law-interest-rate | proof of interest rate |
Card agreement referencing monthly statements for interest rates held sufficient
Wynne v. Citibank South Dakota N.A. (Tex.App.- Amarillo, Apr. 25, 2008)(Campbell)
AFFIRMED: Opinion by Justice Campbell)(We conclude that Citibank met its burden to establish the existence of
a valid contract as a matter of law and accordingly, the trial court did not err in granting summary judgment in
Citibank's favor.)
Wynne finally presents an argument based on Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212 (Tex.App.-
Texarkana 2005, no pet.), in which the court found Citibank had not conclusively established the amount due
under the breached credit card agreement because its summary judgment evidence did not prove Tully had
agreed to the interest rate used in the bank's calculations. The court in Hinojosa rejected a similar argument,
and we reject it here for the same reason. See Hinojosa, 2008 WL 570601. Like the card agreement in Hinojosa,
the card agreement here states the annual percentage rate in effect will appear on the monthly billing
statements, and the billing statements are in the record. Id.
Billing Statements Accepted as Proof of Interest Rate in absence of additional disclosures (notice of
change in terms)
Citibank established Hinojosa accepted the card and used it; therefore, it established the existence of a contract
as a matter of law.
In an attempt to preclude summary judgment, Hinojosa asserts because Citibank attached a 1999 card
agreement to a previous motion for summary judgment, a fact issue exists regarding the controlling agreement-
whether it is the 1996 version or the 1999 version. His argument is without merit. First, Ryning's affidavit
establishes the agreement may be amended from time to time. Therefore, the 1999 agreement is not a different
agreement, but rather the same agreement as it may be amended from time to time. Second, the agreements
contain the same language detailing when it becomes binding and how to cancel it, if necessary.
Hinojosa v. Citibank (South Dakota), N.A., No. 05-07-00059-CV, 2008 WL 570601 (Tex.App.-Dallas, March 4,
2008, no pet. h.) (mem. op.)(distinguishing Tully v. Citibank)(interest rate proven with statements rather than
contract or additional disclosure/separate notice stating rate)
Thus, Hinojosa's argument fails to create a genuine issue of material fact regarding the contract. Hinojosa
also claims a fact issue exists on his acceptance of the agreement's terms because Citibank did not provide the
annual interest rate. The agreement states “This Agreement and the folder containing the card are your Citibank
Card Agreement. The folder contains important account information, including the annual percentage rate and
an indication whether there is a membership fee. Please read and keep both the folder and this Agreement for
your records.” Because the folder is not included in Citibank's evidence, he argues an important term is missing.
Again, Hinojosa's argument fails.
Although the folder is not in evidence, the agreement and the Notice of Change in Terms specifically states “the
annual percentage rate in effect and any subsequent changes to it will appear on the billing statement.” Citibank
included in its summary judgment evidence Hinojosa's billing statements, which include the applicable interest
rate. Therefore, the contract is not missing an essential term. See Footnote 2
Because Hinojosa failed to dispute Citibank's evidence that he entered into a credit card agreement as a matter
of law and because he failed to provide evidence contradicting the validity of the card agreement under any laws,
the trial court properly granted Citibank's traditional motion for summary judgment. Tex. R. Civ. P. 166(c). As
such, we need not address whether summary judgment was appropriate under Citibank's other causes of action.
See Winchek, 232 S.W.3d at 202.
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Footnote 2 Hinojosa relies on Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212 (Tex. App.-Texarkana
2005, no pet.) to support his interest rate argument. The facts here are distinguishable. We question whether the
interest issue was properly before the court despite the court's liberal construction of the issue. Id. at 217 fn.4.
The Tully court determined the contract introduced into evidence did not specify the agreed upon interest rate,
and the only evidence of the rate was specified on the monthly statements. Id. at 217. Here, the contract
specifically states the annual percentage rate in effect appears on the monthly statements and such statements
are in evidence. Thus, we conclude Tully does not support Hinojosa's argument.
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KEY CASE: FAILURE TO PROVE CONTRACTUAL INTEREST RATE
Tully v. Citibank (South Dakota), N.A., 173 S.W.3d 212, No. 06-05-00027-CV (Tex.App.- Texarkana 2005, no
pet.)(Because Citibank failed to prove the contractual interest rate, Citibank has failed to prove it was entitled to
summary judgment.)
The contract introduced into evidence does not specify the interest rate that was agreed on. Further,
there were no notices of interest rate increases introduced into evidence. The only evidence concerning the
rate of interest are the rates specified on the copies of the monthly statements Citibank sent to Tully. Even if the
bills could be construed as notice of a change of the terms of the card agreement, the change could not apply
retroactively. Therefore, there would still be a fact issue as to the amount of interest owed.
Because Citibank failed to prove the contractual amount of the interest, Citibank failed to prove there were no
genuine issues of material fact concerning the amount of its damages or concerning whether the interest rates
charged were authorized under South Dakota law. Therefore, the trial court erred in granting summary judgment.
Citibank failed to prove that the interest rate charged was agreed on by Tully. Tully argues on appeal that a
genuine issue of material fact exists regarding the amount Tully owes Citibank under the contract. We note that
Tully did not specifically argue that Citibank failed to prove the interest rate. However, Tully did argue to the trial
court and in its second point of error that the interest was not authorized. Briefs are to be construed liberally.
Tex. R. App. P. 38.9. This issue is intertwined with the second point of error concerning the counterclaim and
necessarily applicable to the breach of contract claim. Further, Tully alleged a general point of error. Tully's first
point of error states: Citibank cannot sue Tully for a credit card debt in a suit on a sworn account, and may not
recover from Tully under any of the alternative theories it now advances. Under the Malooly rule, set out in
Malooly Brothers, Inc. v. Napier, 461 S.W.2d 119 (Tex. 1970), a point of error stating generally that the trial court
erred by granting summary judgment authorizes review of all possible grounds of trial court error in granting the
summary judgment. Plexchem Int'l,Inc. v. Harris County Appraisal Dist., 922 S.W.2d 930, 930–31 (Tex. 1996) (per
curiam); see Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995). In addition, "[t]he statement of an
issue or point will be treated as covering every subsidiary question that is fairly included." Tex. R.App. P. 38(e).
Because Tully raised a general point of error, the issue of the interest rate else wherein his brief, and the issue
was raised at the trial court level, error was assigned for our review.
The contract introduced into evidence does not specify the interest rate that was agreed on. Further,
there were no notices of interest rate increases introduced into evidence. The only evidence concerning the
rate of interest are the rates specified on the copies of the monthly statements Citibank sent to Tully. Even if the
bills could be construed as notice of a change of the terms of the card agreement, the change could not apply
retroactively. Therefore, there would still be a fact issue as to the amount of interest owed.
Citibank failed to prove its damages as a matter of law. Because a genuine issue of material fact issue exists
concerning the interest rates agreed on, the trial court erred in granting summary judgment.
When a trial court's order granting summary judgment does not specify the ground or grounds relied on for the
ruling, summary judgment will be affirmed on appeal if any of the theories advanced are meritorious. State Farm
Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993). Citibank, though, failed to prove it was entitled to
summary judgment concerning any of the three theories advanced in its motion for summary judgment. A credit
card debt is not a sworn account. Since the summary judgment evidence proved the existence of a contract,
Citibank was not entitled to collect on its quantum meruit theory. Because Citibank failed to prove Tully agreed to
the interest rates Citibank charged, Citibank failed to prove its amount of damages under the breach of contract
theory. We sustain Tully's first point of error. We decline to address the remaining arguments advanced by Tully
because the above arguments are dispositive.
2) Citibank Failed To Disprove Tully's Counterclaim
In his second point of error, Tully argues Citibank failed to prove that his counterclaim was pre-empted or
otherwise invalid. Tully argues the interest charged was usurious under Texas law. In the alternative, Tully
argues Citibank has failed to prove that the interest charged is authorized by South Dakota Law.
Tully argues that, under Texas law, a charge of interest in excess of ten percent is in most cases considered
usurious. See Tex. Fin. Code Ann. § 302.001(b) (Vernon Supp. 2004–2005). We note, though, that Texas law
may permit interest up to eighteen percent for revolving charge accounts. See Tex. Fin.Code Ann. § 346.101
(Vernon Supp. 2004–2005).
However, the National Bank Act pre-empts state usury laws. Marquette Nat'l Bank v. First Omaha Serv. Corp.,
439 U.S. 299, 313 (1978); see Smiley v. Citibank, 517 U.S. 735, 744 (1996) (holding that late fees were interest
under the National Bank Act). The National Bank Act provides that national banks may charge interest "at the
rate allowed by the laws of the State . . . where the bank is located, or . . . ." 12 U.S.C.A. § 85 (West 2001).
Although Section 85 provides that, if the state provides no rate, then the interest is limited to the greater of seven
percent or one percent in "excess of the discount rate on ninety-day commercial paper," the United States
Supreme Court has held that, when a state allows any rate agreed on by the parties to the contract, a rate is still
fixed by the state despite the lack of a maximum rate. Daggs v. Phoenix Nat'l Bank, 177 U.S. 549, 555 (1900);
see Hiatt v.San Francisco Nat'l Bank, 361 F.2d 504, 507 (9th Cir. 1966).
Assuming that Citibank is a national bank located in South Dakota, Citibank argues it sufficiently proved that it
was a national bank because it cited Smiley, 517U.S. at 744, which recognized Citibank as a national bank and
because it identified itself as "Citibank (South Dakota), N. A." in its summary judgment affidavit. Only a national
bank may use the word "National" in its title. 18 U.S.C.A. § 709 (West Supp. 2005). For purposes of this analysis,
we will assume that Citibank is a national bank located in South Dakota.
Citibank has proven as a matter of law that Texas usury law is pre-empted and that it may charge interest at the
rate authorized by South Dakota.
However, merely proving that Texas usury laws are pre-empted by federal law does not establish that the
charges were authorized. Tully's counterclaim was not limited to Texas usury laws; the counterclaim was that the
interest rates were not authorized. If Texas usury laws are pre-empted, Tully argues Citibank has failed to prove
that the interest rates are authorized under South Dakota law. Although Citibank did not respond to this
argument on appeal, Citibank argued to the trial court that Section 54-3-1.1 of the South Dakota Codified Laws
authorized the interest in this case. Section 54-3-1.1 of the South Dakota Codified Laws provides as follows:
Unless a maximum interest rate or charge is specifically established elsewhere in the code, there is no maximum
interest rate or charge, or usury rate restriction between or among persons, corporations, limited liability
companies, estates, fiduciaries, associations, or any other entities if they establish the interest rate or charge by
written agreement. A written agreement includes the contract created by § 54-11-9.
S.D. Codified Laws § 54-3-1.1 (2005). Even if no other maximum rate is established elsewhere in the laws of
South Dakota, Citibank has failed to show that the interest rate is authorized. Section 54-3-1.1 only applies if the
parties "establish the interest rate or charge by written agreement." Id. The summary judgment evidence lacks
any evidence as to the interest rate authorized by the credit card contract. The contract introduced into evidence
does not specify the interest rate that was agreed on.
We note that the contract does contain the amount of at least some of the fees charged.
There were no notices of interest rate increases introduced into evidence. When no interest rate is provided in
the agreement, South Dakota law limits the maximum interest rate to considerably less than the rates charged by
Citibank. See S.D. Codified Laws §§ 51A-12-13, 54-3-4, 54-3-5 (2005). We note that a credit card issuer may
change the terms of the card agreement on sufficient written notice to the cardholder. S.D. Codified Laws § 54-
11-10 (2005). The summary judgment evidence, though, contains no written notices specifying the interest rates
other than the copies of the statements. There are genuine issues of material fact concerning whether the
interest rates Citibank charged Tully are authorized by South Dakota law.
Because Citibank failed to prove the contractual interest rate, Citibank has failed to prove it was entitled to
summary judgment. We sustain Tully's second point of error. Because we find the above issue dispositive, we
decline to address Tully's remaining arguments contained in his second point of error.