Crim Truck & Tractor Co. v. Navistar International Transportation Corp.

(Tex.1985) (summary judgment); Quinn, Corp. Exxon (Tex.1987) (judgments non veredicto).

obstante Esquivel’s admission

that she when knew she wrote the check in

question that she did not have sufficient

funds to it cover does not amount to an

admission that she committed a criminal

offense: a violation of 32.41 Texas Penal §

Code. The testimony reflects that al-

though Esquivel knew at the time she clear,

wrote her check that it would not she employer deposited

believed that her had

sufficient funds to cover the check when deposited

she night deposito- it into WMC’s

ry. testimony provides This therefore

some evidence from which the could complaint

conclude that against filed

Esquivel supported probable was not such,

cause. As upon basis which the appeals affirmed the trial court’s

judgment Esquivel’s as to causes of action prosecution malicious and abuse of

process fails.

WMC has raised a number of alternative

grounds for affirmance which were not

reached appeals, the court of including a

challenge to the factual sufficiency of the

evidence. Pursuant to Tex.R.App.P.

majority of the court judg- reverses the

ment of the court appeals without hear-

ing argument oral and remands the case to

that court for a consideration of the re-

maining points of error in a manner not opinion.

inconsistent with this CO.,

CRIM TRUCK & TRACTOR Travis

Crim, Petitioners, Farley, and Tim

NAVISTAR INTERNATIONAL CORPORATION,

TRANSPORTATION

Respondent.

No. D-0092.

Supreme Court of Texas.

Jan. Beard, Adkison, Mitchell

Ron J. Henderson, petitioners. for Fink, Sloan, W. Dal- Stephen F. Steven las, respondent. for OPINION CORNYN, Justice. Rehearing is

The Motion for overruled. this case is with- original opinion The opinion following is substi- drawn and the tuted therefor. question of wheth- presents

This case of a confidential er there evidence duty, rise tionship, giving a franchise franchisee, Crim Plaintiffs are the ment. Company, Travis Crim Truck and Tractor Crims). (the The defen- Farley and Tim franchisor, Interna- dant is (Navis- Corporation Transportation tional Har- tar), International formerly known as court ren- Corporation. The trial vester on judgment for the Crims based dered contract, findings jury of breach fiduciary duty The court and fraud. a confidential no appeals found evidence fidu- give rise to a ciary duty. 791 S.W.2d no evidence appeals also found court of essen- misrepresentation, an an actionable fraud cause the Crims’ tial element of appeals, court of Id. 245. The action. however, Navis- found some evidence Crims, its contract with tar breached judgment be- trial court’s but reversed the support evidence cause of insufficient damages awarded re- Consequently, the court theory. Id. trial on a new manded case find we also issues. Because relationship,1 or of a confidential inquiries. The first addresses points "no entails two of review for evidence” 1. The standard sys- of an the dealer misrepresentation, actionable we af- communications network judgment appeals. firm sign of the court of tem. Crims elected contract. October Navistar noti- Crim Truck Tractor’s partic- fied Crims that it considered predecessor, with Navistar’s International ipation in the dealer communications net- Harvester, began parties in 1943. The en- mandatory. also work Navistar informed joyed a mutually working beneficial Crims that them in it considered to be tionship years reducing their before contract, anticipatory breach of the but agreement writing 1958. to The written gave opportunity them an to cure the al- agreement again in 1964 and was amended leged and signing returning breach in 1979. The 1979 of the revision franchise agreement by and sales service November agreement, here, at issue allows the Crims signed 1984. The Crims never and re- to terminate the franchise at will. How- the contract. ever, turned unilaterally Navistar could termi- not nate the franchise unless the Crims breach- 10, 1984, Finally, on December Navistar ed any of eleven of the conditions contract. reiterated its intention to terminate the contract, furthermore, The grants April franchise effective Crims a opportunity reasonable to cure again given 1985. Once were the Crims claimed breach. opportunity sign return to and the sales stormy2 relationship

The sometimes be- and service before effective tween parties further deteriorated in and date avoid termination. Because the September 1983. In 1983 Navistar decided did comply Crims not with Navistar’s re- to establish a dealer communi- nationwide peated requests, the franchise was termi- computerized cations network to share in- April 1, nated 1985. formation between and Navistar all of its Thereafter, brought the Crims this suit dealers. system designed This to facil- seeking contract, damages for breach supplies itate among distribution of deal- fiduciary duty fraud. The ers, provision warranty and re- alleged profits, past loss of and future dim- pair services to customers. Navistar called business, inution of the value of the loss of a meeting of all in September of its dealers investment, anguish, exemplary mental 1983 to introduce the dealer communica- damages. judg- The trial rendered system. tions network The Crims declined ment favor of the accordance to representative send a meeting. jury’s appealed. with the verdict. Navistar Thereafter, asked its dealers to sign and return agree- Historically, recognized a sales and service have we ment obligated purchase give them to certain relationships rise to a computer equipment required implement See, “fiduciary” duty as a matter law.3 offered, quality inquiring running dealership. of the evidence was still This resulted tendency exchange threatening legal whether the prove evidence offered in an of letters ac- gen- parties’ attorneys. the existence of a material fact. See tion between the The last Ratliff, occasion, erally prior Powers & Another Look at “No to termination of the franchise time, agreement, Evidence" and Evidence” Points occurred in At that In- 1976. "Insufficient Error, (1991). 69 Tex.L.Rev. ternational Harvester decided to renew the quantitative inquires second is as to wheth- Crims’ contin- proba- er there is more than a mere scintilla of ued to do business under terms the ex- pired urging tive evidence. Id. first of an We must address the contract. At the Internation- quality manager, of the evidence before al contract at offered we can Harvester issue was question quantity reach the of the evi- executed three later. dence offered. difficulty We 3. formulat Although ing “fiduciary” Farley both Travis Crim and Tim a definition of the term that is generally comprehensive enough testified to a cordial be- cover all cases. Kinz parties, tween the Crim testified that bach Tool 138 Tex. Travis Nav- Co. Corbett-Wallace However, Harvester, 565, 571, predecessor, istar’s International had consistently recognized threatened that a termination of we have faith, prior "contemplates ment on at least two occasions. The first legal obligation.” occasion Travis Texas & was in when Crim's father rather than Bank

e.g., dence rises to Kinzbach Tool Co. v. Corbett-Wallace the stature of formal fidu ciary relationship, recognizes the law Corp., 138 Tex. relationships existence confidential (1942) (principal/agent); v. Peck Johnson cases “in those which influence has been ham, 132 Tex. 120 S.W.2d abused, acquired and in which confidence (1938) (partners). recently, More we have betrayed”. reposed has been Texas categorized relationships also certain Moore, Bank & Trust Co. “special relationships,” giving rise to a tort (Tex.1980). The existence of a See, dealing. duty of usually ques confidential e.g., Am., Aranda v. Insurance Co. N. MacDonald, of fact. tion Tex. at (Tex.1988); Arnold 339; 623, Elick, 180 S.W.2d at v. Schiller v. County National Mut. Fire Ins. 363, (1951). 150 Tex. 240 1000 (Tex.1987). Although 167 725 S.W.2d Although recognize we the existence fiduciary encompasses duty very a at relationship ordinarily of a is confidential a a duty minimum faith and fair question fact, issue is one of when the dealing, the converse is not true. The evidence, question it becomes a of law. of good merely re- Locke, Thigpen See v. 363 S.W.2d 253 quires parties fairly” to “deal with one (Tex.1962). encompass another and does not the often The Crims every concede that not fran- requires party onerous more burden that a fiduciary chise a creates place party other interest of the But, tionship. they argue that the facts own, before his often to a fiduci- attributed prove giv- a relationship here confidential duty. ary fiduciary ing rise to an informal relation- Navistar, ship, imposing the on Wé,have also that cer interests, just to seek its own economic but relationships give may tain informal rise to to put the Crims’ interests its own.4 before See, fiduciary a duty. v. e.g., MacDonald Follett, 142 Tex. 180 S.W.2d 334 But, argument this clashes with (1944). Such informal relation party rule that to a is free to a have ships also been termed “confidential pursue interests, its if it own even results relationships” and arise “where one contract, in a of that without incur another, person upon trusts in and relies ring liability. tort See Amoco Production moral, social, the relation is a do whether Alexander, v. Co. merely personal mestic or one”. Fitz-Ger (Tex. 1981). The fact that one businessman Hull, 150 Tex. 237 S.W.2d another, promise ald upon his trusts and relies relationship contract, not every Because perform a not rise to a does involving degree a high relationship. of trust and confi confidential Consolidated Moore, (Tex. by obtaining advantage an to himself at Trust 595 S.W.2d trust Kinzbach, 1980); Tex. 160 S.W.2d at expense confiding trusting party. at or 512. question jury special The was then asked 4. "fiduciary relationship” a existed be- to whether question trial submitted they If answer- tween the Crims and Navistar. relationship a existence of confidential in terms question affirmatively, jury special was ed fiduciary duty. of a instructed then asked whether Navistar had breached that: "fiduciary duty” “in to the Crims connection "fiduciary duty” from a confidential arises [a] Crims’] franchise" [the with termination relationship relationship a or when trust upon special question 4. Conditioned placedby one in another and the one [sic] n question special ques- response to affirmative representations relies on and acts inquired as to whether the breach tion other. Where this of confi- fiduciary duty by was "made con- Navistar exists, duty party or trust a rests on the dence willfully, gross sciously or with indifference placed, trust is in whom the confidence or rights. disregard” reckless the Crims’ other, entering with the into transaction objected to this submission on rights make a disclosure of the other’s full law, grounds that there is no “as matter of in the full disclosure of all transaction parties fiduciary relationship” between might affect the other’s material facts is no or was "there evidence that decision whether to enter the transaction parties. fiduciary relationship” abusing or to refrain from the confidence trust and confidence. How- Thompson, 405 one of mutual Equip. Co. v. Gas & (Tex.1966); Thigpen ever, alone is not subjective “mere trust Locke, (1962). Every 363 S.W.2d enough arms-length to transform of confidence contract includes an element fiduciary relationship.” Thigpen, into a faithfully and trust that each will Further, at 253. the Crims obligation the contract.5 perform his under language in the contract which point to relationship has is the fact that the Neither special trust and they claim articulates one, duration, long evi- been a cordial beyond these confidence between relationship.6 of a confidential dence We ordinarily found a contract.7 363 S.W.2d at 253. Thigpen, language was unpersuaded are inject per- intended to an element he ever Travis Crim testified that be- sonal trust and confidence above be- lieved the with Navistar was reject- only majority jurisdictions action for breach of contract of other to a cause of 5.The imposition general fiduciary give independent tort ed the duties on and does not rise to an Inc., relationship. Campground, Domed Stadium Ho- cause of action. Picture Lake tel, Inns, Inc., Holiday Inc. v. Cir.1984) law); (applying Louisiana Bain v. 43, Co., Champlin Petroleum F.2d 48 692 appeals the court of cites testi- 6. The dissent in law); Cir.1982) (applying Murphy South Dakota mony from Travis Crim that "he and his father Co., 350, Pantry v. White Hen (7th Cir.1982) 354-55 things by always requested had Franchisor_” done the law); (applying Wisconsin Carter 791 S.W.2d at 247. The Co., Equip. Equip. Co. v. lohn Deere Indus. 681 record reveals that the Crims followed the re- 386, (5th Cir.1982) (applying Mississip- F.2d 390 quests on two occasions. made the franchisor law); pi Bottling Coca-Cola Co. v. Coca-Cola 1947, when the The first instance occurred 57, Co., (D.Del.1988); F.Supp. 74-75 General 696 dealership location and elder Crim moved the Business Mach. v. National Semiconductor Data- building suggested by prototype built a Interna- checker/DTS, 1422, F.Supp. 664 1425-26 Harvester. Travis Crim testified that the tional (D.Utah 1987); Corp. Power Motive v. Mannes- building property remained the of his land 1048, Demag Corp., F.Supp. mann 617 1051-52 family. Additionally, several earlier the (D.Colo.1985) law); (applying Ohio Picture Lake computer purchased software recom- Inns, Inc., Campground, Holiday Inc. v. 497 find mended International Harvester. We 858, (E.D.Va.1980); F.Supp. 869 Newark Motor nothing extraordinary requests about these Inns, Inc., 1143, Coip. Holiday F.Supp. Inn v. 472 But, the context of the franchise (D.NJ.1979); Weight Que- 1151-53 Watchers of of a confidential relation- this is not evidence Inc., Weight bec Ltd. v. Watchers Inti 398 ship. 1047, (E.D.N.Y.1975). F.Supp. 1053-54 Several points to the fact that Navis- The dissent also jurisdictions imposi- rejected of those that have predecessor Crims as an tar’s had held out the general fiduciary tion of duties in this context they hoped dealership excellent with whom recognized may have also that duties long relationship. Id. continue a and fruitful independently arise because of the nature of the is based on events that occurred in 1947 This parties regard without to the during "grand opening” of the new dealer- underlying parties. contract between the Carter occasion, ship facility. that International On Co., 390-91; Equip. F.2d at Coca-Cola Bot- 681 newspa- purchased an ad in an area Harvester per congratulating 74-75; Co., tling F.Supp. 696 at General Business new the Crims on their Mach., F.Supp. 664 at Others 1425-26. have per- building complimenting them on their implied duty good contractual Likewise, thirty- this one occurrence formance. agreements in franchise eight years prior of the franchise to termination arising general duty good of a faith and out agreement is no evidence of a confidential dealing implied in all contracts. Cambee's fair tionship. Recreational, Inc., Furniture, Doughboy Inc. v. (8th Cir.1987); F.2d 171 Domed Stadi- 825 um, of the con- The "General Provisions" section 485; 48; Bain, F.2d at F.2d at Til paragraph contains tract between 355; Bottling Murphy, Coca-Cola 691 F.2d at margin notation of "Parties which beside a Bound, 75; Distrib., Co., F.Supp. v. at ABA Inc. Assign- Invalidity and Effect of Partial F.Supp. Adolph 1285-86 Coors provides part; (emphasis supplied), ment” Inc., (W.D.Mo.1982); Campground, Picture Lake 869; agreement, involving personal mutu- F.Supp. is a Newark Motor Inn This trust, We, however, may not be specifi- and it at 1151. al confidence assigned by 472 cally rejected general duty party the written implication either without of a except party, good [Navis- of the other and fair in all contracts. consent faith however, Fischer, (Tex. may, assign English tar] v. event, subsidiary corpora- 1983). any or affiliated of this contractu- of its tions, dealing gives the consent of the duty [Crims]. rise without al faith unnecessary yond ordinarily contemplated law under the current type. statutory controlling aspect scheme by parties to contracts of this relationship. In the re- most rule, general all contracts As cent to the Texas amendments Motor Ve- assignable. v. Cloughly are NBC-Bank- Code, Legislature hicle Commission has (Tex. N.A., Seguin, regulate many aspects undertaken to denied); App. Antonio Kir writ —San relationship at issue here. See Tex.Rev. Indies., Dobbs, by Forest Inc. v. (Vernon 4413(36) Civ.Stat.Ann. art. 5.02 § (Tex.App. writ —Beaumont Supp.1991).9 Wrongful termination of a denied); & see also Tex.Bus. Com.Code dealership agree- motor vehicle exception An to this is that a 2.210. rule § governed by ment is now the Texas Motor personal trust, relies on the per- Vehicle Commission Code. id. A confidence, skill, character or credit of the damages son who has as a sustained result parties, assigned may not be without the provisions bring of a violation of these parties. consent Southern Commu Deceptive suit under the Texas Trade Prac- nity Gas Gas Co. Houston Natural Protection Act. Tex.Rev. tices—Consumer (Tex.Civ. Corp., 197 S.W.2d 4413(36) (Vernon 6.06 Civ.Stat.Ann. art. § n.r.e.); App. writ ref’d Antonio —San Supp.1991). Additionally, since Con- Mohon, see also Moore gress imposed a faith in writ). (Tex.Civ.App. —Waco terminating automobile franchise “Rights arising cannot out of a contract be ments. U.S.C. §§ they if transferred involve relation designed to supple- statute is federal personal confidence such statutory ment common law and state rights whose conferred those rights Id. 1225. We see no and duties. § to must have intended them be exercised existing good regula- to to the reason add by actually him in only whom he confided.” tory by implication of a common scheme Mohon, 514 S.W.2d at 513. The Crims’ fiduciary duty. law language on cited as reliance the relationship of a confidential is Crims, cross-points in their misplaced. plate” language “boiler is Such court, damages the argue in this that designed give degree to the of some anguish, by awarded mental they business, over control with whom do punitive damages as loss of investment and nothing ob language more. This findings by jury’s on the supported are viously to intended render the franchise issues, fiduciary as fraud well unassignable. agreement unilaterally appeals found no evi duty. The court of us, observing Alternatively, misrepresentation, a urge at dence of minimum, claimed impose only misrepresentations that very a common duty contract themselves. fiduciary on franchisors are the terms law agree We with agreements.8 245. termination franchise However, appeals. imposition we find a common court of Curiae, argue significant abuse of 8. Amici Texas Automobile Dealers Asso- Associations ciation, go by Associa- power National Automobile Dealers will unre- and control franchisors tion, (the Associa- Southwest Association a faith dressed unless common law tions), engraft urge a tort us engrafted into franchise and fair is into all franchise faith statutory agreements by Under the current law. They contend that the ments. franchisee/fran- today un in effect these concerns are scheme special relationship a should be deemed chisor founded. dispro- relationship because of the franchisor’s power bargaining portionate control inher- regulating portions the amendments 9. Those typical We in the dis- ent agree. or became termination nonrenewal in this that the We find no evidence case inapplica- and thus are effective June over its franchisee’s franchisor exerted control present in the case which ble to the termination comparable insur- to that exerted an business subsequently April and the suit occurred Adolph claim. See Coors er over insured’s filed in 1987. based thereon (Tex. Rodriguez, 780 S.W.2d denied). App. Corpus writ Christi — Hull, rule, general perform As a failure to Gerald v. 150 Tex. (1951). today, terms of a contract is a breach of As the court notes

contract, not a tort. See International the existence an informal Printing Pressmen Assistants’ Union & tionship, relationship, or “confidential” Smith, N. Am. v. 145 Tex. 198 usually At question of fact. 594. What of S.W.2d However, when evidence, then, might tend to sort estab- one enters into contract with no relationship? lish a confidential performing, misrepresen- intention of —the fact that one businessman trusts may give tation rise to action fraud. another, upon promise and relies his Tours, Spoljaric Inc., v. Percival No, perform a contract? the court (Tex.1986); Stanfield says today; one trust another im- (Tex.1971); O’Boyle, 462 S.W.2d plicitly, and stake a lifetime of earn- Scott, Lone Star Steel Co. ings promise, on the other’s but that is (Tex.App. writ —Texarkana still no evidence of a confidential rela- denied). But, party’s perform failure to tionship. contract, alone, standing is no evidence of —the fact that the has been party’s perform intent at the one, long No, a cordial duration? time the Spoljaric, contract was made. court; says might businesses inter- 708 S.W.2d at 435. A review of this record century, act on the for a best of terms reveals that there no evidence that Nav- but that still not be evi- perform istar did not intend to the terms of dence of trust and confidence. the contract it at the time was made in —express language stating contractual involving that the is one reasons, For these we affirm judg- No, mutual confidence trust? ment of the appeals remanding court of court; says regardless of what the case to the trial for a only new trial parties thought, language indi- damage the contract and related issues. only unassignability, cates which has nothing trust and to do with confi- J., by MAUZY, joined Dissent dence. GAMMAGE, DOGGETT and JJ. conclusions, To reach these bizarre the MAUZY, Justice, dissenting. misrepresents precedents, important court dissenting 24, 1991, The opinion July misapplies and then them to the facts of withdrawn, is following and the is substi- heavily case. on Thig this The court relies in place. tuted its Locke, (Tex.1962), pen v. to present nothing establish that the case in again wrongfully Once disregarding a suggests the existence a confidential verdict, rejected the court has vital case, relationship. though, In that the protection Ignoring for Texas businesses. scope court was careful to limit the of its a long-standing the circum- holding: it, surrounding stances the court abandons All [plaintiffs] motor other we hold is do not vehicle dealers and small busi- that testify nesses the the than their across state to whims of to facts—other own powerful subjective feelings These show franchisors. massive en- —which terprises are to enter our state relationship invited their with [defendant] abuse local without fear anything businesses of re- a debtor-creditor re- more than proach Today’s from Texas courts. deci- lationship. pro-

sion leaves Texas with less franchisees S.W.2d at 253. At the time of the they virtually tection than have in conveyance Thigpen, par- disputed in any jurisdiction. other had for less than ties known each other Nonetheless, years. the court cites long recognized This four court has Thigpen, propo- in for the person upon “where one trusts and relies S.W.2d at another,” relationship relationship between the that “the fact that two sition duration, may give one, long duty. rise to a been a cordial Fitz- of a confidential relation- some evidence of trust and evidence confidence. [is not] added). ship.” (emphasis At I chal- Equip. See Carter Co. v. John Deere In- lenge anyone anything find refer- Equip. dus. supports page proposition enced Cir.1982) (“[T]he agreement nature of for it cited. parties may provide

Similarly, misrepresents fiduciary relationship exists.”). the court the im- that a port Equipment of Consolidated Gas & presented a wealth of evi- Thompson, indicating forty-three-year dence that their (Tex.1966). The court relies on that case was, fact, with Navistar one referring reasoning. even to its without and confidence. After a trust fifteen- Thompson opinion does not indicate year relationship solely on trust —the based relationship; parties’ the duration of the working together without writ- rather, cases, Thigpen it cites and other ten contract—the Crims continued to trust explains and then them as follows: franchisor, bidding. their do its Tra- holdings Our cited are to the ef- above vis Crim testified that he maintained his fect that for a constructive trust to arise partly faith in Navistar because of the fiduciary relationship a must be provision person- is a that “[t]his from, before, apart agreement involving al mutual confidence suit. is our made basis Such trust....”; language, without which holding here. testified, signed he would not have Crim 336. The court’s S.W.2d at failure After the Crims explain today Thompson understanda- building new prototype in a location built parties in the had present ble: the case direction, placed a at Navistar’s Navistar relationship of trust and confidence for fif- describing ad newspaper this structure as teen before symbol “good permanency faith and made the suit. basis Henderson, progressive community explains away The court then some Farley Tim testified that the ter- Texas.” language. important the contract’s most agreement by mination of the franchise writing, agree, Parties that their his in them.” Navistar “broke” “trust confidence; of mutual is one Ettle, Manager, Dick Area Sales so, decides, they but don’t even did not recall the Crims testified that he Offering authority mean really it. refusing anything ever to do that he asked disregarding language, such the court also disregards longstanding rules that a con- of them. Travis Crim testified tract should be construed accordance every prod- line Navistar Crims carried plain language, with American General uct offered them. Indemnity Pepper, Tex. Co. evidence, of the the hearing After all (1960), 339 S.W.2d and relation- jury determined that writing strictly against is construed most the ship and existed between Navistar author, Republic National Bank v. reviewing In that determination Crims. Bank, National 578 S.W.2d Northwest error, this court point a no evidence (Tex.1979). By simply dismissing and infer- only must the consider evidence language "obviously to as intended verdict, jury tending support the ences to agreement unilaterally render the franchise contrary. to the disregard all evidence court misses an unassignable,” at the Morales, Bank, N.A. v. International point: unassignability equally obvious the (Tex.1987); v. Alv Garza S.W.2d agreement plainly indicates a confi- iar, (Tex.1965); In re 395 S.W.2d relationship. were no trust dential If there Estate, 662, 244 Tex. King’s involved, why would a and confidence is more than there When assigna- care whether evidence, may appellate an court scintilla of nonassignability clause not ble? A finding on noa jury’s overturn conclusively the existence of a establish v. First point it of error. relationship; surely but Sherman confidential Bank, (Tex. bargain- in collectively, show imbalance Nat’l ing power: 1988). (1) may add or eliminate truck Navistar today give fails consid- The court to due liability incurring without to models supporting the evidence eration to the Crims. indeed, verdict; the court not even does (2) has over unilateral control Navistar mention much of evidence. bother to accept orders it will from what facts, simply presents The court selected Crims. weight according assigning to those to its (3) very Only limited circum- under doing so, In court own inclinations. can the Crims their stances cancel job for itself the the trial assumes products order for from Navistar. assigned jurors.1 properly to twelve (4) retroactively modify can Navistar I uphold jury’s finding would fidu- from price and the terms of an order ciary relationship. the Crims the Crims after I also hold indi- that these facts placed the order. “special cate the existence of a relation- (5) pay must all The Crims Navistar for ship” the fran- franchisor and incurred expenses by Navistar The court that we correctly re- right contractual Navistar’s in an rela- dealing exists insurer-insured all tain unilateral discretion over tionship. Id. terms extended to the credit Crims.

Here, ample (13) there evidence of Navis- provide must a service The Crims overwhelming bargaining power tar’s and and building and a to sell center over its products. exclusive control franchisees. Navistar’s These service agreement tools, equipment, 1979 franchise contains the fol- service include which, space, library, parts lowing provisions individually shop and service Phillips, 801 majority the first 1. This is not time that this has Transportation Co. v. Houston (Tex.1990). jury. usurped role of See, S.W.2d 523 e.g., Greater 600 agreements. equipment, office fur- “the termination of franchise

bins and 241, (Grant, J., equipment. dissenting). niture and 791 S.W.2d minimum, I there is must, At a would hold that (14) own risk The Crims at their implied duty good of faith and fair deal- service, expense, hire train ing agreement in this sales, between accounting personnel products. Navistar and Crim. and sell Navistar’s service input Travis Crim testified he had no throughout Other courts the nation have wording on the of the franchise power immense wielded it, He stated either or signed that “We we franchisors, developed their law and have did not have a contract.” to fran- protection as to so afford some recognize In Ra refusing special chisees. See Atlantic Richfield case, 736, tionship zumic, 366, in this the court demon- 390 A.2d Pa. disturbing degree myo- (“The judicial (1978) commentary strates of weight pia. view) agreement In my argued judicial recognition in favor of exactly type impos- Navistar and the &ims agreement the nature of a franchise in English envisioned v. duty upon to act arbi- es a franchisors not Fischer, (Tex.1983) 524-25 terminating trarily in J., (Spears, concurring). English, this ment.”) A courts held that have number find an implied court refused to obligations good faith and fair every con- terminating a from prevent a franchisor However, recog- tract. the concurrence See, without cause. relationships nized be Doughboy e.g., Cambee’s Furniture v. the duty faith and fair deal- Recreational, Inc., 825 F.2d 172-73 ing relationship, “springs from (8th Cir.1987); Champlin v. Petrole- Bain from the contract.” Id. 525. This is one Cir.1982); (8th Co., 692 F.2d um relationships. those Co., F.2d 873 Oil Arnott v. American (8th Ra Cir.1979); v. Atlantic is- agreements like the one at Franchise Richfield 742; v. zumic, Co. 390 A.2d at Shell Oil propositions sue here are take-it-or-leave-it (1973). Marinello, 307 A.2d 63 N.J. cannot, through for franchisees. A dealer held that a franchise have Other courts negotiation, materially change the risks give rise to relationship may placed and burdens on him the manufac- dealership termi- duties in the context power turer. The of the franchisor is over- Hotel, See, nation. Domed Stadium e.g., whelming, and its control the relation- over Inns, Inc., F.2d 480 v. Holiday Inc. ship is exclusive. It was that same imba- (5th Pan Cir.1984); Murphy v. Hen White power Congress lance of that led to enact Cir.1982); (7th Coca- try 691 F.2d 350 Act, Day Dealers’ Automobile Court Co., 696 v. Coca-Cola Bottling Cola Co. (1988). Legislative 15 U.S.C. §§ (D.Del.1988); Busi F.Supp. Gen. history Congress passed shows Machs, Data- ness v. Nat’l Semiconductor unequal bargain- recognition Act F.Supp. 1425 n. checker/DTS, 664 ing power of franchisors and franchisees. (D.Utah Corp. 1987); Inn Newark Motor H.R.Rep. Cong., No. 2nd 84th Inc., Inns, Holiday Sess., reprinted Cong. in 1956 & U.S.Code Co. (D.N.J.1979); Atlantic Ad.News 4597. See also Woodard v. Richfield Razumic, at 742. 390 A.2d 480 Pa. 127- General Motors denied, Cir.), cert. 369 U.S. seem within To make its decision S.Ct. 8 L.Ed.2d law, American mainstream of case others provisions foregoing ignore I court cites the cases cannot “The disputes: proposition no one one-sided allow result- reject- ing apparent majority jurisdictions of abuse that is from the record other fiduciary general imposition court in this The dissent in the ed case. relationship.” a franchise appeals good faith and duties on the advocated recog- the court itself dealing requirement Page fair exist for 595 n. 5. As should nizes, suggest the Crims do not justifies departure this The court its from the impose general court fiduciary duties on majority jurisdictions ground vast on the relationship. Rather, the franchise in English that this court reject- v. Fischer argue that the in this case implication general duty good ed the of a supports the conclusion that a confidential dealing faith fair in all contracts. existed, alternatively Page n. That only 5. decision came fiduciary a recog- should be adoption four after of section 205 nized wrongfully where a franchisor has (Second) Contracts, of the Restatement terminated Both provides “[ejvery contract im- arguments of those are consistent with ev- poses upon duty good each faith ery one of the cases the court cites. performance in and its contrast, In today court’s decision is enforcement.” While at that time the five- fundamentally at odds with most of the judge majority in English v. Fischer cites, cases it at least insofar court concept viewed the embodied section 205 completely rejects arguments. the Crims’ as “a novel theory only of law enunciated instance, For Equip. Carter v.Co. John courts,” California 660 S.W.2d at Equip. Co., Deere Indus. 681 F.2d 386 we now know the rule has become so well- Cir.1982), the court that rela- established as to be considered “hornbook tionships like the one at issue here be law.” Corp. Newark Motor Inn v. Holi fiduciary Moreover, in nature.2 of the Inns, Inc., day F.Supp. 1151; at see cases the rejecting general court cites as (3d also 5 Williston on Contracts ed. § fiduciary duty, reject none such a in 1961). repudiation Continued of section termination; context of franchise contrary bring to efforts to coher fact, those that address the actually issue uniformity ence and to American law. I recognize duty. such a See Domed Stadi join the rest of our nation’s courts Hotel, um Inns, Inc., Inc. v. Holiday 732 implying 485; F.2d at Champlin Bain v. Petroleum contracts, dealing in including all franchise Co., 48; 692 F.2d at Murphy v. Hen White agreements. Co., Pantry 354; 691 F.2d at Coca-Cola addressing impose whether to a fiduci- Bottling Co., F.Supp. Coca-Cola ary 74; duty on franchisors in the termination Newark Corp. Motor Inn v. Holi- agreements, Inns, Inc., day court finds F.Supp. at 1152.3 Most “no reason existing state courts to add to the addressing the issue have done See, regulatory by implication the same. scheme e.g., of a com- Ashland v. Dona Oil hue, fiduciary duty.” mon (1976); Page 159 W.Va. law 596. The 223 S.E.2d 433 Marinello, court Shell Oil Co. v. notes that after June 63 NJ. (1973), denied, wrongful

A.2d termination cert. of a motor vehicle dealership governed U.S. 94 S.Ct. L.Ed.2d 475 (1974); Service, Division Triple T. Texas Motor Vehicle Commission (TMVCC). Inc. v. Mobil Oil 60 Misc.2d 304 Code Since this suit was filed (Sup.Ct.1969), mem., time, N.Y.S.2d 191 34 before that the Crims did not have aff'd A.D.2d 311 N.Y.S.2d 961 statutory remedy. the benefit of Machs, goals In addition to the 681 F.2d at 391. See also Gen. Business requisite need for Datachecker/DTS, trust or confidence in v. Natl Semiconductor another, one the nature of the be- (D.Utah 1987) (“This F.Supp. parties may provide tween evidence that concludes that a material issue of fact exists fiduciary relationship exists. If the fran- regard with to whether a ex- relation franchisee, power chisor has to control the dealership agreement isted as a result of the there is an increased likelihood that a fiduci- parties.’’). the course of between the exists, ary relationship since trust or confi- necessarily dence must flow from the con- Distrib., Co., Adolph 3. See also ABA Inc. v. Coors result, party. trolled or dominated power, authority, aAs (W.D.Mo.1982); Ar- bargaining position nott v. American Oil 609 F.2d at 876. both the franchisor and franchisee becomes critical. 602 using Navistar still had dealers

Moreover, treatment of fied that legislature’s forms that the Crims relationship hardly requires the same written using in 1985. Nel- that nature of when terminated itself to were this court blind deal- fifty percent Arnott v. of the relationship. Compare son testified Co., (“[F]ur- computer system to using 609 F.2d at 883 not ers were American Oil of a fiduciary nature place indication of the orders. ther recent relationship is found in the in- plead not coercion or The Crims did general legislation.”). surge of contrary, the Crims timidation. On also have the Crims The court would this proved to the contended and aided they could have been believe that by Nav- wrongful termination action was Day in Act Dealers’ Court the Automobile Thus, is no evidence istar. (1988), (ADDCA), 15 U.S.C. §§ the Crims could suggest record to imposed Congress protections have availed themselves terminating fran- automobile faith The fact that provided by the ADDCA. under the agreements. Case law chise recognized, by enact- Congress eventually ADDCA, however, Act does holds that the disparity of legislation, the same ment of mere “arbi- protect the dealer from gives rise to this bargaining power that or trary” faith conduct. Coercion or bad justify its by the court to action is twisted to show a lack intimidation is needed Although the can result. inequitable defini- good faith under the Code’s stricter ADDCA, the court relies way utilize in no Motors, “good faith.” Overseas tion reject claim. on it to their Ltd., Inc., 519 F.2d Import Motors Inc. v. completely today fails Because the court denied, Cir.1975), 119, (6th 423 125 cert. recognition to imbalances give due 395, L.Ed.2d 304 96 S.Ct. 46 U.S. relationships, strongly I power in business (1975) cites moved to footnote].4 [other judgment I would reverse dissent. in this case was arbi- The termination this cause appeals and remand the court of Planning Templeton, Finance trary. Rex of the factu- consideration to that court for Navistar, that not all Manager for testified insufficiency points. al agreement to sign dealers who failed computer system were purchase the new fact, specific there is

terminated. JJ., GAMMAGE, join DOGGETT and this case of in the record of dissenting opinion. being products other dealer of Navistar purchase the com- for failure to terminated Virgil except for the Crims.

puter system

Nelson, Man- a retired Navistar Contracts trial, a full three

ager, testified at for not were terminated

after the Crims system, computer

agreeing purchase deal- provided had not

that Navistar still necessary for the deal- the forms

ers with inventory computers to order

ers to use the Templeton, Nelson and products. Both Pliler, Al testi- dealer

as well as Navistar Motors, Savannah, Chrysler 357 Inc. v. Corp., Motors 298 v. General Motors 4. See also Woodard Buick, Cir.1966); (5th Berry Inc. denied, Bros. (5th Cir.), F.2d 429 369 U.S. cert. F.2d F.Supp. 546 (1962); Corp., 257 v. General Motors Hub- 8 L.Ed.2d 288 82 S.Ct. Cir.1967); (3d (E.D.Pa.1966), aff'd, F.2d 552 Corp., Co. General Motors bard Chevrolet F.Supp. denied, General Motors (5th Cir.), McDaniel v. 493 U.S. cert. F.2d 873 (2d (E.D.N.Y.1979), .aff’d, 628 F.2d 1345 (1989); Kotula v. 107 L.Ed.2d 508 110 S.Ct. Co., F.Supp. Cir.1980); (8th Cir.1964), Motor v. Ford Sink F.2d Ford Motor (E.D.Mich.1982); Sales Ltd. Unionvale denied, S.Ct. 380 U.S. cert. Motors, Volkswagen Corp., 299 (1965); Peugeot Dreiling v. World-Wide L.Ed.2d (S.D.N.Y.1969). Cir.1988); Victory chisee. notes shipping handling products to have, past, recognized rela- certain the Crims. “special tionships relationships,” and (6) right Navistar has the to add the cost relationships give to those rise a tort company advertising to the Crims’ Pages faith and fair dealing. prices. (citing Aranda v. Co. Insurance (7) expressly right Navistar reserves the Am., (Tex. N compete major with the Crims for 1988); County Arnold v. Mut. National sales accounts the Crims’ des- own (Tex. Fire Ins. ignated trade areas. 1987)). The court there concludes that (8) change right reserves the Navistar special relationship because is no design any specifications evidence that Navistar exerted control over requires product the Crims “comparable the Crims’ business to that product modified accept that fulfill- exerted insurer insured’s over its existing ment of orders. Page disagree. claim.” 596 n. 8. I (9) change are not allowed to Crims Arnold, we held special that a of their the location retail establish- tionship between an insurer insured and its approval. Navistar’s ment without parties’ bargain- arises of the unequal out (10) controls the content Navistar ing power and the exclusive control advertising of the ac- quality Crims’ evaluation, insurer over the processing tivities. of claims. denial Id. at 167. We rec- (11) shifts all for trans- risks ognized that the nature of the charges during portation and losses unscrupulous itself allows carriers take transportation to the Crims. advantage bargaining insured in (12) cred- bear the risk of result, we the settlement claims. As a it transactions with Navistar held that a faith and

Case Details

Case Name: Crim Truck & Tractor Co. v. Navistar International Transportation Corp.

Court Name: Texas Supreme Court

Date Published: Jan 22, 1992

Citation: 823 S.W.2d 591

Docket Number: D-0092

Court Abbreviation: Tex.