Health & Tennis Corp. of America v. Jackson

• Decision Date: 05 June 1996
• Docket Number: No. 04-96-00017-CV,04-96-00017-CV
• Court: Texas Court of Appeals
• Parties: HEALTH & TENNIS CORPORATION OF AMERICA, Successor by Merger to Dallas Health Clubs, Inc. d/b/a Bally's, Appellant, v. Keith JACKSON and Freddie Mack, Individually and On Behalf of All Others Similarly Situated, Appellees.

Page 583

928 S.W.2d 583

HEALTH & TENNIS CORPORATION OF AMERICA, Successor by Merger to Dallas Health Clubs, Inc. d/b/a Bally's, Appellant, v. Keith JACKSON and Freddie Mack, Individually and On Behalf of All Others Similarly Situated, Appellees.

No. 04-96-00017-CV.

Court of Appeals of Texas San Antonio.

June 5, 1996.

Rehearing Overruled July 9, 1996.

Thomas E. Kurth, W. Alan Wright, Leila A. D'Aquin, Haynes and Boone, L.L.P., Dallas, for Appellant.

Barry Snell, Bayne, Snell & Krause, L.L.P., San Antonio, for Appellee.

Before LOPEZ, HARDBERGER and DUNCAN, JJ.

OPINION

PER CURIAM.

This appeal is from an order certifying a class pursuant to rule 42 of the Rules of Civil Procedure. Appellant raises seven points of error asserting that the trial court abused its discretion in certifying the class and urging that appellees' counsel must be disqualified. We affirm.

FACTS

Appellee Jackson ¹ alleges that the facts are as follows: Jackson told a salesperson for Bally's (predecessor to appellant Health & Tennis Corporation) that he wanted to work out at Bally's health club on a month-to-month basis and that he did not want to enter a contract. The salesperson told him that was "no problem" and accepted his payment of $75.00. She then, however, had him sign a contract, which Jackson apparently either did not read or did not recognize as a contract. Bally's later informed Jackson that he had entered a three-year contract and that, although he had paid $75, he was only given credit for paying $25. Jackson alleges that he began to receive rude and harassing telephone calls from Bally's and then from Perimeter Credit, L.P., the company to which Bally's turned over his contract for collection. The following is a chronology of the subsequent legal actions:

February 14, 1995: Jackson sues Bally's and Perimeter Credit in County Court at Law No. 3. He alleges violations of the DTPA and the Credit Code, including allegations regarding oral misrepresentations and failure to credit his full $75 payment.

March 22, 1995: Jackson settles with Perimeter for $3000. The settlement specifically excludes Jackson's claims against Bally's.

March 29, 1995: Jackson nonsuits Perimeter from the county court at law suit.

May 7, 1995: Jackson deposes Bally's corporate representative and discovers that Bally's routinely charges monthly dues of $6.00 to those customers who purchase on credit, but no monthly dues to those who pay cash.

May 8, 1995: Jackson amends the county court at law suit to delete allegations of violations of the Credit Code. He files suit against Bally's in district court, alleging violations of the DTPA and the Credit Code. The alleged violations do not include allegations regarding oral misrepresentations and failure to credit his full $75 payment, but are limited to the charging of an excessive time-price differential in the form of "monthly dues."

June 14, 1995: Jackson abandons his cause of action arising from Bally's oral misrepresentations and dismisses the county court at law suit with prejudice.

October 30, 1995: Jackson files for class certification in the district court suit.

November 7, 1995: The district court holds a hearing on the certification motion. Although numerous exhibits (including deposition testimony) are admitted, only two witnesses testify live--Jackson and his attorney, Barry Snell.

November 8, 1995: Jackson files a Second Amended Original Petition adding a second named plaintiff--Freddie Mack.

December 11, 1995: The trial court signs an order certifying the class under TEX.R. CIV. P. 42(b)(4) and creating two sub-classes. The first sub-class (the Credit Code Class) includes those persons who have a claim only under the Credit Code. The second sub-class (the Credit Code/DTPA Class) includes those persons who meet the criteria of the Credit Code class, but who also signed a contract with Bally's within the DTPA statute of limitations. The court further requires that each class member's contract with Bally's show that the monthly dues plus the stated finance charges exceed the maximum time-price differential permitted under the Credit Code.

STANDARD AND SCOPE OF REVIEW

Certification of a class requires findings that: (1) the class is so numerous that joinder of all members is impracticable (numerosity); (2) there are questions of law or fact common to the class (commonality); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class (typicality); and (4) the representative parties will fairly and adequately protect the interests of the class (adequacy). TEX.R. CIV. P. 42(a); Weatherly v. Deloitte & Touche, 905 S.W.2d 642, 647 (Tex.App.--Houston [14th Dist.] 1995, dism'd w.o.j.); Dresser Industries, Inc. v. Snell, 847 S.W.2d 367, 372 (Tex.App.--El Paso 1993, no writ). Class certification also requires a finding of one of the four circumstances enumerated in TEX.R. CIV. P. 42(b). Dresser Industries, 847 S.W.2d at 372. The court in the present case found that a class action was maintainable because questions of law or fact common to the class members predominate over questions affecting only individual members and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. See TEX.R. CIV. P. 42(b)(4).

The trial court's decision on a motion to certify a class is subject to review only for an abuse of discretion. Vinson v. Texas Commerce Bank--Houston, Nat'l Ass'n, 880 S.W.2d 820, 823 (Tex.App.--Dallas 1994, no writ); Wente v. Georgia-Pacific Corp., 712 S.W.2d 253, 255 (Tex.App.--Austin 1986, no writ). Further, the reviewing court must view the evidence in the light most favorable to the trial court's ruling and indulge every presumption in favor of that ruling. Vinson, 880 S.W.2d at 823; Dresser Industries, 847 S.W.2d at 371-72. The trial court abuses its discretion only when it fails to properly apply the law to undisputed facts, when it acts arbitrarily or unreasonably, or when its ruling is based on factual assertions not supported by material in the record. Weatherly, 905 S.W.2d at 648; Vinson, 880 S.W.2d at 823; see also Dresser Industries, 847 S.W.2d at 371 (acting without reference to guiding principles); Clements v. League of United Latin American Citizens (LULAC), 800 S.W.2d 948, 952 (Tex.App.--Corpus Christi 1990, no writ) (same). Also, we note that when the trial court determines class status at an early stage in the proceedings, it should err in favor of certification; the certification order is always subject to later modification if circumstances require it. Clements, 800 S.W.2d at 952; Life Ins. Co. of the Southwest v. Brister, 722 S.W.2d 764, 774-75 (Tex.App.--Fort Worth 1986, no writ).

A proponent of a class is not required to make an extensive evidentiary showing in support of the motion for certification. Vinson, 880 S.W.2d at 823. The trial court is not limited to evidence that would be admissible at trial, but may consider the pleadings and other material in the record. Vinson, 880 S.W.2d at 823.

STANDING

Appellant contends that Jackson lacks standing to sue because Jackson's claim is barred by the "one satisfaction" rule. Appellant asserts Jackson has already received from his settlement with Perimeter Credit more money than he is seeking in the present action against Bally's. Thus, he cannot recover against Bally's. We acknowledge that the "one satisfaction" rule may afford appellant an affirmative defense against Jackson's claim, see TEX.R. CIV. P. 94, but it has no bearing on Jackson's standing to sue. "[Appellants] confuse the legal concept of standing with ability to prove the merits of a cause of action." Dresser Industries, 847 S.W.2d at 375. Appellant's challenge to Jackson's standing is overruled.

TYPICALITY

Appellant contends that Jackson's claim is not typical of the claims of absent class members because (1) his claim is subject to the "one satisfaction" defense; (2) he is alleging that Bally's made oral misrepresentations to him that were not necessarily made to other class members; (3) he received a discount on his membership price; (4) he has suffered no actual damages because he defaulted on the contract and did not pay any finance charges or monthly dues; and (5) appellant has asserted a counterclaim against him.

The requirement of typicality is satisfied when the class representative demonstrates that his claims have the same essential characteristics as those of the class as a whole. Microsoft Corp. v. Manning, 914 S.W.2d 602, 613 (Tex.App.--Texarkana 1995, no writ); Cedar Crest Funeral Home, Inc. v. Lashley, 889 S.W.2d 325, 331 (Tex.App.--Dallas 1993, no writ); Wiggins v. Enserch Exploration, Inc., 743 S.W.2d 332, 334-35 (Tex.App.--Dallas 1987, writ dism'd w.o.j.). "The claims need not be identical or perfectly coextensive, but only substantially similar." Cedar Crest, 889 S.W.2d at 331; see also Dresser Industries, 847 S.W.2d at 372; Wiggins, 743 S.W.2d at 335. Further, the claims must arise from the same event or course of conduct and must be based on the same legal theory. Microsoft, 914 S.W.2d at 613.

Regarding the second "distinction" set forth above, we note that Jackson is not pursuing his claim for oral misrepresentations in this action. The fact that he alleged such a claim in a prior lawsuit does not render his claim in the present lawsuit atypical. Regarding the fifth "distinction" set forth above, the mere filing of a counterclaim against a class representative cannot defeat certification of the class. The record does not reflect that the counterclaim asserted against Jackson will detract from his ability to pursue his claim for relief on behalf of the class.

Insofar as appellant asserts defenses against Jackson, it is not the duty of this court to determine the validity of those defenses or of Jackson's claims. "The probability of the plaintiffs' success on the merits of their claims is an improper standard by which to measure...