Chapter 3-8 Suit on an Account

• Jurisdiction: United States

3-8 Suit on an Account

3-8:1 Overview

Parties may keep open or stated accounts to record transactions between them. When the debtor defaults on a payment, the creditor may pursue a suit on an account. Plaintiffs should always attempt to file a verified petition for a Suit on a Sworn Account under Texas Rule of Civil Procedure 185.

3-8:1.1 Related Causes of Action

Suit on a Sworn Account, Usury, Breach of Contract, Quantum Meruit

MUST READ CASES

Capital One Bank (USA), N.A. v. Conti, 345 S.W.3d 490 (Tex. App.—San Antonio 2011, no pet.)

Wing Aviation, L.L.C. v. Balmanno, No. 09-06-022-CV, 2006 Tex. App. LEXIS 7447 (App.—Beaumont Aug. 24, 2006)

Livingston Ford Mercury, Inc. v. Haley, 997 S.W.2d 425 (Tex. App.—Beaumont 1999, no pet.)

3-8:2 Elements

3-8:2.1 Suit on an Open Account

(1) An open account exists.

(1)(a) Transactions between the parties.²⁶⁵

• The transactions may be sales of personal property or completion of ser-vices.²⁶⁶
• The goods or services do not necessarily have to pass between the two parties to the account, but could pass between third parties.²⁶⁷

(1)(b) Creating a creditor-debtor relationship through the general course of dealing.²⁶⁸

(1)(c) With the account still being open.²⁶⁹

• An "open" account is one in which nothing has occurred to bind either party to price or time of payment.²⁷⁰
• A "stated" account is one in which each item within it has been agreed to as to the price and time of payment.²⁷¹

(1) (d) With the expectation of further dealing.²⁷²

(2) The amount due on the account is just or the amount due is reasonable, customary and usual.²⁷³

• A "just" amount is one that is expressly agreed to by the parties.²⁷⁴

(3) The account is due and owing.²⁷⁵

3-8:2.2 Suit on an Account Stated

(1) The sale and delivery of merchandise or performance of services.²⁷⁶

• A "stated" account is one in which each item within it has been agreed to as to the price and time of payment.²⁷⁷

(2) The amount due on the account is just or the amount due is reasonable, customary and usual.²⁷⁸

• A "just" amount is one that is expressly agreed to by the parties.²⁷⁹

(3) The account is due and owing²⁸⁰

3-8:3 Damages and Remedies

3-8:3.1 Actual Damages

The plaintiff may recover the amount due and owing.²⁸¹

3-8:3.2 Prejudgment Interest

In the absence of contract, a creditor may recover prejudgment interest at the statutory rate.²⁸²

3-8:3.3 Attorney's Fees

Attorney's fees are appropriate under Texas Civil Practice and Remedies Code Section 38.001.²⁸³

3-8:4 Defenses

3-8:4.1 Statute of Limitations

The four-year limitations period applies.²⁸⁴ The cause of action accrues at the time the dealings in which the parties were interested together cease.²⁸⁵ To establish when dealings have ceased, a defendant must prove more than the date of last payment.²⁸⁶ A defendant need not file a verified denial in response to a plaintiff's verified petition in order to assert a confession and avoidance defense.²⁸⁷

3-8:4.2 Payment

Payment on an account is an appropriate defense.²⁸⁸ A defendant need not file a verified denial in response to a plaintiff's verified petition in order to assert a confession and avoidance defense.²⁸⁹

3-8:4.3 Accord and Satisfaction

Accord and satisfaction is an appropriate defense.²⁹⁰ A defendant need not file a verified denial in response to a plaintiff's verified petition in order to assert a confession and avoidance defense.²⁹¹

3-8:4.4 Failure of Consideration

Failure of consideration is an appropriate defense.²⁹² A defendant need not file a verified denial in response to a plaintiff's verified petition in order to assert a confession and avoidance defense.²⁹³

3-8:4.5 Other Affirmative Defenses

Other affirmative defenses likely available include:

• Fraud;
• Discharge in bankruptcy;
• Release;
• Duress; and
• Statute of frauds.²⁹⁴

A defendant need not file a verified denial in response to a plaintiff's verified petition in order to assert a confession and avoidance defense.²⁹⁵

3-8:5 Procedural Implications

3-8:5.1 Pleading—As Sworn Account

A suit on an account may be pleaded as a sworn account.²⁹⁶ Special pleading requirements apply when swearing to an account.²⁹⁷

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Notes:

^[265] Capital One Bank...