*1 COMPANY, LTD. FINANCE REGAL II, Company Regal Finance Petitioners,
Ltd., MOTORS,
TEX STAR
INC., Respondent.
No. 08-0148.
Supreme Court of Texas. 9, 2009.
Argued Sept. Aug.
Decided *2 Post, Gunn,
Russell S. M. David David Beck, II, J. Michael Ernest Richardson Pfeiffer, Huber, Constance H. Erin Hilary Beck, Secrest, L.L.P., Houston, Redden & TX, for Regal Company, Finance Ltd. and II, Regal Company Finance Ltd. Scott, Jacalyn D. Eugene B. Wilshire Jr., Scott, P.C., Houston, TX, Wilshire & Motors, for Tex Star Inc.
Justice MEDINA opinion delivered the of the Court in which Chief Justice JEFFERSON, HECHT, Justice Justice WAINWRIGHT, GREEN, Justice Justice WILLETT, GUZMAN, Justice and Justice joined. LEHRMANN Under Article 9 of the Uniform Com- Code, mercial a secured may creditor re- default, possess collateral after dispose it, any deficiency purchase then which could then sue note at its from the proceeds that remains after the agreements, discretion. Under these Tex A are to the debt. se- applied collateral Star sold the notes to with “full *3 to recover a cured creditor that seeks recourse,” meaning Regal could require however, deficiency, prove must it Tex Star to repurchase any non-perform- “commercially acted in a reasonable” ing loans. The PSAs also created a deal- In disposing manner of collateral. fund, er-reserve titled the “Holdback Re- case, proved the secured creditor that to serve[,]” capitalized by Regal withholding jury, the satisfaction of the who awarded paid from the amount it Tex Star $750 deficiency The court judgment. it a of when purchasing each note. While main- however, aside, appeals, set the verdict by Regal, tained the Holdback Reserve finding no evidence of commercial rea- belonged to Tex Star. primary purpose Its 745, sonableness. 246 751-52 & was to finance Tex note-repurchase Star’s n. 9. obligations any nonper- loans became forming. practice, In Regal paid Tex Star The court concluded that in- $2,000 from the Reserve when Holdback structions on commercial reasonableness repurchased Tex Star a non-performing of a required proof particular here indus- note. After payment pur- of all notes standard, try regardless of whether Article Star, chased from Tex Regal was to return such required proof. Id. Because any remaining amount in the dealer re- produce any secured creditor failed to evi- standard, serve to Tex Star. dence of this the court further concluded there was no evidence of com- As its business with Tex expanded, Star mercial reasonableness and therefore no Regal outgrew its existing lending rela- deficiency judgment against basis for a 1999, with tionships smaller banks. In We, however, disagree debtor. Id. $25,000,000 Regal three-year, obtained a jury charge altered the standard for revolving line of credit with Bank One. The commercial under Article reasonableness Bank agreement required Regal One loan further conclude that evidence of We eq- to maintain a dealer-reserve fund that legally commercial reasonableness here is principal ualed 5% of the balances of Re- support jury’s sufficient to verdict. gal’s outstanding notes. we Accordingly, ap- reverse the court of peals’ judgment the case remand Regal agreed and Tex Star never that court for its further consideration. keep- for writing responsible who would be
ing compliant the dealer-reserve fund with I agreement. Regal’s the Bank One loan manager orally testified that Tex Star Motors, Tex Star a used-car agreed to maintain the dealer-reserve fund dealer, signed a Retail Installment Con- financing it meant more for Tex because Agreement tract Purchase and Sales any personal Star without additional liabili- (“PSA”) Regal Company, with Finance ty for Tex Star’s Tex Star denied owners. (collective- and, Ltd. another PSA any agreement. the existence of oral Nev- “PSAs”) ly, Regal with Finance Com- a half ertheless over the next two and II, pany (collectively, “Regal”). Ltd. a total sum of years, deposited Tex Star obligated PSAs Tex to offer each Star $975,000 maintain the reserve at dealer gen- secured automobile installment note it by the Bank One loan through Regal, erated consumer sales to the level dictated II agreement.1 One had to exit By Bank decided selling repossessed After vehicles lending auto notified sub-prime than the outstanding less loan bal- it not renew its credit line. ances, Regal Tex Star for the defi- sued turn, informed Tex Star that it Regal, counterclaim, ciency. Tex Star filed buying Tex Star’s automobile would not be seeking the funds held in the dealer-re- year procured at least a while it notes for fund, allegedly serve monies owed under financing. alternate Around the same repurchased, the PSAs for it *4 bring to the dealer-reserve fund into com- provide ure to notice to and conduct the pliance agreement. with the Bank One loan vehicle faith good sales and in a com- mercially reasonable manner. attorney Tex Star’s advised that neither Bank agree- the PSAs nor the One loan jury, The case was tried to a which Tex obligated ment Star to maintain the comply found that Tex Star to with failed by reserve levels mandated the Bank One some, the PSAs and was liable for but not advice, agreement. Heeding loan Tex this all, Regal sought. deficiencies $386,000. Star refused to fund the Tex answering damages question, jury did, however, Star continue to repurchase to instructed consider the loans nonperforming Regal notes from over the relating Regal in good vehicles sold months, next Regal quit paying few but faith and in a $2,000 per Tex Star note from the Hold- Jury manner. provided instructions also back Reserve. additional information on meaning 2002, In November Tex Star notified these terms. Regal suspending performance it was un- der the and no longer PSAs collect Finding Regal sold some vehicles in notes, vehicles, repossess and sell on good faith reason- Regal’s Rather behalf. than hire another manner, able jury Regal awarded services, company provide Regal these $4,000,000 in deficiency damages. The decided to handle these matters itself. jury also found that Tex Star agreed had to maintain the dealer-reserve at the fund
In early December
Regal estab-
required by
level
the Bank One loan
port-
lished a location to service its notes’
$975,000
agreement
in that fund
repossessions.
folio and handle
Within
belonged to Tex Star. The trial court ren-
days
location,
three
opening
Regal
verdict,
judgment
dered
on the
part,
accepted
repossessed
from
vehicles
$4,136,000
awarding Regal
in damages
Star,
2,400
Tex
by
followed
loan
over
files
plus attorney’s fees and interest. The
Having
next two weeks.
exper-
little
claims,
court further
all Tex
business,
denied
Star’s
tise in the
Regal
used-car
hired
including its claim to monies held in the
Wright,
James
an
profes-
automobile sales
Regarding
sional who
dealer-reserve
fund.
bought
had
and sold several
$975,000 from that
29-year
thousand used vehicles over a
fund awarded to Tex
pe-
riod. Regal required Wright
jury,
Star
the trial
evaluate
court rendered
liquidate
repossessed
judgment
vehicles.
notwithstanding the verdict.
1. This was in addition to the PSA-mandated
notes from Tex Star.
$750
purchasing
withheld when
9.627(b)(l)-(3). However,
§Id.
a comment
reversed the trial
appeals
The court
explains
to Article 9
that these safe har-
deficiency-
vacating the
judgment,
court’s
prov-
are not the exclusive means of
bors
awarding
favor and
judgment
ing
commercial
reasonableness.
Id.
$975,000
Regal in the
held
Tex Star
3;
§ 9.627 cmt.
Havins v. First Nat’l
Ill following reasonableness in the in cial in Question contained 6 of the structions Article 9 of the Uniform Commercial charge: act that a secured creditor requires Code *5 answering question, this consider commercially in a reason good
in faith and cases, only relating Loans to vehicles that manner, and, [Re- provide in most able in faith and in a commer- gal] good sold of disposing when reasonable notification faith cially reasonable manner. Good collateral. See Tex. Bus. repossessed & honesty in fact the observ- means § cmt. 2. A secured cred 9.625 Com.Code ance of reasonable commercial stan- prove disposed it of collateral itor must dealing. of fair dards manner be commercially in a reasonable Every aspect disposition, See id. of the includ- may any deficiency. fore it recover method, manner, time, 9.610; ing place § see also Greathouse Charter (Tex. Bank-Sw., commercially rea- other terms must be Nat’l 1992). commercially sonable. A sale is reason- dispo Every aspect of a collateral com- reasonable, able it conforms to reasonable sition must be among in the method, manner, time, practices mercial dealers “including subject of that was the of type property terms.” Tex. Bus. & Com. place, and other the sale. 9.610(b). § sever provides Article 9 Code examples greater
al reasonable fact that a amount could collection, en- by to as safe have obtained a dispositions, commonly referred been forcement, acceptance at disposition, include: harbors. These safe harbors in method a different time or a different (1) in the usual man- dispositions “made [Regal] is not of from that selected market;” any recognized ner on preclude [Regal] from itself sufficient (2) price “at the cur- dispositions made collection, that the enforce- establishing any recognized market at the rent ment, was disposition, acceptance disposition[s];” time of the man- made in a reasonable ner. (3) conformity made “in dispositions added). The instruction’s sec- practice (emphasis
with reasonable
commercial
the lan-
appears to track
type
property
paragraph
in the
ond
among dealers
sections
specifically
of Article
subject
disposi- guage
of the
9.627(b)(3).2
9.610(b) and
tion[s].”
collateral,
9.610(b) reads,
including
meth-
disposition
"Every aspect
a
2. Section
expression
mandatory
concluded that the The clearest
of a
appeals
The court of
“only
required Regal
prove
say
instruction
condition is to
if’.4 In some
above
contexts,
only
option
sales conformed to
reasonable dealer
where
one
exists to
its
condition,
standard,
“if’
satisfy
present
or in the words of the instruc-
can
tion,
mandatory
being preced-
to reasonable commer-
without
condition
“conformfed]
in the
It
practices among
“only”.5
cial
dealers
ed
word
is more com-
mon, however,
subject
for the word to
property
was the
sale.”
introduce a
condition,
By reading
following
the “if’
the instruction’s
non-exclusive
like the
if,”
“only
paragraph
example:
second
to mean
converted one of Article 9’s safe
court
Supreme
jurisdic-
The Texas
has
Court
provisions
mandatory
harbor
into a
condi-
interlocutory
tion
an
appeal
over
“if’
9.627(b)(3). And,
§id.
proof.
tion of
See
there
appeals.
is dissent
the court of
there was no evidence that Regal’s
because
This sentence
read
isolation would
sales conformed
dealer
grant jurisdiction if there were a
dissent
standard, the court reversed and rendered.
However,
the court of appeals.
We ing the meaning parts of other of the “if’ can
The word hold different mean- instruction. para- The instruction’s second ings ordinarily graph different contexts. It begins general description with a of non-mandatory describes a condition.3 commercial reasonableness.6 The next od, manner, time, terms, place, stating phrases way and other not those are another of “if”). saying must be reasonable." College The Webster’s II New Tex. Bus. 9.610(b). 9.627(b)(3), § Dictionary ways, Section "if” defines different but & Com.Code states, provisions, gives one of the safe harbor "A example mandatory when it an for the disposition of collateral is made a commer- "on condition that” definition it uses "if” disposition preceded reasonable manner if the ”only[.]” the word II Webster's (1995). conformity ... College Dictionary made with reasonable com- 549 New practices among mercial dealers in the of property subject disposi- that was the of the appeals quotes litany 5. The court of a of one 9.627(b)(3). § tion.” Id. charges pattern jury sentence to illustrate this point. 246 S.W.3d at n. 4. In 751 this limit- See, ed, context, e.g., single sentence "if” creates a Compact 3. the Edition of Oxford En- (1971); glish Dictionary mandatory jury 1370-71 II The condition. instruction in Webster’s (1995). College Dictionary 549 this case exists in no such vacuum and needs New to be read in context. 4. See A. A Bryan Dictionary Garner, of Modern (2d ed.1995) (stating Legal Usage "Every 414 aspect disposition, the including of the "if, "if, method, manner, time, phrases only only if” place but if” and other terms if,” unnecessary way saying "only are but must be reasonable.”
601 sufficiency evidential be measured method for specific supplies sentence jury charge. contrary, the To the against The commercial reasonableness.7 proving agree that the evidence must be meas- we other dis- implies that following paragraph against charge. simply ured the We dis- practices outside those methods position agree charge requires. about what still be among may dealers The dissent reads second sentence’s pro- sentence If the second reasonable.8 prac- mention of reasonable commercial proving com- the exclusive method vided dealers as an exclusive defini- among tices reasonableness, preceding sen- mercial tion, method which providing the following paragraph tence and measure commercial reason- jury could superfluous. be In the context of the instruc- ableness. jury charge that a have said We tion, however, merely we read it as an a statute should submitting liability under determining example of one method for closely as as statutory language track Although commercial reasonableness. Eagle Star Ins. Co. possible. Spencer sentence, isolation, qualify- second lacks Am., 154, (Tex.1994)(citing 876 S.W.2d sentence ing language, preceding Co., Storage v. Am. & Brown Transfer that the concluding paragraph inform deal- (Tex.1980)). The lan er standard is not the exclusive means of altered to conform may slightly guage commercial reasonableness. establishing presented the issue to the evidence ap- conclude then that the court of We case, Brown, at but reading instruction peals erred with sur court should not burden require commercial reasonableness to on instructions, Acord v. Gen. Motors plus dealer standard. evidence of a reasonable (Tex.1984). Corp., minimum, however, At a the instruction closely here tracked instruction method, required some evidence 9.610(b) language sections time, manner, other place, and terms 9.627(b)(3). say not to This is might find com- sale from which the conveyed Article 9’s perfectly instruction *7 mercial reasonableness. the second sen- requirements. Qualifying proving tence as a non-exclusive method B have reasonableness would commercial Although commercial reasonable context, purpose. clarified its But read 9, in Article precisely is not defined ness rule, conveys general the first sentence a number of non courts have considered alternative the second sentence offers an addressing the exclusive factors when prove commercial reasonable- method (1) term, secured such as: whether the ness, allows following paragraph and price endeavored to obtain the best party reasonable meth- that other (2) whether the collateral possible; may ods be used. (3) whether it piecemeal; sold in bulk or (4) sale; public analysis private as was sold via The dissent characterizes our inspection be- it available for rule whether was departure from the well-established acceptance at a different time disposition, "A is it con- sale practices commercial that selected forms to reasonable or in a different method from property among dealers [Regal] preclude is not of itself sufficient subject collection, was the of the sale.” establishing [Regal] from enforcement, acceptance was disposition, or greater have that a amount could 8. "The fact commercially reasonable manner.” made in a collection, enforcement, by a been obtained (5) cles, sale; ensuring whether it was at a the vehicles had same sold fore the (6) features, time; at expenses attempt whether the then to solicit least propitious Wright from wholesalers.9 testi- during the sale were reasonable two bids incurred (7) privately sales were made whether the sale was fied most necessary; and (8) advertised; multiple bids were to a small number of trusted automobile whether (9) received; justified practice the collateral was wholesalers.10 He what state (10) con- in; by describing generally poor was conducted. that the and where sale See, Havins, high mileage of the vehicles e.g., (citing at 181 dition price limited the that could be obtained v. Nat’l Bank Commerce San Pruske (Tex.Civ. Antonio, Wright selling 937 n. 1 to non-wholesalers. also writ)). Regal, company, no As testified that as a finance App.-San Antonio facilities, have the imply, commercial reason did not nor license these factors Wright that re to sell the vehicles retail. further inquiry ableness is a fact-based compet of Article 9’s two testified auctioned a small number quires balance (1) protecting against debtors of vehicles to test that method’s effective- ing policies: (2) ness, utilizing dishonesty minimizing in but discontinued auctions creditor Pruske, dispositions. practice terference in honest when it determined the to be ex- ineffective, (citing pensive garnering at E. lower William Ho prices private Wright than sales. also tes- gan, Party The Secured Pro Default UCC, 47 ceedings pure repossessed tified that the volume of Under Minn. L.Rev. (1962)). inquiry’s timely dispose 219-20 ulti vehicles and the need to however, is to ensure the the collateral meant that purpose, procedures, mate some satisfactory price. notably receiving creditor realizes a at least two bids on each vehicle, always Summers, J. RobeRT S. were not How- followed. James White & 34-11(b) (6th ever, § Wright emphasized his substantial Uniform Commercial Code ed.2010). But, a satisfactory price experience selling is not automobiles when at- necessarily highest price, testing and it that Regal strove to achieve the recognized that secured creditors fre highest selling price, under the circum- stances, quently dispositions. sell the low end of wholesale on all 906 11(c). § markets. Id. 34— Additionally, Regal entered the 906 loan trial, time, At several witnesses place, testified files as evidence of the dispositions repos- disposition. about other terms of each Not all However, vehicles. Wright, complete, complete sessed James loan files were but a *8 by Regal note, hired individual evaluate file would contain the loan a certifi- vehicles, record, dispose provided (copy), payment and most cate of title a loan affidavit, testimony regarding repossession the method and man- a a vehicle condition value, disposition. Wright report, estimating ner of testified he a form NADA car, each fill inspect would out a condition any bids tendered for the vehicles. report, pro- Copies negotiable and use this information to of various instruments time, date, duce separate report containing price, a that included identi- an fying buyer vehicle’s features and estimated value. the collateral’s were also en- report He compare to the vehi- tered into evidence. buyer buyers,
9. experienced Notably, Another Tex seller of Star was one of vehicles, opined used that vehicles this sealed bid bidding submitting on 109 but way appropriate repos- method was an to sell highest only twenty bid times. sessed vehicles.
603 (Tex.1997). Havner, rebuttal, 711 emphasized Tex Star other 953 S.W.2d In “ could have Evidence that is ‘so weak as to no suggesting Regal do evidence more than create a mere surmise suspi the vehicles it superior price obtained cion’ that the fact exists” is less than a all the and that did not sell sold Tex., Kroger scintilla. Ltd. v. P’ship man- Su in a reasonable vehicles (Tex.2006) beru, (quot 793 Tex Star introduced evi- Specifically, ner. ing Ford Motor v. Ridgway, Co. buyers wholesaler resold dence some (Tex.2004)). S.W.3d For evidence Regal’s repossessed profit vehicles at a conclusively opposite establish the of a through subsequent auctions. Tex Star fact, vital the evidence must be the type wholesaler, presented Thorpe, John also not people could lead reasonable Jr., he Thorpe as a witness. testified un- Keller, City different conclusions. vehi- successfully Regal’s bid on some of at S.W.3d 815-16. cles, winning subsequently paid then origi- the same amount as his wholesalers Regal’s testimony on the method and Further, disputed Tex Star Re- nal bids. manner of its coupled sales with the loan unsuccessful auctions gal’s account its time, evidencing place, files and other information in the loan files by comparing suspicion terms creates more than a results. On examina- to the auction cross portion surmise that at least a tion, receiving at Wright admitted not sales were reasonable. Tex every on vehicle and that least two bids challenges Star and contradicts much of always were not com- the 906 loan files evidence, but its substance is not Additionally, plete. testimony showed prevent people such as to from publicly vehicles were not advertised for drawing different conclusions. Because large sale and other evidence revealed a conflicting evidence created a fact is- deficiency per average sale. upon sue which reasonable minds could differ, reject legal we must Tex Star’s Legally sufficient evidence is sufficiency challenge. that which “would enable reasonable and appeals, the court of Tex Star also people fair-minded to reach the verdict sufficiency factual challenged the Wilson, City under review.” Keller v. however, appeals, evidence. The court of (Tex.2005). 802, 827 When issue, having did not reach the determined reviewing legally whether evidence is suffi there to be no evidence of commercial verdict, support cient to we “must view reasonableness under its erroneous view of light the evidence in the favorable to the charge. Because a review of the evi- verdict, crediting favorable evidence rea sufficiency a power dence for factual could, jurors disregarding con sonable exclusively ap- committed to the court of trary jurors evidence unless reasonable remand the issue to that peals, we must legally could not.” Id. at 807. Evidence is Const, V, 6(a); § court. See Tex. art. see (a) complete insufficient “when there is a Carter, Corp. also BIC Pen (b) fact, of a vital absence of evidence *9 500, (Tex.2008). merely 509 We hold that court is barred rules of law or of evi there evidence of commercial rea- is some giving weight only dence from to the evi in this record and that the sonableness (c) fact, prove a vital dence offered jury negate instruction did not its exis- prove evidence offered to a vital fact is no in the case are tence. The other issues (d) scintilla, more than a the evidence appeals. remanded to the court of conclusively opposite establishes the of the n n n n ‡ Pharms., v. $ vital fact.” Merrell Dow Inc. 604 appeals legally Regal’s of the court of sufficient evidence of judgment
The dam- cause is ages and the remanded to to the extent damages reversed those were for its further consideration. that court commercially based on reasonable sales. a dissenting JOHNSON filed Justice Jury Charge I. The Defined opinion. “Commercially Reasonable” JOHNSON, dissenting. Justice jury charge contained in- standard concludes there is some evi- The Court structions, including the instruction that jury’s support findings dence to “[wjhen words are in in charge used damages disposal based on of re- sense that varies from the meaning com- possessed commercially vehicles in a rea- understood, monly you given proper are manner, though even sonable there is no definition, legal you which are bound to dispositions evidence the conformed accept place any meaning.” other jury in the one standards instruction set- See Tex.R. P. 226a. A trial court must ting out how sales could be Civ. submit “such instructions and definitions reasonable. The holding Court’s effective- as shall proper to enable the ly jury’s approves having decided on render a verdict.” Tex.R. its own what the standards are for com- P. Civ. Jury charges are lay jurors directed to mercially dispositions repos- reasonable law, charge untrained thus language sessed automobiles. It then remands the perspective is evaluated from the of such a case for the court of appeals to measure juror. See Columbia Rio sufficiency Grande Health- the factual of the evidence care, Hawley, 851, L.P. v. 284 S.W.3d against that unknown 862 standard. (Tex.2009); Galveston, H. & Ry. S. A. Co. analysis The Court’s is flawed in two 510, Washington, 534, v. 94 Tex. 63 S.W. First, major ways. the Court does not (1901). 538 sufficiency adhere to the rule that of the against evidence must be measured parties defini- Neither of the nor the Court they tions are given jury charge, as laypersons maintains that have a common even if the incomplete definitions are understanding legal term “commer Second, lay jurors incorrect. are not pre- reasonable” as it is used the Uni (UCC). sumed to know the meaning legal Thus, terms form Commercial Code “commercially such as reasonable.” term So is one that should have been defined assuming even it would have proper been in the charge. Ry. See Tex. & P. Co. v. Mercer, 220, to determine whether Regal’s 557, Tex. 127 90 S.W.2d (1936) sales of vehicles were (explaining rea- that “proximate cause” using sonable a standard definition); other than the is a legal phrase requiring given charge, definition way Magnolia Long, Petroleum Co. v. 126 Tex. 195, 450, would have (1935); known another stan- 86 S.W.2d Reliable Consultants, dard would have been through 336, evidence Jaquez, Inc. v. such properly qualified expert as (Tex.App.-Austin denied); testimo- pet. ny Stewart, (Tex. regarding Mayes the other standard. There denied) was no such evidence. Accordingly, I dis- App.-Houston pet. [1st Dist.] (“While agree with the Court’s conclusion that explain the trial court must legal legally terms, there is sufficient evidence or technical its discretion in deter sales were mining sufficiency of such explanations *10 thus disagree holding broad.”); Whitehurst, with its that there is is Johnson v. commercially man- made reasonable (Tex.App.-Houston [1st n.r.e.) (“The only ner. refd writ Dist.] the to be observed is that
requirement
legal
give
must
definitions of
trial court
difference,
any,
b. The
if
between the
terms.”).
technical
and other
unpaid balance on all
that Tex
Loans
guaranteed
Star has not
and the amount
Question
from
6 of the
The issue arises
by [Regal] upon
received
the sale of the
Regal’s alleged
charge which submitted
vehicles that served as collateral for
began by asking
damages.
question
The
purposes
ques-
such Loans. For
of this
any,
fairly
if
money,
what sum of
tion,
only
relating
consider
Loans
to ve-
its
reasonably compensate Regal
for
that [Regal]
good
hicles
sold in
damages.
question
parts
had four
faith
commercially
and in a
reasonable man-
damages
with
elements of
sub-
separate
(a)
(b)
ner as those terms are
in the
in each
Parts
part.
mitted
defined
paragraphs,
giving
and after
preceding
are the
accompanying
their
instructions
reasonable notice to Tex Star.
In
relevant to the
decision.
parts
Court’s
the
was instructed to find
parts,
those
added).
(emphasis
damages
by
measured
In regard
paragraph
to the second
difference,
any,
between the
a. The
(a)
says
“read in
instructions
Court
all Loans that Tex
unpaid balance on
context,
[“Every aspect
the first sentence
and the amount
guaranteed
Star has not
method,
disposition, including
of the
the sale of the
by [Regal] upon
received
manner, time,
other terms must
place and
as collateral for
vehicles that served
commercially
conveys the
reasonable”]
be
such Loans.
rule,
general
the second sentence
sale
[“A
answering
question,
consider
if it conforms
is
reasonable
only
relating
Loans
to vehicles that [Re-
among
practices
to reasonable commercial
gal]
good
sold in
and in a commer-
that was
type
property
faith
dealers
manner. Good
cially reasonable
an alterna-
subject
faith
of the
offers
sale”]
honesty
means
in fact and the observ-
prove
tive method to
commercial reason-
ance of reasonable commercial stan-
ableness,
following paragraph
and the
dealing.
fair
dards of
amount could
greater
fact that a
[“The
Every aspect
disposition,
includ-
collection,
by a
en-
have been obtained
method, manner, time,
ing
place
forcement,
acceptance
at a
disposition,
commercially rea-
other terms must be
in a
method”]
different time or
different
A
rea-
sonable.
sale is
that other
allows
if it conforms to reasonable com-
sonable
used.”
and it can UCC and Court, not;1 that what a or persons understand word by cases cited the it was it a definition of the term. term means is way. was defined in one The trial court Dictionary (8th 455 See also Black’s did not include the Law qualifying words defini- ed.2004) (“define” means to state or ex ways tion as one of several alternative establish, to fix or to set plain explicitly, proven could have its were sales meaning phrase; of a forth the word commercially reasonable. See Tex. Bus. & meaning “definition” means the of word 9.627(b)(3). Further, § the Comm.Code document); in a explicitly as stated drafted structure of the sentence militates favor Collegiate Dictionary Merriam-Webster’s of using complete the definition as a defini- (11th ed.2003) (“definition” 327 is a state tion, against jury’s the considering expressing ment the essential nature of definition as one of several alternatives. of the something meaning or a statement foregoing The is also consistent with the group sign of a word or word or a (b) specific language in that refers to defi- term, symbol). As definition “good nitions of faith” “commercially second sentence set forth the stan (a). (b) reasonable” The instruction in charge by dard in the which the jury could inquired about damages Regal incurred evaluate whether sales were com unpaid due to relating balances on “Loans mercially reasonable and still follow the that [Regal] good vehicles sold faith charge, regardless of whether the defini manner, in a commercially tion complete was a statement of the law. as those preced- terms are defined Therefore, sufficiency of the evidence added). ing paragraphs.” (emphasis of a reasonable sale must be And, contrary statement, to the Court’s against measured the definition in the (a) the third paragraph imply does not Consol, Inc., charge. Romero KPH to the that there are other methods of (Tex.2005) (“The 212, 221 sufficien determining whether dispositions of collat- cy of the evidence must be measured eral are commercially reasonable or offer when, here, the jury charge as there has any guidance comprise for what would it.”); objection been no City Fort commercially reasonable sale. It neither (Tex. Zimlich, Worth v. adds to nor detracts from the definition of 2000) (“Since party neither objected to this “commercially preced- reasonable” instruction, we are bound to review the Rather, ing paragraph. para- third definition.”); light evidence in of this Ost merely graph emphasizes that the process Peca, (Tex.2000) erberg v. disposition of a is what must be commer- (“[I]t is the charge, court’s not some other reasonable, the end result— law, that unidentified measures the suffi price received collateral— ciency of the opposing evidence when the should not itself a finding dictate that a party object fails to charge.”). disposition did not conform to commercial- The Question text of supports the con- ly reasonable methods. clusion that it defines the term “commer- cially reasonable” charge. as used in the Further supporting the conclusion Although the term could have been defined the sentence “A sale is rea- example, For Tex proposed language Star submitted a allowing reasonable commercial setting instruction practices among out numerous factors the proper- dealers determining Regal's could ty consider in subject of the sale to be disposition methods were rea- considered as a factor. The trial court re- sonable. proposed instruction included fused instruction.
607
out the essential le-
lowing
com-
instruction set
to reasonable
if it conforms
sonable
gal
dealing”
nature of the term “course of
dealers
among
practices
mercial
only be construed as a definition
subject of
and could
that was the
property
though
even
it was not identified as such:
“commercially reason-
defines
the sale”
merely offering
opposed
as
able”
dealing
sequence
A course of
is a
method to make its
alternative
jury an
concerning previous transac-
conduct
that the structure of
is the fact
findings
parties
particular
tions between the
to a
that of oth-
is consistent with
the sentence
fairly
regarded
to be
transaction
throughout
charge.
er definitions
a
establishing
as
common basis
under-
“Definitions”
separate
charge contained
standing
interpreting
expres-
their
included definitions
con-
and also
section
and other
sions
conduct.
jury questions, al-
with individual
nection
Question
3 the
was asked:
And
always labeled as
they were not
though
An
Regal partly perform?”
accompa-
“Did
illustrate
examples
Several
definitions.
it
nying
specify
instruction did not
section,
In the “Definitions”
point.
but it
defining “partial performance”
was
the words
authority”
among
was
“apparent
it set out the
manifestly did so because
did
The definition
phrases
and
defined.
meaning of the term:
language such as “When
not contain
used,
authority’ is
it means
‘apparent
term
performance
Partial
occurs when—
“
authority’ is defined as
‘Apparent
...” or
can
party
a. a
takes actions that
clearly was a defi-
...”
it nevertheless
but
explained as reliance on an oral
be
being
of its
nition both because
promise;
it
section and because
sub-
“Definitions”
acting in reliance on the
party
b.
lay
aby
would be understood
stantively
has suffered a substantial
contract
defining the term:
jury as
for which it has no ade-
detriment
(1)
authority
party
exists
Apparent
remedy; and
quate
to hold him-
knowingly permits another
promise
c.
failure to enforce the oral
(2)
or,
authority
having
as
self out
award an unearned benefit
care,
ordinary
bestows
through lack of
party.
the other
authority
another such indications of
on
person to
reasonably prudent
that lead
whether Tex
Question
inquiring
9
existence of author-
rely
apparent
on the
fraud,
principals
its
committed
Star and
Only the acts of
ity to his detriment.
defined
an instruction
“fraud” was
charged
with
party sought
a defini-
specifically
not
identified as
another
for the conduct of
responsibility
tion:
determining
considered in
may be
occurs when—
Fraud
authority exists.
apparent
whether
misrepre-
material
party
a. a
makes a
Dictionary
(8th
See Black’s
Law
sentation,
Collegiate
ed.2004); MeRRIam-Webster’s
with
misrepresentation is made
b.
(11th ed.2003).
Dictionary
falsity or made
knowledge of its
Next, Question
inquired
whether Re-
knowledge of
recklessly
any
without
Tex Star would
gal
agreed
Tex Star
assertion,
positive
and as a
the truth
account,
maintain a dealer reserve
with
is made
misrepresentation
c.
that it could consider
jury was instructed
acted
that it should be
the intention
between
“any
dealing”
earlier course of
party,
the other
immediately
fol-
on
Tex Star. The
Regal and
wholesalers,
party justifiably
private
relies on
sales to a small num
d.
the other
wholesalers,
auction,
ber
trusted
misrepresentation
thereby
*13
the
that Regal’s
and concludes
evidence on
injury.
suffers
sales,
the method and manner of its
to
foregoing demonstrate that within
gether with the loan files and their con
three
charge
the
there were
structural
tents,
suspicion
creates more than a
or
the
concepts relevant
issues on this
portion
surmise that at least a
of
First,
jury
whether a
instruction
appeal.
sales were
reasonable. The
depended on the
was a definition
instruc-
is,
(1)
problem
jury
the
did not have
the
than
tion’s context
substance rather
of
knowledge
benefit
the Court’s
of the
on whether the instruction was labeled as
(2)
UCC;
appellate opinions
access to the
Second, definitions in the
a definition.
(3)
cites;
knowledge
the Court
of the
typically
language
did not include
charge
the
says
various factors
Court
could be
of
term
limiting
meaning
the
the word or
jury
considered when the
was determin
to the enumerated elements and
defined
ing
whether
sales were commer
Third,
elements.
the trial
no other
court’s
reasonable,
because the information
general
jury
instruction that
the
was
charge
was not included in the
and there
accept and
the
apply
bound to
definitions
testimony
was no evidence such as expert
given
charge required
jury
the
those factors should be considered
findings according
the
make its
sub-
so,
ju
and if
how. Even if some of the
by
and essential elements set out
stance
rors had the benefit of the
knowl
Court’s
in
charge
though
the definitions
even
edge
appellate opin
and the
UCC
large majority
of instructions that de-
cites,
charge
ions the Court
unless the
fined terms did not limit the definitions to
jury
par
instructed the
that such law or
in defining
by
the words used
the terms
aspects
applicable
ticular
of it was
or the
including language such as
if’
“if
“only
injected
law was
into the
through
trial
ev
only
but
if.”
idence,
jury
could not
use it mak
Citing Texas Business
ing
and Commerce
its
That
decisions.
is because the
9.627(b)(l)-(3)
jury
by
charge
Code section
and comment
was bound and limited
and,
says
provides
language
beyond
“Article Nine
in matters
the com
Court
knowledge
mon
and understanding
lay
examples
several
reason-
jurors, by
charge
and evidence admit
dispositions,
able
commonly referred to as
trial,
testimony
ted at
such as
from ex
harbors,”
safe
then lists three examples
See,
Tamez,
perts.
e.g., Mack
Trucks
from the statute.
what the factors were and how to tell
it,
to the record before
appeals
of
adhered
legal requirements.
evidence met
charge
given,
as
and well-estab-
says
that
the court of
The Court
reaching
its result.
principles
lished
reading of the second sentence of
appeals’
appeals’ analysis
The court
sale is commer-
paragraph
the second
—“A
“commercially
paragraph
third
defines
if
to reason-
cially reasonable
it conforms
surrounding
with the
in-
reasonable” fits
among dealers
practices
able commercial
(a)
logical:
structions in
and is
type
property
that was the sub-
submitted
this case
charge
[T]he
appeals
sale”—the court of
con-
ject of the
commercially rea-
that a sale is
states
verted one of
Article 9’s safe harbor
UCC
stan-
if it conforms to the dealer
sonable
mandatory
into a
condition
provisions
lan-
meaning
The
of this
plain
dard.
that “if’ cannot
proof. The Court reasons
the dealer
suggest
does not
guage
“only if’ because then the first sen-
mean
or an
is either a safe harbor
standard
and the
paragraph
tence of the second
standard,
any
or that
optional
otherwise
(a)
superflu-
would be
paragraph
third
considered,
be
may
other factors
even
disagree
I
with the
Respectfully,
ous.
balanced,
that a
First,
but instead
“if’
let alone
reading the
reasoning.
Court’s
(and
reasonable
the fact
sale
“only merely
if’
reinforces
if)
thus,
met.
Second,
standard is
only
the dealer
is a definition.
that the sentence
method, manner,
time,
only
place
not
and other
contention would thus
in the
submitted
terms” conformed to reasonable commer-
render
definition
it would authorize
charge meaningless,
among
repos-
cial
dealers in
practices
vehicles,
reviewing court to measure
sufficien-
and in the further absence
sessed
stan-
cy
against
of evidence
different
establishing
of evidence
either another
jury....
to the
than was submitted
dard
standard for
reasonable sales
properly
or from which it could
tell how to
added).
(emphasis
Standard required. But more was nesses. There Reasonableness have Wright’s must been evidence that general commercially methods were rea- if the Even Court is correct and the “[e]very aspect sonable and also that charge “commercially did not define rea- method, disposition, including [each] only provided but an alter- sonable” sales manner, time, place and other terms” was way they proven, native in which could be There no reasonable. was testimony then as from an evidence such way jury for the to know if his methods expert necessary have been for the every aspect of them were commer- Regal’s to know if sales were com- cially given reasonable because it not because, mercially reasonable.2 That as by which it they standards could tell if noted, previously mat- issue involves Accordingly, were. I would that the hold beyond jurors’ understanding ters common legally support evidence is insufficient to no other expressed there is standard Trucks, finding sales were commer- charge. Mack See reasonable, apart even lack 583; from the at Fulgham, 154 S.W.3d at support finding of evidence to that Re- 89; Turbines, Dardis, 726, Inc. v. gal’s sales were denied). (Tex.App.-Amarillo pet. charge. under the definition in the Because was allowed to determine sales were reason- III. Conclusion able in the absence of evidence from which properly “Every it could tell whether judgment as- I would affirm the of the court pect of disposition, including the of appeals damages Regal [each] as to claims agree appeals mony. 2. I with the court of that sales at 752 n. 9. Such a com- might proven commercially reasonable un- charge language bination of facts and is not der some combinations of facts and present here. charge language expert absent witness testi- Questions jury’s on the answers to based 6(b)
6(a) the remainder and consider parties. presented
of the issues Texas, re Relator. STATE 10-0235.
No.
Supreme Court of Texas. March 2011.
Argued Aug.
Decided notes $386,000 time, Regal sought from Tex Star statutory damages for fail- Regal’s alleged