Suit on sworn account is not a cause of action, but a different way to plead a common-law suit on account

San Antonio Court of Appeals reiterates that a sworn account is not a cause of action in its own right, but instead a procedural vehicle to present a prima facie case. The benefit of a prime facie case under Rule 185 are lost when the defendant files a sworn denial. When that happens, the plaintiff must prove the suit on account under the ordinary evidentiary standards (i.e. those applicable to a trial on the merits, or for summary judgment).  

NATURE OF SWORN ACOUNT SUIT (TRCP 185)

A suit on a sworn account is not an independent cause of action. Southern Mgmt. Servs., Inc. v. SM Energy Co., No. 14-12-00377-CV, 2013 WL 793153, at *2 (Tex. App.-Houston [14th Dist.] Mar. 5, 2013, no pet. h.). "It is based instead on Rule 185, which affords a procedural right of recovery in certain contract disputes." Id.; see also Pine Trail Shores Owners Ass'n v. Aiken, 160 S.W.3d 139, 144 (Tex. App.-Tyler 2005, no pet.) (noting Rule 185 is not a rule of substantive law and suit on sworn account is not a cause of action).
   

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-12-00029-CV – 6/5/2013
   

ADDITIONAL SWORN ACCOUNT CLIPS:

 

Under rule 185 of the Texas Rules of Civil Procedure, 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. See Tex. R. Civ. P. 185; Panditi v. Apostle, 180 S.W.3d 924, 926 (Tex. App.-Dallas 2006, no pet.).

SUBSTANTIVE ELEMENTS OF SWORN ACCOUNT (common-law suit on account) 
   

 

SUBSTANTIVE SWORN ACCOUNT ELEMENTS

 

The essential elements to prove a sworn account are: (1) that there was a sale and delivery of merchandise or performance of services; (2) that the amount of the account is just, that is, that the prices were charged in accordance with an agreement or were customary and reasonable prices; and (3) that the amount is unpaid. Adams v. H & H Meat Prods., Inc., 41 S.W.3d 762, 773 (Tex. App.-Corpus Christi 2001, no pet.). See also Cass v. Stephens, 156 S.W.3d 38, 70 (Tex. App.-El Paso 2004, pet. denied); Burch v. Hancock, 56 S.W.3d 257, 264 (Tex. App.-Tyler 2001, no pet.); Tex. R. Civ. P. 185.   

SALES TRANSACTION REQUIRED

A "sale and delivery of merchandise or performance of services" is one of the elements essential to prove a sworn account. Adams, 41 S.W.3d at 773.

A "sale" consists in the passing of title from the "seller" to the "buyer" for a price. Tex. Bus. & Com. Code Ann. § 2.106(a) (Vernon 1994). "Buyer" means a person who buys or contracts to buy goods. Tex. Bus. & Com. Code Ann. § 2.103(a)(1) (Vernon Supp. 2006). "Seller" means a person who sells or contracts to sell goods. Id. § 2.103(a)(4). Unless otherwise agreed by the parties, title to goods passes to the buyer at the time and place of delivery. Tex. Bus. & Com. Code Ann. § 2.401(b) (Vernon Supp. 2006).

SOURCE: DALLAS COURT OF APPEALS - 05-06-00216-CV - 2/23/2007

Capacity to sue and standing are distinct, and also have different procedural implications

 

CORPORATIONS’ CAPACITY TO SUE VS. STANDING

   

A corporation's authority to bring a lawsuit on a claim is an issue of capacity, not standing to sue. See El T. Mexican Rests., Inc. v. Bacon, 921 S.W.2d 247, 249 (Tex. App.-Houston [1st Dist.] 1995, writ denied) (capacity is a party's legal authority to go into court to prosecute or defend a suit). A party must challenge a corporation's capacity to file suit by a verified denial under rule 93. See id.; see also Sixth RMA Partners v. Sibley, 111 S.W.3d 46, 56 (Tex. 2003) (“When capacity is contested, Rule 93 requires that a verified plea be filed unless the truth of the matter appears of record.”).

  

SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12

  

Gutierrez's first three issues claim TWLF could not recover on the contract because its corporate privileges were forfeited by the secretary of state in 2004 for non-payment of franchise taxes. Gutierrez did not raise these arguments in a verified denial under rule 93; instead he raised them for the first time in a supplemental motion for new trial filed more than thirty days after the judgment was signed. Thus, the issues were not timely raised in the trial court and are not preserved for appeal. See Tex. R. Civ. P. 93(1), (2), (6), 329b(b); Tex. R. App. P. 33.1(a).

   

Gutierrez argues this is an issue of standing to sue and can be raised at any time. We disagree.

Gutierrez v. Wright Lawfirm, PLLC, No. 05-10-00725-CV, 2012 WL 1898950 (Tex. App.-Dallas Apr. 27, 2012, no pet.) (mem. op.)

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

Sworn Account Claim under Rule 185

TRCP 185 SWORN ACCOUNT CLAIM – SWORN DENIAL DESTROYS PRIMA FACIE CASE 

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. A petition that complies with the Rule establishes a prima facie case entitling the plaintiff to summary judgment. See Whiteside v. Ford Motor Credit Co., 220 S.W.3d 191, 194 (Tex. App.—Dallas 2007, no pet.); Powers v. Adams, 2 S.W.3d 496, 498 (Tex. App.—Houston [14th Dist.] 1999, no pet.).

If the sworn petition contains any deficiency, however, the account will not constitute prima facie evidence of the debt. Panditi v. Apostle, 180 S.W.3d 924, 927 (Tex. App.—Dallas 2006, no pet.). A party resisting a claim on a sworn account must submit a sworn denial supported by affidavit. Tex. R. Civ. P. 93(10). The filing of a sworn denial destroys the evidentiary effect of the itemized account, requiring the plaintiff to produce proof of the claim. Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex. 1979); Thorp v. Adair & Myers, 809 S.W.2d 306, 307 (Tex. App.—Houston [14th Dist.] 1991, no writ). 

SOURCE: Houston Court of Appeals 14-08-00691-CV 5/5/11