Thursday, August 11, 2011
Sworn Account Pleading Requirements & How to Respond - TRCP 185 and 93(10)(verified denial)
SUIT ON SWORN ACCOUNT UNDER RULE 185
Pleading requirements for petition and answer - A general denial is insufficient to controvert a prima-facie case created by proper sworn account pleading, but the Plaintiff must comply with Rule 185 to take advantage of evidentiary benefits of the sworn account rule.
Texas Rule of Civil Procedure 185 applies to “any claim for a liquidated money demand . . . [for] labor done or labor or materials furnished . . . .” Tex. R. Civ. P. 185. This rule is not a rule of substantive law; rather, “it is a rule of procedure regarding the evidence necessary to establish a prima facie right of recovery” on certain types of contractual account claims. See Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex. 1979); Smith v. CDI Rental Equipment, Ltd., 310 S.W.3d 559, 566 (Tex. App.—Tyler 2010, no pet.); Panditi v. Apostle, 180 S.W.3d 924, 926 (Tex. App.—Dallas 2006, no pet.).
Rule 185 provides that “when an action is founded on an open account on which a systematic record has been kept and is supported by an affidavit, the account shall be taken as prima facie evidence of the claim, unless the party resisting the claim files a written denial under oath.” Panditi, 180 S.W.3d at 926; see Tex. R. Civ. P. 185.
To establish a prima facie case in a suit on a sworn account, the plaintiff must strictly comply with the requirements of Rule 185. Nguyen v. Short, How, Frels & Heitz, P.C., 108 S.W.3d 558, 562 (Tex. App.—Dallas 2003, pet. denied).
The plaintiff’s petition “must contain a systematic itemized statement of the services rendered, reveal offsets made to the account, and be supported by an affidavit stating the claim is within the affiant’s knowledge and that it is ‘just and true.’” Id.; see also Panditi, 180 S.W.3d at 926 (stating requirements for sworn account petition and accompanying affidavit). If there is a deficiency in the plaintiff’s sworn account, the account will not constitute prima facie evidence of the debt. Panditi, 180 S.W.3d at 927; Nguyen, 108 S.W.3d at 562.
The defendant resisting the sworn account must also strictly comply with the requirements of Rule 185, “or he will not be permitted to dispute the receipt of the services or the correctness of the charges.” See Panditi, 180 S.W.3d at 927; see also Vance v. Holloway, 689 S.W.2d 403, 404 (Tex. 1985) (per curiam) (“Holloway failed to file a sworn denial and he has, therefore, waived his right to dispute the amount and ownership of the account.”).
Rule 185 requires the defendant to “comply with the rules of pleading” and “timely file a written denial, under oath,” or else the defendant “shall not be permitted to deny the claim, or any item therein.” Tex. R. Civ. P. 185; Panditi, 180 S.W.3d at 927 (noting that Rule 185 requires sworn denial to be written and verified by affidavit). To place the plaintiff’s sworn account claim at issue, the defendant must file a “special verified denial of the account” in accordance with Texas Rule of Civil Procedure 93. See Huddleston v. Case Power & Equip. Co., 748 S.W.2d 102, 103 (Tex. App.—Dallas 1988, no writ); see also Tex. R. Civ. P. 93(10) (“A pleading setting up any of the following matters, unless the truth of such matters appear of record, shall be verified by affidavit[:] A denial of an account which is the foundation of the plaintiff’s action . . . .”).
This sworn denial must be included in the defendant’s answer; a sworn denial in a response to a summary judgment motion does not satisfy Rule 185. See Cooper v. Scott Irrigation Constr., Inc., 838 S.W.2d 743, 746 (Tex. App.—El Paso 1992, no writ); see also Rush v. Montgomery Ward, 757 S.W.2d 521, 523 (Tex. App.—Houston [14th Dist.] 1988, writ denied) (“Only in the affidavit accompanying his response to Ward’s motion for summary judgment did appellant dispute the correctness and fairness of the charges, and demand additional proof of his liability. Because the combined effect of Texas Rule of Civil Procedure 185 and Texas Rule of Civil Procedure 93(10) required appellant to raise those claims in his answer, we hold that appellant raised his assertions too late.”).
If the defendant fails to file a verified denial to the sworn account, the sworn account is received as prima facie evidence of the debt, and the plaintiff, as summary judgment movant, is entitled to summary judgment on the pleadings. Nguyen, 108 S.W.3d at 562; see Livingston Ford Mercury, Inc. v. Haley, 997 S.W.2d 425, 430 (Tex. App.—Beaumont 1999, no pet.) (holding that when plaintiff files proper sworn account petition but defendant does not comply with Rule 185, the petition will support summary judgment and “additional proof of the accuracy of the account is unnecessary”).
“In other words, a defendant’s noncompliance with rule 185 conclusively establishes that there is no defense to the suit on the sworn account.” Nguyen, 108 S.W.3d at 562; see Whiteside v. Ford Motor Credit Corp., 220 S.W.3d 191, 194 (Tex. App.—Dallas 2007, no pet.) (“When the defendant fails to file a sworn denial and the trial court enters summary judgment on a sworn account, appellate review is limited because the defendant will not be allowed to dispute the plaintiff’s claim.”).
If, however, the plaintiff’s suit on a sworn account was not properly pleaded pursuant to Rule 185, the defendant is not required to file a sworn denial. Panditi, 180 S.W.3d at 927. In this circumstance, a general denial is sufficient to controvert the account. Tex. Dep’t of Corrs. v. Sisters of St. Francis of St. Jude Hosp., 753 S.W.2d 523, 524 (Tex. App.—Houston [1st Dist.] 1988, no writ).
SOURCE: Houston Court of Appeals - 01-10-00610-CV - 8/11/11
Here, [ Defendant ] contends that his general denial and sworn affidavit attached to his response to [ Plaintiff ]’s summary judgment motion, which alleges that several offsets should be applied to the account, raises a fact issue because [ Plaintiff ] did not allege that all offsets, payments, and credits had been applied to the account, and, therefore, [ Plaintiff ] did not properly plead a sworn account in compliance with Rule 185. The record, however, reflects otherwise.
In its original petition, [ Plaintiff ] alleged that it “sold and delivered to [[ Defendant ]] certain heating and air conditioning labor, materials and supplies specified in the Account.” [ Plaintiff ] attached its contract with [ Defendant ] and two unpaid invoices totaling $32,365 to its original petition. [ Plaintiff ] also attached the affidavit of William Nylan. Nylan averred that he had personal knowledge of the account and stated:
According to [[ Plaintiff ]’s] books and records, pursuant to request by [[ Defendant ]], [[ Plaintiff ]] sold, delivered, and installed for [[ Defendant ]] certain labor, materials and supplies on account to one or more real properties, on which account a systematic record has been kept. A true and correct copy of the invoice(s) for said materials, labor, and supplies so provided . . . is (are) attached hereto as Exhibit “A-1” and incorporated herein for all purposes.
According to [[ Plaintiff ]’s] books and records, this claim is just and true and the amount due and unpaid by [[ Defendant ]] to [[ Plaintiff ]] after allowing for all just and lawful offsets, payments, and credits is [$32,365].
[ Plaintiff ]’s petition, affidavit, and supporting invoices contain all of the information required by Rule 185. See Tex. R. Civ. P. 185; Nguyen, 108 S.W.3d at 562 (stating requirements for sworn account petition and supporting affidavit). Thus, to dispute [ Plaintiff ]’s implied assertion that [ Defendant ] was not entitled to any offsets, [ Defendant ] was required to file a verified denial of the account in compliance with Rule 185 and Rule 93(10). See Panditi, 180 S.W.3d at 927. It is undisputed that [ Defendant ] filed only an unsworn general denial and did not argue that he was entitled to offsets until his response to [ Plaintiff ]’s summary judgment motion. Because [ Defendant ] did not file a verified denial, “he was precluded from denying ‘the claim or any item therein.’” See id. (quoting Tex. R. Civ. P. 185); Solano v. Syndicated Office Sys., 225 S.W.3d 64, 67 (Tex. App.—El Paso 2005) (“The failure to follow Rule 185 precludes the defendant from raising a fact issue and from disputing the receipt of the items or services rendered or the correctness of the claim. The defendant may not deny the claim or raise an issue that he did not owe the account or that it was wrongfully charged to him.”).
We conclude that because [ Plaintiff ] properly stated that all lawful offsets had been applied to [ Defendant ]’s account and [ Defendant ] did not file a verified denial challenging this assertion, [ Plaintiff ]’s petition and supporting affidavit constituted prima facie evidence of the sworn account which [ Defendant ] waived the right to dispute, entitling [ Plaintiff ] to summary judgment on its pleadings. We therefore hold that the trial court correctly rendered summary judgment in favor of [ Plaintiff ] on its sworn account.
We overrule [ Defendant ]’s first issue.
SOURCE: Houston Court of Appeals - 01-10-00610-CV - 8/11/11