Robinson v. Garcia, 13-89-140-CV

• Citation: 804 S.W.2d 238
• Decision Date: 31 January 1991
• Docket Number: No. 13-89-140-CV,13-89-140-CV
• Parties: 14 UCC Rep.Serv.2d 689 Edward ROBINSON and Sandra Robinson, Appellants, v. Ramon GARCIA, Ramon Garcia, P.C., Texas Commerce Bancshares, Inc., Appellees.
• Court: Court of Appeals of Texas

Page 238

804 S.W.2d 238

14 UCC Rep.Serv.2d 689

Edward ROBINSON and Sandra Robinson, Appellants, v. Ramon GARCIA, Ramon Garcia, P.C., Texas Commerce Bancshares Inc., Appellees.

No. 13-89-140-CV.

Court of Appeals of Texas Corpus Christi.

Jan. 31, 1991.

Rehearing Overruled Feb. 28, 1991.

Bob Roberts, Austin, Roberto Garcia, Garcia, Lopez & Rodriguez, Edinburg, Larry Doherty, Doherty & Williamson, Houston, for appellants.

Thomas J. Sims, Fred Knapp, Andrews & Kurth, Houston, John E. Lewis, Lewis, Pettitt & Hinojosa, McAllen, Dana Lester, Allison & Lester, Brownsville, Roger W. Hughes, Adams & Graham, Harlingen, William M. Mills, Atlas & Hall, McAllen, Guy Allison, Allison & Huerta, Corpus Christi, for appellees.

Before NYE, C.J., and KENNEDY and SEERDEN, JJ.

OPINION

KENNEDY, Justice.

Appeal is taken from the granting of two motions for summary judgment and the denial of one motion for partial summary judgment. Appellants, the Robinsons, sued attorney Ramon Garcia for breach of fiduciary duty, violations of the Canons of Professional Responsibility, and violations of the Texas Deceptive Trade Practices Act, alleging that Garcia failed to properly distribute the proceeds of a settlement agreement. The Robinsons joined Texas Commerce Bancshares, allegedly the stakeholder of the funds. Bancshares and Garcia each moved for summary judgment. Both motions were granted. The Robinsons moved for partial summary judgment. Their motion was denied. We affirm Bancshares' summary judgment, reverse Garcia's summary judgment, and find no error in the trial court's denial of the Robinsons' motion for partial summary judgment.

I. Texas Commerce Bancshares' Summary Judgment

Bancshares' motion for summary judgment is supported by the affidavit of John P. Sherry, Senior Vice-President and General Counsel for Bancshares. The affidavit states that Bancshares "has not nor will it ever be holding sums pursuant to the sealed settlement agreement for disbursement to other parties in the litigation." The affidavit incorporates the final judgment from the underlying suit which evidences a settlement agreement between the Robinsons and Texas Commerce Bank-McAllen.

The Robinsons responded that Bancshares was the parent corporation of TCB-McAllen and that Bancshares was a party to the underlying suit and the resulting settlement agreement. There was no summary judgment proof supporting this response. The Robinsons contend that these facts raise an issue regarding Bancshares' control of TCB-McAllen and to "various theories of piercing the corporation veil between the two...."

The standard of review in summary judgment cases is well settled. The movant for summary judgment has the burden to show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-59 (Tex.1985). When deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant is taken as true. Id. In that regard, every reasonable inference is indulged in favor of the non-movant and any doubts resolved in its favor. Id.

Bancshares' summary judgment proof shows a complete defense to appellants' claim, namely, that the bank held no money and had no obligation under the settlement agreement. Once Bancshares made this showing, it became the Robinsons' burden to present to the trial court those facts which would defeat Bancshares' right to summary judgment. See City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 679 (Tex.1979). The Robinsons' response raises no facts which would render Bancshares liable or subject it to an injunction. Because the trial court properly granted Bancshares' motion for summary judgment, there is likewise no error in the court's transferring venue to Hidalgo County, the county in which the cause of action accrued and the county of Garcia's residence. See Tex.Civ.Prac. & Rem.Code Ann. § 15.001 (Vernon 1986). The Robinsons' third and fourth points of error are overruled.

II. Garcia's Summary Judgment

In his motion, Garcia asserted a single ground upon which he claimed an entitlement to summary judgment: that the Robinsons' claim was precluded as a matter of law because a common law accord and satisfaction had occurred between the parties. The pertinent facts are not disputed and are relatively uncomplicated. Attorney Garcia contended that he was entitled to attorney fees consisting of fifty percent of the Robinsons' ten million dollar settlement plus his expenses. In opposition, the Robinsons asserted that Garcia was entitled to only thirty-seven and one-half percent of the settlement plus his expenses. Because this appeal is taken from a summary judgment, we presume from the summary judgment proof that both beliefs were honestly and reasonably held.

Disputing the amount claimed by the Robinsons, Garcia tendered to them a check for $4,935,151.72 (just slightly more than Garcia concedes to be due under the fee agreement). The instrument contained the following restrictive endorsement:

acceptance in full and final settlement and in satisfaction of all claims Cause # C-1948-84-D (Our file # 797-84R).

To which, the Robinsons added the following language:

Except for disputed Attys fees and related claims Cause No. 87-35582 [the suit below]

and then proceeded to negotiate the check.

Section 1-207 of the Uniform Commercial Code provides:

A party who with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as "without prejudice", "under protest" or the like are sufficient.

Tex.Bus. & Com.Code Ann. § 1.207 (Tex.UCC) (Vernon 1968) (emphasis added). Thus, the dispositive issue regarding Garcia's summary judgment is whether section 1-207 of the Uniform Commercial Code (Tex.Bus. & Com.Code Ann. § 1.207 (Tex.UCC) (Vernon 1968) ¹) applies to the tender of a "full-payment check." ² We hold that it does.

Texas Case Law

To date, three Texas appellate courts have encountered the full-payment check/section 1-207 issue: while one court did not acknowledge or refer to section 1-207, the other two courts recognized, at least in part, the implications of that section. In Roylex, Inc. v. S & B Engineers, Inc., 592 S.W.2d 59 (Tex.Civ.App.--Texarkana 1979, no writ), the debtor disputed the amount of the debt and tendered a full-payment check to the creditor. Without endorsing the check, the creditor exchanged it for a cashier's check and deposited the proceeds. The creditor later sued for the remaining amount allegedly due; in response, the debtor raised the defense of common law accord and satisfaction.

Without reference to section 1-207, the Texarkana court applied the common law doctrine and held, "[w]hen Roylex received this check it was given the choice, either to accept the check as full payment of the debt, or to return same, unaccepted, and sue S & B for its full claim." Roylex, 592 S.W.2d at 60. The court did not consider a third option under section 1-207, whereby the creditor might have accepted the check under protest, reserving the right to sue later for the remaining amount allegedly due. See Krahmer, Commercial Transactions, 35 Sw.L.J. 191, 193-94 (1981). We note that even if the Texarkana court had addressed the section 1-207 issue, the result would have been the same because the creditor had not explicitly reserved its rights as required by that section.

The issue was subsequently raised in Hixson v. Cox, 633 S.W.2d 330 (Tex.Civ.App.--Dallas 1982, writ ref'd n.r.e.). In Hixson, the parties contracted for engineering and related services. After the creditor performed the services, he billed the debtor. The debtor then tendered a full-payment check to the creditor. The creditor marked through the debtor's restrictive endorsement, inserted a notation that the check was accepted as part payment only and without prejudice to his right to demand full payment of the balance of the account, and negotiated the check. Finding a valid accord and satisfaction, the Dallas court held in favor of the debtor. Regarding section 1-207, the court stated:

[t]his provision appears as one of the general provisions applicable to subsequent chapters of the code, none of which purport to deal with the engagement of personal services or with disputes over payment for such services. ... No Texas case has applied § 1.207 to a check tendered in full settlement of a disputed account, whether the subject of the original dispute fell within one of the subjects of the code, or not.

Id. at 331. The court, citing Roylex, determined that the creditor had two options: accept the check as full payment or return the check and sue for the full amount. The court then held that the creditor could not delete the restrictive endorsement and proceed with his own notation to "vary the terms and conditions" upon which the check was tendered. Id. at 332. To support this rule of law, the Dallas court cited Groves v. Sawyer, 384 S.W.2d 193 (Tex.Civ.App.--Eastland 1964, writ ref'd n.r.e.), a case decided two years prior to this State's adoption of the Uniform Commercial Code. The Hixson opinion has been interpreted as leaving unanswered the question of whether the application of section 1-207 might lead to a different result in cases involving the sale of goods, a Code article two transaction. See Krahmer, Commercial Transactions, 37 Sw.L.J. 146 (1983).

The last Texas court to face the issue was the Houston First Court, which has addressed it twice: initially, in Pileco, Inc. v. HCI, Inc., 735 S.W.2d 561 (Tex.App.--Houston [1st Dist.] 1987, writ ref'd n.r.e.), and finally, in Trevino v. Brookhill Capital Resources, 782 S.W.2d 279 (Tex.App.--Houston [1st Dist.] 1989, writ denied). ³ In Pileco, the creditor filed suit on a sworn account. Before the debtor was served with citation,...