Court Opinion

ID: 9675816
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:06:24.847962+00
Date Added: 2024-06-11T18:16:39.740869
License: Public Domain

MAUZY, Justice,
dissenting.
The dissenting opinion of July 24, 1991, is withdrawn, and the following is substituted in its place.
Once again wrongfully disregarding a jury verdict, the court has rejected vital protection for Texas businesses. Ignoring a long-standing contract and the circumstances surrounding it, the court abandons motor vehicle dealers and other small businesses across the state to the whims of powerful franchisors. These massive enterprises are invited to enter our state and abuse local businesses without fear of reproach from Texas courts. Today’s decision leaves Texas franchisees with less protection than they would have in virtually any other jurisdiction.
This court has long recognized that “where one person trusts in and relies upon another,” the relationship between the two may give rise to a fiduciary duty. Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 261 (1951). As the court notes today, the existence of an informal fiduciary relationship, or “confidential” relationship, is usually a question of fact. At 594. What sort of evidence, then, might tend to establish a confidential relationship?
—the fact that one businessman trusts another, and relies upon his promise to perform a contract? No, the court says today; one may trust another implicitly, and stake a lifetime of earnings on the other’s promise, but that is still no evidence of a confidential relationship.
—the fact that the relationship has been a cordial one, of long duration? No, says the court; businesses might interact on the best of terms for a century, but that would still not be any evidence of trust and confidence.
—express contractual language stating that the relationship is one involving mutual confidence and trust? No, says the court; regardless of what the parties thought, that language indicates only unassignability, which has nothing to do with trust and confidence.
To reach these bizarre conclusions, the court misrepresents important precedents, and then misapplies them to the facts of this case. The court relies heavily on Thigpen v. Locke, 363 S.W.2d 247 (Tex.1962), to establish that nothing in the present case suggests the existence of a confidential relationship. In that case, though, the court was careful to limit the scope of its holding:
All we hold is that [plaintiffs] do not testify to facts — other than their own subjective feelings — which show that their relationship with [defendant] was anything more than a debtor-creditor relationship.
363 S.W.2d at 253. At the time of the conveyance disputed in Thigpen, the parties had known each other for less than four years. Nonetheless, the court cites Thigpen, 363 S.W.2d at 253, for the proposition that “the fact that the relationship has been a cordial one, of long duration, *598[is not] evidence of a confidential relationship.” At 595 (emphasis added). I challenge anyone to find anything on the referenced page that supports the proposition for which it is cited.
Similarly, the court misrepresents the import of Consolidated Gas & Equipment Co. v. Thompson, 405 S.W.2d 333, 336 (Tex.1966). The court relies on that case without even referring to its reasoning. The Thompson opinion does not indicate the duration of the parties’ relationship; rather, it cites Thigpen and other cases, and then explains them as follows:
Our holdings above cited are to the effect that for a constructive trust to arise there must be a fiduciary relationship before, and apart from, the agreement made the basis of the suit. Such is our holding here.
405 S.W.2d at 336. The court’s failure today to explain Thompson is understandable: the parties in the present case had a relationship of trust and confidence for fifteen years before the franchise agreement made the basis of this suit.
The court then explains away some of the contract’s most important language. Parties may agree, in writing, that their relationship is one of mutual confidence; but even so, the court decides, they don’t really mean it. Offering no authority for disregarding such language, the court also disregards longstanding rules that a contract should be construed in accordance with its plain language, General American Indemnity Co. v. Pepper, 161 Tex. 263, 264, 339 S.W.2d 660, 661 (1960), and that a writing is construed most strictly against its author, Republic National Bank v. Northwest National Bank, 578 S.W.2d 109, 115 (Tex.1979). By simply dismissing this language as "obviously intended to render the franchise agreement unilaterally unassignable,” at 596, the court misses an equally obvious point: the unassignability of the agreement plainly indicates a confidential relationship. If there were no trust and confidence involved, why would a party care whether the agreement was assignable? A nonassignability clause may not conclusively establish the existence of a confidential relationship; but surely it is some evidence of trust and confidence. See Carter Equip. Co. v. John Deere Indus. Equip. Co., 681 F.2d 386, 391 (5th Cir.1982) (“[T]he nature of the agreement between the parties may provide evidence that a fiduciary relationship exists.”).
The Crims presented a wealth of evidence indicating that their forty-three-year relationship with Navistar was, in fact, one of trust and confidence. After a fifteen-year relationship based solely on trust — the parties working together without any written contract — the Crims continued to trust their franchisor, and to do its bidding. Travis Crim testified that he maintained his faith in Navistar partly because of the franchise provision that “[t]his is a personal agreement involving mutual confidence and trust....”; without which language, Crim testified, he would not have signed the franchise agreement. After the Crims built a prototype building in a new location at Navistar’s direction, Navistar placed a newspaper ad describing this structure as a symbol of “good faith and permanency in the progressive community of Henderson, Texas.” Tim Farley testified that the termination of the franchise agreement by Navistar “broke” his “trust in them.” Dick Ettle, a Navistar Area Sales Manager, testified that he did not recall the Crims ever refusing to do anything that he asked of them. Travis Crim testified that the Crims carried every line of Navistar product offered to them.
After hearing all of the evidence, the jury determined that a fiduciary relationship existed between Navistar and the Crims. In reviewing that determination on a no evidence point of error, this court must consider only the evidence and inferences tending to support the jury verdict, and disregard all evidence to the contrary. International Bank, N.A. v. Morales, 736 S.W.2d 622, 624 (Tex.1987); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965); In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1952). When there is more than a scintilla of evidence, an appellate court may not overturn the jury’s finding on a no evidence point of error. Sherman v. First *599Nat’l Bank, 760 S.W.2d 240, 242 (Tex.1988).
The court today fails to give due consideration to the evidence supporting the jury verdict; indeed, the court does not even bother to mention much of that evidence. The court simply presents selected facts, assigning weight to those according to its own inclinations. In doing so, the court assumes for itself the job which the trial court properly assigned to twelve jurors.1 I would uphold the jury’s finding of a fiduciary relationship.
I would also hold that these facts indicate the existence of a “special relationship” between the franchisor and the franchisee. The court correctly notes that we have, in the past, recognized certain relationships as “special relationships,” and that those relationships give rise to a tort duty of good faith and fair dealing. Pages 593-594 (citing Aranda v. Insurance Co. of N Am., 748 S.W.2d 210, 212-13 (Tex.1988); Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987)). The court concludes that there is no special relationship because there is no evidence that Navistar exerted control over the Crims’ business “comparable to that exerted by an insurer over its insured’s claim.” Page 596 n. 8. I disagree.
In Arnold, we held that a special relationship between an insurer and its insured arises out of the parties’ unequal bargaining power and the exclusive control the insurer has over the evaluation, processing and denial of claims. Id. at 167. We recognized that the nature of the contract itself allows unscrupulous carriers to take advantage of the insured in bargaining for the settlement of claims. As a result, we held that a duty of good faith and fair dealing exists in an insurer-insured relationship. Id.
Here, there is ample evidence of Navis-tar’s overwhelming bargaining power and exclusive control over its franchisees. The 1979 franchise agreement contains the following provisions which, individually and collectively, show the imbalance in bargaining power:
(1) Navistar may add or eliminate truck models without incurring liability to the Crims.
(2) Navistar has unilateral control over what orders it will accept from the Crims.
(3) Only under very limited circumstances can the Crims cancel their order for products from Navistar.
(4) Navistar can retroactively modify the price and the terms of an order from the Crims after the Crims have placed the order.
(5) The Crims must pay Navistar for all expenses incurred by Navistar in shipping and handling the products to the Crims.
(6) Navistar has the right to add the cost of company advertising to the Crims’ prices.
(7) Navistar expressly reserves the right to compete with the Crims for major sales accounts in the Crims’ own designated trade areas.
(8) Navistar reserves the right to change the specifications and design of any product and requires the Crims to accept that modified product in fulfillment of existing orders.
(9) The Crims are not allowed to change the location of their retail establishment without Navistar’s approval.
(10) Navistar controls the content and quality of the Crims’ advertising activities.
(11) Navistar shifts all risks for transportation charges and losses during transportation to the Crims.
(12) The Crims bear the risk of any credit transactions with Navistar by Navistar’s contractual right to retain unilateral discretion over all credit terms extended to the Crims.
(13) The Crims must provide a service center and a building to sell and service Navistar’s products. These include service tools, equipment, shop space, service library, parts *600bins and equipment, and office furniture and equipment.
(14) The Crims must, at their own risk and expense, hire and train service, sales, and accounting personnel to service and sell Navistar’s products.
Travis Crim testified that he had no input on the wording of the franchise agreement. He stated that “We either signed it, or we did not have a contract.”
In refusing to recognize a special relationship in this case, the court demonstrates a disturbing degree of judicial myopia. In my view) the agreement between Navistar and the &ims is exactly the type of relationship envisioned in English v. Fischer, 660 S.W.2d 521, 524-25 (Tex.1983) (Spears, J., concurring). In English, this court refused to find an implied duty of good faith and fair dealing in every contract. However, the concurrence recognized that there may be relationships in which the duty of good faith and fair dealing “springs from the relationship, not from the contract.” Id. at 525. This is one of those relationships.
Franchise agreements like the one at issue here are take-it-or-leave-it propositions for franchisees. A dealer cannot, through negotiation, materially change the risks and burdens placed on him by the manufacturer. The power of the franchisor is overwhelming, and its control over the relationship is exclusive. It was that same imbalance of power that led Congress to enact the Automobile Dealers’ Day in Court Act, 15 U.S.C. §§ 1221-1225 (1988). Legislative history shows that Congress passed the Act in recognition of the unequal bargaining power of franchisors and franchisees. See H.R.Rep. No. 2850, 84th Cong., 2nd Sess., reprinted in 1956 U.S.Code Cong. & Ad.News 4596, 4597. See also Woodard v. General Motors Corp., 298 F.2d 121, 127-28 (5th Cir.), cert. denied, 369 U.S. 887, 82 S.Ct. 1161, 8 L.Ed.2d 288 (1962).
I cannot ignore the provisions of this one-sided agreement and allow the resulting abuse that is apparent from the record in this case. The dissent in the court of appeals advocated that a good faith and fair dealing requirement should exist for “the termination of franchise agreements. 791 S.W.2d 241, 249 (Grant, J., dissenting). At a minimum, I would hold that there is an implied duty of good faith and fair dealing in this franchise agreement between Navistar and Crim.
Other courts throughout the nation have recognized the immense power wielded by franchisors, and have developed their law so as to afford some protection to franchisees. See Atlantic Richfield Co. v. Razumic, 480 Pa. 366, 390 A.2d 736, 742 (1978) (“The weight of commentary has argued in favor of judicial recognition that the nature of a franchise agreement imposes a duty upon franchisors not to act arbitrarily in terminating the franchise agreement.”) A number of courts have held that obligations of good faith and fair dealing prevent a franchisor from terminating a franchise agreement without cause. See, e.g., Cambee’s Furniture v. Doughboy Recreational, Inc., 825 F.2d 167, 172-73 (8th Cir.1987); Bain v. Champlin Petroleum Co., 692 F.2d 43, 48 (8th Cir.1982); Arnott v. American Oil Co., 609 F.2d 873 (8th Cir.1979); Atlantic Richfield v. Razumic, 390 A.2d at 742; Shell Oil Co. v. Marinello, 63 N.J. 402, 307 A.2d 598 (1973). Other courts have held that a franchise relationship may give rise to fiduciary duties in the context of dealership termination. See, e.g., Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732 F.2d 480 (5th Cir.1984); Murphy v. White Hen Pantry Co., 691 F.2d 350 (7th Cir.1982); Coca-Cola Bottling Co. v. Coca-Cola Co., 696 F.Supp. 57, 74-75 (D.Del.1988); Gen. Business Machs, v. Nat’l Semiconductor Data-checker/DTS, 664 F.Supp. 1422, 1425 n. 4 (D.Utah 1987); Newark Motor Inn Corp. v. Holiday Inns, Inc., 472 F.Supp. 1143, 1152 (D.N.J.1979); Atlantic Richfield Co. v. Razumic, 480 Pa. 366, 390 A.2d at 742.
To make its decision seem within the mainstream of American case law, the court cites the foregoing cases and others for a proposition no one disputes: “The majority of other jurisdictions have rejected the imposition of general fiduciary duties on the franchise relationship.” Page 595 n. 5. As the court itself recog*601nizes, the Crims do not suggest that this court impose general fiduciary duties on the franchise relationship. Rather, the Crims argue that the evidence in this case supports the conclusion that a confidential relationship existed, and alternatively that a fiduciary relationship should be recognized where a franchisor has wrongfully terminated the franchise agreement. Both of those arguments are consistent with every one of the cases the court cites.
In contrast, the court’s decision today is fundamentally at odds with most of the cases it cites, at least insofar as the court completely rejects the Crims’ arguments. For instance, in Carter Equip. Co. v. John Deere Indus. Equip. Co., 681 F.2d 386 (5th Cir.1982), the court recognized that relationships like the one at issue here may be fiduciary in nature.2 Moreover, of the cases the court cites as rejecting a general fiduciary duty, none reject such a duty in the context of franchise termination; in fact, those that address the issue actually recognize such a duty. See Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732 F.2d at 485; Bain v. Champlin Petroleum Co., 692 F.2d at 48; Murphy v. White Hen Pantry Co., 691 F.2d at 354; Coca-Cola Bottling Co. v. Coca-Cola Co., 696 F.Supp. at 74; Newark Motor Inn Corp. v. Holiday Inns, Inc., 472 F.Supp. at 1152.3 Most state courts addressing the issue have done the same. See, e.g., Ashland Oil v. Donahue, 159 W.Va. 463, 223 S.E.2d 433 (1976); Shell Oil Co. v. Marinello, 63 NJ. 402, 307 A.2d 598, 601-02 (1973), cert. denied, 415 U.S. 920, 94 S.Ct. 1421, 39 L.Ed.2d 475 (1974); Division of the Triple T. Service, Inc. v. Mobil Oil Corp., 60 Misc.2d 720, 304 N.Y.S.2d 191 (Sup.Ct.1969), aff'd mem., 34 A.D.2d 618, 311 N.Y.S.2d 961 (1971).
The court justifies its departure from the vast majority of jurisdictions on the ground that this court in English v. Fischer rejected the implication of a general duty of good faith and fair dealing in all contracts. Page 595 n. 5. That decision came only four years after the adoption of section 205 of the Restatement (Second) of Contracts, which provides that “[ejvery contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” While at that time the five-judge majority in English v. Fischer viewed the concept embodied in section 205 as “a novel theory of law enunciated only by California courts,” 660 S.W.2d at 522, we now know the rule has become so well-established as to be considered “hornbook law.” Newark Motor Inn Corp. v. Holiday Inns, Inc., 472 F.Supp. at 1151; see also 5 Williston on Contracts § 670 (3d ed. 1961). Continued repudiation of section 205 is contrary to efforts to bring coherence and uniformity to American law. I would join the rest of our nation’s courts in implying a duty of good faith and fair dealing in all contracts, including franchise agreements.
In addressing whether to impose a fiduciary duty on franchisors in the termination of franchise agreements, the court finds “no good reason to add to the existing regulatory scheme by implication of a common law fiduciary duty.” Page 596. The court notes that after June 16, 1989, the wrongful termination of a motor vehicle dealership franchise agreement is governed by the Texas Motor Vehicle Commission Code (TMVCC). Since this suit was filed before that time, the Crims did not have the benefit of this statutory remedy. *602Moreover, the legislature’s treatment of the franchise relationship hardly requires this court to blind itself to that nature of that relationship. Compare Arnott v. American Oil Co., 609 F.2d at 883 (“[F]ur-ther indication of the fiduciary nature of a franchise relationship is found in the recent surge of general franchise legislation.”).
The court would also have the Crims believe that they could have been aided by the Automobile Dealers’ Day in Court Act (ADDCA), 15 U.S.C. §§ 1221-1225 (1988), in which Congress has imposed a duty of good faith in terminating automobile franchise agreements. Case law under the ADDCA, however, holds that the Act does not protect the dealer from mere “arbitrary” or bad faith conduct. Coercion or intimidation is needed to show a lack of good faith under the Code’s stricter definition of “good faith.” See Overseas Motors, Inc. v. Import Motors Ltd., Inc., 519 F.2d 119, 125 (6th Cir.1975), cert. denied, 423 U.S. 987, 96 S.Ct. 395, 46 L.Ed.2d 304 (1975) [other cites moved to footnote].4
The termination in this case was arbitrary. Rex Templeton, Finance Planning Manager for Navistar, testified that not all dealers who failed to sign the agreement to purchase the new computer system were terminated. In fact, there is no specific evidence in the record of this case of any other dealer of Navistar products being terminated for failure to purchase the computer system except for the Crims. Virgil Nelson, a retired Navistar Contracts Manager, testified at trial, a full three years after the Crims were terminated for not agreeing to purchase the computer system, that Navistar still had not provided its dealers with the forms necessary for the dealers to use the computers to order inventory and products. Both Nelson and Templeton, as well as Navistar dealer Al Pliler, testified that Navistar still had dealers using the same written forms that the Crims were using when terminated in 1985. Nelson testified that fifty percent of the dealers were not using the computer system to place orders.
The Crims did not plead coercion or intimidation. On the contrary, the Crims contended and proved to the jury that this action was a wrongful termination by Nav-istar. Thus, there is no evidence in the record to suggest that the Crims could have availed themselves of the protections provided by the ADDCA. The fact that Congress eventually recognized, by enactment of legislation, the same disparity of bargaining power that gives rise to this action is twisted by the court to justify its inequitable result. Although the Crims can in no way utilize ADDCA, the court relies on it to reject their claim.
Because the court today fails completely to give due recognition to imbalances of power in business relationships, I strongly dissent. I would reverse the judgment of the court of appeals and remand this cause to that court for consideration of the factual insufficiency points.
DOGGETT and GAMMAGE, JJ., join in this dissenting opinion.

. This is not the first time that this majority has usurped the role of the jury. See, e.g., Greater Houston Transportation Co. v. Phillips, 801 S.W.2d 523 (Tex.1990).

. In addition to the goals of the parties and the requisite need for trust or confidence in one another, the nature of the agreement between the parties may provide evidence that a fiduciary relationship exists. If the franchisor has power to control the franchisee, there is an increased likelihood that a fiduciary relationship exists, since trust or confidence necessarily must flow from the controlled or dominated party. As a result, the power, authority, and bargaining position of both the franchisor and franchisee becomes critical. 681 F.2d at 391. See also Gen. Business Machs, v. Natl Semiconductor Datachecker/DTS, 664 F.Supp. 1422, 1425 (D.Utah 1987) (“This court concludes that a material issue of fact exists with regard to whether a fiduciary relation existed as a result of the dealership agreement and the course of dealing between the parties.’’).

. See also ABA Distrib., Inc. v. Adolph Coors Co., 542 F.Supp. 1272, 1285-86 (W.D.Mo.1982); Ar-nott v. American Oil Co., 609 F.2d at 876.

. See also Woodard v. General Motors Corp., 298 F.2d 121, 127-28 (5th Cir.), cert. denied, 369 U.S. 887, 82 S.Ct. 1161, 8 L.Ed.2d 288 (1962); Hubbard Chevrolet Co. v. General Motors Corp., 873 F.2d 873 (5th Cir.), cert. denied, 493 U.S. 978, 110 S.Ct. 506, 107 L.Ed.2d 508 (1989); Kotula v. Ford Motor Co., 338 F.2d 732, 739 (8th Cir.1964), cert. denied, 380 U.S. 979, 85 S.Ct. 1333, 14 L.Ed.2d 273 (1965); Dreiling v. Peugeot Motors, 850 F.2d 1373, 1379 (10th Cir.1988); Victory Motors of Savannah, Inc. v. Chrysler Motors, 357 F.2d 429 (5th Cir.1966); Berry Bros. Buick, Inc. v. General Motors Corp., 257 F.Supp. 542, 546 (E.D.Pa.1966), aff'd, 377 F.2d 552 (3d Cir.1967); McDaniel v. General Motors Corp., 480 F.Supp. 666 (E.D.N.Y.1979), .aff’d, 628 F.2d 1345 (2d Cir.1980); Sink v. Ford Motor Co., 549 F.Supp. 245, 249 (E.D.Mich.1982); Unionvale Sales Ltd. v. World-Wide Volkswagen Corp., 299 F.Supp. 1365, 1367 (S.D.N.Y.1969).