Court Opinion

ID: 9949342
Source: CourtListenerOpinion
Date Created: 2024-03-11 14:11:31.406777+00
Date Added: 2024-06-11T14:30:25.119731
License: Public Domain

Opinion issued March 7, 2024

                                         In The

                                Court of Appeals
                                        For The

                            First District of Texas
                             ————————————
                                NO. 01-22-00795-CV
                             ———————————
                         DAVID R. PATRICK, Appellant
                                           V.
            AMERICAN EXPRESS NATIONAL BANK, Appellee

                    On Appeal from the 268th District Court
                           Fort Bend County, Texas
                     Trial Court Case No. 21-DCV-283812

                           MEMORANDUM OPINION

      This is a suit to recover a credit card debt. American Express National Bank

sued David R. Patrick, individually, and his limited liability company (the “LLC”),1

1
      The LLC, E Solutions Tech Svc, also known as eSolutions Technologies &
      Services, LLC, which Patrick asserts is insolvent and defunct, is not a party to this
      appeal.
for breach of contract and account stated, alleging they defaulted on a credit card

agreement by failing to pay as agreed. American Express moved for summary

judgment on its claims, asserting Patrick and the LLC were jointly and severally

liable on the debt. The trial court granted summary judgment for American Express.

      Patrick now appeals pro se. In his sole issue, Patrick contends that the

summary judgment is erroneous because American Express failed to conclusively

establish his individual liability on the debt.

      We affirm.

                                     Background

      American Express alleged that it entered into a Cardmember Agreement with

Patrick and the LLC, provided an American Express credit card, and extended cash

advances or payments to third parties on their behalf. It further alleged that, under

the terms of the Agreement, Patrick and the LLC agreed to repay the advances, along

with interest and finance charges. However, despite demand, they failed or refused

to pay as agreed. Patrick answered and asserted that he was not liable for the debt

in his individual capacity.

      American Express then moved for summary judgment on its claims against

both Patrick and the LLC. American Express argued that it was entitled to a

summary judgment on its breach-of-contract claim because its evidence

conclusively established that it issued a credit card to Patrick and the LLC, and that,

                                            2
by keeping and using the card, Patrick and the LLC agreed to the terms of the

Cardmember Agreement. American Express further argued that it conclusively

established that it performed its obligations under the Agreement; that Patrick and

the LLC breached the Agreement by failing or refusing to pay as agreed; and that

such breach proximately caused American Express damages in the amount of

$13,005.60.

      American Express also maintained that it was entitled to judgment on its claim

for account stated2 because its evidence established: (1) a series of transactions

between the parties giving rise to the indebtedness of Patrick and the LLC to

American Express; (2) an agreement between the parties fixing an amount due; and

(3) implied promises by Patrick and the LLC to pay the indebtedness.

      In his summary-judgment response, Patrick asserted that the LLC was

registered in Texas in 2011 and that he is its sole member. He contended that, as a

member of the LLC, he could not be personally liable for its debt under Texas law.

He asserted that, in 2016, American Express invited him to open a corporate account,

and he provided the LLC’s company agreement and tax identification number. The

American Express representative “confirmed that [he] would not be personally

2
      A common-law claim for “account stated” is not a “suit on a sworn account,” which
      is “not available in a suit to recover credit card debt.” Williams v. Unifund CCR
      Partners, 264 S.W.3d 231, 235 (Tex. App.—Houston [1st Dist.] 2008, no pet.).

                                          3
responsible for the debt accrued on this account,” and he “never agreed verbally or

in writing to be personally liable for the debt(s) of [the LLC].”

      After conducting a virtual hearing, the trial court rendered summary judgment

for American Express in all things, awarding damages, jointly and severally, against

Patrick and the LLC in the amount of $13,005.60 and costs of $482.05.3

                                Summary Judgment

      Patrick argues in his sole issue that the trial court erred in granting summary

judgment for American Express against him because it failed to conclusively

establish the elements of its claims against him in his individual capacity.

3
      On September 26, 2022, American Express filed a “Notice of Remote Hearing,”
      setting its summary judgment motion for a virtual hearing on September 30, 2022.
      On that same day, the trial court inadvertently signed a “Final Summary Judgment”
      in favor of American Express.
      At the September 30 hearing, the trial court acknowledged that it had prematurely
      granted American Express’s motion and withdrew its prior summary judgment. At
      the conclusion of the hearing, the trial court orally granted summary judgment for
      American Express. The record before us does not reflect that the trial court’s oral
      pronouncement was ever memorialized in a written judgment. A judgment,
      however, is “‘rendered’ when the trial court’s decision upon the matter submitted to
      it for resolution is officially announced either orally in open court or by
      memorandum filed with the clerk.” In re Bill Heard Chevrolet, Ltd., 209 S.W.3d
      311, 314 n.5 (Tex. App.—Houston [1st Dist.] 2006, orig. proceeding) (emphasis
      added). Once a judgment is rendered by oral pronouncement, the entry of a written
      judgment is purely a ministerial act. Id. at 314. Accordingly, the trial court’s oral
      rendition in open court here constitutes the final judgment in this case.

                                            4
Standard of Review

      We review a trial court’s grant of summary judgment de novo. Eagle Oil &

Gas Co. v. TRO-X, L.P., 619 S.W.3d 699, 705 (Tex. 2021). In a traditional motion

for summary judgment, the moving party must show that no genuine dispute exists

as to any material fact such that the party is entitled to judgment as a matter of law.

TEX. R. CIV. P. 166a(c). We review the summary judgment record in the light most

favorable to the nonmovant, indulging every reasonable inference and resolving any

doubts against the motion. Eagle Oil & Gas Co., 619 S.W.3d at 705.

      If the moving party establishes its entitlement to judgment as a matter of law,

the burden then shifts to the non-movant to present countervailing evidence that

raises a genuine issue of material fact on the movant’s claims. City of Hous. v. Clear

Creek Basin Authority, 589 S.W.2d 671, 678 (Tex. 1979). Evidence raises a genuine

issue of material fact if reasonable people could differ in their conclusions in light

of all of the summary-judgment evidence. Goodyear Tire & Rubber Co. v. Mayes,

236 S.W.3d 754, 755 (Tex. 2007).

      When, as here, the trial court’s order granting summary judgment does not

specify the grounds relied upon, we will affirm the summary judgment if any of the

grounds are meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868,

872 (Tex. 2000).

                                          5
Breach of Contract

      To be entitled to summary judgment on its breach-of-contract claim against

Patrick, American Express must establish, as a matter of law: (1) a valid contract

with Patrick, (2) performance by American Express, (3) a breach by Patrick, and

(4) damages resulting from the breach. See Prime Prods., Inc. v. S.S.I. Plastics, Inc.,

97 S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied).

      To prove the existence of a valid contract, American Express had to establish

that (1) it made an offer; (2) Patrick accepted the offer in strict compliance with its

terms; (3) a meeting of the minds occurred on the essential terms; (4) each party

consented; and (5) the parties executed and delivered the contract with the intent that

it be mutual and binding. See Arshad v. Am. Express Bank, FSB, 580 S.W.3d 798,

804 (Tex. App.—Houston [14th Dist.] 2019, no pet.).

       In a credit-card case, these elements are satisfied when there is an issuance of

a credit card by one party and the use of the card by the other party. Jones v. Citibank

(S.D.), N.A., 235 S.W.3d 333, 338–39 (Tex. App.—Fort Worth 2007, no pet.)

(holding that contract was formed even if cardmember never signed card agreement

because cardmember obtained and used credit card); Winchek v. Am. Exp. Travel

Related Servs. Co., 232 S.W.3d 197, 204 (Tex. App.—Houston [1st Dist.] 2007, no

pet.) (credit card use and payments on account as reflected on statements

demonstrated existence of contract).

                                           6
      Further, in construing a written contract, we must ascertain and give effect to

the parties’ intent as expressed in the writing itself. Italian Cowboy Partners, Ltd. v.

Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011). We must give contract

terms their plain, ordinary, and generally accepted meanings unless the contract

itself shows them to be used in a technical or different sense. Valence Operating Co.

v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). And we must examine and consider

the entire writing in an effort to harmonize and give effect to all provisions so that

none will be rendered meaningless. Italian Cowboy Partners, 341 S.W.3d at 333. If,

after applying the pertinent rules of construction, the contract can be given a certain

or definite legal meaning or interpretation, then it is not ambiguous, and we will

construe the contract as a matter of law. Id.

      Here, American Express presented the business records affidavit of its

custodian, Mario D. Morales-Arias; the Cardmember Agreement; and billing

statements.

      In his affidavit, Morales-Arias stated:

      7.    I have personally reviewed American Express’ records
      concerning defendant DAVID R PATRICK aka DAVID PATRICK
      and E SOLUTIONS TECH SVC (“Defendant”). Those records reflect
      that Defendant opened an American Express credit card account, the
      current account number ending in [] (the “Account”) in May 2016. . . .
      8.     American Express’ records further reflect that Defendant used
      the Account to pay for various goods and services and/or obtain cash
      advances. Consistent with American Express’ standard business
      practices, American Express’ records reflect that it transmitted monthly

                                           7
      billing statements to Defendant. There is no record of Defendant ever
      asserting a valid unresolved objection to the balance shown as due and
      owing on the monthly statements provided to Defendant.
      9.    Pursuant to American Express’ records, under the terms of the
      Cardmember Agreement, Defendant defaulted in making the payments
      due on the Account. American Express’ records reflect that American
      Express closed Defendant’s Account. After giving Defendant credit for
      all payments made, if any, the amount justly due and owing as of
      8/30/2021 is $13,005.60, exclusive of court costs and attorneys’ fees.
      True and correct monthly Account Statements for the defendant’s
      Account for the period of 7/9/2020-7/9/2021 is/are annexed . . . .

      The May 14, 2016 Cardmember Agreement reflects that American Express

issued a “Business Platinum Card” to “Company Name: E Solutions Tech Svc” and

“Cardmember Name: David Patrick.” The Agreement specifies that:

      Basic Cardmember means the person who applied for this account or
      to whom we address billing statements. Company means the business
      for which the Account is established. You and your mean the Basic
      Cardmember and the Company. You agree, jointly and severally, to be
      bound by the terms of this Agreement.

(Emphasis added.) And, “[w]hen you . . . use the Account (or sign or keep a card),

you agree to the terms of the Agreement.”

      The terms of the Agreement include:

      ▪ “You may use the card to make purchases. You may also use the
        card at an ATM to get cash from a checking account you designate.”
      ▪ “Each Cardmember acknowledges and agrees that cards are
        intended to be used for the Company’s commercial or business
        purposes.”
      ▪ “We decide whether to approve a charge based on how you spend
        and pay on this Account and other accounts you have with us and
        our Affiliates. We also consider your credit history and your
        personal resources that we know about.”
                                        8
      ▪ “You promise to pay all charges . . . .”
      ▪ Upon closing the account, the “Basic Cardmember and Company
        remain jointly and severally liable for all Charges made on the
        Account.”

(Emphasis added.) The interest, charges, fees, and method of calculation are also

specified. And the Agreement states that it is the “final expression of the agreement

governing the Account” and that it “may not be contradicted by any alleged oral

agreement.”

      American Express additionally presented billing statements reflecting

transactions on an American Express Business Platinum Card in the name of “E

Solutions Tech Svc” and “David R Patrick.”

      This evidence established a contract between American Express and Patrick.

See Prime Prods., Inc., 97 S.W.3d at 636.4 The affidavit and billing statements show

that American Express issued a credit card to Patrick, as “Cardmember,” and the

Agreement provides that by using, signing, or keeping the card, the Cardmember

agrees to the terms of the Agreement. The billing statements reflect acceptance and

use—that is, a series of transactions and payments. See Jones, 235 S.W.3d at 338;

4
      See also Duran v. Citibank (S.D.), N.A., No. 01-06-00636-CV, 2008 WL 746532,
      at *5 (Tex. App.—Houston [1st Dist.] Mar. 20, 2008, no pet.) (mem. op.) (evidence
      of credit card use and payments established as matter of law existence of valid
      contract in breach-of-contract action); Hinojosa v. Citibank (S.D.), N.A., No. 05-07-
      00059-CV, 2008 WL 570601, at *3 (Tex. App.—Dallas Mar. 4, 2008, pet. denied)
      (mem. op.) (holding that acceptance and use of card established existence of
      contract as matter of law in breach-of-contract action).
                                            9
Winchek, 232 S.W.3d at 204. And the terms of the Agreement further provide that,

Patrick, as Cardmember, agreed to be “jointly and severally” bound to its terms and

to “pay all charges.” See Italian Cowboy Partners, 341 S.W.3d at 333.

      The evidence also establishes performance by American Express in the form

of extending credit to Patrick. See Prime Prods., Inc., 97 S.W.3d at 636.

      Further, the evidence establishes that Patrick breached the Agreement by not

paying all charges as agreed and establishes damages resulting from the breach. See

id. The affidavit states: “Pursuant to American Express’ records, under the terms of

the Cardmember Agreement, Defendant defaulted in making the payments due on

the Account.” And American Express transmitted monthly billing statements to

Patrick, and there is “no record of Defendant ever asserting a valid unresolved

objection to the balance shown as due and owing on the monthly statements

provided.” The statements and affidavit reflect an unpaid balance in the amount of

$13,005.60, in the name of not only the LLC, but also “David R Patrick.” See id.

      Patrick argues that American Express failed to meet its initial summary-

judgment burden to establish a valid contract with him individually and that he

breached its terms. According to Patrick, the Agreement governs a business credit

card to be used only for business expenses and that he was merely acting as a

member of the LLC in obtaining and using credit from American Express. He argues

that he is not liable for the debts of the LLC, relying on Section 101.114 of the Texas

                                          10
Business Organizations Code. He asserts that the “LLC Operating [A]greement

specifies [that he] is not obligated” for the debts of the LLC and that he “never agreed

verbally or in writing to be personally liable.”

      Section 101.114 of the Business Organizations Code states:

      Except as and to the extent the company agreement specifically
      provides otherwise, a member or manager is not liable for a debt,
      obligation, or liability of a limited liability company, including a debt,
      obligation, or liability under a judgment, decree, or order of a court.

TEX. BUS. ORGS. CODE § 101.114. Section 101.113 provides that a “member of a

limited liability company may be named as a party in an action by or against the

limited liability company only if the action is brought to enforce the member’s right

against or liability to the company.” Id. § 101.113.

      Generally, the “statutory protections afforded to members and managers of an

LLC give way only when a plaintiff can show that the LLC was used for the purpose

of perpetrating, and did perpetrate, an actual fraud for the member or the manager’s

direct personal benefit.” Fin & Feather Club v. Leander, 415 S.W.3d 548, 556 (Tex.

App.—Texarkana 2013, pet. denied) (citing Shook v. Walden, 368 S.W.3d 604, 621

(Tex. App.—Austin 2012, pet. denied)).5 This protection stems from the premise

that a limited liability company is a separate legal entity from its members. See Julka

v. U.S. Bank Nat’l Ass’n., 516 S.W.3d 84, 88 (Tex. App.—Houston [1st Dist.] 2017,

5
      See TEX. BUS. ORGS. CODE §§ 21.223, 21.224 (limitations on liability for fraud and
      under alter ego theory).

                                          11
no pet.); Sherman v. Boston, 486 S.W.3d 88, 94 (Tex. App.—Houston [14th Dist.]

2016, pet. denied).

      But, Texas law does not protect members of a limited liability company from

their own obligations. In re White-Robinson, 777 F.3d 792, 799 (5th Cir. 2015)

(distinguishing TEX. BUS. ORGS. CODE § 101.114). Under the Business

Organizations Code, a member may have individual liability if he “expressly

assumes, guarantees, or agrees to be personally liable to the obligee for the

obligation.” TEX. BUS. ORGS. CODE § 21.225(1); see Willis v. Donnelly, 199 S.W.3d

262, 272 (Tex. 2006); see also TEX. BUS. ORGS. CODE § 101.002(a) (“Subject to

Section 101.114,” Section 21.225 applies to limited liability companies and their

members).

      “Agency law is based on the same premise—an agent is not personally liable

on contracts made for a disclosed principal, in the absence of an express agreement

to be bound.” Neel v. Tenet HealthSystem Hosps. Dall., Inc., 378 S.W.3d 597, 605

(Tex. App.—Dallas 2012, pet. denied). Thus, an agent is not precluded from binding

himself if he has pledged his own responsibility in addition to that of his principal.

Id.

      Texas has a “strong policy favoring the freedom to contract.” Barrow-Shaver

Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 488 (Tex. 2019). “[P]arties

are free to contract around established industry custom and usage.” Id.          And

                                         12
“[p]arties are free, of course, to contract out of statutory default rules.” Solar

Applications Eng’g, Inc. v. T.A. Operating Corp., 327 S.W.3d 104, 112 (Tex. 2010).

“Absent compelling reasons, courts must respect and enforce the terms of a contract

the parties have freely and voluntarily entered.” Phila. Indem. Ins. Co. v. White, 490

S.W.3d 468, 471 (Tex. 2016).

      In Dominguez v. American Express Bank, FSB, American Express sued

Dominguez individually, asserting that he breached two Cardmember Agreements

pertaining to credit cards he obtained for two of his businesses—a corporation that

he owned and a limited liability company, of which he was the sole member. No.

14-17-00157-CV, 2020 WL 2832075, at *1 (Tex. App.—Houston [14th Dist.] May

29, 2020, pet. denied) (mem. op.). A jury found in favor of American Express, and

the trial court rendered a judgment against Dominguez. Id.

      On appeal, Dominguez argued that the trial court “ignored the separate

existence of each entity from him individually” and “improperly” held him liable for

the debts of his corporation and limited liability company. Id. at *2.

      Our sister court held that,

      [u]nder the unambiguous language of each of the Cardmember
      Agreements admitted into evidence at trial, “You” is defined to mean
      both Dominguez and his respective company, and in each agreement
      Dominguez and the company “agree[d], jointly and severally, to be
      bound by the terms of this Agreement.

                                          13
Id. It explained that the record did “not reflect that the trial court held him liable for

a corporate entity’s debt because Dominguez was the owner or member of that

entity.” Id. Rather, the pleadings, record, and judgment reflected that the trial court

held Dominguez liable “for his own breach of two contracts to which he was a

party.” Id. (emphasis added).

      Similarly here, the pleadings, record, and judgment reflect that the trial court

held Patrick liable for his own breach of the contract—the Cardmember

Agreement—to which he was a party.              Under its unambiguous language, the

Agreement states that “You” and “Your” mean the “Basic Cardmember and the

Company.” It defines “Cardmember” as Patrick and provides that the parties agree

American Express will, in deciding whether to approve specific charges, consider

“personal resources.” And it plainly states that “You agree, jointly and severally, to

be bound by the terms of the Agreement,” and that, upon closing the account, the

“Basic Cardmember and Company remain jointly and severally liable for all

Charges made on the Account.”

      Thus, we need not determine whether Patrick, as the sole member of the LLC,

has shown himself entitled to the general statutory protection he asserts. Similar to

Dominguez, construing the plain language of the Agreement in this case negates a

legal conclusion that Patrick was acting solely as agent of the LLC and that he did

not agree to be bound by the terms of the Agreement. See id. at *1; Neel, 378 S.W.3d

                                           14
at 605 (“The objective intent of the parties, as expressed in the unambiguous

language of the lease, was that those persons comprising Live Oak—Neel and

Welborne—would be jointly and severally responsible for Live Oak’s obligations

under the lease.”).

      American Express therefore established its right to summary judgment on its

breach-of-contract claim against Patrick individually. See Prime Prods., Inc., 97

S.W.3d at 636. The burden then shifted to Patrick to present evidence raising a

genuine issue of material fact. See City of Hous., 589 S.W.2d at 678.

      Patrick presented the LLC’s 2011 Certificate of Formation and Certificate of

Filing with the Office of the Secretary of State, his formation agreement, and his

credit report. Having determined, as discussed above, that Patrick was sued and

found liable individually, and not merely as a member of the LLC, this evidence

does not raise any genuine issue of material fact precluding summary judgment.

      Patrick argues that American Express “violated a mutual verbal agreement

established prior to the origination of the credit card account” and that, had he been

informed that he would be personally liable, “the LLC would not have opened it.”

      When we construe a contract to determine the intent of the parties, it is the

objective intent that controls. Neel, 378 S.W.3d at 605. We do not consider the

parties’ present interpretations or subjective intent. Id. There is a “legal presumption

that a party who signs a contract knows its contents.” Cantella & Co. v. Goodwin,

                                          15
924 S.W.2d 943, 944 (Tex. 1996). And, a party is bound by the terms of the contract,

“regardless of whether he read it or thought it had different terms.” In re McKinney,

167 S.W.3d 833, 835 (Tex. 2005). Moreover, the Cardmember Agreement expressly

states that it is the “final expression of the agreement governing the Account” and

that it “may not be contradicted by any alleged oral agreement.”

      Patrick presented no other evidence to raise a genuine issue of material fact.6

      Taking as true all evidence favorable to Patrick, as the non-movant, and

indulging every reasonable inference and resolving any doubts in his favor, as we

must, we conclude that American Express conclusively established its right to

summary judgment on its breach-of-contract claim against Patrick individually. We

therefore hold that the trial court did not err in granting summary judgment in favor

of American Express and against Patrick in his individual capacity.7

6
      Patrick complains on appeal that he “could not fully present his evidence” during
      the virtual hearing on the motion for summary judgment because there were
      technology issues that the “judge should have recognized.” He asserts that the trial
      court should have “rescheduled this hearing to allow it to be heard in person at a
      later date.” We have carefully reviewed each of Patrick’s citations to the transcript,
      all of which merely point to incomplete sentences, apparent breaks in thought, or
      individuals speaking over one another, as evidenced by dashes or ellipses, without
      further discussion. He does not direct us to any place in the record in which he
      requested that the hearing be reset because he was unable to fully present his
      evidence. See TEX. R. APP. P. 33.1(a) (“As a prerequisite to presenting a complaint
      for appellate review, the record must show that . . . the complaint was made to the
      trial court by a timely request, objection, or motion” and that the trial court ruled on
      the request).
7
      Having upheld the trial court’s summary judgment in favor of American Express on
      its breach-of-contract claim, we do not reach whether the trial court erred by
      granting summary judgment on its account-stated claim. See TEX. R. APP. P. 47.1;
                                             16
      We overrule Patrick’s sole issue.

                                   Conclusion

      We affirm the trial court’s summary judgment in all things.

                                               Terry Adams
                                               Chief Justice

Panel consists of Chief Justice Adams and Justices Landau and Rivas-Molloy.

      Compton v. Citibank (S.D.), N.A., 364 S.W.3d 415, 417 (Tex. App.—Dallas 2012,
      no pet.).

                                          17