Wolfgang Hirczy v. Citibank, N.A. ( 2014 )

Opinion issued August 26, 2014
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00986-CV
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WOLFGANG HIRCZY, Appellant
V.
CITIBANK, N.A., Appellee
On Appeal from the County Court at Law No. 2
Harris County, Texas
Trial Court Case No. 1001936
MEMORANDUM OPINION
Wolfgang Hirczy appeals the post-answer default judgment rendered in
favor of appellee, Citbank, N.A., on its cause of action for breach of contract. In
four issues, Hirczy contends that (1) the trial court erred in granting judgment in
favor of Citibank absent proof of the underlying contract; (2) the trial court’s
judgment contravenes federal law governing national banks; (3) the trial court’s
judgment contravenes federal and state policy favoring arbitration; and (4) the
absence of a reporter’s record constitutes reversible error. We affirm.
Background
Based on Hirczy’s default on a credit card agreement, Citibank filed suit
alleging breach of contract and seeking damages of $15,555.33, plus interest and
costs. The petition was accompanied by requests for disclosure, interrogatories,
and requests for admissions. Although the return of service reflects that Hirczy
was served with the petition and discovery requests on October 24, 2011, he failed
to answer any of the discovery requests.
The following May, 2012, Citibank amended its petition and filed a second
set of discovery requests 1 seeking that Hirczy admit, among other things, that (1)
he used a credit card account issued to him by the bank to make purchases and/or
obtain cash advances; (2) he made at least one payment on the account; (3) he was
provided with a copy of the applicable terms and conditions and/or the cardholder
agreement for the account prior to using the account; (4) he did not object to the
1
Although entitled “Plaintiff’s First Discovery Request,” these requests for
disclosure, production, admissions, and interrogatories were actually Citibank’s
second set of discovery requests. In this amended petition, Citibank sought
damages in the amount of $15,831.33.
2
applicable terms and conditions; (5) Citibank paid all vendors and merchants for
any purchases charged by him to the account; (6) he received monthly account
statements; (7) he ceased making payments on the account; (8) he received a
demand letter for payment of the debt; (9) all due payments, credits, and/or
adjustments in his favor were applied to the account; and (10) he had a balance
remaining owed on the credit card account at the time he ceased making payments.
Despite several attempts, Citibank never served Hirczy with the amended pleading
and discovery requests. Hirczy filed his answer on February 3, 2013, but never
answered any of the discovery requests.
Although Citibank provided notice of the August 19, 2013 trial setting via
certified mail, 2 Hirczy failed to appear.
The following trial exhibits were admitted: 3
• Citibank’s notice to Hirczy of the trial setting and the court’s order for trial
setting (Exhibit A);
• an affidavit on deemed admissions by Citibank’s attorney (Exhibit B);
• a certificate of last known mailing address (Exhibit C);
• a non-military affidavit (Exhibit D);
2
During the course of litigation, Hirczy filed a motion to dismiss and Citibank filed
a motion for summary judgment but the trial court did not rule on these motions.
3
It is undisputed that Citibank presented no live testimony at trial.
3
• the affidavit of Daniel Fisher, a Citibank document control officer (Exhibit
E); and
• an account statement (Exhibit F).
On August 21, 2013, the trial court entered judgment against Hirczy in the
amount of $15,831.33, plus interest and court costs. The trial court entered
findings of fact and conclusions of law on September 13, 2013, at Hirczy’s request.
Hirczy timely filed this appeal.
Discussion
In his first issue, Hirczy contends that the trial court’s judgment for Citibank
on its breach of contract cause was error because there was no evidence of the
underlying contract, i.e., the cardmember agreement. Absent proof of the terms of
the underlying contract, he argues, the evidence is insufficient.
We must initially address Hirczy’s argument that the trial court’s findings of
fact and conclusions of law demonstrate that the trial court used the wrong default
judgment standard in granting its judgment to Citibank. Conclusion of law No. 2
stated, “Defendant failed to appear for trial and default judgment was granted in
favor of the Plaintiff.” Hirczy argues that this conclusion, coupled with the trial
court’s findings of fact,4 reflects the trial court’s erroneous application of the
4
The trial court made the following findings of fact:
1. Citibank N.A. filed [its first amended petition] against Defendant Wolfgang
Hirczy (“Hirczy”) on May 15, 2012.
4
criteria for a no-answer default judgment. We disagree. In its finding of fact no. 3,
the trial court noted that Hirczy had filed an original answer and finding of fact no.
8 stated, “Defendant failed to appear for trial on August 19, 2013 and a post-
answer default judgment was signed” (emphasis added).
A post-answer default judgment occurs where a timely answer, that puts the
merits of plaintiff’s claim at issue, is on file, but the defendant fails to appear at
trial. Sharif v. Par Tech, Inc., 135 S.W.3d 869, 872 (Tex. App.—Houston [1st
Dist.] 2004, no pet.) (citing Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex.
1979)).5 If a defendant has filed such an answer, the defendant’s failure to appear
2. Hirczy was served [with Citibank N.A.’s original petition] on October 24,
2012.
3. Hirczy filed his original answer in response to Citibank, N.A.’s petition on
May 20, 2013.
4. Hirczy’s answer contained a general denial and objection and plea of
privilege.
5. Citibank, N.A. filed its Motion for Summary Judgment on July 23, 2013.
6. The Court set the case on its trial docket on August 19, 2013.
7. Plaintiff appeared for trial and announced ready on August 19, 2013.
8. Defendant failed to appear for trial on August 19, 2013 and a post-answer
default judgment was signed.
5
In contrast, under Texas Rules of Civil Procedure 239, “the plaintiff may . . . take
judgment by default against [the] defendant if he has not previously filed an
answer . . . .” TEX. R. CIV. P. 239.
5
at trial is neither an abandonment of the defendant’s answer nor an implied
confession of any issues thus joined by the defendant’s answer. Stoner, 578
S.W.2d at 682; Sharif, 135 S.W.3d at 872. Judgment cannot be entered on the
pleadings; instead, the party seeking judgment must offer evidence and prove his
case. Stoner, 578 S.W.2d at 682.
Proof of its breach of contract claim required Citibank to establish (1) the
existence of a valid contract between Hirczy and Citibank, (2) performance by
Citibank, (3) breach of the contract by Hirczy, and (4) damages sustained as a
result of the breach. See Am. Express Centurion Bank v. Minckler, 345 S.W.3d
204, 208 (Tex. App.—Dallas 2011, no pet.); Winchek v. Am. Express Travel
Related Servs. Co., 232 S.W.3d 197, 202 (Tex. App.—Houston [1st Dist.] 2007,
no pet.). In its petition, Citibank alleged that it issued a credit card to Hirczy in his
name, Hirczy received and used the card, Citibank performed under the contract by
reimbursing merchants who accepted Hirczy’s credit card in payment, Hirczy
breached the contract by defaulting on the payment obligation of the credit card
agreement; and the outstanding balance of Hirczy’s credit card account was
$15,831.33. Citibank’s requests for admissions sought Hirczy’s admission of the
truth of each of these allegations.
“Deemed admissions may be employed as proof, and once admissions are
deemed admitted by operation of law and where the admissions fully support each
6
element of a cause of action, including damages, they will fully support a judgment
based thereon.” Oliphant Fin., LLC v. Galaviz, 299 S.W.3d 829, 838 (Tex. App.—
Dallas 2009, no pet.) (noting “unanswered requests for admissions are deemed
admitted without the necessity of a court order and any matter thus admitted is
conclusively established as being true”); see TEX. R. CIV. P. 198.2(c). Here, the
record reflects that Hirczy failed to answer Citbank’s second requests for
admissions and, therefore, Citibank’s requests were deemed admitted without the
necessity of a court order.6 See Overstreet v. Home Indem. Co., 669 S.W.2d 825,
827–28 (Tex. App.—Dallas 1984), rev’d on other grounds, 678 S.W.2d 916 (Tex.
1984); see also Rowlands v. Unifund CCR, No. 14-05-01122-CV, 2007 WL
1395101, at *3 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (“[T]o the extent
they address the elements of proof of a claim, deemed admissions provide
uncontroverted proof of these elements as a matter of law.”). Accordingly, Hirczy
is deemed to have admitted each of the elements of proof required to sustain the
judgment for Citibank.
At trial, the affidavit of Daniel Fisher, a Citibank document control officer,
was admitted attesting that Hirczy incurred charges on his account; failed to make
6
Although Hirczy was not served with this petition and set of discovery requests, he
made an appearance in the suit when he subsequently filed his answer. Under
Texas Rule of Civil Procedure 121, an answer constitutes an appearance and
“dispense[s] with the necessity for the issuance or service of citation upon [the
defendant].” TEX. R. CIV. P. 121.
7
the required payments on the account; defaulted on the account; the outstanding
balance on the account was $15,831.33, and the account balance was due and
owing as of the date of execution of the affidavit. Citibank also offered an account
statement for the period from April 21, 2010 to May 20, 2010 reflecting a balance
due of $15,831.33.
Hirczy’s deemed admissions and the evidence at trial supported each
element of Citibank’s breach of contract action. See Minckler, 345 S.W.3d at 208
(concluding credit card issuer was entitled to default judgment where deemed
admissions and evidence at trial supported issuer’s breach of contract claim against
cardholder); Galaviz, 299 S.W.3d at 837–38 (finding creditor was entitled to
default judgment because credit card account holder’s deemed admissions
conclusively proved all elements of creditor’s breach of contract claim).
Accordingly, we overrule Hirczy’s first issue.
Hirczy’s second issue contends that, if permitted to stand, the trial court’s
judgment would contravene federal law by allowing national banks to obtain
judgments without the necessity of establishing a contractual basis for charging
interest in compliance the Truth in Lending Act, 15 U.S.C. § 1601, Regulation Z,
12 C.F.R. § 226, and the National Bank Act, 12 U.S.C. § 85. Hirczy complains
that without proof of the terms of the credit contract, “it is not even possible to
determine whether a [Truth in Lending Act] violation occurred . . . .”
8
We find this argument unavailing for several reasons. First, Hirczy is not
complaining that default judgment was improper because Citibank failed to
provide disclosures related to credit terms mandated by federal banking law.
Rather, he argues that, without evidence of the cardholder agreement, it is
impossible to determine whether Citibank made the mandatory disclosures. This
argument, alleging a hypothetical violation of federal law, is without merit.
Second, we note that in failing to respond to Citibank’s first set of requests for
admissions, Hirczy was deemed to have admitted that he received all applicable
notices. 7 Galaviz, 299 S.W.3d at 838. Third, Hirczy did not raise this argument
before the trial court in either his answer or his motion to set aside the default
judgment. See TEX. R. APP. P. 33.1. Thus, we overrule Hirczy’s second issue.
In his third issue, Hirczy contends that the default judgment, if affirmed,
would contravene federal and state policy favoring arbitration. He argues that
Citibank’s failure to produce the cardmember agreement precluded him from
7
In failing to respond to Citibank’s requests for admissions that accompanied its
amended petition, Hirczy admitted that he (1) was notified of all applicable
interest rates, late-fees, over-limit fees and other fees and/or penalties that could be
assessed on the account prior to use of the account, (2) the monthly account
statements received by him for the account accurately set forth all transactions,
purchases, payments, credits, debits, deductions, interest rates, late-fees, over-limit
fees and/or other fees posted to the account, (3) was notified of all charges and/or
amendments to the terms and conditions and/or cardholder agreement for the
account, and (4) was notified of any changes to the applicable interest rates, late-
fees, over-limit fees and other fees and/or penalties that could be assessed to the
account. In failing to respond, these unanswered requests became deemed
admissions. See Oliphant Fin., LLC v. Galaviz, 299 S.W.3d 829, 838 (Tex.
App.—Dallas 2009, no pet.).
9
invoking the arbitration clause that was likely a provision under the contract.
Hirczy’s argument, however, presupposes that there was an arbitration provision in
the contract and that he would have exercised his right to arbitrate. Further, the
record does not indicate that Hirczy attempted to serve Citibank with document
requests that would have allowed him to obtain the contract. 8 Finally, a party’s
contractual right to arbitration (if one existed) is not self-executing; a trial court
does not err in failing to compel arbitration when nobody asked it to do so. Cf.
Forged Components, Inc. v. Guzman, 409 S.W.3d 91, 100 (Tex. App.—Houston
[1st Dist.] 2013, no pet.) (noting presumption favoring arbitration arises only after
party seeking to compel arbitration proves existence of valid, enforceable
arbitration agreement) (citing In re Kellogg Brown & Root, Inc., 166 S.W.3d 732
(Tex. 2005)). Consequently, we overrule Hirczy’s third issue.
In his fourth issue, Hirczy contends that the absence of a reporter’s record
requires reversal of the default judgment. Hirczy correctly notes that when a
judgment is rendered after presentation of evidence to the court in the absence of
the appellant and his attorney, the failure to have the court reporter present to make
a record constitutes reversible error. See Sharif, 135 S.W.3d at 873. However,
Citibank states in its brief that all of the exhibits admitted at trial were included in
8
In his answer, Hirczy requested “a copy of the amended petition with whatever
attachments so I can figure out how to respond.” Such a request does not
constitute a request for the contract.
10
the clerk’s record and no live testimony was presented at trial. In his reply brief,
Hirczy acknowledges that “the absence of a reporter’s record in this case is no
longer an issue because [Citbank] avers in its brief that no oral testimony was
presented at trial, and that all of the trial exhibits are included in the appellate
record.” See Galaviz, 299 S.W.3d at 837–38 (noting plaintiff may be awarded
damages on liquidated claim without necessity of hearing or presentation of
evidence and affirming award on contract claim based on deemed admissions).
Thus, we conclude that Hirczy has abandoned this issue on appeal, and we need
not address his fourth issue.
Conclusion
We affirm the trial court’s judgment.
Jim Sharp
Justice
Panel consists of Justices Keyes, Sharp, and Huddle.
11