Cadence Bank, N.A. v. Roy J. Elizondo III and Roy J. Elizondo III, Pllc, 20-0273

Background

Roy Elizondo, a Houston attorney, received a fraudulent $496,850 cashier’s check, deposited it into his IOLTA account at Cadence Bank, and was given a receipt stating items were credited "subject to payment."
Elizondo authorized an international wire of $398,980; Cadence employee sent an "International Outgoing Wire Transfer Request" form that Elizondo signed and returned.
The form’s bottom administrative fields (including “Collected Balance/Cash” and "Employee Who Verified Collected Balance") were blank when Elizondo signed; Cadence later filled those fields, recorded a collected balance, and employee(s) signed before initiating the wire.
The next day Chase dishonored the cashier’s check; Cadence revoked the provisional credit and charged back the account under the UCC and the deposit agreement.
Elizondo sued for breach of contract (arguing the wire form created a duty to verify and use only the collected balance), while Cadence relied on UCC §4.214 and the deposit agreement to justify the chargeback.
Trial court granted summary judgment for Elizondo on his contract claim; the court of appeals affirmed (2–1). The Texas Supreme Court reversed, holding the wire-transfer form did not create the contractual duty Elizondo claimed, and remanded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the signed wire-transfer form created a binding contract obligating Cadence to verify and use only the account's “collected balance” (excluding provisionally credited funds) before executing the wire	The form (and its administrative fields) created an offer to pay $55 for a transfer from the collected balance; Cadence accepted by completing the form and sending the wire, imposing a contractual duty to verify collected funds	The form was an internal administrative processing form, not a definite contractual promise; Cadence did not intend to be bound to the narrow duty alleged	The form was not sufficiently definite to establish the contractual duty Elizondo claimed; summary judgment for Elizondo on that contract claim cannot stand and is reversed
Whether the UCC/deposit agreement preclude a customer–bank contract that would defeat the bank’s statutory/contractual chargeback rights	Elizondo: the form did not disclaim UCC warranties but imposed a separate contractual verification obligation	Cadence: UCC warranties and the deposit agreement authorize revocation of provisional credits and chargebacks; the UCC restricts altering certain warranties	The Court declined to decide whether such a contract would be permitted under the UCC because the transfer form did not create the asserted contract; resolution unnecessary
Whether Cadence could revoke provisional credit and charge back the account after the check was dishonored	Elizondo: Cadence breached a superseding duty to use only verified/collected funds and thus caused its own damages	Cadence: UCC §4.214 and the deposit agreement expressly allow revocation of provisional credit and chargeback when an item is dishonored	The Court noted Elizondo conceded he breached transfer warranties; the UCC and the deposit agreement authorize chargeback — the dispositive issue was lack of a contractual verification duty on the form

Key Cases Cited

Compass Bank v. Calleja-Ahedo, 569 S.W.3d 104 (Tex. 2018) (do not find conflict between statutory UCC rules and contractual provisions absent clear language)
Fischer v. CTMI, L.L.C., 479 S.W.3d 231 (Tex. 2016) (contract must be sufficiently definite to demonstrate intent to be bound and to identify obligations)
Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831 (Tex. 2000) (contractual definiteness standards; court must understand parties’ obligations)