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In Simien and Cockrell, the plaintiffs had assumed ownership of contracts that prior account-makers had entered into with the defendant.
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No. 01-08-00593-CV
Opinion issued December 10, 2009.
On Appeal from County Civil Court at Law No. 4 Harris County, Texas, Trial Court Cause No. 903573.
Panel consists of Justices KEYES, ALCALA, and HANKS.
MEMORANDUM OPINION
In this lawsuit to collect credit card debt, appellant, Michelle D. Simien, appeals a judgment following a bench trial in favor of Unifund CCR Partners (hereafter "Unifund"). In five issues, Simien challenges the legal and factual sufficiency of the evidence and contends the trial court erred by admitting hearsay documents, excluding deposition evidence, awarding attorney's fees, and awarding prejudgment interest. We conclude the trial court properly admitted evidence, the evidence is legally sufficient to support the award of damages, and the trial court properly awarded attorney's fees and prejudgment interest. We therefore affirm.
Background
Simien opened a credit card account with Citibank. The credit card allowed Simien to make charges and receive cash advances, which she was obligated to repay under the terms of her agreement with Citibank. Simien received monthly statements showing her account expenditures, payments, and monthly balances. Simien made no attempts to dispute any information in the monthly statements or the amount showing on the account. Simien failed to pay the amount showing as of December 18, 2002, which was $10,540.51. Unifund purchased the debt on Simien's credit card account from Citibank on November 29, 2005.
On September 12, 2007, Unifund filed suit against Simien based on Simien's failure to pay the balance on the account. Unifund sought $34,600.08 in unpaid principal and interest. In her answers to requests for admission, Simien admitted that she breached the credit card agreement, but she did not admit the damages or the interest rate alleged by Unifund were accurate.
Over Simien's objection at trial, the trial court admitted a business record affidavit offered by Unifund that was signed by one of its employees, Joseph Lutz. Unifund attached documents to the affidavit, including a Unifund statement; an Assignment to Unifund from Citibank; three Citibank monthly statements; and a Citibank Card Agreement. Unifund also attached an affidavit from Kim Kenney. Neither affidavit included any reference to an explicit interest rate that would show how Simien's principal debt of $10,540.29 grew to $34,600.08 by July 23, 2007. Unifund's attorney also presented live testimony in support of the reasonableness and necessity of the attorney's fees sought. Unifund offered no other evidence.
In support of her objection to the Lutz affidavit, Simien offered portions of a deposition given by Lutz at a previous trial concerning an attempt to collect a different debt from a different debtor. The trial court excluded the deposition, ruling Lutz's testimony in the prior case was irrelevant and inadmissible. Simien did not personally appear at the trial. Simien's attorney did not introduce any evidence at the trial.
The trial court's judgment awards Unifund $34,600.08 in damages and $6,000 in attorney's fees. Following the trial, the court made findings of fact and conclusions of law.
Admission of Evidence
In her first two issues, Simien asserts that the trial court erred by (1) admitting hearsay documents and (2) excluding a deposition.
A. Standard of Review
Evidentiary rulings are committed to the trial court's sound discretion. Bay Area Healthcare Group, Ltd. v. McShane, 239 S.W.3d 231, 234 (Tex. 2007). We review a trial court's decision to admit or exclude evidence for an abuse of that discretion. In re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005). A trial court abuses its discretion when it acts without reference to any guiding rules or principles. Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex. 1999). We must uphold the trial court's evidentiary ruling if there is any legitimate basis for the ruling. Owens-Corning Fiberglass Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998); Oyster Creek Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307, 317 (Tex. App.-[1st Dist.] 2004, pet. denied).
B. Admission of Business Records Affidavit
Simien contends the affidavit by which Unifund sought to authenticate its business records under the hearsay exception is inadequate, and the trial court, therefore, erred by admitting hearsay.
1. The Rules of Evidence
"'Hearsay' is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Tex. R. Evid. 801(d). The proponent of hearsay has the burden of showing that the testimony fits within an exception to the general rule prohibiting the admission of hearsay evidence. Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 908 n. 5 (Tex. 2004).
Rule 803(6) of the Texas Rules of Evidence provides the following exception to the hearsay rule for business records:
A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, or by affidavit that complies with Rule 902(10), unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.
Tex. R. Evid. 803(6); see In re E.A.K., 192 S.W.3d 133, 141 (Tex. App.-[14th Dist.] 2006, pet. denied).
The predicate for admission of the business records may be established "by affidavit that complies with Rule 902(10)." Tex. R. Evid. 803(6). Rule 902(10) provides,
Any record or set of records or photographically reproduced copies of such records, which would be admissible under Rule 803(6) or (7) shall be admissible in evidence in any court in this state upon the affidavit of the person who would otherwise provide the prerequisites of Rule 803(6) or (7), that such records attached to such affidavit were in fact so kept as required by Rule 803(6) or (7). . . .
Rule 902(10) provides a form for the affidavit and states the affidavit "shall be sufficient if it follows this form though this form shall not be exclusive, and an affidavit which substantially complies with the provisions of this rule shall suffice. . . ." Tex. R. Evid. 902(10)(b). The form specified by the rule is as follows:
My name is _____, I am of sound mind, capable of making this affidavit, and personally acquainted with the facts herein stated:
I am the custodian of the records of _____. Attached hereto are _____ pages of records from _____. These said _____ pages of records are kept by _____ in the regular course of business, and it was the regular course of business of _____ for an employee or representative of _____, with knowledge of the act, event, condition, opinion, or diagnosis, recorded to make the record or to transmit information thereof to be included in such record; and the record was made at or near the time or reasonably soon thereafter. The records attached hereto are the original or exact duplicates of the original.
Id.
2. Verification of Third-Party Documents
In her first issue concerning the admission of Unifund's business records, Simien contends that Lutz's affidavit does not show he or anyone from Unifund verified the accuracy of the records provided by Citibank to Unifund.
Cases applying Rule 803(6) have stated that where an entity creates business records but the records become the second entity's primary record for the underlying transaction, the records may be admissible pursuant to Rule 803(6). See GT MC, Inc. v. Tex. City Ref., Inc., 822 S.W.2d 252, 258 (Tex. App.-[14th Dist.] 1991, writ denied); see also Cockrell v. Republic Mortgage Insurance Co., 817 S.W.2d 106, 112-13 (Tex. App.-Dallas 1991, no writ) (holding Rule 803(6) satisfied by testimony that third-party documents were kept in ordinary course of business and formed basis for insurance payment); see also GT, 822 S.W.2d at 258 (holding Rule 803(6) satisfied where documents "became buyer's primary record of information about underlying transaction"). In addition, records from the first entity may be admissible as records of the second entity, if the second entity determines the accuracy of the information generated by the first entity. See Duncan Dev., Inc., v. Haney, 634 S.W.2d 811, 813 (Tex. 1982) (holding subcontractor's invoices became integral part of builder's records where builder's employees' regular responsibilities required verification of subcontractors' performance and invoice accuracy); see also Martinez v. Midland Credit Mgmt., Inc., 250 S.W.3d 481, 485 (Tex. App.-El Paso 2008, no pet.)
In her affidavit, Kenney stated Unifund purchased Simien's account from Citibank. Lutz and Kenney both averred that the attached account documents were the originals or "exact duplicate[s]" of Simien's account documents. Lutz also stated that the records were kept in Unifund's regular course of business. Lutz's affidavit followed the form the example affidavit provided by Rule 902(10). This is sufficient to support the admission of the documents. See GT, 822 S.W.2d at 258 (holding invoice created and sent by different entity admissible as business records of receiving entity where invoices "became buyer's primary record of information about underlying transaction"); Cockrell, 817 S.W.2d at 112 (testimony by employee of mortgage insurer that documents assigned from loan servicer were received and kept in ordinary course of business and formed basis for insurance payment satisfied requirements of Rule 803(6)). We hold the Citibank documents became Unifund's primary record of the transaction and the documents were properly admitted by the trial court as the business records of Unifund.
3. Qualified Witness
Within her first issue, Simien also contends Lutz is not qualified to testify about the Citibank documents because he did not state he or anyone from Unifund knew of the events or conditions recorded in Citibank's records or had knowledge of the manner in which Citibank prepared the documents.
A witness may be unqualified to testify to the validity of third-party documents if the witness cannot testify about the third party's record-keeping practices. Martinez, 250 S.W.3d at 485. While the witness need not be the creator of the records or have personal knowledge of the contents, the witness is required to have personal knowledge of the manner in which records were prepared. Martinez, 250 S.W.3d at 485. The standards for both verification and witness qualification can be satisfied by testimony that documents obtained by assignment were kept in the ordinary course of business and formed a basis for ongoing transactions. See Cockrell, 817 S.W.2d at 112. Furthermore, a witness may be qualified when the witness testifies about the procedure by which invoices become the second company's records. See GT, 822 S.W.2d at 258.
In his affidavit, Lutz does not expressly aver that he has personal knowledge of Citibank's record-keeping practices. Lutz does state, however, that he has personal knowledge of the records, and "the records attached hereto are the originals or exact duplicates thereof of the records and documents" for Simien's account. The affidavit itself includes the monthly statements from Citibank, as well as the bill of sale and assignment of the account from Citibank to Unifund.
We hold Lutz is qualified to testify to the accuracy of the documents. See id.; cf. Martinez, 250 S.W.3d at 485 (holding affiant unqualified because he did not produce name of third party, his own full name, information of original acquisition, or any evidence of qualification to testify); Powell, 136 S.W.3d at 765 (holding affiant unqualified because he produced no third party documents and no assignment occurred).
4. Trustworthiness of Records
As a final argument within her first issue, Simien asserts Lutz's affidavit lacks trustworthiness because Lutz avers that records created by Citibank were records created by Unifund. Simien contends the affidavit does not meet the requirements of 803(6), which states, "the source of information or the method or circumstances of preparation [must not] indicate lack of trustworthiness."
Lutz states, "It was in the regular course of business of Unifund CCR Partners for an employee or representative of Unifund CCR Partners with knowledge of the act, event . . . recorded to make the record or transmit information . . . to be included in such record." This language mirrors precisely the language approved for submitting business records affidavits under the Texas Rules of Evidence. See Tex. R. Evid. 902(10). Kenney's affidavit states that Unifund purchased the account from Citibank and the business records attached to Lutz's affidavit included the bill of sale from Citibank. Because the affidavit accurately represents where the documents came from, it does not indicate a lack of trustworthiness. Cf. United Pac. Ins. Co. v. Jones, 710 S.W.2d 760, 762 (Tex. App.-Beaumont 1986, writ refused n.r.e.) (records of post-mortem test lacked trustworthiness because certain recitations in Rule 901(b)(10) affidavit "impossible" and because of certain gaps in chain of custody and chain of evidence of blood sample).
We conclude the trial court did not abuse its discretion in admitting the business records affidavit, and therefore, did not err in admitting all of the documents that are verified by the affidavit.
We overrule Simien's first issue.
C. Exclusion of Deposition
In her second issue, Simien contends the trial court improperly excluded deposition testimony given by Lutz at a previous trial. Simien contends the deposition is admissible as relevant evidence. Simien argues the evidence is relevant under Rule 401 because it has a "tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." See Tex. R. Evid. 401. Simien also asserts the deposition is relevant under rule 406 because it shows Lutz's actions "on a particular occasion [were] in conformity with [his] habit" of unfamiliarity with third-party records. See id. 406. Simien claims the Lutz deposition casts doubt on the trustworthiness of the Citibank documents attached to the affidavit.
Determining admissibility of business records affidavits involves deciding whether "the source of information or the method or circumstances of preparation indicate a lack of trustworthiness." Tex. R. Evid. 803(6). Simien does not challenge the trustworthiness of the source of information or the preparation of the Citibank documents, and the Lutz deposition is silent about Citibank. The excluded excerpts of the Lutz deposition relate only to the credibility of Unifund's employee, Lutz, on a different account several months prior to the events in question. The trial court did not abuse its discretion in excluding the Lutz deposition concerning a different case because that deposition does not pertain to Citibank and Simien never challenges the trustworthiness of the Citibank documents. See Associated Carriages, Inc. v. Int'l Bank of Commerce, 37 S.W.3d 69, 74 (Tex. App.-San Antonio 2000, pet. denied) (holding trial court's exclusion of irrelevant evidence not abuse of discretion).
We overrule Simien's second issue.
Sufficiency of Evidence
In the third issue, Simien contends the evidence is legally and factually insufficient to support many of the trial court's findings of fact.
A. Standard of Review
"The final test for legal sufficiency must always be 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). Legal-sufficiency review in the proper light must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. Id. If the evidence would enable reasonable and fair-minded people to differ in their conclusions, then jurors must be allowed to do so. Id. at 822. A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls within this zone of reasonable disagreement. Id. Although the reviewing court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it, if the evidence allows only one inference, neither jurors nor the reviewing court may disregard it. Id.
In determining factual sufficiency, this Court weighs all the evidence, both supporting and conflicting, and may set the finding aside only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Comm'n of Contracts v. Arriba Ltd., 882 S.W.2d 576, 582 (Tex. App.-[1st Dist.] 1994, no writ). In an appeal from a bench trial, we may not invade the fact-finding role of the trial court, who alone determines the credibility of the witnesses, the weight to give their testimony, and whether to accept or reject all or any part of that testimony. Nordstrom v. Nordstrom, 965 S.W.2d 575, 580-81 (Tex. App.-[1st Dist.] 1997, pet denied).
The essential elements of a breach of contract claim are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of contract by the defendant; and (4) damages sustained as a result of the breach. Williams v. Unifund CCR Partners Assignee of Citibank, 264 S.W.3d 231, 2335-36 (Tex. App.-[1st Dist.] 2008, no pet.) (citing Winchek v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197, 202 (Tex. App.-[1st Dist.] 2007, no pet.)).
B. Analysis
Simien contends that "if the business records attached to the Lutz affidavit are excluded, there remains no evidence to support findings of fact 1 through 5." Having held that the trial court's admission of the business records affidavit was proper, we overrule Simien's challenges to findings of fact one, three, and five because those challenges are expressly conditioned on the exclusion of the business records. However, as addressed below, Simien does assert challenges to a portion of finding of fact number two and finding of fact number four that are not conditional.
Findings of Fact one through five state,
1. That [Unifund] and [Simien] entered into an account agreement.
2. [Simien] did purchase goods and services at different places upon the account. Said purchases were at the agreed prices charged at the reasonable market value.
3. [Simien] promised to pay for said account.
4. Said account remains unpaid damaging [Unifund] in the amount of $34,600.08.
5. By failing to pay for said account pursuant to the terms of the account agreement, [Simien] breached the account agreement.
Simien also makes a conditional challenge to the trial court's conclusions of law one, two, four, five, and six. Simien states these conclusions of law "are invalid, because they are not supported by any facts if the documents attached to the Lutz affidavit are excluded." Because we have determined the business records were properly admitted, we overrule this portion of Simien's challenge to these conclusions of law.
Conclusions of Law one, two, four, five, and six state,
1. Said account remains unpaid damaging [Unifund] in the amount of $34,600.08.
2. Pursuant to the terms of the account agreement, [Simien] was also responsible for interest upon the indebtedness, as well as attorney's fees.
4. [Unifund] has standing to sue for breach of the account agreement.
5. [Unifund] performed under the terms of the account agreement.
6. By failing to pay for said account pursuant to the terms of the account agreement, [Simien] breached the account agreement.
The only challenges by Simien that are not conditioned upon the exclusion of the business records are that: (1) there is no evidence or insufficient evidence to support "that part of finding of fact number [two] in which the trial court found that the purchases made by Simien using the account 'were at the agreed prices charged or at the reasonable market value;'" and (2) there is insufficient evidence to support any damage award over $10,540.29.
Although Simien refers to finding of fact four, the quoted language is in finding number two.
1. Finding of Fact Number Two
Assuming Simien is correct that the evidence is legally and factually insufficient to support a finding that Simien's credit card purchases were "at the agreed prices charged or at the reasonable market value," we must still affirm.
"[A]n appellate court will overrule a challenge to fact findings that underpin a legal conclusion or disposition when other fact findings that also support that legal conclusion or disposition go unchallenged." Howeth Investments, Inc. v. City of Hedwig Village, 259 S.W.3d 877, 889 (Tex. App.-[1st Dist.] 2008, pet. denied) (quoting Britton v. Tex. Dep't of Crim. Justice, 95 S.W.3d 676, 682 (Tex. App.-[1st Dist.] 2002, no pet.)). Here, Simien acknowledges the trial court's findings of fact "appear to mirror the elements" of Unifund's claims. However, whether Simien paid "the agreed prices" or "the reasonable market value" when making purchases with her Citibank credit card is not an element of Unifund's claim for breach of contract because the credit card agreement does not require payments only for goods purchased at agreed prices or the reasonable market value. The remaining findings of fact, which Simien only challenged conditionally, are sufficient to support the trial court's conclusions of law and judgment for Unifund's claim for breach of contract. See Howeth Investments, Inc., 259 S.W.3d at 889-90 (overruling appellate issue because unchallenged findings of fact supported trial court's conclusions of law and judgment).
2. Damages
In finding of fact number four (and conclusion of law number one), the court stated, "Said account remains unpaid damaging [Unifund] in the amount of $34,600.08." Simien asserts the evidence is insufficient to support an award "of any damages over $10,540.29." Specifically, Simien contends,
[T]here is nothing in the record which explains how this account could accrue $24,059.79 in interests and fees between December 18, 2002, the date of the last tendered monthly statement, and May 16, 2008, the date of the judgment, so that damages could equal $34,600.08. . . . There is also insufficient evidence to support the application of any other interest rate from December 18, 2002 to May 16, 2008. All of the monthly statements reflect that there are different interest rates imposed. . . . Furthermore, none of the admitted records other than the three monthly statements set forth the applicable interest rate.
(Record citations omitted).
In his affidavit, Lutz states, "There is presently due, owing and unpaid by the Defendant, MICHELLE D. SIMIEN, the sum of $34,600.08, as of July 23, 2007." Kenney similarly avers, "There is due and payable from MICHELLE D. SIMIEN . . . the amount of $34600.08." Simien presented no controverting evidence.
Lutz's and Kenney's affidavits are some evidence from which a reasonable fact-finder could determine that Simien owed $34,600.08 on her credit card account. See City of Keller, 168 S.W.3d at 827. Because no other evidence was admitted, in weighing all the evidence we conclude the finding of $34,600.08 in damages is not so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust. See Cain, 709 S.W.2d at 176. We hold the evidence is legally and factually sufficient to uphold the award for damages.
We overrule Simien's third issue.
Attorney's Fees
In her fourth issue, Simien challenges the trial court's award of attorney's fees. Specifically, Simien asserts
If this Court holds that the documents attached to the Lutz business records affidavit were inadmissible, Unifund will not be able to prevail on any theory of liability nor can it recover any damages. Without prevailing on one of its causes of action and without recovering any damages, Unifund is not entitled to recover any attorney's fees.
Because we hold the business records affidavit is admissible, we need not address this conditional challenge.
We overrule Simien's fourth issue.
Prejudgment Interest
In her fifth issue, Simien challenges the trial court's award for prejudgment interest, asserting it amounts to a prohibited double recovery of damages. See Parkway Co. v. Woodruff, 901 S.W.2d 434, 441 (Tex. 1995). Simien states the trial court should not award prejudgment interest, calculated here at a rate of 5.25% from July 23, 2007 through May 16, 2008, the date of the judgment. The prejudgment interest is in addition to damages which include interest on her principal credit card debt for defaulting on her payments. Simien contends this default interest rate is 21.846% from December 18, 2002, until May 16, 2008. Simien asserts the prejudgment and default interest overlap from July 2007 to May 2008, awarding a double recovery to Unifund.
The prejudgment interest and the credit card account interest are two separate interest rates for two separate time periods. The interest rate for defaulting on credit card payments applied to the principal debt of $10,540.51 from December 18, 2002 through July 23, 2007. On July 23, 2007, the business records affidavit calculates Simien's debt to Unifund at $34,600.08. Therefore, before the trial court assessed any prejudgment interest, the damages had reached $34,600.08. The prejudgment interest was applied for the period of time after July 23, 2007. The trial court's judgment expressly provides for prejudgment interest "at the rate of 5.25% per annum from July 23, 2007 until date of entry of this judgment." Simien's argument against prejudgment interest on appeal is not supported by the record. We hold there is no double recovery in this case because the interest allowed by the credit card did not overlap with the period of time for which the prejudgment interest was ordered. We overrule Simien's fifth issue.
Conclusion
We affirm the judgment of the trial court.