law-cc-interest | finance charges |
Interest and Finance Charges
Variable rates provision in cardmember agreement | Fixed Rate | Modification of Rate by separate notice
(Additional Disclosure) and/or provision on monthly statement
Method of calculation if formula | Prime rate + | LIBOR +
Default rate (fixed or variable)
Assignee did not prove agreement on interest rate, etc.
Williams argues that because Unifund did not submit a copy of the credit agreement signed by Williams,
Unifund did not prove the existence of an agreement or any of its terms. Unifund submitted the affidavit of
its designated agent, Angela Freckman, the affidavit of Unifund's media supervisor, Bharati
Lengade, a statement from Unifund to Williams, and multiple statements from Citibank to Williams.
However, Unifund did not produce the actual agreement or any other document that established the
agreed terms, including the applicable interest rate or the method for determining the applicability and
amount of finance charges. The interest rate and other information reflected in the statements that were
provided by Unifund are inconsistent, varying from 5% to 22.4%, and there is no indication of the
agreement reached as to interest. Furthermore, Unifund presented no evidence on how it calculated the
interest rates and finance charges that increased Williams's account balance from the $7,895.00 he owed
on the June 2002 statement to the $14,153.90 Unifund claimed in its lawsuit.
Williams v. Unifund CCR Partners Assignee of Citibank, — SW3d —, 2008 WL 339855, at *4 (Tex.App.—
Houston [1st Dist.] Feb. 7, 2008, no pet. h.)(Plaintiff failed to produce the Card Agreement or any
document that established the agreed terms, including the applicable interest rate or the method for
determining the applicability and amount of finance charges.)
While Unifund's summary judgment evidence might indicate that the parties had reached an agreement of
some kind, their evidence is not sufficient to establish the terms of a valid contract as a matter of law. See
Winchek, 232 S.W.3d at 202; T.O. Stanley Boot, 847 S.W.2d at 221. Therefore, Unifund did not meet its
burden and summary judgment was inappropriate on Unifund's breach of contract theory. (5) See Knott,
128 S.W.3d at 215-16; Winchek, 232 S.W.3d at 202.
We sustain appellant's first, third and fourth issues as they relate to Unifund's failure to establish the
material terms of the contract as a matter of law.
Agreement on Interest rate must be proven - material term of the contract
Parties form a binding contract when the following elements are present: (1) an offer, (2) an
acceptance in strict compliance with the terms of the offer, (3) meeting of the minds, (4) each
party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be
mutual and binding. Id. To be enforceable, a contract must be sufficiently certain to enable a
court to determine the rights and responsibilities of the parties. Id. (citing T.O. Stanley Boot Co.
v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex.1992)). The material terms of a contract must be
agreed upon before a court can enforce the contract. See T.O. Stanley Boot, 847 S.W.2d at 221
(holding that interest rate is material term in context of contract to loan money).
Barajas v. Harvest Credit Management VI-B, LLC (Tex.App.- Houston [14th Dist.] Aug. 28, 2008)(Guzman)
(credit card debt suit, summary judgment for debt collector reversed, contract terms not proven),
summary judgment evidence submitted by Plaintiff contradictory, fact issue, conflicting representations as
to applicable interest rate)
Here, Harvest's summary-judgment evidence did not include the actual agreement or any other evidence
that established the agreed terms, including the applicable interest rate or the method for determining the
applicability and amount of finance charges. Harvest also produced no evidence regarding any
transactions or cash advances associated with the account or any statements issued to Barajas.
Moreover, statements contained in affidavits offered in support of Harvest's motion for summary judgment
conflict with Harvest's representations in its pleadings and in its summary-judgment motion. For example,
Harvest attached two documents to its original petition. The first document is identified by Harvest as an
affidavit by Martin Ravin, Harvest's general manager, in which he stated that the interest rate applicable
to Barajas's account is 23.9%. The second document is entitled “Direct Merchants Credit Card Bank Last
Statement Details," and identifies the applicable interest rate as 29.99%. As summary-judgment evidence,
[2] however, Harvest attached David Ravin's affidavit, in which he asserted that Barajas's indebtedness
includes interest at an unspecified “legal rate."
Assignee proved interest rate
Duran v. Citibank (Tex.App.- Houston [1st Dist.] Mar. 20, 2008)(Taft) (=/= Williams)
(consumer credit, suit by creditor, summary judgment, attorney's fees, creditor prevails)
The Card Agreement further explained how the finance charges will be applied, explaining that Citibank
will “multiply the “balance subject to finance charge” by 1.65%, the monthly periodic rate, which
corresponds to a 19.8% annual percentage rate. This amount is your finance charge on purchases.” The
Card Agreement similarly explains finance charges for cash advance transactions.
Furthermore, each Notice of Change in Terms detailed the annual percentage rate then applicable,
stating that the rate would be calculated by “adding the applicable margin to the Prime Rate published in
The Wall Street Journal. . . .” Lastly, the monthly account statements reflected the balance subject to a
finance charge, the periodic rate, the nominal annual percentage rate, and the annual percentage rate.
Creditor proved interest rate (=/= Hay v. Citibank)
Appellant also contends American Express presented insufficient evidence to support the amount of
finance charges included in the balance. In essence, the agreement prescribes the following method for
calculating finance charges: a daily periodic rate (ADPR") is applied to the “Average Daily Balance"; the
DPR is based on the annual percentage rate (AAPR") and may vary monthly; and the APR is determined
by adding 9.99% to the Prime Rate.[5]
Ghia v. AMEX (Tex.App.- Houston [14th Dist.] Oct. 11, 2007)(Seymore)
(summary judgment for American Express, original creditor, in credit card debt suit affirmed)
Beneath the APR shown on the account statements is the following language: “Certain of the periodic rates and APRs
above may be variable. Those rates may vary based upon the prime rate identified in the Wall Street Journal, as described
in your Cardmember Agreement as currently in effect."
Appellant contends American Express offered no evidence regarding the applicable prime rate used to
determine the APR. Appellant cites an unpublished opinion, Hay v. Citibank (South Dakota) N.A., in which
we held that the plaintiff bank did not present sufficient summary judgment evidence to support the
finance charges awarded on a credit card debt. No. 14-04-01131-CV, 2006 WL 2620089, at *3 (Tex. App.
- Houston [14th Dist.] Sept. 14, 2006, no pet.) (mem. op.). Notably, the agreement authorized a default
rate of up to 19.99% plus the applicable prime rate. Id. But, the bank did not present any evidence of the
applicable prime rate for the relevant time periods covered by the statements. Id. The bank argued the
default rate reflected on some statements minus the 19.99% factor indicated the applicable prime rate.
Id. We held that this default rate reflected the prime rate used, but the bank did not establish “what the
applicable prime rate for any date or time period actually was, such as by reference to a source of that
information.” Id.
In contrast, here, the agreement specifically refers to a source by providing that the Prime Rate is to be
determined from The Wall Street Journal. Moreover, the 2004 account statements include a detailed
description regarding American Express's calculation of finance charges and indicate it indeed used the
prime rate published in The Wall Street Journal.[6] Again, the record does not include statements prior to
2004 and thus does not show how American Express calculated finance charges for previous years.
However, as we have explained, in response to the summary judgment, appellant offered no evidence
showing that she timely disputed the calculation of any finances charges on her monthly statements.
Accordingly, by demonstrating the balance attributable to the "Sign & Travel" feature, American Express
sufficiently proved its right to recover the portion constituting finance charges.
Finally, appellant argues that American Express assessed a “default" APR in excess of the rate
authorized by the agreement. On the November and December
Ghia v. AMEX (Tex.App.- Houston [14th Dist.] Oct. 11, 2007)(Seymore)
(summary judgment for American Express, original creditor, in credit card debt suit affirmed)