EMCC INC., Assignee in Interest to REVGRO NATIONS v. Tony W. Johnson ( 2006 )

IN THE

TENTH COURT OF APPEALS

 

No. 10-05-00287-CV

EMCC, INC., Assignee in Interest

to REVGRO NATIONS,

                                                                      Appellant

 v.

Tony W. Johnson,

                                                                      Appellee

From the County Court at Law

McLennan County, Texas

Trial Court No. 2005-0171-CV1

MEMORANDUM Opinion

EMCC, Inc. sued Tony W. Johnson for a credit card debt.  Johnson failed to answer.[1] The court granted EMCC a default judgment for nominal damages.  In three issues, EMCC contends that: (1) it is entitled to judgment as a matter of law; (2) the court’s judgment is not supported by the evidence; and (3) the court improperly granted less relief than requested.  We modify the judgment and affirm the judgment as modified.

ANALYSIS

          In its second issue, EMCC contends that there is no evidence to support the court’s judgment reducing the amount of damages.  We address this issue in four sub-issues: (1) whether a default judgment was proper; (2) whether EMCC’s claims entitled it to a default judgment; (3) whether EMCC was entitled to damages; and (4) whether EMCC was entitled to attorney’s fees.

Standard of Review

A court’s findings of fact are reviewed in the same manner as jury findings.  See Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994); Lucas v. Texas Dep't of Protective & Regulatory Servs., 949 S.W.2d 500, 502 (Tex. App.—Waco 1997, pet. denied).  A no-evidence “challenge should be addressed to specific findings rather than the judgment as a whole.”  Beard v. Beard, 49 S.W.3d 40, 54 (Tex. App.—Waco 2001, pet. denied).

Where the “appellant asserts that there is no evidence to support an adverse finding on which she had the burden of proof, we construe the issue as an assertion that the contrary was established as a matter of law.”  Id; see Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989); see also La Grange v. Nueces County, 989 S.W.2d 96, 99-100 (Tex. App.—Corpus Christi 1999, pet. denied); Ex parte Thomas, 956 S.W.2d 782, 786 n.5 (Tex. App.—Waco 1997, pet. denied).  A no evidence point requires consideration of “whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review.”  City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).  We “must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not.”  Id.

Whether Default Judgment was Proper

A default judgment is appropriate where the petition “properly states a cause of action, invokes the trial court’s jurisdiction, gives fair notice to the defendant, and does not affirmatively disclose any invalidity of the claim on its face.”  Jackson v. Biotectronics, Inc., 937 S.W.2d 38, 42 (Tex. App.—Houston [14th Dist.] 1996, no writ). “At any time after a defendant is required to answer, the plaintiff may take a default judgment if the defendant has not previously filed an answer, and the citation with the officer’s return has been on file with the clerk for ten days.”  Aguilar v. Livingston, 154 S.W.3d 832, 834 (Tex. App.—Houston [14th Dist.] 2005, no pet.); see Tex. R. Civ. P. 239; see also Tex. R. Civ. P. 107.

Johnson filed no answer and the return of service remained on file for ten days before EMCC requested a default judgment.  See Jackson, 937 S.W.2d at 44; see also Tex. R. Civ. P. 107, 239; Aguilar, 154 S.W.3d at 834.  The court’s own judgment acknowledged that “service and personal jurisdiction are proper, all legal requirements have been met, the answer date is past, the officer’s return has been on file for the required time period, and a default judgment is appropriate.”  Under these circumstances, default judgment is proper.  See id.

EMCC’s Entitlement to a Default Judgment

EMCC claims relief based on Texas Rule of Civil Procedure 185 and breach of contract. First, Rule 185 governs suits on account and applies to transactions involving a “sale upon one side and a purchase upon the other, whereby title to personal property passes from one to the other, and the relation of debtor and creditor is thereby created by general course of dealing.”  Bird v. First Deposit Nat’l Bank, 994 S.W.2d 280, 282 (Tex. App.—El Paso 1999, pet. denied) (emphasis original); see Tully v. Citibank, N.A., 173 S.W.3d 212, 216 (Tex. App.—Texarkana 2005, no pet.).  Transactions “resting upon special contract” are excluded.  Id.

In credit card cases, “no title to personal property passes from the bank to the cardholder; rather, the card evidences a line of credit extended by the bank which the cardholder may use to purchase goods and services from a third party.”  Bird, 994 S.W.2d at 282; see Tully, 173 S.W.3d at 216.  Therefore, “a credit card issued by a financial institution does not create the sort of debtor-creditor relationship” required by Rule 185.  Id.  Because the record reflects that EMCC’s suit against Johnson involves a credit card debt, EMCC is not entitled to a default judgment based on Rule 185.  See Bird, 994 S.W.2d at 282; see also Tully, 173 S.W.3d at 216.

Second, to prove breach of contract, a party must show: (1) a valid contract with the defendant; (2) plaintiff performed or tendered performance; (3) defendant breached the contract; and (4) plaintiff suffered damages as a result of the breach.  Critchfield v. Smith, 151 S.W.3d 225, 233 (Tex. App.—Tyler 2004, pet. denied); Runge v. Raytheon E-Systems, Inc., 57 S.W.3d 562, 565 (Tex. App.—Waco 2001, no pet.).

To support its breach of contract claim, EMCC relied on requests for admissions included in its petition.  Johnson failed to answer either the petition or the admissions, but the court found that EMCC “offered no evidence” that Johnson was served with the requests.  We disagree.

A “certificate by a party or an attorney of record, or the return of the officer, or the affidavit of any other person showing service of a notice shall be prima facie evidence” of service.  Tex. R. Civ. P. 21a (emphasis added); see Mathis v. Lockwood, 166 S.W.3d 743, 745 (Tex. 2005).  According to the officer’s return, Johnson was personally served with the petition.  The admissions were incorporated into the body of EMCC’s petition.  Therefore, the officer’s return constitutes prima facie evidence that Johnson was served with both the petition and the admissions. See id.  Because Johnson failed to respond to the requests, the admissions are deemed admitted.  See Tex. R. Civ. P. 198.2(c).

Of these deemed admissions, the following is established:

EMCC and Johnson agreed that EMCC would provide services, goods, wares, and/or merchandise to Johnson, for which Johnson would pay.

EMCC performed the acts described in the contractual agreement by delivering to Johnson the goods, wares, merchandise and/or services described in such agreement. 

The remainder between the payments made and the purchases, plus proper interest is $8,763.85.

Johnson has made payments less than the total of the purchases, plus proper interest.

Johnson has no defense to the suit, and judgment should be granted, as prayed for.

The affidavit of an EMCC representative also stated that Johnson “defaulted, by not paying timely, in violation of the agreement.”

The affidavit, pleadings, and deemed admissions establish that: (1) Johnson agreed to make payments in exchange for a line of credit; (2) EMCC provided the credit; (3) Johnson defaulted; and (4) EMCC was owed $8,763.85.  Thus, EMCC conclusively proved each element of its breach of contract claim.  See Critchfield, 151 S.W.3d at 233; see also Runge, 57 S.W.3d at 565; Jackson, 937 S.W.2d at 41-42; Tex. R. Civ. P. 107, 239.

EMCC’s Entitlement to Damages

Finding that EMCC produced no evidence of damages at the default hearing, the court awarded only $100 in nominal damages.  While the court’s findings indicate that EMCC’s attorney did not appear for a hearing, EMCC claims a hearing was not held.  No reporter’s record exists to confirm whether a hearing occurred.  Nevertheless, the court incorrectly concluded that EMCC failed to produce evidence of damages.

Pleadings and affidavits “constitute a record upon which the court may base a default judgment.”  Barganier v. Saddlebrook Apartments, 104 S.W.3d 171, 173 (Tex. App.—Waco 2003, no pet.); see Tex. Commerce Bank v. New, 3 S.W.3d 515, 516-517 (Tex. 1999).[2] The pleadings, affidavits, and deemed admissions on which EMCC relied conclusively establish that Johnson breached his contract with EMCC in the amount of $8,763.85.  Thus, the record provided the court with a sound basis for awarding damages in the amount of $8,763.85.  See id.

EMCC’s Entitlement to Attorney’s Fees

A party is entitled to attorney’s fees upon a showing that the fees are reasonable and necessary and that: (1) the claimant is represented by counsel; (2) the claimant presented the claim to the opposing party; and (3) payment must not have been tendered within 30 days after presentment.  Tex. Civ. Prac. & Rem. Code Ann. § 38.002 (Vernon 1997); see Doncaster v. Hernaiz, 161 S.W.3d 594, 606 (Tex. App.—San Antonio 2005, no pet.).  A party may obtain attorney’s fees for a claim based on “an oral or written contract.”  See Jackson, 937 S.W.2d at 44; Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 1997).

An affidavit from EMCC’s attorney stated that $2,921.28 is a “reasonable and customary” attorney’s fee.  The deemed admissions also established that: (1) EMCC made demand on Johnson for payment of the outstanding balance due at that time; (2) at least $2,921.28 should be awarded as attorney’s fees; and (3) Johnson has made payments less than the total of the purchases, plus proper interest.  This evidence conclusively proved EMCC’s entitlement to attorney’s fees in the amount of $2,921.28.  See Tex. Civ. Prac. & Rem. Code Ann. §§ 38.001, 38.002; see also Jackson, 937 S.W.2d at 44; Doncaster, 161 S.W.3d at 606.

CONCLUSION

The court properly found that EMCC is entitled to a judgment on the merits as a result of Johnson’s default.  However, in light of the evidence, the court’s finding that EMCC failed to produce evidence of damages and its reduction of EMCC’s damages are not supported by the record.  City of Keller, 168 S.W.3d at 827.  Rather, default judgment was proper and the evidence conclusively establishes EMCC’s breach of contract claim and its entitlement to damages and attorney’s fees.  See Jackson, 937 S.W.2d at 41-42, 44; see also Aguilar, 154 S.W.3d at 834; Critchfield, 151 S.W.3d at 233; Runge, 57 S.W.3d at 565; Barganier, 104 S.W.3d at 173; New, 3 S.W.3d at 516-517; Doncaster, 161 S.W.3d at 606.  We, therefore, sustain EMCC’s second issue and do not address its remaining issues.  See Tex. R. App. P. 47.1.  We modify the court’s judgment to reflect that EMCC recover from Johnson damages of $8,763.85; and attorney’s fees of $2,921.28.  We affirm the judgment as modified.

FELIPE REYNA

Justice

Before Chief Justice Gray,

Justice Vance, and

Justice Reyna

(Chief Justice Gray dissenting)

Affirmed as modified

Opinion delivered and filed October 25, 2006

[CV06]       

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[1] Johnson also did not file an Appellee’s Brief in this proceeding.

[2] In unliquidated damages cases, courts must hear evidence regarding damages.  See Tex. R. Civ. P. 243.  “Because unobjected to hearsay constitutes probative evidence, it satisfies the requirement of Rule 243 that there be evidence of unliquidated damages.”  Tex. Commerce Bank v. New, 3 S.W.3d 515, 517 (Tex. 1999).