Roberto Villarreal v. First Presidio Bank

Case: 17-50765 Document: 00514576198 Page: 1 Date Filed: 07/30/2018
REVISED July 30, 2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 17-50765 FILED
July 27, 2018
ROBERTO M. VILLARREAL, Lyle W. Cayce
Clerk
Plaintiff - Appellee
v.
FIRST PRESIDIO BANK, and its Successor-in-Interest, Big Bend Banks,
National Association, doing business as The Marfa National Bank,
Defendant - Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 3:15-CV-88
Before DAVIS, HAYNES, and DUNCAN, Circuit Judges.
PER CURIAM:*
In this case we conclude that the plaintiff may not validly bring a money-
had-and-received claim to contest a Texas bank’s refusal to honor a cache of
decades-old certificates of deposit. The express terms of the CDs governed the
parties’ payment dispute. Instead of suing for breach of contract, however, the
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 17-50765
plaintiff sued for money-had-and-received, a claim based on quasi-contract.
That theory is precluded by Texas law: “[W]hen a valid, express contract covers
the subject matter of the parties’ dispute, there can be no recovery under a
quasi-contract theory[.]” Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684
(Tex. 2000). The district court misapplied that settled rule. We therefore
REVERSE the district court’s judgment and RENDER judgment for the bank.
I.
In May 2014, Roberto M. Villarreal (“Villarreal”) attempted to redeem
five certificates of deposit (“CDs”) he had purchased in 1983 and 1984 from
First Presidio Bank (“Bank”) in Presidio, Texas. Villarreal had the physical
certificates for each CD, which he had retrieved by drilling his long-defunct
safety deposit box. The Bank refused to pay. It believed the three-decades-old
CDs had been redeemed years ago through a “lost certificate” affidavit, which
would have allowed redemption without physical certificates. The Bank lacked
records to back this up—given industry practice to destroy records every five-
to-seven years—but Bank employees testified that Villarreal had used this
procedure to redeem CDs. Moreover, Villarreal’s checking account had been
closed since 2008, and six months of statements from that year (one of the few
records produced at trial) showed no interest deposit from any CD, although
both parties agreed that any interest would have been deposited into that
account. For his part, Villarreal maintained he had never redeemed the CDs.
In March 2015, Villarreal sued the Bank in federal court under two
Texas law theories: (1) wrongful dishonor, see TEX. BUS. & COM. CODE ANN.
§ 4.402, and (2) money-had-and-received (which, as discussed below, is
premised on quasi-contract). On January 17, 2017, the district court denied the
Bank’s motion for summary judgment on both claims.
Following Villarreal’s case-in-chief, the Bank filed a motion for
judgment, which the district court granted on the wrongful dishonor claim but
2
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denied on the money-had-and-received claim. As relevant here, the court held
that the existence of a contract (i.e., the CDs) did not preclude Villarreal’s
money-had-and-received claim. It reasoned that Villarreal sought relief that
was not “inconsistent” with the contract and, further, that the contract did not
cover the issue in dispute because it did not address “whether or not Plaintiff
has redeemed the certificates of deposit.” After a bench trial, the court entered
judgment in Villarreal’s favor on the money-had-and-received claim for
$210,572.50, representing the sum of the CDs plus interest dating back to 1983
and 1984. The Bank timely appealed on multiple grounds, including the
ground that the express contracts evidenced by the CDs should preclude
Villarreal’s money-had-and-received claim.
II.
In an appeal from a bench trial we review findings of fact for clear error
and legal issues de novo. In re Mid–South Towing Co., 418 F.3d 526, 531 (5th
Cir. 2005). We need resolve only the legal issue of whether Villarreal brought
a valid money-had-and-received claim under Texas law. 1
III.
Under Texas law the CDs were valid and enforceable contracts
evidencing a debt between the parties. See, e.g., Ames v. Great S. Bank, 672
S.W.2d 447, 449 (Tex. 1984) (explaining “[t]he provisions of a certificate of
deposit form a contract which creates the relationship of debtor and creditor
between the bank and its depositor … subject to the law of contracts”).
Villarreal did not sue for breach of contract, however. 2 He sued for money-had-
and-received, which is a claim rooted in quasi-contract and unjust
1We sit in diversity—Villarreal is a Mexican citizen and the Bank is a Texas citizen—
and therefore apply Texas substantive law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938);
28 U.S.C. § 1332(a)(2).
2 When asked why at oral argument, Villarreal’s counsel could give no explanation.
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enrichment. 3 Fortune, 52 S.W.3d at 683; Stonebridge Life Ins. Co. v. Pitts, 236
S.W.3d 201, 203 n.1 (Tex. 2007).
Settled Texas law precludes Villarreal’s money-had-and-received claim:
“[W]hen a valid, express contract covers the subject matter of the parties’
dispute, there can be no recovery under a quasi-contract theory[.]” Fortune, 52
S.W.3d at 684; accord N. Cypress Med. Ctr. Operating Co., Ltd. v. Cigna
Healthcare, 781 F.3d 182, 204 & n.138 (5th Cir. 2015) (citing Fortune). Good
reason supports that rule: quasi-contract actions presuppose no contract
governs the dispute. See, e.g., Fortune, 52 S.W.3d at 684 (explaining “[a] quasi-
contract … ‘is not a contract at all but an obligation imposed by law to do justice
even though it is clear that no promise was ever made or intended’”) (quoting
Calamari, et. al., The Law of Contracts § 1–12 (3d ed. 1987)). Applying that
principle, Texas courts of appeals have explained that “[t]he 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.” MGA Ins. Co. v. Charles R.
Chesnutt, P.C., 358 S.W.3d 808, 815 (Tex. App.—Dallas 2012, no pet.) (citing
Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833, 836 (Tex.
App.—Dallas 2008, pet. denied)) (emphasis added). 4 That general rule settles
this case: express written contracts (the CDs) governed the parties’ payment
dispute, precluding a quasi-contract theory like money-had-and-received.
3 A money-had-and-received claim requires a plaintiff to “show that a defendant holds
money which in equity and good conscience belongs to him.” Plains Exploration & Prod. Co.
v. Torch Energy Advisors, Inc., 473 S.W.3d 296, 302 n.4 (Tex. 2015) (internal quotation marks
and citation omitted).
4 See also Mowbray v. Avery, 76 S.W.3d 663, 679 (Tex. App.—Corpus Christi-Edinburg
2002, pet. denied) (explaining that “[t]he unjust enrichment doctrine applies the principles
of restitution to disputes where there is no actual contract”); Amoco Prod. Co. v. Smith, 946
S.W.2d 162, 164 (Tex. App.—El Paso 1997, no pet.) (“The implied contract action for money
had and received is a cause of action for debt not evidenced by a writing.”).
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The district court mistakenly thought this case fell within an exception
to that general rule. Under Texas law an overpayment beyond what a contract
provides may sometimes be recovered as unjust enrichment. See, e.g., Sw. Elec.
Power Co. v. Burlington N. R.R. Co., 966 S.W.2d 467, 469–70 (Tex. 1998)
(observing that “in some circumstances, overpayments under a valid contract
may give rise to a claim for restitution or unjust enrichment”) (and collecting
decisions); accord N. Cypress Med. Ctr., 781 F.3d at 204 & n.139 (citing Sw.
Elec. Power Co.). If an overpayment qualifies as unjust enrichment, reasoned
the district court, so should an underpayment. Villarreal re-urges this
argument on appeal. We disagree. Overpayment typically falls outside a
contract’s terms and, in that event, the contract would not “cover[ ] the subject
matter of the parties’ dispute.” Fortune, 52 S.W.3d at 684. By contrast, here
the dispute involved the claimed non-payment of a debt evidenced by express
contracts (the CDs). Unjust enrichment has no role to play.
On appeal, Villarreal also argues that because he sought relief “not …
inconsistent” with the express contracts, he was not barred from claiming
money-had-and-received. Texas law is to the contrary: the Texas Supreme
Court has explained that recovery under equitable theories is “generally
inconsistent” with an express agreement covering the dispute. Fortune, 52
S.W.3d at 684. Moreover, Villarreal’s rule would lead to absurd results. If a
party could claim money-had-and-received so long as the recovery sought was
“not inconsistent” with the contract, then any contract claim could be re-cast
in quasi-contract, rendering contract law inert. As already explained, a quasi-
contract theory like money-had-and-received presupposes no valid contract.
See id. 5
5Staats v. Miller, 150 Tex. 581 (1951), on which Villarreal heavily relies, is not to the
contrary. There, the defendant allegedly breached an oral agreement to repair and sell a
harvester, after which the defendant would return some of the proceeds to the plaintiffs. Id.
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Finally, the district court reasoned (as does Villarreal on appeal) that the
CDs did not govern the dispute because their terms did not address “whether
or not Plaintiff has redeemed the certificates of deposit.” The pleadings
demonstrate otherwise. The subject matter of Villarreal’s money-had-and-
received claim and the contracts was identical—namely, the debt putatively
owed Villarreal according to the terms of the CDs. See, e.g., Fortune, 52 S.W.3d
at 684 (comparing “subject matter” of contract and unjust enrichment claim
and concluding that “the contract governs the parties’ respective rights and
obligations with regard to [that subject matter]”). Texas law therefore
precludes recovery under an unjust enrichment theory like money-had-and-
received. Id.
IV.
We REVERSE the judgment of the district court and RENDER judgment
for the Bank.
at 585. The Texas Supreme Court held the plaintiffs had “stated a cause of action for money
had and received.” Id. Staats does not discuss whether the agreement’s terms were
inconsistent with an equitable theory of recovery. In any event, the decision must be read in
light of the rule articulated in subsequent Texas Supreme Court cases that “when a valid,
express contract covers the subject matter of the parties’ dispute, there can be no recovery
under a quasi-contract theory.” Fortune, 52 S.W.3d at 684; see also, e.g., Sw. Elec. Power Co.,
966 S.W.2d at 469-70 (characterizing Staats as “allowing restitution for excess money held by
defendant … pursuant to oral contract”) (emphasis added).
6