Tuesday, November 29, 2011

Sworn Account suit requires more than a verified general denial to destroy prime-facie case if the petition conforms with TRCP 185

An answer in the form of a general denial does not controvert a prima-face case under Rule 185 (Suit on [sworn] Account) even if it puts all claims and facts in issue in other civil suits in Texas courts. Because the evidentiary presumption in favor of the plaintiff created by the sworn account rule is not destroyed, judgment may be had on the pleadings without the need for additional summary judgment evidence. Rule 185 provides an exception to the general rule that pleadings are not evidence and cannot support a judgment, standing alone. 
Under rule 185, a suit on a sworn account must contain a systematic record of the goods sold or services rendered and be supported by an affidavit stating that the “claim is, within the knowledge of affiant, just and true, that it is due, and that all just and lawful offsets, payments and credits have been allowed.” Tex. R. Civ. P. 185. This is a rule of procedure regarding the evidence necessary to establish a prima facie right of recovery.. Panditi v. Apostle, 180 S.W.3d 924, 926 (Tex. App.--Dallas 2006, no pet.). An open account .on which a systematic record has been kept and is supported by an affidavit. is prima facie evidence of a claim. Id. A plaintiff claiming a suit on a sworn account is not required to formally introduce the account as evidence of the debt. Brown Found. Repair & Consulting, Inc. v. Friendly Chevrolet Co., 715 S.W.2d 115, 116 (Tex. App.--Dallas 1986, writ ref'd n.r.e.).

The evidentiary presumption can be defeated, and the plaintiff forced to introduce proof of its claim, if the defendant files a sworn denial of the plaintiff's account supported by an affidavit denying the account as required by rule 93(10). See Tex. R. Civ. P. 93(10); Powers v. Adams, 2 S.W.3d 496, 498 (Tex. App.--Houston [14th Dist.] 1999, no pet.). But a sworn general denial does not constitute a denial of the account and is insufficient to remove the evidentiary presumption created by a properly worded and verified suit on an account. See Panditi, 180 S.W.3d at 927; Andrews v. East Tex. Med. Ctr., 885 S.W.2d 264, 268 (Tex. App.--Tyler 1994, no writ); Cooper v. Scott Irrigation Const., Inc., 838 S.W.2d 743, 746 (Tex. App.--El Paso 1992, no writ); Huddleston v. Case Power and Equipment Co., 748 S.W.2d 102, 103 (Tex. App.--Dallas 1988, no writ). Moreover, the defendant's written denial must state more than a .broad generalization that he .specially denies' each and all of the allegations . . . [and must] address the facts on which he intends to rebut the plaintiff's affidavit.. Andrews, 885 S.W.2d at 268. A defendant is not required to file a sworn denial if the plaintiff's suit on a sworn account was not properly pleaded. Panditi, 180 S.W.3d at 927.        
In this case, appellee sued appellant based on a sworn account for liquidated damages under rule 185. Appellee alleged that it delivered “certain goods, wares and merchandise and/or personal services” to appellant, that appellant agreed to pay appellee the sums charged, and that, after all “just and lawful offsets, payments and credits,” the sum of $775.68 was past due and owing. In addition, appellee sought $300 in reasonable attorney's fees. Appellee's petition included an affidavit from Bong Hoe Kim, president of Everbeauty, Inc. d/b/a Hair to Go, alleging that appellant's account, which was attached to the affidavit and incorporated by reference, was true and correct. Appellant's last responsive pleading, a verified “Fifth Amended Answer and Petition for Declaratory Judgement,” in addition to containing a general denial, included the following list of matters that were designated as defenses:

1. Defendant affirmatively claims defense of estoppel.

2. Defendant affirmatively claims defense of accord and satisfaction.

3. Defendant affirmatively claims defense of latches.

4. Defendant affirmatively claims defense of statute of limitations.

5. Defendant pleads defense of waiver.

6. Defendant pleads defense of satisfaction.

7. Defendant pleads defense of offsets for the returned merchandises to Plaintiff.

8. Defendant pleads defense of credit for the returned merchandises to Plaintiff.

9. Defendant pleads that he was always willing and able to pay Plaintiff any amount that was owed to Plaintiff.

10. Defendant pleads that attorney's fees requested by Plaintiff be denied because Defendant was always willing and able to pay the appropriate amount that was owed to Plaintiff.

11. Any demands for payment by Plaintiff was excessive and in bad faith. Therefore, attorney's fees for Plaintiff should be denied.
Attached to appellant's answer was a business records affidavit from Chu Chang Shu, the custodian of records for Q Hair Beauty Supply II, that included two collection notices, a UPS merchandise return receipt, an invoice, and a translated statement signed by appellee's salesperson on June 27, 2006.
At the trial held before the court on July 12, 2010, appellee's counsel requested judgment based on the rule 185 pleading and appellant's failure to file a verified denial of the account. The trial court discussed with counsel for both parties the sufficiency of appellant's answer and defenses. The court told appellant's trial counsel that appellant's answer and accompanying business records affidavit were insufficient to remove the evidentiary presumption because they did not allege any facts rebutting appellee's affidavit. The trial court heard argument from both parties before granting judgment for appellee, after which it listened to testimony from appellee's counsel regarding attorney's fees. The court did not enter findings of fact and conclusions of law.
Appellant now argues that the trial court “refused to hear [appellant's] defenses,” and that “failure to comply with the rule requiring sworn denials . . . does not foreclose assertion of other defenses that are not inconsistent with a true and just account for goods as delivered.” But appellant's written denial did not comply with rule of civil procedure 93(10), “which requires a special verified denial of the account to put plaintiff's claim at issue.. Huddleston, 748 S.W.2d at 103; see Tex. R. Civ. P. 93(10). Appellant denied .each and every allegation of [appellee's] [p]etition” and demanded “strict proof thereof.” This general denial, however, even though sworn to, did not constitute a denial of the account, and it was insufficient to rebut the evidentiary effect of appellee's pleadings. See Tex. R. Civ. P. 185, 93(10); Andrews, 885 S.W.2d at 268; Cooper, 838 S.W.2d at 746; Huddleston, 748 S.W.2d at103-04; see also Panditi, 180 S.W.3d at 927; Nguyen v. Short, How, Frels & Heitz, P.C., 108 S.W.3d 558, 562 (Tex. App.--Dallas 2003, pet. denied); Seisdata, Inc. v. Compagnie Generale de Geophysique, 598 S.W.2d 690, 692 (Tex. App.--Houston [14th Dist.] 1980, writ ref'd n.r.e.). As we have observed, “[a] defendant resisting a suit on a sworn account must comply with the rules of pleading and timely file a verified denial or he will not be permitted to dispute the receipt of the services or the correctness of the charges.” Panditi, 180 S.W.3d at 927 (citing, in part, rules 185 and 93(10)). “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.

Pursuant to the rules that govern sworn accounts, appellee presented a prima facie case and was not required to offer additional proof. The record also shows that appellant never offered evidence regarding any affirmative defenses, nor did it seek evidentiary rulings from the court, and it did not make an offer of proof or file a bill of exception. We further note that although appellant cites Cooper and Seisdata to support its argument, neither case suggests a party is free to argue that a trial court “refused to hear” its defenses when, as in this case, no effort was made to prove those defenses. See Cooper, 838 S.W.2d at 747; Seisdata, 598 S.W.2d at 691-92; see also Heggy v. Am. Trading Employee Ret. Account Plan, 123 S.W.3d 770, 778 (Tex. App.--Houston [14th Dist.] 2003, pet. denied) (“an affirmative defense does not rebut the factual proposition of the plaintiffs' pleading, but instead, allows the defendant to introduce evidence to establish an independent reason why the plaintiff should not prevail”). Accordingly, the trial court did not err by entering judgment against appellant.
We overrule appellant's issue.
We affirm the trial court's judgment.
SOURCE: DALLAS COURT OF APPEALS - 05-10-01268-CV -  11/22/11

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