401 S.W.3d 190
Tex. App.2012Background
- Tex Star Motors contracted to sell notes to Regal under Retail Installment PSAs; Regal sued for over $8M for alleged deficiencies.
- Tex Star counterclaimed for $975,000 held in a reserve; final judgment awarded Regal roughly $4M in damages plus fees, Tex Star took nothing.
- On original submission, court reversed in part and remanded to address reserve and other issues; Supreme Court later reversed and remanded for reconsideration.
- PSAs required a Holdback/Dealer Reserve to cover deficiencies; later practice funded reserves by $750 per note and a $975,000 additional deposit to meet a 5% reserve, tied to Bank One credit.
- Bank One loan imposed a 5% reserve; when Bank One exited in 2002, Regal stopped purchasing notes; Tex Star suspended performance; Regal began handling repossessions and dispositions.
- On remand, issues include factual sufficiency of commercial reasonableness, Article 9 challenges, money had and received claim, attorneys’ fees, and prejudgment interest calculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the evidence factually sufficient for commercial reasonableness? | Tex Star | Regal | No; evidence supports reasonableness |
| Do Article 9 findings and notification control over other findings? | Tex Star | Regal | Findings 6(a)/(6)b control; other vehicle-specific findings do not override |
| Did Regal's notice requirements under Article 9 apply to disposition of collateral? | Tex Star | Regal | Notice not required where Regal was a purchaser of chattel paper; duties limited |
| Does acceptance of collateral discharge Tex Star as secondary obligor? | Tex Star | Regal | No; under 9.622, Tex Star remains liable; acceptance did not release secondary obligor |
| Is Tex Star entitled to money had and received for the $975,000 reserve deposit? | Tex Star | Regal | No; express contract governs; reserve remains payable until liquidation and balance |
| When should prejudgment interest accrue for Regal's claims? | Tex Star | Regal | Accrual begins November 15, 2002 (amended petition date), not August 15, 2002 |
Key Cases Cited
- Havins v. First Nat'l Bank of Paducah, 919 S.W.2d 177 (Tex. App.—Amarillo 1996) (nonexclusive factors for commercial reasonableness)
- Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757 (Tex. 2003) (factual sufficiency standard)
- Dow Chem. Co. v. Francis, 46 S.W.3d 237 (Tex. 2001) (evidence weight and fairness in reviewing jury verdicts)
- Barclay v. C.C. Pitts Sand & Gravel Co., 387 S.W.2d 644 (Tex. 1965) (broad form submission over discrete findings (overruled later))
- Burk Royalty Co. v. Walls, 616 S.W.2d 911 (Tex. 1981) (overruled Barclay; supports broad form submission)
- Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671 (Tex. 2000) (express contract bars equitable relief when subject matters overlap)