COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-09-304-CV
VERONICA S. ROLEN APPELLANT
V.
LVNV FUNDING, LLC, APPELLEE
ASSIGNEE OF SEARS
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FROM COUNTY COURT AT LAW NO. 2 OF DENTON COUNTY
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MEMORANDUM OPINION1
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I. Introduction
In three issues, Appellant Veronica S. Rolen asserts that the trial court erred
by granting summary judgment for LVNV Funding, LLC, Assignee of Sears (“LVNV”).
W e reverse and remand.
II. Factual and Procedural History
1
See Tex. R. App. P. 47.4.
On March 28, 2007, LVNV brought a suit on account against Rolen. Rolen
filed a general denial. LVNV served requests for admissions on Rolen. Rolen failed
to respond. LVNV then filed a motion for summary judgment, arguing that Rolen
never filed a verified written answer or denial of the account and that the pleadings,
affidavits, and admissions on file showed that there was no genuine issue of material
fact. Rolen did not respond to LVNV’s motion for summary judgment and failed to
appear at the summary judgment hearing. The trial court granted LVNV’s motion,
and this appeal followed.
III. Standing
In her first issue, Rolen complains that the trial court erred by granting LVNV’s
motion for summary judgment because LVNV did not meet its burden of establishing
that it had standing to sue and was a proper party to bring suit.
A. Standard of Review
Standing, a necessary component of subject-matter jurisdiction, is a
constitutional prerequisite to maintaining a suit under Texas law. Tex. Ass’n of Bus.
v. Tex. Air Control Bd., 852 S.W .2d 440, 444–45 (Tex. 1993); see also Univ. of Tex.
Sw. Med. Ctr. at Dallas v. Loutzenhiser, 140 S.W .3d 351, 358 (Tex. 2004) (“Not only
may an issue of subject matter jurisdiction ‘be raised for the first time on appeal by
the parties or by the court’, a court is obliged to ascertain that subject matter
jurisdiction exists regardless of whether the parties have questioned it.” (internal
citations omitted)), superseded by statute on other grounds, Tex. Gov’t Code Ann.
2
§ 311.034 (Vernon Supp. 2009). Standing cannot be waived. Tex. Ass’n of Bus.,
852 S.W .2d at 445. It cannot be conferred by consent. See Loutzenhiser, 140
S.W .3d at 358. Whether a party has standing to pursue a claim is a question of law
reviewed de novo. See Mayhew v. Town of Sunnyvale, 964 S.W .2d 922, 928 (Tex.
1998), cert. denied, 526 U.S. 1144 (1999); Eaves v. Unifund CCR Partners, 301
S.W .3d 402, 404 (Tex. App.—El Paso 2009, no pet.).
Standing is a party’s justiciable interest in a controversy. See Nootsie, Ltd. v.
Williamson County Appraisal Dist., 925 S.W .2d 659, 661–62 (Tex. 1996); Eaves,
301 S.W .3d at 404. Only the party whose primary legal right has been breached
may seek redress for an injury. Eaves, 301 S.W .3d at 404 (citing Nauslar v. Coors
Brewing Co., 170 S.W .3d 242, 249 (Tex. App.—Dallas 2005, no pet.)). W ithout a
breach of a legal right belonging to that party, that party has no standing to litigate.
Id. (citing Cadle Co. v. Lobingier, 50 S.W .3d 662, 669–70 (Tex. App.—Fort W orth
2001, pet. denied)).
In reviewing standing on appeal, we construe the petition in the plaintiff’s
favor, and if necessary, review the entire record to determine if any evidence
supports standing. See Tex. Ass’n of Bus., 852 S.W .2d at 446.
B. Privity
A party must prove its privity to an agreement to establish standing to assert
a breach of contract cause of action. See Pagosa Oil & Gas, L.L.C. v. Marrs &
Smith P’ship, No. 08-07-00090-CV, 2010 W L 450910, at *2 (Tex. App.—El Paso
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Feb. 10, 2010, no pet. h.) (citing OAIC Commercial Assets, L.L.C. v. Stonegate
Village, L.P., 234 S.W .3d 726, 738 (Tex. App.—Dallas 2007, pet. denied)). For
standing purposes, privity is established when the plaintiff proves that the defendant
was a party to an enforceable contract with either the plaintiff or with a third party
who assigned its cause of action to the plaintiff. Id. An assignee stands in the shoes
of the assignor and may assert those rights that the assignor could assert. See Gulf
Ins. Co. v. Burns Motors, Inc., 22 S.W .3d 417, 420 (Tex. 2000).
The El Paso Court of Appeals has addressed standing to sue on an assigned
credit card debt. See Eaves, 301 S.W .3d at 404–06. It held that an assignee had
standing to sue when the evidence demonstrated that the original holder of the debt
(Citibank) issued a credit card to Eaves, who defaulted on his account; Citibank sold
the account to Unifund Portfolio; and Unifund Portfolio assigned its rights to collect
the debt to Unifund Partners—the plaintiff in the debt collection suit. Id. at 404–06.
The court observed that Unifund Partners’ petition and its response to Eaves’s
motion for summary judgment alleged, and the evidence presented at trial showed,
that it was the present owner of the account and entitled to sue to collect the debt,
recounting the following:
The bill of sale from Citibank to Unifund Portfolio conveyed good and
marketable title to the account, and more importantly, Unifund Portfolio
expressly assigned the rights to collect on the account, including
litigation, to Unifund Partners. Based on this evidence, we find Unifund
Partners had standing to sue to collect the debt.
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Id. at 404–05. The court noted that, even though the bill of sale did not expressly
reference Eaves’s account, other evidence in the record allowed the inference that
Eaves’s account was sold to Unifund Portfolio; this evidence included affidavits
attached to the pleadings and a Unifund statement that noted Eaves’s account from
Citibank, stated the defaulted balance, and indicated that he must tender payment
to Unifund. Id. at 405; see also Cartwright v. MBank Corpus Christi, N.A., 865
S.W .2d 546, 551–52 (Tex. App.—Corpus Christi 1993, writ denied) (holding that
MBank’s pleadings were sufficient to allow judgment on the theory that MBank,
either as holder or assignee, was entitled to sue to collect on a note; MBank had
pleaded that it was a holder of the note and entitled to sue on it; that the Cartwrights
executed the note and delivered it to Enterprise Development, and that Enterprise
Development assigned the note to MBank in consideration for value).
Another of our sister courts has also addressed this issue. See Gellatly v.
Unifund CCR Partners, No. 01-07-00552-CV, 2008 W L 2611894, at *1 (Tex.
App.—Houston [1st Dist.] July 3, 2008, no pet.) (mem. op.). In Gellatly, Unifund
sued as Citibank’s successor-in-interest on an unpaid credit card account. Id. The
court concluded that deemed admissions supplied conclusive proof of the elements
of Unifund’s breach of contract claim because they established
(1) the existence of a contract between Gellatly and Unifund’s
predecessor in interest; (2) that Unifund’s predecessor in interest
performed on the contract; (3) that Unifund now owns the debt; (4) that
Gellatly breached the contract by failing to make payments; and (5) that
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Unifund’s predecessor in interest, and therefore, Unifund were
damaged by Gellatly’s failure to pay.
Id. at *6 (emphasis added); see also Tex. R. Civ. P. 198.2(c) (“If a response is not
timely served, the request is considered admitted without the necessity of a court
order.”), 198.3 (“A matter admitted under this rule is conclusively established as to
the party making the admission unless the court permits the party to withdraw or
amend the admission.”). The court noted in a footnote that the deemed admissions
supplied conclusive proof of Unifund’s standing to sue as the owner of the account.
Gellatly, 2008 W L 2611894, at *6 n.2; see also Butler v. Hudson & Keyse, L.L.C.,
No. 14-07-00534-CV, 2009 W L 402329, at *1–2 (Tex. App.—Houston [14th Dist.]
Feb. 19, 2009, no pet.) (affirming summary judgment when, among other things,
Hudson established the first element of its account-stated claim on a credit card debt
when it provided an affidavit that explained that Chase Manhattan Bank, issuer of
the credit card to Butler, had assigned the right to collect on the debt to Hudson);
Rowlands v. Unifund CCR, No. 14-05-01122-CV, 2007 W L 1395101, at *1 & n.1
(Tex. App.—Houston [14th Dist.] Mar. 27, 2007, no pet.) (mem. op.) (“Unifund
alleged that it purchased the account from Citibank ‘for good and valuable
consideration’ and claimed to be the assignee of Citibank. . . . Attached collectively
as ‘Exhibit A’ to Unifund’s live pleading was . . . [among other things] a ‘Citibank
Card Agreement’ . . . [which] states, among other things, ‘W e . . . reserve the right
to assign any or all of our rights and obligations under this Agreement to a third
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party.’”); McManus v. Sears, Roebuck & Co., No. 09-02-00472-CV, 2003 W L
22024238, at *2 (Tex. App.—Beaumont Aug. 28, 2003, no pet.) (mem. op.)
(concluding that suit on sworn account was appropriate when Sears, Roebuck & Co.
alleged in its motion for summary judgment that even though McManus entered into
a credit agreement with Sears National Bank, he purchased goods and services
from Sears, Roebuck & Co., which subsequently became the assignee of Sears
National Bank’s rights, and in McManus’s responses to requests for admissions, he
admitted that Sears, Roebuck & Co. was the proper party plaintiff and that the credit
card issued to him was issued by Sears, Roebuck & Co.).
C. Pleadings and Admissions
The style of the case, set out in the caption of LVNV’s original petition is
“LVNV FUNDING, LLC ASSIGNEE OF SEARS.” The body of LVNV’s petition states
as follows:
PLAINTIFF’S ORIGINAL PETITION
TO THE HONORABLE JUDGE OF SAID COURT:
This is a suit on a debt. Defendant(s) can be served with
process at the address below.
....
I
Plaintiff, LVNV FUNDING, LLC, requests discovery be conducted
at Level 1 (TRCP 190.2). In the usual course of business, Plaintiff
and/or its Predecessor extended credit to Defendant for purchase of
goods, wares, merchandise, services, or for cash advances. Defendant,
or one duly authorized, accepted, used, and derived benefits from the
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credit account. “Exhibit A” represents the summary of transactions of
which a systematic record was kept.
II
Defendant’s failure to honor payment obligations created a
balance due and owing to Plaintiff, as shown in “Exhibit A.” Despite
Plaintiff’s timely demand, payment has not been forthcoming. All
conditions precedent have been performed.
III
The breach of Defendant led Plaintiff to employ the undersigned
law firm to file suit, necessitating a reasonable fee for attorney services.
LVNV prayed for $5,858.13 as the balance due, for attorney’s fees and costs, and
for any other appropriate relief. The affidavit attached to the original petition
sponsors an exhibit attached apparently for the sole purpose of showing the number
“$5858.13.” 2 The exhibit consists of a half page of computerized gibberish, in which
the word “CITI-SEARS” appears once.
LVNV incorporated its original petition into its summary judgment motion, in
which the style of the case is once more set forth as “LVNV FUNDING, LLC
ASSIGNEE OF SEARS,” but it did not elaborate on how it came into possession of
Rolen’s debt. Rather, in summarizing the basis for its summary judgment, it relied
on its interpretation of the deemed admissions, stating as follows:
2
The affidavit does not serve to clarify matters of standing or anything else,
stating in part,
It was the regular business of Plaintiff and/or its Predecessor for an
employee of Plaintiff and/or its Predecessor, with knowledge of the act,
event, conditions, opinion, or diagnosis recorded, to make the record
of to transmit information thereof to be included in such record; and the
record was made at or near the time of the event recorded or
reasonable [sic] soon thereafter.
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3. Respondent has admitted that Defendant or another with permission
of Defendant, accepted the goods, wares, merchandise or services
bought from Plaintiff, as evidenced by Plaintiff’s Request for
Admissions, which are deemed admitted.
4. Respondent has admitted that the balance due and owing to Plaintiff
from Defendant on the account that is the subject of this suit is
$5,858.13, as evidenced by Plaintiff’s Request for Admissions, which
are deemed admitted.
5. Respondent has admitted that Respondent has failed to pay the
amount due Plaintiff on the account, as evidenced by Plaintiff’s Request
for Admissions, which are deemed admitted.
In the exhibit attached to LVNV’s motion for summary judgment—LVNV’s
request for discovery containing its requests for disclosure and for admissions—the
style of the case is set out as “LVNV FUNDING, LLC Plaintiff,” without any mention
of an assignor. The exhibit contains the following pertinent requests for admissions
that were deemed admitted by Rolen’s failure to respond:
No. 1: Admit Defendant entered an agreement whereby Plaintiff or
Plaintiff’s original assignor extended credit to Defendant(s).
No. 2: Admit Defendant(s), or another with permission of Defendant(s),
accepted the credit extended for the purchase of goods, wares,
merchandise, services, or for cash advances.
....
No. 6: Admit Defendant(s) promised to pay Plaintiff or Plaintiff’s original
assignor on the credit account the subject of this suit.
No. 7: Admit Defendant(s) made payments to Plaintiff or Plaintiff’s
original assignor on the credit account the subject of this suit.
No. 8: Admit there is an unpaid balance on the credit account the
subject of this suit that is due and owing from Defendant(s) to Plaintiff.
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No. 9: Admit the balance due and owing to Plaintiff from Defendant(s)
on the credit account the subject of this suit, after all offsets, payments,
claims, and credits is at least $5858.13.
....
D. Analysis
The flaws in LVNV’s petition and other documents in the record appear to
stem primarily from LVNV’s failure to allege facts to support the bases for its suit,
including (but not limited to) the basis for an assignment. That is, although LVNV
sets out in its petition, in the style of the case, that it is “assignee of Sears,” it alleges
in the body of its petition that “Plaintiff and/or its Predecessor extended credit” to
Rolen. [Emphasis added.] This “and/or” clause gives rise to the following
interpretations: (1) LVNV and its predecessor extended credit—on which basis
LVNV could bring its own claim if it extended credit to Rolen separately but would
also have to allege facts to support the assignment by its predecessor who also,
jointly or separately, extended credit to Rolen; or (2) LVNV or its predecessor
extended the credit—on which basis LVNV could bring its own claim that it extended
credit or allege facts to support the assignment by its predecessor if it hoped to
support a claim on the basis of assignment. LVNV does not allege in the body of its
petition that it acquired a debt owed by Rolen to Sears—nowhere other than in the
caption is Sears even mentioned. 3
3
Nor does LVNV state within the actual body of its petition how its claim or
its predecessor’s claim would entitle it to file what appears to be a suit on sworn
account. See, e.g., McFarland v. Citibank (S.D.), N.A., 293 S.W .3d 759, 764 (Tex.
10
The deemed admissions do not clarify whether LVNV can sue because LVNV
had a contract with Rolen itself or because LVNV acquired a contract as an
assignee. LVNV asked Rolen to “[a]dmit [she] entered an agreement whereby
Plaintiff or Plaintiff’s original assignor extended credit to [her]” and to “[a]dmit [she]
promised to pay Plaintiff or Plaintiff’s original assignor on the credit account the
subject of this suit.” [Emphasis added.] LVNV’s requests for admissions do not
include requests that would clear up the confusion, such as “Admit you opened a
credit account with Sears,” “Admit that LVNV acquired your debt from Sears,” or
“Admit Sears is LVNV’s predecessor in interest.” And LVNV’s own interpretation of
the deemed admissions fails to clarify matters regarding who extended credit to
Rolen (“Plaintiff and/or its Predecessor”) when it states, “3. Respondent has
admitted that Defendant or another with permission of Defendant, accepted the
goods, wares, merchandise or services bought from Plaintiff, as evidenced by
Plaintiff’s Request for Admissions, which are deemed admitted.” 4 [Emphasis added.]
App.—W aco 2009, no pet.) (“Thus, we join our sister courts in holding that account
stated, and not a suit on a sworn account, is a proper cause of action for a credit
card collection suit because no title to personal property or services passes from the
bank to the credit card holder.”). Because of our resolution of this case on subject
matter jurisdiction grounds, we do not reach the propriety of a suit on sworn account
for what appears to be credit card debt. Cf. Lottie v. Harvest Credit Mgmt. LLC, No.
02-06-00303-CV, 2008 W L 110251, at *1 (Tex. App.—Fort W orth Jan. 10, 2008, no
pet.) (mem. op.) (affirming suit on sworn account brought on credit debt because
appellant failed to preserve errors complained of).
4
This also appears to misconstrue the actual request for admission, which
states, “Admit Defendant(s), or another with permission of Defendant(s), accepted
the credit extended for the purchase of goods, wares, merchandise, services, or for
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W e have found nothing in the record, other than the style of the case, to
indicate that Sears was LVNV’s predecessor or that it assigned Rolen’s debt to
LVNV. See Tex. Ass’n of Bus., 852 S.W .2d at 446. Because LVNV did not allege
sufficient facts to support both its claim that it extended credit to Rolen and that its
predecessor did so and transferred the claim to LVNV and did not request any
admissions to show the connection between Rolen, LVNV, and LVNV’s predecessor
or attach anything to show this connection—including, for example, a copy of the
credit card contract between Rolen and Sears or of an assignment between Sears
and LVNV—LVNV failed to allege or prove the requisite privity for standing to sue
Rolen as an assignee. See Pagosa Oil & Gas, L.L.C., 2010 WL 450910, at *2; see
also Eaves, 301 S.W .3d at 404–06; Butler, 2009 W L 402329, at *1–2; Gellatly, 2008
W L 2611894, at *1, 6 & n.2; Rowlands, 2007 W L 1395101, at *1 & n.1; McManus,
2003 W L 22024238, at *2; Cartwright, 865 S.W .2d at 551–52; cf. Unifund CCR
Partners v. Hawthorne, No. 05-08-01574-CV, 2009 W L 4879017, at *1–2 (Tex.
App.—Dallas Dec. 17, 2009, no pet.) (mem. op.) (affirming debtor’s no-evidence
summary judgment when Unifund failed to offer a scintilla of evidence that it was the
assignee of a creditor to whom he incurred a debt); Unifund CCR Partners v.
Perkins, No. 05-08-01576-CV, 2009 W L 4202635, at *1, 4 (Tex. App.—Dallas Nov.
25, 2009, no pet.) (mem. op.) (holding same with regard to Unifund’s failure to offer
cash advances.” [Emphasis added.]
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a scintilla of evidence that it was either debtor’s original creditor or original creditor’s
assignee). W e sustain Rolen’s first issue.
IV. Conclusion
Having sustained Rolen’s first issue, we reverse the trial court’s judgment and
remand this case to afford LVNV the opportunity to amend its pleadings. See, e.g.,
Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W .3d 835, 839–40 (Tex. 2007).
PER CURIAM
PANEL: MCCOY, J.; LIVINGSTON, C.J.; and GARDNER, J.
DELIVERED: April 22, 2010
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