How Do Discover Bank Debtors Fare in Trial Courts? An Empirical Investigation of Credit Card Collection Litigation in Texas

Abstract

This research report is the second in a series of empirical studies of sets of 100 cookie-cutter collection cases filed by the same original creditor. The first such pilot study looked a consumer credit card actions filed by Wells Fargo Bank, N.A. (WFBNA) in Harris County district courts in 2017. This study examines a sample of like size consisting of credit card collection cases filed by Discover Bank in 2014 in the same local court system, using a different law firm. FREQUENCY DISTRIBUTION OF CASE OUTCOMES For the Discover Bank credit card cases in this study, the breakdown by disposition type was as follows: Dismissal on Plaintiff’s Motion or Nonsuit: 39% Default Judgment for Plaintiff: 24% Dismissal for Want of Prosecution: 21% Agreed Judgment for Plaintiff: 10% Summary Judgment for Plaintiff: 3% Bench Trial Judgment for Plaintiff: 2% Bench Trial Judgment for Defendant: 1% Only in one case did the defendant win at a trial. This represents 1% of the entire sample, but would look better relative to contested cases only. In two other cases that went to trial and were won by the Plaintiff, the judge noted on the Bank’s proposed judgment that the defendant did not appear. DEFENDANTS WITH AND WITHOUT ATTORNEY As for representation status, consumer defendants had an attorney of record in 9% of the cases. Several of the pro se defendants indicated in their written answer that they had signed up with a debt settlement company (Freedom Debt Relief), but that organization did not provide them with an attorney. Of the few cases in which the defendant was represented by counsel, three resulted in agreed judgments, another three resulted in dismissals on the Bank’s motion. One was taken to trial and ended in a take-nothing judgment in the Defendant’s favor. In two other cases that went to trial, the Bank won. The number of cases that were actually tried, and the number of cases with counsel, is too small to reach definitive conclusions regarding the role of litigation performance, but the data is not inconsistent with the proposition that attorney representation can make a difference in garden-variety consumer collection cases. All of the default judgments could have been avoided had the defendant filed at least a general denial answer as authorized by the Texas Rules of Civil Procedure, which could have be done without an attorney by using a form, or by filing a narrative letter-type answer. This could, at the minimum, have given the Defendants a temporary reprieve, and more time to come up with money for a settlement/payment plan. RESOLUTIONS BY SETTLEMENT In contrast to the findings of the first study in the series, a number of Discover Bank cases contained documents that reveal the terms of settlements (so-called Rule 11 Agreements) and were generally filed in conjunction with agreed judgments. Discover Bank collection cases thus provide more information on settlement outcomes than is true of Wells Fargo cases. This category of information is not comprehensive, however, because a case may settle for a one-time lump sum payment, followed by a dismissal with prejudice on the Plaintiff’s motion. If the settlement has already been consummated, there is no need to recite the settlement terms in a court filing because they can no longer be breached. A dismissal with prejudice will do under such circumstances. LIMITED DISCRETIONARY ROLE OF TRIAL COURTS Because of the prevalence settlement, voluntary dismissal, or dismissal for want of prosecution (DWOP), the role of trial court judges in an adjudicatory capacity is limited to a very small proportion of the caseload.