½ Price Checks Cashed v. United Automobile Insurance Co.
344 S.W.3d 378
| Tex. | 2011Background
- UAIC issued a $1,288.64 check payable to Patrick Bretton, Brandy Bretton, and DBD Motor Co., Inc.
- The check was endorsed, cashed by 1/2 Price Checks Cashed, making Half-Price the holder; its bank presented the check, but UAIC’s bank dishonored it.
- Half-Price sued in justice court for breach of contract under Tex. Bus. & Commerce Code §3.414 and sought attorney's fees under Tex. Civ. Prac. & Rem. Code §38.001(8).
- Justice court and later county court at law awarded Half-Price damages, costs, and attorney's fees; the Court of Appeals reversed on the attorney's fees issue.
- Half-Price petitioned for review to determine whether §38.001(8) applies to a §3.414 claim.
- The Texas Supreme Court held that a §3.414 claim is a contract-based claim and §38.001(8) applies, remanding for a fees determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §3.414 claim is contractual for fees under §38.001(8) | Half-Price contends the check is a contract and the suit on a dishonored check is a contract claim. | UAIC argues the §3.414 claim is statutory, not contractual, and §38.001(8) does not apply. | Yes; §3.414 claim is contractual and §38.001(8) applies. |
| Does applying §38.001(8) to a §3.414 claim disrupt the UCC's scheme | Allowing §38.001(8) aligns with liberal construction and contract-based remedy alongside UCC provisions. | Importing external fee-shifting could disturb Article 3's comprehensive liability framework. | No; it does not disrupt Article 3's scheme. |
Key Cases Cited
- Medical City Dallas, Ltd. v. Carlisle Corp., 251 S.W.3d 55 (Tex. 2008) (allowed §38.001(8) fees for article 2 contract claim; contract-based reasoning)
- Temple-Eastex Inc. v. Addison Bank, 672 S.W.2d 793 (Tex. 1984) (bank-letter of credit context; liberal construction of §38.001)
- Southwest Bank v. Info. Support Concepts, Inc., 149 S.W.3d 104 (Tex. 2004) (importing non-UCC liability provisions into UCC article 3 can disrupt scheme)
- JCW Electronics, Inc. v. Garza, 257 S.W.3d 701 (Tex. 2008) (distinguished Southwest Bank; article 2 lacks a comprehensive fault scheme)
- Time Out Grocery v. Vanguard Group, Inc., 187 S.W.3d 41 (Tex.App.-Dallas 2005) (held §38.001(8) not apply to §3.414; contrasted cashier vs ordinary check)
- Barham v. Sugar Creek Nat'l Bank, 612 S.W.2d 78 (Tex.Civ.App.-Houston [14th Dist.] 1981) (early authority on contract-based attorney’s fees in related contexts)
- Med. City Dallas, Ltd. v. Carlisle Corp., 251 S.W.3d 55 (Tex. 2008) (liberal construction of §38.001; contract-based damages remedy)
- Temple-Eastex, Inc. v. Addison Bank, 672 S.W.2d 793 (Tex. 1984) (attorney's fees under §38.001(8) permitted in finance-related actions)