Opinion
No. 04-05-00355-CV
Delivered and Filed: February 15, 2006.
Appeal from the 79th Judicial District Court, Jim Wells County, Texas, Trial Court No. 01-09-39795, Honorable Richard C. Terrell, Judge Presiding.
Affirmed.
Sitting: Alma L. LÓPEZ, Chief Justice, Catherine STONE, Justice, Phylis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
Appellants, Tres Cantu and Jose Alviar, appeal the trial court's order granting special exceptions and dismissing with prejudice their suit against appellees, ATT Broadband (ATT), Time Warner Communications (Time Warner), and TCI of South Texas (TCI). We affirm.
Background
Appellants received cable television services from appellees. Each cable subscription contract contained a written warning that failure to pay a bill timely would result in an administrative fee ranging from $2.95 to $5.00. Appellants failed to timely pay their cable bills various months and were assessed the administrative fee.
Appellants filed this purported class action lawsuit in October 2001 in Jim Wells County. The original petition alleged several causes of action resulting from payments of the late fees. After special exceptions filed by appellees were granted, appellants filed their first amended petition. This process repeated itself until the fourth amended petition was filed by appellants.
Jose Alviar was added as a plaintiff in trial court just prior to the filing of plaintiff's third amended petition. No class has been certified.
Appellants' fourth amended petition alleged that appellees: 1) breached the duty of good faith and fair dealing; 2) collected usurious interest; and 3) violated the Texas Finance Code, section 349.003. Appellants also sought declaratory and injunctive relief and restitution of all amounts paid to appellees. Once more, appellees filed special exceptions; however, upon granting special exceptions, the trial court dismissed appellants' case with prejudice.
Issues
Appellants contend the trial court erred by: 1) granting appellees' special exceptions, and 2) dismissing appellants' claims with prejudice. The substantive issue is whether the administrative late fee charged by appellees constitutes usury under Texas law. We conclude that it does not.
Standard of Review
When an appellant challenges a trial court's order sustaining special exceptions and dismissing a cause of action, two examinations are required. Mowbray v. Avery, 76 S.W.3d 663, 678 (Tex.App.-Corpus Christi 2002, pet. denied). We first review the trial court's order sustaining the special exceptions for an abuse of discretion. Id. The test for an abuse of discretion is whether the trial court acted without reference to any guiding rules and principles or in a manner deemed arbitrary and capricious. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). In the second examination we assess whether the petition states a claim. Meyer v. Shelley, 34 S.W.3d 619, 622 (Tex.App.-Amarillo 2000, no pet.). Because the second question is one of law, our review is de novo. Id.
Usury
Appellants contend they properly pled a usury cause of action, thus the trial court erred in granting appellees' corresponding special exceptions. Specifically, appellants claim the late fees charged by the cable television providers amounted to usury under the Texas Finance Code. Usury is "interest that exceeds the applicable maximum amount allowed by law." Tex. Fin. Code Ann. § 301.002(a)(17) (Vernon Supp. 2005). A usurious transaction involves a loan of money, an absolute obligation to repay the principal, and the exaction of a greater compensation than allowed by law for the use of the money. First Bank v. Tony's Tortilla Factory, Inc., 877 S.W.2d 285, 287 (Tex. 1994). In order for usury laws to apply, there must be an overcharge by a lender for the use, forbearance, or detention of the lender's money. Tex. Fin. Code Ann. § 301.002(a)(4) (defining interest as "compensation for the use, forbearance, or detention of money"). Because usury laws are penal in nature, they should be strictly construed. Houston Sash Door Co. v. Heaner, 577 S.W.2d 217, 222 (Tex. 1979).
Appellants claim the cable providers qualify as lenders because they lend their cable equipment or television programs to their customers; therefore, appellants claim, the late fees constitute usurious interest. We disagree with this argument, as did the Corpus Christi Court of Appeals in Garcia v. Texas Cable Partners, L.P., 114 S.W.3d 561, 565 (Tex.App.-Corpus Christi 2003, no pet.) and in Gallardo v. TCI Cablevision of Texas, Inc., No. 13-02-460-CV, 2004 WL 1932662, at *2 (Tex.App.-Corpus Christ Aug. 31, 2004, no pet.) (mem. op.), and the United States District Court in Rivera v. ATT Corp., 141 F.Supp.2d 719, 723 (S.D. Tex. 2001). The appellees "are more accurately described as cable service providers and, as service providers, [their] late fees cannot be usurious." Rivera, 141 F.Supp.2d at 723. A contract between parties to lend property is a rental agreement and the late fees charged do not constitute interest under Texas usury law. Id. at 723-24. In addition, a loan is defined as "an advance on money. . . ." Tex. Fin. Code Ann. § 301.002(a)(10) (Vernon Supp. 2005). Here, appellees have not provided an advance on money.
All three of these cases were filed on behalf of the respective plaintiffs by Bryan Powers, the appellants' attorney in the present case.
Furthermore, interest is needed for a usury claim to exist. Garcia, 114 S.W.3d at 566-67. The Gallardo court noted:
[B]ecause no lending transaction was involved in this case, there was no use, forbearance or detention of a lender's money. Therefore, the late fee does not constitute interest as defined [by] . . . the Texas Finance Code. . . . We conclude, therefore, that as a matter of law the late fees charged by appellees in this case are not interest. Thus appellants have failed to state a claim for usury under Texas law.
Gallardo, 2004 WL 1932662, at *2. The trial court did not abuse its discretion in granting appellees' special exceptions as to appellants' usury claim.
Appellants' second claim merely states that the Finance Code violation qualifies for up to treble damages under Section 349.003. Tex. Fin. Code Ann. § 349.003 (Vernon 1998). Because this transaction does not fall within the purview of the Texas Finance Code, this claim is without merit.
Duty of Good Faith and Fair Dealing
Appellants allege appellees breached a duty of good faith and fair dealing because: 1) appellees concealed the fact that the administrative fees bore no realistic relationship to actual costs associated to late payments; 2) the fees were usurious; and 3) appellees publicized false statements pursuant to the rate, term, or condition of the extension of credit. The alleged damages owed appellants are the late fees paid to the appellees.
Certain "special relationships" give rise to the duty of good faith and fair dealing. Herrin v. Med. Protective Co., 89 S.W.3d 301, 308 (Tex.App.-Texarkana 2002, pet. denied). Absent a formal or informal relationship of trust and confidence, no duty exists. Crim Truck Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992), rev'd on other grounds, Subaru of Am. v. David McDavid Nissan, Inc., 84 S.W.3d 212 (Tex. 2002). Further, this duty does not arise in all contractual relationships. Subaru, 84 S.W.3d at 225. Generally, there is no duty of good faith and fair dealing in an ordinary, arms-length commercial transaction. Formosa Plastics Corp. USA v. Presidio Eng'rs Contractors, Inc., 960 S.W.2d 41, 52 (Tex. 1998); Frazier v. Frontier State Bank, No. 04-98-00384-CV, 1999 WL 125441, at *2 (Tex.App.-San Antonio May 10, 1999, no pet.) (mem. op.).
Appellants state a special relationship is present because appellees operate as public service companies which gives rise to an element of trust with their customers. In support of this argument appellants cite a Houston Court of Appeals case stating in dicta that the cable television provider had a special relationship with its customers owing them a duty of good faith and fair dealing. Houston Cable TV, Inc. v. Inwood W. Civic Ass'n, Inc., 839 S.W.2d 497, 504 (Tex.App.-Houston [14th] 1992), writ granted and judgment set aside without reference to merits, 860 S.W.2d 672 (Tex. 1993). We decline to follow this case.
As to this claim, the trial court did not act without reference to any guiding principles or rules or in a manner deemed arbitrary and capricious, thus, the trial court did not abuse its discretion in granting appellees' special exceptions. See Downer, 701 S.W.2d at 241-42.
Declaratory Judgment/Injunctive Relief
Appellants contend the trial court erred in granting appellees' special exceptions because they properly pled causes of action sufficient to sustain a declaratory judgment and injunctive relief. Specifically, appellants asked the trial court to declare the late fees an unenforceable penalty and they sought injunctive relief to stop the enforcement of the penalty clause and the charging of late fees. We overrule appellants' claims.
Texas law provides that penalty will not stand as an independent cause of action; penalty is an affirmative defense provided for by the Texas Rules of Civil Procedure. Phillips v. Phillips, 820 S.W.2d 785, 789 (Tex. 1991); Gallardo, 2004 WL 1932662, at *2.
The claims here are the same pursued in Gallardo v. TCI, and for the same reasons, the claims are overruled. Id. at *3. Appellants' penalty claims are merely restatements of their usury claim. Id. The actions for declaratory and injunctive relief involve the same late fee payments which form the basis for the usury claim. Id. The exclusive usury penalties provided for by the Finance Code do not include the relief prayed for by appellants. See Tex. Fin. Code Ann. § 305.007 (Vernon Supp. 2005); Gallardo, 2004 WL 1932662, at *3. Because no usury claim or penalty claim can be established, declaratory or injunctive relief cannot be provided. The trial court properly granted appellees' special exceptions.
Restitution
Appellants assert each fee charged and received was greater than twice the amount authorized by law, and therefore, each member of the class is entitled to a declaration that appellees forfeited all rights to collect the principal due and the late fees paid. Once again, this is simply a reassertion of the usury claim. Thus, pursuant to the reasoning applied to appellants' claims for usury and declaratory and injunctive relief, this claim is overruled.
Dismissal With Prejudice
Appellants allege the trial court erred in dismissing their causes of action with prejudice. A special exception is the appropriate vehicle to illustrate a plaintiff has failed to state a cause of action. Tex. R. Civ. P. 90-91; State v. Houdaille Indus., Inc., 632 S.W.2d 723, 724 (Tex. 1982). If the trial court sustains special exceptions for failure to state a cause of action, the court must allow the pleader an opportunity to amend its plea. Friesenhahn v. Ryan, 960 S.W.2d 656, 658 (Tex. 1998). The pleader may then amend the pleadings in order to cure the defect or stand on the pleadings and challenge the court's decision on appeal. Moseley v. Hernandez, 797 S.W.2d 240, 242 (Tex.App.-Corpus Christi 1990, no writ).
"[T]he right to amend does not extend to the privilege of multiple opportunities to amend in the face of repeated grants of special exceptions. If there is no reasonable probability that further amendment would disclose facts legally sufficient to sustain a cause of action, the trial court may properly refuse further leave to amend." Mowbray, 76 S.W.3d at 678 (emphasis added).
In the present case, the facts show appellants' original petition was filed in October 2001, and thereafter, appellees filed special exceptions. This same process continued until appellants filed their fourth amended petition in February 2005, and again the appellees filed special exceptions. Thus, after four amendments spanning well over three years, appellants' pleadings still failed to state a cause of action. We conclude that the trial court did not err in dismissing appellants' case with prejudice.
Additionally, appellants claim the trial court erred in dismissing their claim against TCI because TCI did not appear or point out any defects in appellants' petition. Because this is the only information supplied by appellants pursuant to this claim, this issue is waived. See Tex.R.App.P. 38.1(h) (requiring appellant's brief contain "a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record"); see also In re C.L., No. 04-03-00638-CV, 2004 WL 86136, at *3 (Tex.App.-San Antonio Jan. 21, 2004, no pet.) (mem. op.) (concluding the appellant's brief, containing four sentences on the issue complained of, failed to offer any substantive analysis or substantive discussion of the evidence in support of her contention).
Conclusion
Because the trial court did not abuse its discretion when it sustained appellees' special exceptions and subsequently dismissed the case with prejudice, we affirm the trial court's judgment.