Waxler v. Household Credit Services, Inc.

• Decision Date: 30 April 2003
• Docket Number: No. 05-02-01065-CV.,05-02-01065-CV.
• Citation: 106 S.W.3d 277
• Parties: Devera WAXLER, Appellant, v. HOUSEHOLD CREDIT SERVICES, INC., Appellee.
• Court: Texas Court of Appeals

106 S.W.3d 277

Devera WAXLER, Appellant, v. HOUSEHOLD CREDIT SERVICES, INC., Appellee.

No. 05-02-01065-CV.

Court of Appeals of Texas, Dallas.

April 30, 2003.

Supplemental jOpinion Overrulinng rehearing June 23, 2003.

Michael L. Langley, Michael L. Langley, P.C., Richardson, for Appellant.

David Scott Curcio, Boudreaux Leonard & Hammond, Houston, for Appellee.

Before Justices WRIGHT, FITZGERALD and LANG.

OPINION

Opinion By Justice LANG.

Devera Waxier ("Waxier") appeals the summary judgment rendered against her in favor of Household Credit Services, Inc. ("HCS"). In two issues, Waxier contends the trial court erred in ruling that her negligence and gross negligence claims were barred by the statute of limitations because (1) she filed suit less than two years after her cause of action accrued, or (2) alternatively, HCS's actions constituted a "continuing tort," which ceased within two years of Waxier filing this lawsuit. For reasons that follow, we resolve Waxler's first issue in her favor. Accordingly, we reverse the trial court's order and remand this cause for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

Waxier was the holder of a credit card issued by HCS. On August 14, 1998, Waxier made payment on her account by a personal check in the amount of $605.12. However, sometime in September 1998, HCS incorrectly encoded the check for $105.12. Waxier realized the discrepancy in her bank statement and contacted HCS to inform it of its error. On September 25, 1998, Waxler's bank credited HCS the additional $500, as reflected by Waxler's October 1998 bank statement. Nonetheless, HCS notified Waxier that she was delinquent and made demand for payment. By October 28, 1998, HCS had admitted its error, but asked Waxier to send documentation reflecting that the bank had made the $500 payment. Waxier did so, and despite her subsequent efforts to compel the correction, HCS refused. In March 1999, HCS issued a negative credit report as to Waxler's creditworthiness. HCS thereafter made similar negative reports in each of the next four months. Finally, in August 1999, HCS issued a credit report stating that the $500 unpaid bill had been charged off as a bad debt.

In October 2000, appellant applied for a credit card from Chase Bank. On November 6, 2000, Chase notified Waxier that it had denied her application based on a negative credit rating. The only negative report on Waxler's credit history was from HCS. Waxier filed this lawsuit on July 16, 2001, alleging she had been damaged by HCS's negligence and gross negligence respecting the filing of the negative credit reports and the charge-off report. After discovery, HCS filed a motion for summary judgment claiming that Waxler's negligence claims were barred by the twoyear statute of limitations. The trial court agreed and granted summary judgment.¹

STATUTE OF LIMITATIONS

The only issue before us is whether the trial court's granting of summary judgment was proper on the grounds that Waxler's negligence claims were barred by the statute of limitations. Because we conclude summary judgment was not justifiable, we reverse the judgment of the trial court.

A. Standard of Review and Applicable Law

We review a summary judgment de novo. Dickey v. Club Corp. of Am., 12 S.W.3d 172, 175 (Tex.App.-Dallas 2000, pet. denied). The standards for reviewing a traditional summary judgment are well established. See Sysco Food Servs. v. Trapnell, 890 S.W.2d 796, 800 (Tex.1994); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985). We disregard all conflicts in the evidence and accept as true all evidence supporting the nonmovant. See Fought v. Solce, 821 S.W.2d 218, 219 (Tex.App.-Houston [1st Dist.] 1991, writ denied).

When a defendant moves for summary judgment based on the affirmative defense of the statute of limitations, he assumes the burden of showing as a matter of law that the suit is barred by limitations. Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 80-81 (Tex.1989). The limitations period begins to run when the cause of action accrues, and the date of accrual is a question of law. See Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex.1990); Black v. Wills, 758 S.W.2d 809, 815 (Tex.App.-Dallas 1988, no writ). Negligence claims must be brought "not later than two years after the day the cause of action accrues." TEX. CIV. PRAC. & REM. CODE ANN. § 16.003 (Vernon Supp.2003). Because the statute does not define or specify when accrual occurs, we look to the common law to determine when a cause of action accrues. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 750 (Tex.1999).

The elements of a cause of action for negligence are well established: (1) a legal duty owed by one person to another; (2) a breach of that duty; (3) the breach was an actual cause of injury; and (4) actual injury. See Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex.1990). "Because actual injury is an element of a negligence claim, lain action for negligence cannot be maintained unless some damages result therefrom.'" Deloitte & Touche v. Weller, 976 S.W.2d 212, 215 (Tex.App.-Amarillo 1998, pet. denied) (quoting Johnson v. Sovereign Camp, W.O.W., 125 Tex. 329, 335, 83 S.W.2d 605, 608 (1935)). "As a general rule, tort actions accrue, so as to start the running of limitations, when the elements of duty, breach, and resulting injury or damage are present." 54 C.J.S. Limitations of Actions § 164 (1987) (emphasis added); see also Black, 758 S.W.2d at 816. The Texas Supreme Court agrees that a cause of action in tort generally accrues when the tort is committed, but the court has emphasized that "[a] legal injury must be sustained, of course, before a cause of action arises." Atkins v. Crosland, 417 S.W.2d 150, 153 (Tex.1967) (citations omitted).

The first step in calculating when the statute of limitations begins to run against an action sounding in tort is to determine whether the act causing the damage itself constitutes a legal injury. Id. If the act complained of is itself a legal injury to a plaintiff, the wrong is "completed" and the cause of action accrues "from the time the act is committed, even where little, if any, actual damage occurs immediately on commission of the tort." Id. Conversely, if the act complained of is not itself unlawful and the plaintiff sues to recover damages subsequent to that act, the cause of action accrues "when, and only when, the damages are sustained." Id.

B. Application of Law to the Facts

Waxier argues her claim accrued when she was denied credit by Chase Bank on November 6, 2000. Alternatively, she argues HCS's negative credit reporting was a "continuing tort." Under this latter theory, her cause of action accrued in August 1999, when the last negative credit report was issued, which stated that the $500 debt had been charged off. Under either of her alternative theories, the claim is not barred by the two-year limitations period since her petition was filed on July 16, 2001. HCS responds by contending that Waxler's cause of action accrued when HCS wrongfully encoded her check and informed her that she still owed $500. That event, which occurred in September 1998, would render her July 2001 petition untimely.

1. Identifying the Tortious Conduct

In order to test the contentions of the parties, we must identify when the injury occurred. HCS repeatedly contends that the "alleged wrongful act" was the "misrecording of a check" and that Waxler's "legal injury" was "the encoding error." HCS even goes so far as to say that Waxler's application and subsequent denial for credit by Chase Bank was a "fortuitous event" which "did not create a new injury." However, Waxler's complaint is premised on the denial of credit by Chase Bank on November 6, 2000. This denial stemmed from HCS's having negligently issued credit reports that erroneously reported Waxier had not paid her bill to HCS and that her account was charged off to bad debt because it remained unpaid. Waxier claims the negligent acts of issuing the erroneous credit reports occurred despite the fact that HCS acknowledged it was responsible for the encoding error and even though Waxier sent HCS verification of her payment long before the erroneous credit reporting occurred. Therefore, according to Waxler, the accrual date that must be determined for statute of limitations purposes pivots, at the very earliest, upon Waxler's allegations of negligence as to negative credit reporting and charging-off to bad debt, which ended in August 1999. Waxler suggests that the latest the accrual date could be was the date Chase Bank denied her credit because of the erroneous credit report, or November 6, 2000.

2. Accrual Under General Tort Principles

In regard to the time of accrual, Atkins v. Crosland, 417 S.W.2d 150 (Tex.1967), is instructive. There the plaintiff, an owner and operator of several automobile service stations, hired an accountant to prepare his income tax returns in 1958. The accountant used the cash receipts and disbursement method of accounting instead of the accrual method. In 1960, the accountant decided to change to the accrual method. This change resulted in an apparent tax liability of nearly $12,300 less than if he had continued to employ the cash method. However, the accountant failed to secure the consent of the commissioner of internal revenue before changing accounting methods, as required by the Internal Revenue Code. Thereafter, in October 1961, the IRS assessed plaintiff with a tax deficiency in the amount of the $12,300 difference. Plaintiff sued the accountant in September 1963, alleging that he had been negligent in (1) originally adopting the cash method of accounting instead of the accrual method; (2) failing to obtain the permission of the commissioner before changing to the accrual method; and (3) failing to warn plaintiff of his potential tax problem so that plaintiff could pay off his accounts payable before the end of...