Court Opinion

ID: 2904556
Source: CourtListenerOpinion
Date Created: 2015-09-09 22:11:44.622421+00
Date Added: 2024-06-11T11:37:16.155809
License: Public Domain

In The

Court of Appeals

Ninth District of Texas at Beaumont

____________________

NO. 09-02-509 CV

____________________

BMG DIRECT MARKETING, INC., Appellant

V.

PATRICK PEAKE, ET AL, Appellee

On Appeal from the 60th District Court
Jefferson County, Texas

Trial Cause No. B-167,222

MEMORANDUM OPINION
	Patrick Peake filed suit on behalf of himself and a putative statewide class of BMG
Direct music club members who paid late fees to BMG Direct Marketing, Inc.  Peake
moved to certify a class.  BMG opposed the motion.  Following a hearing, the trial court
granted class certification.  BMG brings this interlocutory appeal.  
	BMG claims Peake has not satisfied the requirements of Rule 42 and Bernal.  See
Tex. R. Civ. P. 42; and Southwestern Refining Co. v. Bernal, 22 S.W.3d 425 (Tex. 2000). 
In its first issue, BMG contends individual issues will predominate over common issues
because the voluntary payment rule requires an individualized inquiry into the
voluntariness of each class member's payment of late fees, precluding class certification. 
Under this issue, BMG also claims the trial court failed to conduct a rigorous analysis of
the predominance requirement by refusing to meaningfully address BMG's affirmative
defense of voluntary payment. (1)  We find otherwise.  Not only does the hearing on BMG's
motion contain extensive argument regarding the defense, but in its order, the trial court
found: 
	The voluntary payment doctrine is an equitable defense and need not be
applied where the rationale for its existence does not exist.  It appears this
is such a case and that it is unlikely the voluntary payment doctrine would
apply in this lawsuit.  Even if the voluntary payment doctrine is to be
contested in this case, it appears from the evidence presented by Plaintiff that
the issue is not individual and may be determined as another common issue
on a class wide basis.

It is clear the trial court considered the defense and found it did not bar class certification
because it will either apply to bar recovery by all class members, or none.  Based upon
Peake's pleadings, and our decision in TCI Cablevision of Dallas, Inc. v. Owens, 8
S.W.3d 837 (Tex. App.--Beaumont 2000, pet. dism'd by agr.), (2) we agree.
	In TCI Cablevision, the voluntary payment doctrine was raised to bar recovery of
late fees charged by cable television companies.  We noted:
		Texas courts, of course, recognize the voluntary payment rule
expressed in  Tyler v. Tyler, 742 S.W.2d 740 (Tex.App.--Houston [14th
Dist.] 1987, writ denied):  "[M]oney voluntarily paid with full knowledge of
all the facts and without fraud, deception, duress or coercion cannot be
received back although it was paid upon a void or illegal demand or upon a
claim which had no foundation in fact and was paid without consideration." 
Id. at 743 (emphasis added).  The question, however, is whether the
voluntary payment doctrine applies here to preclude class certification.

Id. at 844.  In TCI Cablevision, Owens contended the voluntary payment doctrine did not
apply "because he did not have full knowledge of all the facts."  Id.  Owens maintained
the material facts related to his claim were "whether the late fees were reasonably related
to the costs of late payment and constituted a reasonable advance estimate of those costs." 
Id.  Here, Peake argues he did not pay with "full knowledge of all the facts" because BMG
never disclosed to him, or any other class member, whether the fee represented a
reasonable estimation of the actual damages.  It is Peake's assertion that BMG's failure to
disclose precludes applying the voluntary payment doctrine because no class member paid
with the requisite "full knowledge."
	BMG contends we "side-stepped" TCI's argument that the voluntary payment rule
barred the action and class certification.  We disagree.  We noted a split of authority
existed among other jurisdictions in applying the doctrine to late fees for cable services. 
Id. at 845.  We concluded that "[c]onsidering the split of authority and [plaintiff's]
statement that he did not have full knowledge of the material facts, it is far from clear that
the voluntary payment doctrine applies here."  Id.  Accordingly, we were not convinced
the trial court abused its discretion in certifying the class.  Id. 
	BMG is correct that we did not determine whether the voluntary payment rule
barred the action.  Such a determination is inappropriate upon review of an order certifying
a class action.  See Peltier Enterprises, Inc. v. Hilton, 51 S.W.3d 616, 621-22 (Tex. App.--Tyler 2000, pet. denied).  If BMG believes the class has no cause of action, there are
measures it can take to resolve that issue.  See Compaq Computer Corp. v. Lapray 79
S.W.3d 779, 787 (Tex. App.--Beaumont 2002, pet. filed) (citing Tex. R. Civ. P. 91,
166a.).  "Decertification of the class, however, is not the appropriate procedural tool." 
Id. (quoting Employers Cas. Co. v. Tex. Ass'n of Sch. Bds. Workers' Comp. Self-Ins.
Fund, 886 S.W.2d 470, 477 (Tex. App.--Austin 1994, writ dism'd w.o.j.)).
	BMG's defense is simple: the voluntary payment doctrine applies because Peake,
and all other class members, had full knowledge of the material facts, and there has been
no allegation of fraud, duress or coercion.  Peake's contest to application of the doctrine
is equally simple: he, and all other class members, did not have full knowledge of the
material facts.  However the substantive issue is decided, the class lives or dies in toto. 
See Graebel/Houston Movers, Inc. v. Chastain, 26 S.W.3d 24, 34-35 (Tex. App.--Houston
[1st Dist.] 2000, pet. dism'd w.o.j.).
	BMG's position that an individualized inquiry is necessary to determine whether
each class member paid voluntarily is incorrect because Peake's counter to the defense is
want of "full knowledge" based on BMG's failure to disclose all the material facts in the
agreement - a failure that would be common to the entire class.  Therefore, the trial court
did not abuse its discretion in finding common issues predominate.  See Tex. R. Civ. P.
42(b)(4).  Issue one is overruled.
	BMG's second issue argues Peake did not satisfy the typicality or adequacy
prerequisites for class certification.  See Tex. R. Civ. P. 42(a)(3), (4).  As set forth above,
the claims or defenses of Peake are typical of the claims or defenses of the class.  BMG
contends Peake's "voluntary" payment of his late fees disqualifies him from serving as an
adequate class representative.  Peake contends he did not "voluntarily" pay, vis a vis the
voluntary payment doctrine, because he did not have full knowledge of material facts. 
Whether or not Peake's payments were "voluntary" is a substantive issue not properly
before this court in this appeal.  
	BMG further claims Peake's testimony disqualifies him because it does not support
the allegations in his petition.  In its order the trial court found "[m]any of the factual
details that [BMG] points to [Peake] being in error on do not appear to have any relevance
to the ultimate resolution of the contested issues in this lawsuit.  Further, the factual details
are clearly readily available to both [Peake] and [BMG] not only for [Peake] but for the
entirety of the proposed class from [BMG's] records."  Although BMG summarily
contends the trial court abused its discretion in finding Peake an adequate representative,
no contest is made to the specific findings in the court's order.  Having reviewed BMG's
complaints regarding Peake's testimony, we are unable to say the trial court erred in its
conclusions.   Issue two is overruled.
	The judgment of the trial court is AFFIRMED.

                                                                                     DON BURGESS

                                                                                            Justice

Submitted on April 2, 2003
Opinion Delivered May 1, 2003 

Before McKeithen, C.J., Burgess and Gaultney, JJ.
DISSENTING OPINION

	I do not believe it is possible without individual trials to determine whether each
payment by each class member was voluntary.  But that is what this class certification
requires.  If the plaintiff class, as certified, loses at trial because the payment is found to
be voluntary, judgment will then be entered that the payments by all class members were
voluntary.  However, whether an individual's payment was voluntary depends -- by
definition -- on individual choice and individual circumstances.  See Salvaggio v. Houston
Indep. Sch. Dist., 709 S.W.2d 306, 307-08 (Tex. App.--Houston [14th Dist.] 1986, writ
dism'd w.o.j.) (voluntary payment rule precluded class certification of group of taxpayers
because of need for case-by-case factual analysis).  Class certification is improper here
because individual issues predominate.  See Southwestern Ref. Co. v. Bernal, 22 S.W.3d
425, 434 (Tex. 2000).  I respectfully dissent.
							_________________________________
								DAVID B. GAULTNEY
									   Justice

Dissent Delivered
May 1, 2003

 

1.   We note that BMG did not plead this affirmative defense until after the hearing
on class certification, but it was raised prior to the hearing and the issue was argued.
2. We recognize TCI Cablevision was decided before Bernal, supra, but Bernal did
not address employing the voluntary payment doctrine to decertify a class; thus it does not
control our decision in this matter.