence of a written contract. See, e.g., McFarland v. Citibank (S.D.), N.A., 293 S.W.3d 759, 764 (Tex. App.-Waco 2009, no pet.) ("Thus, we join our sister courts in holding that account stated, and not a suit on a sworn account, is a proper cause of action for a credit card collection suit because no title to personal property or services passes from the bank to the credit card holder."); Jaramillo v. Portfolio Acquisitions, LLC, No. 14-08-00939-CV, 2010 WL 1197669, at *7 (Tex.App.-Houston [14th Dist.] Mar. 30, 2010, no pet. h.) (mem. op.); Butler v. Hudson & Keyse, L.L.C., No. 14-07-00534-CV, 2009 WL 402329, at *3 (Tex.App.-Houston [14th Dist.] Feb. 19, 2009, no pet.) (mem. op.); also see Houle v. Capital One Bank (USA), NA., No. 08-16-00234-CV (Tex.App.- El Paso, 2018, pet. filed) (affirming summary judgment for credit card bank on two theories).

McFarland v. Citibank (South Dakota), N.A., 293 S.W.3d 759 (Tex.App.-Waco 2009, no pet.) 

  
QUANTUM MERUIT REMEDY ALSO MIS-APPROPRIATED FOR CONSUMER DEBT COLLECTION - FOR THE BENEFIT OF A VULTURE FUND, NO LESS  

One Texas court of appeals has gone so far as to bless quantum meruit as an alternative theory for the collection of a bank debt, even though quantum meruit is an equitable theory and is generally precluded when a contract governs the parties’ relationship because a suit to enforce the contract provides an adequate legal remedy.

In 2008, the Fourteenth Court of Appeals jumped on quantum meruit to accommodate a debt-buyer entity that was at that time a prolific litigant in court all around Texas, but had not adduced sufficient evidence from the original creditor to prevail on its breach-of-contract claim in the case that came before the court. See McElroy v. Unifund CCR Partners, No. 14-07-00661-CV, 2008 WL 4355276 (Tex. App.-Houston [14th Dist.] Aug. 26, 2008, no pet.) (mem. op.).

Quantum meruit generally applies only to claims based on the sale of goods or provision of services not paid for. A bank does not sell goods or services. Instead, it makes its money by charging interest on the extension of credit and on fees paid by merchants that accept their cards. Interest is not compensation of services, and the goods or services charged on a credit card are provided by third parties. These purchases are financed by the bank, rather than the bank acting as seller. The only component of a balance on a credit card account that arguably constitutes compensation for a service provided by the bank to its customer would be an annual membership fee or monthly service charge. But even that is debatable, at least under federal law governing consumer credit, including the federal definition of what constitutes finance charges.  

A memorandum opinion issued by the same Houston-based appellate court in a subsequent credit card collection case brought by a bank (rather than a debt buyer) likened the case to McElroy in that it was undisputed that “there was a credit-card agreement of some kind,” but did not take issue with the blessing of the quantum meruit doctrine for credit card debt collection. See 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.) (reversing summary judgment granted in favor of bank on breach-of-contract theory).

Ayers’ discussion of McElroy solidifies the conclusion that the quantum meruit claim had been permitted even though the breach-of-contract cause of action was available, and could have been pursued with proper evidence. By affirming the judgment for the creditor in McElrod despite the creditor’s failure to prove up the terms of the underlying credit card agreement, the Fourteenth Court of Appeals essentially condoned and excused the debt buyer’s failure to adduce the requisite type and amount of proof. It blessed the circumvention of those proof requirements through an alternative theory that had--at least until then--been inapposite and unavailable because quantum meruit is an equitable remedy incompatible with the existence of a contract governing the parties’ relationship.

But once a court of appeals makes an error of law, the same court can then defend and repeat the error by treating it as a prior ruling with the force of precedent.

That has not happened with McElroy, but it did happen with the Dulong precedent from Dallas, which has been cited and relied upon numerous times by appellate courts since. Account Stated is routinely pleaded by some creditors in mass litigation in the trial courts. Very few such cases reach the courts of appeals these days. Some banks have also embraced the new opportunity.
Wells Fargo, for example, now pleads an account-stated count in addition to their cause of action for breach of contract.
  

RELAXATION OF PROOF REQUIREMENTS FOR BREACH OF CONTRACT ITSELF 

In addition to providing a work-around when a creditor cannot find a contract as a predicate for a breach-of-contract claim, Texas courts have also lowered the standards that generally apply in contract cases to accommodate credit card issuers and purchasers of charged-off accounts. There is now, in effect, a special interest jurisprudence for the benefit of creditors that has carved out its custom exceptions from general rules of law and procedure.

Many courts no longer hold plaintiffs to the burden of actually having to prove that a boilerplate agreement attached to a summary judgment affidavit is the agreement that was provided to the customer and subsequently accepted by card use. Instead, they consider conclusory affidavit testimony to the effect that “Exhibit A is a true and correct copy of the applicable agreement” sufficient. See, e.g., Houle v. Capital One Bank (USA), NA. No. 08-16-00234-CV (Tex.App.- El Paso, 2018, pet. filed).

One court saw no problem with the fact that the date printed on the generic agreement did not match the date referenced by the affiant as the date of contract-formation by card use, reasoning that the bank had the right to change the terms (as shown on the face of the challenged agreement) and that the defendant accepted the more recent version by continued card use. See Wakefield v. Wells Fargo Bank, N.A., No. 14-12-00686-CV, 2013 Tex. App. LEXIS 14018 (Tex. App.-Houston [14th Dist.]. Nov. 14, 2013, no pet.) (mem. op.).

Affidavit excerpt from Wakefield: Approximate Contract-formation Date 

Although, with the appellate court's help, Wells Fargo defeated the pro se appeal, the bank subsequently changed its affidavit template, which no longer includes the date of card use as a relevant contract-formation fact. See excerpt from a more recent case below:

Excerpt from Wells Fargo affidavit in a recent filing: Date of last payment reported,
but no date for contract formation by card use

CONTRACT-FORMATION PROOF IN DISPUTES OVER ARBITRATION

Interestingly, the contract-formation analysis with respect to notice of terms is much more refined when it comes to acceptance of an arbitration agreements by an employee (by continuing to work after notice) and when the which-version-is-the-controlling-contract issue surfaces in other types of  litigation involving banks and their customers. 

As for formation of an agreement to arbitrate in the employment context, see Kmart Stores of Tex., L.L.C. v. Ramirez, 510 S.W.3d 559, 565 (Tex.App.-El Paso 2016, pet. denied) (where employer provided evidence that employee had logged on to computer and received notice of arbitration agreement, employee bore burden of raising a fact issue contesting formation, which she met by filing a sworn denial of notice); Stagg Restaurants, LLC v.. Serra, No. 04-18-00527-CV (Tex.App.- San Antonio, Feb. 13, 2019, no pet.) (trial court's denial of motion to compel arbitration affirmed in interlocutory appeal where employer failed to prove notice of arbitration provision in occupational injury plan document to employee who later brought work-related injury suit).

Stagg Restaurants, LLC v. Serra, No. 04-18-00527-CV (Tex.App.- San Antonio, Feb. 13, 2019, no pet.) (holding that employer's motion to compel arbitration was properly denied because employer failed to prove that employee was given notice of arbitration provisions within occupational injury plan, and employee swore he had no notice) 

As for different sorts of bank-customer litigation, see In Re Comerica, No. 14-16-00418-CV  (Tex.App.- Houston [14^th Dist.]  Jun. 30, 2016)(concluding that “Comerica has not established that the trial court clearly abused its discretion by ordering Comerica to withdraw its application to arbitrate the claim against it with JAMS because the record contains no evidence that Comerica mailed written notice of the amended Contract and its text to [customers] or that [customers] by some other means agreed to the amended Contract with the arbitration provision.”).

In Re Comerica, No. 14-16-00418-CV  (Tex.App.- Houston [14th Dist.]  Jun. 30, 2016)
(agreement on arbitration not proven)

THIS IS THE CONTRACT THAT APPLIES TO THE DEFENDANT; TAKE MY WORD FOR IT

There are significant differences among major credit card issues on whether the credit card agreement offered as evidence in a collection suit contains any indicia that link it to a specific account or the specific account holder.

American Express used to rely generic agreements like other major card issuers, but years ago switched to a practice of issuing cardholder agreements that are dated, and also contain the name of the account holder (including the name of the business for business cards), the account ending digits, and the type of account. The unique identifying information is printed in the top section of the first page of the cardmember agreement, which consists of two parts. One part sets forth the account-specific pricing terms while the other part contains the standard (invariant) terms that also apply to other cardholders within the same customer segment. Those terms include a Utah choice of law clause and regularly also encompass some form of an arbitration agreement.

Discover Bank’s customer agreements do not contain information identifying accounts by numbers or customers by name, but references the version of the agreement (called “Terms Level”) within the body of the affidavit of its servicer, which is a variable data field in the template along with other case-specific data such as name of cardholder and amount of the outstanding balance for which the Bank seeks judgment.

The Customer Agreements attached by Wells Fargo Bank, by contrast, do not contain any account or customer-specific particulars. Nor does Wells Fargo even attach the “Important Terms of Your Account” document that sets forth the account-specific cost-of-credit disclosures required under the Truth in Lending Act. A number of appellate cases, even from otherwise creditor-friendly courts of appeal, hold that the creditor must prove the cost terms because they are essential contract terms, but adherence to this long-standing rule of law is also eroding.

Texas court of appeals cases that found that proof of credit terms (or derivation of balance, which requires proof of interest) was lacking or insufficient:  

Uribe v. Pharia, LLC, No. 13-13-00551-CV, 2014 WL 3555529 (Tex.App.-Corpus Christi July 17, 2014) (mem. op.) (collecting cases). 

• Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 236 (Tex. App.-Houston [1st Dist.] 2008, no pet.)(holding evidence was insufficient to establish the terms of a valid contract as a matter of law where creditor failed to produce actual credit-card agreement or any other document that established the agreed terms, including the applicable interest rate or method for determining finance charges); 
• 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 interest rate charged was agreed on where the only evidence was the rates specified in monthly statements);  
• Hooper v. Generations Community Federal 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 for creditor where cardholder agreement was not offered into evidence and there was no evidence establishing debtor's specific obligations under an agreement); 
• Colvin v. Tex. Dow Employees Credit Union, No. 01-11-00342-CV, 2012 WL 5544950, at *6 (Tex. App.-Houston [1st Dist.] Nov. 15, 2012, no pet.) (mem. op.) (reversing summary judgment for creditor where creditor failed to offer the original agreement, monthly statements, or other evidence establishing how it calculated its alleged damages); 
• Martin v. Federated Capital Corp., No. 01-12-00116-CV, 2012 WL 4857835, at **2-3 (Tex. App.-Houston [1st Dist.] Oct. 11, 2012, no pet.) (mem. op.) (reversing summary judgment for creditor where creditor's evidence failed to explain how it calculated its damages); 
• Ayers v. Target National 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 creditor where creditor failed to present cardholder agreement and a portion of the form language on the credit-card application was illegible and 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 creditor where creditor presented the cardholder agreement but important portions of the agreement were illegible, including a section entitled "Finance Charges," and creditor presented no evidence regarding the calculations it used to arrive at claimed outstanding balance); 
• Jaramillo v. Portfolio Acquisitions, LLC, No. 14-08-00939-CV, 2010 WL 1197669, at **5-6 (Tex. App.-Houston [14th Dist.] March 30, 2010, no pet.) (mem. op.) (holding evidence insufficient to establish a valid contract where card member agreement was entered into evidence, but many of its material terms were missing; "This court and its sister court have drawn a distinction between cases where a card member agreement is entered into evidence and where there is no card member agreement.")  

FUTURE POST: THE LOWERING OF EVIDENTIARY STANDARDS IN CONSUMER DEBT COLLECTION CASES 

[ forthcoming ]

Acknowledgement of Debt: Texas Supreme Court Disagrees on Pleading Sufficiency Issue, Reverses: DeRoeck v DHM Ventures, LLC, No. 17-0033 (Tex. June 6, 2018)

In Texas, acknowledgement of a debt is subject to a special statute of frauds. When acknowledgement applies, an otherwise time-barred debt claim may be pursued against the defendant who acknowledged the debt. But suing on that basis technically means suing on the acknowledgement, rather than on the original cause of action, and requires proper pleadings. In this case, the Texas Supreme Court reversed the court of appeals on the issue of pleading sufficiency, holding that the pleaded facts were sufficient under the state's fair-notice pleading standard even though the theory of recovery was not expressly pleaded in the causes of action section of the plaintiff's amended petition. The pleading standard in Texas state courts is famously more lax than its federal counterpart. 

DeRoeck v DHM Ventures, LLC, No. 17-0033 (Tex. June 6, 2018)

DeRoeck v DHM Ventures, LLC, No. 17-0033 (Tex. 2018) 

IN THE SUPREME COURT OF TEXAS

NO. 17-0033

BRIAN DEROECK, MELINDA YOUNG, AND KATHRYN BOYKIN,

CO-TRUSTEES OF THE WALTER A. DEROECK QTIP TRUST,

ASSIGNEE OF TEXAS CAPITAL BANK NATIONAL ASSOCIATION, PETITIONERS,

v.

DHM VENTURES, LLC, JAMES W. MORITZ,

AND NATHAN W. HALSEY, RESPONDENTS

4444444444444444444444444444444444444444444444444444

ON PETITION FOR REVIEW FROM THE

COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS

4444444444444444444444444444444444444444444444444444

PER CURIAM

BRIAN DEROECK, MELINDA YOUNG, AND KATHRYN BOYKIN, CO-TRUSTEES OF THE WALTER A. DEROECK QTIP TRUST, ASSIGNEE OF TEXAS CAPITAL BANK NATIONAL ASSOCIATION, Petitioners,
v.
DHM VENTURES, LLC, JAMES W. MORITZ, AND NATHAN W. HALSEY, Respondents.

No. 17-0033.

Supreme Court of Texas.

Opinion delivered: June 22, 2018.

Wallace B. Jefferson, Alexandra W. Albright, William R. Hemphill, Jr., J. Woodfin Jones, for Brian DeRoeck, Kathryn Boykin and Melinda Young, Petitioners.

Andrew P. Vickers, Rola Daaboul, Eric J. Taube, Craig T. Enoch, Shelby L. O'Brien, for Nathan W. Halsey, James W. Moritz and DHM Ventures, LLC, Respondents.

On Petition for Review from the Court of Appeals for the Third District of Texas.

PER CURIAM.

The court of appeals held that a cause of action for acknowledgment of a debt must be "specifically and clearly" pleaded "in plain and emphatic terms."^[1] Because this holding conflicts with Rule 47(a) of the Texas Rules of Civil Procedure, which provides that a pleading is "sufficient" if it "give[s] fair notice of the claim involved,"^[2] we reverse and remand the case to the court of appeals for further proceedings.

DHM Ventures, LLC borrowed $8.5 million for a real estate investment as evidenced by a promissory note secured by a deed of trust and guaranteed by two of its principals, James Moritz and Nathan Halsey. After the note matured on its second anniversary, it was acquired by the Walter A. DeRoeck QTIP Trust (the "Trust"). DHM continued to make principal and interest payments for more than four years, then stopped in December 2013, still owing $7 million in principal and more than $58,000 in interest. The Trust's trustees^[3] sued DHM, Moritz, and Halsey (collectively, the "defendants") seven months later.

Both sides moved for summary judgment. The defendants argued that the Trust's claims were barred by the four-year statute of limitations.^[4] In its response, the Trust stated that "to the extent necessary and to simply avoid any limitations defense asserted by Defendants, Plaintiffs' summary judgment evidence shows that DHM and Halsey and Moritz each acknowledged the original debt evidenced by the Note up until December 2013 on multiple occasions." The Trust made a similar statement in an amended petition filed contemporaneously with the response. In both the amended petition and the response, the statement was in a section captioned "Avoidance of Defendants' Limitations Defense" that also described in detail the attached evidence supporting the Trust's assertion of acknowledgment. That section of the amended petition concluded: "For purposes of this avoidance pleading, the effect of these numerous acknowledgments is to create a new promise to pay the old debt evidenced by the Note and the loan documents." The section in the response added: "Such an acknowledgment of the old debt gives rise to a new claim separate from the old debt, and the moral obligation to pay is sufficient consideration for the new promise." But the amended petition, like the original petition, contained a section captioned "Causes of Action" that stated claims on the note and guaranties but not on the asserted acknowledgment. And the prayer of the amended petition sought judgment for "[t]he unpaid principal balance and accrued interest and other sums due to [the Trust] under the terms of the Note and [guaranties]" without mentioning the asserted acknowledgment.

In reply to the Trust's response to their motion for summary judgment, the defendants argued that the Trust had not properly pleaded acknowledgment and had not produced evidence to support such a claim or its claims on the note and guaranties. The trial court denied the Trust's motion and granted the defendants' motion without stating the grounds. The court of appeals affirmed the summary judgment, concluding that while the Trust had raised acknowledgment in response to defendants' motion for summary judgment, it had failed to plead acknowledgment as a cause of action because it had not done so "specifically and clearly" and in "plain and emphatic terms."^[5]

A suit on a debt is separate from a suit on a later written acknowledgment of the debt, and the latter is not barred by limitations merely because the former is. We have held that an acknowledgment must "1) be in writing and signed by the party to be charged; 2) contain an unequivocal acknowledgment of the justness or the existence of the particular obligation; and 3) refer to the obligation and express a willingness to honor that obligation."^[6] A claim of acknowledgment does not always require an explicit promise to pay. "[I]f the writing acknowledges the justness of the claim, the acknowledgment imports (1) an admission that the claim is a subsisting debt and (2) a promise to pay it, if unaccompanied by any circumstances repelling the presumption of willingness or intention to pay."^[7] The acknowledgment can come before or after suit on the original debt is barred by limitations.^[8] A pleading of acknowledgment must be made "upon the new promise" and "must declare upon it as [the] cause of action, in order to avoid respondents' plea of limitation."^[9] "The correct practice is either (1) to quote the writing alleged to constitute the new promise, or (2) to attach it to the pleading as an exhibit."^[10]

Rule 47 requires that "[a]n original pleading which sets forth a claim for relief . . . shall contain . . . a short statement of the cause of action sufficient to give fair notice of the claim involved. . . ."^[11] There is no exception for a pleading of acknowledgment. "A petition is sufficient if it gives fair and adequate notice of the facts upon which the pleader bases his claim."^[12] The key inquiry is whether the opposing party "can ascertain from the pleading the nature and basic issues of the controversy and what testimony will be relevant."^[13]

In Hanley v. Oil Capital Broadcasting Ass'n, Hanley claimed he had sufficiently pleaded an acknowledgment cause of action.^[14] He alleged in his petition that he performed services for Oil Capital and that Oil Capital had agreed to pay the fees.^[15] Oil Capital had never before complained of the fees and had acknowledged the validity of the debt in letters saying it would make payment soon.^[16] Hanley argued he could base his theory of acknowledgment on the admission in this letter.^[17] Hanley never used the word "acknowledgment" in his petition.^[18] We held "this was a sufficient notice to the respondents that Hanley intended to rely on the letters as a new promise in order to avoid the operation of the statute and that no further allegation in that regard was necessary."^[19] "Moreover," we said, "any other holding would be contrary to both the letter and the spirit of Rule No. 47, Texas Rules of Civil Procedure."^[20]

In the present case, the Trust's amended petition used the word "acknowledgment[]," unlike the petition in Hanley. The amended petition also detailed the evidence on which the Trust relied for its contention that the defendants had acknowledged their debt within four years of the Trust's filing suit. That evidence, attached as exhibits as Hanleyinstructs (though that might not have been necessary), included emails, checks, bank statements, and tax returns. The petition summarized:

Defendants each specifically acknowledged the debt evidenced by the Note and related loan documents. Further, they show a willingness to pay the Note. Also, the exhibits make reference to and acknowledge the obligation evidenced by the Note and the amount owed is susceptible of ready ascertainment. For purposes of this avoidance pleading, the effect of these numerous acknowledgments is to create a new promise to pay the old debt evidenced by the Note and the loan documents.

Defendants argue that the assertion of acknowledgment and detailing of supporting evidence did not properly plead a claim because they were in a section of the amended petition captioned "Avoidance of Defendants' Limitations Defense." But "avoidance" merely characterized the function of an acknowledgment claim and did not suggest that no claim was being asserted. The "avoidance" was not to defeat the limitations defense to the suit on the original debt. That suit was still barred. The "avoidance" was the statement of a separate claim not barred by limitations—the only point of asserting acknowledgment.

Defendants also argue that the Trust's failure to list acknowledgment in the "Causes of Action" section and in the prayer of its amended petition show that it did not intend to plead acknowledgment as a cause of action. But neither failure kept the amended petition from being "sufficient to give fair notice"—Rule 47's standard—that the Trust was asserting a claim on the defendants' acknowledgment. As we have held, pleading facts sufficient to put an opponent on notice of a claim is sufficient, even if the claim is never actually named.^[21]

The Trust's amended petition was fair notice to the defendants of its claim on their acknowledgment and thus satisfied Rule 47. The court of appeals erred in requiring a higher standard. We therefore grant the Trust's petition for review, and without hearing oral argument,^[22] reverse the court of appeals' judgment and remand the case to that court to consider the parties' other arguments on appeal.

[1] No. 03-15-00713-CV, 2016 WL 4270000, at *2 (Tex. App.-Austin Aug. 9, 2016) (mem. op.) (citing Siegel v. McGavock Drilling Co., 530 S.W.2d 894, 896 (Tex. Civ. App.-Amarillo 1975, writ ref'd n.r.e.) ("[T]o recover on the new promise to pay embraced in the acknowledgment of the previous debt, the new promise to pay must be specifically pleaded as the cause of action in order to avoid the pleaded bar of limitation to the original debt."), and Canon v. Stanley, 100 S.W.2d 377, 378 (Tex. Civ. App.-El Paso 1936, no writ) ("While the original cause of action should be set out as constituting the consideration for the new promise, the suit being upon the subsequent promise it should be alleged in plain and emphatic terms.")).

[2] TEX. R. CIV. P. 47(a).

[3] The co-trustees are Brian DeRoeck, Melinda Young, and Kathryn Boykin.

[4] TEX. CIV. PRAC. & REM. CODE § 16.004(a) ("A person must bring suit on the following actions not later than four years after the day the cause of action accrues: . . . (3) debt. . . . .").

[5] 2016 WL 4270000, at *2-3.

[6] Stine v. Stewart, 80 S.W.3d 586, 591 (Tex. 2002); see also TEX. CIV. PRAC. & REM. CODE § 16.065 ("An acknowledgment of the justness of a claim that appears to be barred by limitations is not admissible in evidence to defeat the law of limitations if made after the time that the claim is due unless the acknowledgment is in writing and is signed by the party to be charged.").

[7] Hanley v. Oil Capital Broad. Ass'n, 171 S.W.2d 864, 865 (Tex. 1943).

[8] Cain v. Bonner, 194 S.W. 1098, 1098 (Tex. 1917).

[9] Hanley, 171 S.W.2d at 866.

[10] Id.

[11] TEX. R. CIV. P. 47.

[12] Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex. 2000) (quoting Roark v. Allen, 633 S.W.2d 804, 810 (Tex. 1982)).

[13] Id. at 896.

[14] 171 S.W.2d at 865.

[15] Id.

[16] Id.

[17] Id.

[18] Id. at 866.

[19] Id.

[20] Id.

[21] Sw. Bell Tel. Co. v. Garza, 164 S.W.3d 607, 616-17 (Tex. 2004) (facts pleaded were enough to alert the opposing party that a discrimination claim was being brought despite the absence of the word "discrimination" in the pleading); Steves Sash & Door Co. v. Ceco Corp., 751 S.W.2d 473, 476 (Tex. 1988) (the factual allegations in the pleading should have alerted the defendant of the plaintiff's claims regardless of the plaintiff's failure to specifically mention the cause of action).

[22] See TEX. R. APP. P. 59.1.

Sufficiency of the Pleadings: Was the bank's debt claim properly stated in plaintiff's petition?

HAS THE CREDITOR SUING ON AN ACCOUNT PLEADED PROPERLY? 

Fair Notice Standard applies to pleadings in Texas Courts

The quality and specificity of pleadings filed by debt collection attorneys varies considerably; but even at the lower end of the spectrum, a pleading will probably pass muster in most circumstances because the pleading rules in state court are more relaxed, compared to federal court. This is true for plaintiffs as well as defendants.

Texas courts apply the fair notice standard to pleadings by the plaintiff, and do not require the defendant to admit or deny specific factual allegations in the numbered paragraphs of the Plaintiff's petition.

Nor is the defendant required to provide specific facts supporting affirmative defenses when filing an answer. The identification of the relevant defense(s) by name is generally sufficient. Rule 94 lists defenses that must be pleaded expressly, and Rule 93 specifies which matters require verified (sworn) answer.

But see -- > Requests for admissions are sometimes embedded in the pleadings, which is not proper under the rules governing pleadings and discovery, and can create confusion, but is standard practice for many collection law firms. They are rarely scolded for it.

The Bank's petition mentioned credit card account and default. Was the cause of action properly identified? 

While it was not one of the main issues in the case, the Texarkana Court of Appeals, in Tully v Citibank, addressed the issue of pleading sufficiency with respect to breach of contract. Although Citibank's attorney had not expressly pleaded breach of contract as a cause of action in the trial court, the appellate court held that it had nevertheless satisfied the fair notice standard, which applies to trial court pleadings in Texas courts.

The higher court noted that Citibank had stated in its petition that the suit was based on a credit card debt. More specifically, Citibank alleged that Tully "defaulted in making the payments required by the terms of the Card Agreement. Due to Defendant's breach of the terms of the agreement....". The "cardmember agreement" is indisputably a type of contract, and the allegation of "default" amounts to an allegation of "breach" under a contract governing extension of credit and repayment of amounts loaned. Construing the petition liberally, the court concluded that it gave fair notice that Citibank was asserting a cause of action for breach of contract. The Tully v. Citibank case stands for the proposition that a suit for collection for a credit card debt is a breach of contract suit, and is cited for this legal point, even by federal bankruptcy courts. See In re Tran, 369 B.R. 312, 317 (S.D. Tex. 2007), aff'g 351 B.R. 440, 445 (Bankr. S.D. Tex. 2006)

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). Thus, Texas law provides that eCast's claim is one based on a writing, therefore, to be entitled to prima facie evidentiary effect, eCast's claim must include the writing under Rule 3001(c).

Challenging the other party's pleadings with Special Exceptions  

In Texas, pleading deficiencies may be attacked through a motion by another name: Special Exceptions. The rule governing this procedure, which essentially involves a motion for an order requiring the opponent to re-plead, is rule 91 of the Texas Rules of Civil Procedure (TRCP 91). It must be read in conjunction with Rule 90, which addresses waiver of such defects in form.

Normally, it is not worth mounting this type of challenge because it requires a hearing, and the payoff, even in the best-case scenario will be meager. The debt collection case cannot be resolved favorably for the defendant based solely on special exception without the plaintiff being given an opportunity to amend and thereby correct the error. Only if an attempt at amendment would be futile, can the trial court dismiss a petition on special exceptions and close the case.

A motion for summary judgment, by contrast, can seek a final disposition. Either party can file such a motion, and when the plaintiff files one, the defendant may consider countering it with a motion for summary judgment of his or her own. Also see -- > No evidence motion for summary judgment by the defendant.

In contrast to special exceptions, a summary judgment motion does not afford the non-movant a safe harbor, or second chance, after the motion has been heard and granted (except a motion for reconsideration or a motion for a new trial, which applies generally).

Pleading sufficiency review in the default judgment context 

Sometimes, however, a defective pleading can become a controlling issue; particularly in the context of an appeal from a default judgment. Texas courts have held that the examination of the pleading as a basis for a judgment under such circumstances is more rigorous. The caselaw on this issue is supported by rule 90, which essentially says that all complaints of pleading deficiencies are waived if not made the subject of special exceptions except that the rule does not apply against a party against whom a default judgment is rendered. See TRCP 90.

This makes sense. After all, in the default judgment context, the defendant did not (by definition) appear and was not in a position to challenge the plaintiff's pleading or assert any objections.

Case in point from the Beaumont Court of Appeals 

In 2012 the Ninth Court of Appeals, sitting in Beaumont, handed down an interesting opinion on the subject of pleading sufficiency when presented with the issue after default judgment was rendered against a consumer in a case in which the plaintiff had sued two. Hankston v. Equable Ascent Financial, 382 S.W.3d 631 (Tex.App.- Beaumont - 2012).

Applying the more exacting standard applicable to review of default judgments, the court held, in an opinion written by Justice David Gaultney, that the debt buyer's pleadings did not support the various theories that the creditor's attorney urged on appeal.

Petition did not sufficiently allege elements of account-suit theories 

As for the theory of open and stated account, the petition did not include an allegation that the defendant had agreed that the balance alleged as due was correct, in addition to equivocating on how much was due by conceding that the pleaded-for amount may not reflect all payments made.

Even though an affidavit was attached to the pleading, it did not qualify as a sworn account because the affidavit did not state that the "claim is, within the knowledge of affiant, just and true...." See Tex.R. Civ. P. 185, and therefor did not meet the minimum requirements of a sworn account suit under Rule 185. Nor did the petition contain any allegation that the account was "for goods, wares and merchandise," for material furnished, for personal services rendered, or for labor done or furnished. See Tex.R. Civ. P. 185.

As for the quantum meruit claim, there was no allegation that the plaintiff provided valuable services or materials. The court also noted that a quantum meruit claim is not available when there is an express contract, as was also alleged in the petition. -- > Express contract renders recovery in quantum meruit unavailable.

But the breach of contract claim was defective too, because the plaintiff tried to impose liability on two defendants, but the body of the petition referred only to one, and did not say which one opened the account or signed the contract. Nor did it even identify the original creditor, which is an additional proof requirement for a plaintiff suing as an assignee.

RELATED TOPICS AND BLOG POSTS

Theories of recovery in Texas debt collection suits
Breach of contract as the proper theory to collect a credit card debt (Tully v. Citibank)
Account suit theories: Open account, account stated, and sworn account
Challenging default judgments after the fact: Different methods of attack 
Post-judgment motion vs. restricted appeal: Caveats 

Anh H. Regent - Review and critique of standard pleadings filed by this Houston-based debt collection attorney [who is now a debtor in bankruptcy[

Anh Huynh Regent – Profile of debt collection attorney

Anh Regent (not Ann; this is a guy) has his own lawfirm, REGENT & ASSOCIATES, based in Houston, which specializes in debt collection, and has numerous corporate clients, including major credit card banks.

2015 UPDATE: Anh Regent filed for bankruptcy in March 2015 in the Southern District of Texas. He owes his process servers several hundred thousand dollars and one of his (former) debt buyer clients says he absconded with money advanced for payment of filing fees in cases he never filed. He also owes $200,000 to Chase, and smaller amounts to numerous other creditors. Anh Regent is a defendant (or represented the defendant) in numerous actions in which debtors allege that he or his firm violated the Fair Debt Collection Practices Act (FDCPA).    
   

NATURE OF PLEADINGS FILED BY ANH REGENT 

  

Regent files initial pleadings that are longer than those prepared by other debt collection attorneys because they include discovery requests as numbered sections, of which there are seven to nine, counting all. Some also includes attachments (or claim to include them, though they are actually omitted). 

  

Regent's original petition template is unique in pleading a hybrid causes of action titled "SUIT ON OPEN & STATED ACCOUNT/DEBT/BREACH OF CONTRACT" in a single paragraph. Although this is confusing, Regent has been presenting different banks' and debt buyer's cause of action or causes of action against the defendant in such fashion for years. Presumably it is meant to invoke the common-law cause of action of "suit on open account" (which is not applicable to credit card debt claims under long-standing precedents because the creditor does not sell goods or service); account stated (which has been approved for credit card debt collection by several courts of appeals in Texas, but not by all), and breach of contract, which is the correct and obvious legal theory for a debt claim based on a credit card agreement. As for "debt" generally, it is not a cause of action, and it is not clear what legal theory Regent intends to invoke by including it. 

  

DISCOVERY REQUESTS WITHIN THE BODY OF THE PLEADING 
[not proper under the TRCP]

  

The inclusion of discovery request within a pleading is a practice of dubious validity under the rules of civil procedure. One court of appeals has already taken Regent to task for embedding discovery requests within his petition, thus confounding the distinct purposes of pleadings and discovery, in violation of the TRCP, and creating confusion regarding the applicable due date for the answer to the lawsuit and the due date for discovery responses (which is longer). 

Be that as it may, it rarely becomes an issue. Pro se defendants generally do not know that the rules state that discovery is not to be filed, and consumer attorneys probably do not consider it worthwhile objecting, since the plaintiff can simply re-serve the discovery requests by fax or certified mail later. The improper form of service may, however, provide a defense for deemed admissions, or additional grounds for a motion to strike them. It may also provide a basis for an attack on a default judgment. 

           

Regent's typical petition encompasses two types of requests: Requests for Admissions, and Requests for Disclosures. Other debt suit attorneys also serve interrogatories with the citation and petition, but as separate document that also includes other discovery requests.

The purpose of requests for admissions is to use deemed admissions in lieu of evidence for summary judgment, or for default judgment purposes. Deemed admissions result automatically when the Defendant fails to respond to requests for admissions by the deadline. In the case of such default, all propositions which the cardholder is asked to admit, are considered admitted. (--> Deemed admissions in debt suit litigation). 
  
Requests for admissions are not supposed to be embedded in pleadings, but Anh Regent deliberately flouts that rule, and rarely gets taken to account when he uses the deemed admissions so obtained for default judgment purposes. See excerpt from motion for default judgment below:  

Regent uses the tactic because he can then use the return of citation, i.e. the proof that the petition was served, to also prove that the requests for admissions were served.

REGENT PLEADINGS IN COMPARATIVE VIEW

Regent's typical original petition also differs from pleadings filed by other debt collections attorneys in that it alleges (in the fact section) that the revolving balance was accelerated by the original creditor. The pleading typically does not identify the original creditor, however, unless the plaintiff expressly sues as assignee of such-and-such bank, and the original creditor thus appears in the case style.  

ATTORNEY FEES. Regent pleads for attorneys fees in a separate paragraph. He does not plead for a specific amount, but one of the items in the enumerated list of requests for admission asks the defendant to admit that a specific dollar figure is reasonable. That  dollar amount is 25% of the amount that the petition alleges is owed by the defendant.

SUIT-ON-ACCOUNT THEORIES. Regent pleads "open account" as a theory of recovery, and moves for summary judgment on it, as an alternative to breach of contract and account stated (discussed elsewhere). Suit on account, however, presupposes a sales transaction from the creditor to the debtor, and that does not apply in credit card debt cases. Under long-standing appellate decisions, the open account theory fails for the same reason the sworn account theory fails. Sworn account is, after all, not a theory of recovery, it is merely an expedited procedure for bringing a common-law open account suit by attaching verification and documentation to the original petition. If the procedural requisites of Rule 185 are not satisfied, the Plaintiff must prove its common-law account claim under the normal evidentiary standard. But the standard of proof does not affect the substantive requirement that the claim be based on sale of goods or services by the claimant to the defendant.

ORIGINAL CREDITOR SUITS VS LAWSUIT BY DEBT BUYERS. Regent apparently uses the same petition template for original creditors suits and collection suits by debt buyers. Some references in the standard pleading are in the disjunctive ("either/or") form so as to cover alternative scenarios, e.g. reference to "the terms of the agreement with Plaintiff/Plaintiff's predecessor in interest."  Discovery requests similarly refer to "Plaintiff or Plaintiff's predecessor in interest."

VENUE PARAGRAPH. Regent asserts alternative basis why venue would be appropriate in the county in which suit is filed: (1) because this is where the contract was signed; (2) where the Defendant resides, or (3) where the events giving rise to Plaintiff's claim occurred. What is noteworthy here is the inclusion of the first. Credit card accounts typically do not involve signed contracts, and even signed applications are rarely produced as summary judgment or trial exhibits.

APPELLATE REVIEW OF REGENT PLEADINGS 

One court of appeals  has had occasion to examine the quality and sufficiency of Regent's pleading in an appeal from a default judgment. Applying a more exacting standard because a default judgment was involved, it found fault with it for multiple reasons, and reversed the default judgment because none of the theories of recovery that Regent urged on appeal was supported by proper allegations in the petition. Hankston v. Equable Ascent Financial, 382 S.W.3d 631 (Tex.App.- Beaumont - 2012, no petition to Texas Supreme Court).

Here is an excerpt from what the appellate panel had to say about Regent's pleading:

In this case appellee, claiming to be the current owner of an indebtedness, sued two defendants. The pleading references supporting "attached documentation[,]" but neither the underlying contract nor an assignment is attached to the petition. 

Neither the petition nor any attached document names the original lender. The petition includes only an account number, but does not name the defendant who opened the account or signed the contract. See Lambert v. Dealers Elec. Supply, Inc., 629 S.W.2d 61, 63 (Tex.App.-Dallas 1981, writ ref'd n.r.e.) (op. on reh'g) ("[O]nly those matters alleged in the body of the petition are matters upon which defendant is placed upon notice that plaintiff intends to prove upon trial."). 

Appellant's name is misspelled in the preamble, the only place in the petition other than the style where he is named, and the petition (filed in Orange County) does not provide the appellant's residence (in Harris County), although that was known. See Tex.R. Civ. P. 79. The body of the pleading refers to only one defendant, though not by name, an allegation consistent with appellant's argument that he did not sign the contract or open the account. See Lambert, 629 S.W.2d at 63. But appellee seeks to hold both defendants liable for the alleged amount.

In the petition, appellee also states: "However, this amount may not include any payments or credits occurring after the date of this petition or the date of the affidavit of [p]laintiff's representative." The attached "affidavit" appears to be dated eleven months before the default judgment is signed, and refers to a single unnamed "defendant." The affidavit is an apparent attempt to support a suit on account under Rule 185, but the affidavit does not state the "claim is, within the knowledge of affiant, just and true...." See Tex.R. Civ. P. 185; see also Griswold, 249 S.W.2d at 61(reversing default judgment because affidavit did not meet the requirements of Rule 185). Although the affidavit uses the singular "defendant," it does not state which defendant allegedly owes the debt. 

The petition contains no assertion that the account was "for goods, wares and merchandise," for material furnished, for personal services rendered, or for labor done or furnished. See Tex.R. Civ. P. 185; see also Hollingsworth v. Nw. Nat'l Ins. Co., 522 S.W.2d 242, 245 (Tex. Civ.App.-Texarkana 1975, no writ). Furthermore, appellee was not a party to the original transaction. SeeVolvo Petroleum, Inc. v. Getty Oil Co., 717 S.W.2d 134, 138 (Tex.App.-Houston [14th Dist.] 1986, no writ) ("Such accounts, though verified, are hearsay as to such parties[.]"), overruled on other grounds by Sosa v. Cent. Power & Light, 909 S.W.2d 893, 895 (Tex.1995).

Appellee argues that the pleading nevertheless is sufficient as a suit on an open account and on an account stated. But the petition does not include an allegation that the appellant agreed that the balance alleged to be due is correct. See E. Dev. & Inv. Corp. v. City of San Antonio, 557 S.W.2d 823, 824-26 (Tex.Civ.App.-San Antonio 1977, writ ref'd n.r.e.); Unit, Inc. v. Ten Eyck-Shaw, Inc., 524 S.W.2d 330, 334 (Tex.Civ.App.-Dallas 1975, writ ref'd n.r.e.). Rather, the petition itself includes an assertion that the amount may not reflect all payments made. And while the appellee also attempts to assert an action for quantum meruit, the pleading contains no assertion that appellee provided valuable services or materials to appellant. See Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990). Also, the discovery requests in the petition reference an express contract. See id. ("Generally, a party may recover under quantum meruit only when there is no express contract[.]").

ALL THREE THEORIES PLEADED BY REGENT FAILED IN TULLY VS. CITIBANK 

In Tully v Citibank, the Texarkana Court of Appeals held that the cardholder’s affidavit filed to counter Citibank’s motion for summary judgment was conclusory and therefore was ineffective, but that it did not matter because Citibank had not met its burden of proof on its only potentially viable theory of recovery: breach of contract. With respect to the other two theories on which Regent had moved for summary judgment, the court held that they were not viable as a matter of law.

The court rejected the proposition that the credit card suit can be brought as a sworn account suit, which a number of other courts of appeals have confirmed also; and held that Citibank could not recover in quantum meruit because it had proven the existence of a contract. The rule has long been that equitable remedies are not available when a plaintiff has a legal remedy for breach of contract. -- > Expresss contract defense to non-contract theories of recovery 

The opinion does not specifically address the implications of a credit card bank withholding the contract (so that it is not before the court), and moving for summary judgment only on the quantum meruit theory. That litigation tactic should fail because a written contract was required under federal law, and the plaintiff’s decision to withhold it does not alter the fact that the relationship between the parties was necessarily a contractual one. --> In re Tran, 351 B.R. 440, 445 (Bankr. S.D. Tex. 2006), aff'd, 369 B.R. 312 (S.D. Tex. 2007)(contract required by TILA).    

"Money Had and Received" claim in debt suit pleadings

Money Had and Received? - What is that supposed to mean?  

This is an oddly phrased common-law theory that allows a plaintiff to sue for the return of money that was received by someone who was not entitled to it. Like other common-law theories and remedies that are equitable in character, the judicial precedents upon which this legal theory rests do not allow it to be used for collection of a debt that represents money advanced or disbursed as a loan, or credit extended based on a contract or formal agreement.

If pleaded in a credit card debt suit, this theory may therefore be attacked as nonapplicable under the express-contract preclusion of equitable claims.

NATURE OF MONEY HAD AND RECEIVED AS A THEORY OF RECOVERY 
AND ESSENTIAL ELEMENTS THEREOF 

A cause of action for money had and received is not premised on wrongdoing, but looks only to the justice of the case. The critical issue is whether the defendant has received money which rightfully belongs to another. Such an action may be maintained to prevent unjust enrichment when a party obtains money which in equity and good conscience belongs to another. In short, it is an equitable doctrine applied to prevent unjust enrichment.

To prove a claim for money had and received, the plaintiff must show that a defendant holds money which in equity and good conscience belongs to the plaintiff. In defending against such a claim, a defendant may present any facts and raise any defenses that would deny a claimant's right under this theory.
Generally, when a valid, express contract covers the subject matter of the parties' dispute, there can be no recovery under a quasi-contract theory.

The quasi-contractual action for money had and received is a cause of action for a debt not evidenced by a written contract between the parties.

EXPRESS CONTRACT AND CLAIM FOR EQUITABLE RELIEF INCOMPATIBLE 

Because a credit card collection suit is always based on an underlying contract between lender and cardholder that specifies interest rate and other terms, money had and received is not a proper theory of recovery for collection of a debt incurred on a credit card.

That does not mean that debt collection attorneys do not invoke their theory in pleadings

See sample from pleading filed by Mark Rechner, a debt collection attorney with VINCENT LOPEZ SERAFINO JENEVEIN, P.C. in Dallas, in petition on behalf of Wells Fargo Bank NA:

This blawg post on money had and received as a legal theory of recovery in Texas was last modified or updated on March 14, 2014; January 21, 2014.

TEXAS CASELAW CLIP: MONEY-HAD-AND-RECEIVED CLAIM 

Money Had and Received claim under Texas law (caselaw snip)

A money had and received claim is "`equitable in nature'" and "`belongs conceptually to the doctrine of unjust enrichment.'" Fowler v. U.S. Bank Nat'l Ass'n, 2 F. Supp. 3d 965, 983 (S.D. Tex. 2014) (Lake, J.) (quoting Best Buy Co. v. Barrera, 248 S.W.3d 160, 162 (Tex. 2007), and Edwards v. Mid-Continent Office Distribs., L.P., 252 S.W.3d 833, 837 (Tex. App.—Dallas 2008, pet. denied)). To establish a claim for money had and received, Bryant must show that the "defendants hold money which in equity and good conscience belongs to him." Id. at 983.

Under Texas law, unjust enrichment "characterizes the result of failing to make restitution or benefits received under circumstances giving rise to an implied or quasi-contract." TransAmerica Natural Gas Corp. v. Finkelstein, 933 S.W.2d 591, 600 (Tex. App.—San Antonio 1996, writ denied). The purpose for the claim is to prevent unconscionable loss to the payor and unjust enrichment to the payee. Bryan v. Citizens Nat'l Bank in Abilene, 628 S.W.2d 761, 763 (Tex. 1982). An unjust enrichment claim "is based on quasi-contract and is unavailable when a valid, express contract governing the subject matter of the dispute exists." Coghlan v. Wellcraft Marine Corp., 240 F.3d 449, 454 (5th Cir. 2001) (applying Texas law); see also Finkelstein, 933 S.W.2d at 600.