An action to collect on a credit card debt may be brought as an action on an “open account.” Eaves v. Unifund CCR Partners, 301 S.W.3d 402 (Tex. App.-El Paso 2009, no pet.). The elements of an open account are: (1) transactions between the parties, (2) creating a creditor-debtor relationship through a general course of dealing, (3) with the account still being open, and (4) with the expectation of further dealing. Capital One Bank (USA), N.A. v. Conti, 345 S.W.3d 490 (Tex. App.-San Antonio 2011, no pet.), citing, Eaves v. Unifund CCR Partners, 301 S.W.3d 402 (Tex. App.-El Paso 2009, no pet.).
If your case meets the elements of an open account, there is also another tactical reason to allege a cause of action for an open account – the statute of limitations that governs an open account. Section 16.004(c) of the Texas Civil Practice and Remedies Code provides that “A person…must bring an action for an open or stated account…..not later than four years after the day that the cause of action accrues….The cause of action accrues on the day that the dealings in which the parties’ were interested together cease.” The Conti opinion provides an excellent illustration of the benefits of the statute and advice for credit card issuers.
In Capital One Bank (USA), N.A. v. Conti, 345 S.W.3d 490 (Tex. App.-San Antonio 2011, no pet.), Capital One sued Conti for breach of a credit card contract and for accounts owed pursuant to the account. Conti asserted a claim of limitations and counterclaimed for violations of various debt collection statutes because more than four years had passed since Conti made his last payment. Conti filed a motion for summary judgment alleging that because the lawsuit was filed more than four years after the last payment and the last payment date is a definite and objective date to determine when the statute of limitations begins to run, the claim was barred by the applicable four year statute of limitations. Capital One alleged that summary judgment was improper because the date of the last payment does not determine when the parties dealings ceased under Section 16.004(c) of the Texas Civil Practice and Remedies Code.
The trial court agreed with Conti and granted summary judgment. However, on appeal, the San Antonio Court of Appeals reversed. In reversing the trial court, the San Antonio Court of Appeals held that a typical credit card agreement requires the credit card holder to make payments at regular intervals. Merely establishing the last date of payment is not sufficient to establish, as a matter of law, that the parties’ relationship also ceased on that date. Capital One Bank (USA), N.A. v. Conti, 345 S.W.3d 490, 492 (Tex. App.-San Antonio 2011, no pet.). Because Conti only provided the date of last payment without anything else to establish that the relationship had ceased, Conti did not conclusively establish the date the cause of action accrued and summary judgment was improper.
The lessons of Conti and other cases that have followed it are worth noting. When a creditor brings a lawsuit on a credit card debt, bring a claim for an open account along with the traditional breach of contract claim. Also, some thought should be given to when the parties’ relationship and dealings cease. The opinions in this blog are the author’s and any suggestions, replies or comments should be sent to the author at firstname.lastname@example.org.