Fibergrate Corp. v. Research-Cottrell, Inc., No. CA 3-79-0365-G.

• Court: United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Northern District of Texas
• Writing for the Court: Calhoun & Spillman by Mark Alan Calhoun, Roy L. Stacy, Dallas, Tex., for defendant
• Citation: 481 F. Supp. 570
• Parties: FIBERGRATE CORP. v. RESEARCH-COTTRELL, INC.
• Decision Date: 28 December 1979
• Docket Number: No. CA 3-79-0365-G.

481 F. Supp. 570

FIBERGRATE CORP.
v.
RESEARCH-COTTRELL, INC.

No. CA 3-79-0365-G.

United States District Court, N. D. Texas, Dallas Division.

December 28, 1979.

Raymond D. Noah & Associates, Richardson, Tex., Lancaster Smith, Harvey L. Davis, Dallas, Tex., for plaintiff.

Calhoun & Spillman by Mark Alan Calhoun, Roy L. Stacy, Dallas, Tex., for defendant.

ORDER

PATRICK E. HIGGINBOTHAM, District Judge.

This case revolves around certain services and materials plaintiff Fibergrate Corporation allegedly provided defendant Research-Cottrell and a cancellation of an order defendant placed with plaintiff. Specifically, plaintiff asserts (1) that defendant, by purchase orders defendant issued, ordered and received plaintiff's services and materials, valued at $124,187.17, as set out in certain invoices and (2) that in another transaction, defendant ordered and insured plaintiff's services, but that prior to completion of manufacture of items ordered, defendants cancelled the order, thereby incurring a cancellation charge of $45,449.10. Plaintiff, alleging that it had not received either sum, initially sought judgment in state court in the amount of $169,633.47 (the total of $124,187.17 and $45,449.10), together with interest thereon at the rate of 6% per annum from June 7, 1978, to date of judgment and at 9% per annum thereafter until paid, and costs of suit. In the amended complaint, filed after removal to this court, plaintiff also sought punitive damages and attorney's fees.

Defendant Research-Cottrell has filed a motion for summary judgment. Research-Cottrell argues that Texas law, as decided in Houston Sash and Door, Inc. v. Heaner, 577 S.W.2d 217 (Tex.1979) is that the charging of interest on an "open account" during the calendar year in which the account is made is in excess of twice that permitted by

481 F. Supp. 571

Article 5069-1.03,¹ Tex.Rev.Civ.Stat. (Vernon), i. e., in excess of twice zero, and that this would subject the creditor to the penalty provisions of Article 5069-1.06.² Defendant argues that since plaintiff Fibergrate was not entitled to any interest on what defendant alleges was an "open account" until after January 1, 1979, its prayer for interest in this suit from June 7, 1978, constitutes a violation of Article 5069-1.03, subjecting plaintiff to the penalty provisions of Article 5069-1.06. The defendant urges that plaintiff is thus subject to forfeiture of twice the amount of interest charged, all principal, interest, and other charges and reasonable attorneys' fees set by the court, and as a result plaintiff does not have the right to recover the principal amount sought

In essence, Research-Cottrell urges that because the plaintiff in its prayer for relief sought too much interest, it is entitled to summary judgment. Fibergrate replies that assuming that too much interest was prayed for, to grant a summary judgment for reasons suggested would violate fundamental concepts of procedural fairness. Fibergrate points out that plaintiffs often seek amounts larger than that which they can reasonably expect or may be entitled to by law, and argues that it should not be denied all relief simply because it may have similarly prayed for more than it is entitled to.

The Usury Statute

Since Article 5069-1.06 is a usury statute and is penal in nature, it should be strictly construed. ...