Court Opinion

ID: 9680734
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:37:37.570572+00
Date Added: 2024-06-11T18:17:30.195061
License: Public Domain

WANDA McKEE FOWLER, Justice,
concurring.
I agree completely with the majority opinion. I write only to explain the differences between this case and another U.C.C. case recently issued by this court, in which we held that a fact issue existed on whether a party acted in good faith in setting an “open price term.” See HRN, Inc. v. Shell Oil Co., 102 S.W.3d 205 (Tex.App.-Houston [14th Dist.] 2003, n.p.h.); Tex. Bus. & Com.Code Ann. § 2.305. In HRN, lessee dealers of Shell alleged that Shell was charging them unreasonably high prices for gasoline, and that it did this with the intent of running them out of business. Id. at 211. Shell defended, claiming that it charged its dealers a price comparable to those charged by its competitors. Id.
Relying on a U.S. Circuit Court opinion from the Fifth Circuit that involved nearly identical facts and issues, we held that, even though Shell’s price might be comparable to its competitors’, Shell was required to set the price in good faith, and that a fact issue existed on that point. Id. at 215. In reaching this conclusion, we relied on the plain language of section 2.305 and on the official U.C.C. comment to the section. Id. at 211-215. The plain language of section 2.305(b) requires that an open price term- — described as a “price to be fixed by the buyer or seller” — must be fixed in good faith. Id. at 211. The comment to section 2.305 states that normally a “posted price” or “market price” will satisfy the good faith requirement, but, it noted that whatever price is set must be set in good faith. Id. at 212. The dealers in HRN presented some evidence by which a jury could conclude that *692Shell — allegedly desiring to switch to Shell-owned gas stations — was setting its price to force its dealers out of business. Id. at 214-15. As a result, we found a fact issue existed and remanded the case for further proceedings or a trial.
This case is very different from HRN, and that is why we have held that no fact issue exists, even though we held one existed in HRN. There are several ways the cases are different.
First, the U.C.C. sections themselves differ. Section 4.303, at issue here, expressly allows a bank to post checks in any order. Although the U.C.C. section in HRN allowed parties to use “open price terms,” it required that the terms be set in good faith. No such requirement exists in section 4.303.
Second, the official U.C.C. comments for the two sections are very different. The comment for 4.303 expressly notes that no priority rule for paying checks is stated in the section and that it would be impossible to state a rule that was fair in all cases. Tex. Bus. & Com.Code Ann. § 4.303 cmt. 7 (Vernon 2002). The comment acknowledges the futility of choosing a priority system that is fair to all, and so it acknowledges that any order is acceptable, acknowledging also that the drawer should have funds available for all the checks written. In contrast, the U.C.C. comment involved in HRN did not approve of all price settings; it approved only of those set in good faith. Thus, consideration of good faith is part and parcel of the U.C.C. comment for section 2.305 (in HRN), but not in 4.303 (this case). Although the State Bar Comment to 4.303 does attempt to add good faith consideration into section 4.303, as we note in the majority opinion, our legislature did not approve that language, and we do not find it persuasive. And, in fact, a plain reading of section 4.303 would lead one to believe that good faith is not part of the equation.
The final difference between the two cases lies in the relationships between the parties and the control Fetter and the dealers exercised over their fates. Here, Fetter — the drawer/plaintiff — was on notice through his contract with the bank that it could pay cheeks in order of highest to lowest. If he did not like that system, he could choose to take his business to another bank. In addition, the fees were only charged if Fetter did not have enough money in the bank to cover the checks he had written. Unlike Fetter, the dealers in HRN alleged that they were captive buyers who were required by contract to buy gas from Shell. Moreover, unlike Fetter, who was partly responsible for the fees he had to pay, the dealers did not control whether they incurred ill effects from Shell’s alleged bad acts.
In short, the majority opinion is correct. Unlike HRN, neither the applicable U.C.C. provisions nor the parties’ agreement may be read to impose a duty of good faith on Wells Fargo’s check-posting practices.