With today’s orders list, the Texas Supreme Court:

  • issued two decisions, including one about the jury charge in deficiency-judgment cases, which should be of interest to many lawyers these days;

  • chose three new cases to be argued this fall, including the case about press access to travel vouchers submitted for the Governor’s out-of-state travel; and

  • denied a large number of petitions after its end-of-summer conference this week. (The petitions that had been carried forward to today’s list were those marked for discussion at conference by at least one Justice.)

Buried within the orders list is a small news item I didn’t know: The Texas Supreme Court’s November 10, 2010 argument sitting will be in Amarillo, Texas, at the Globe-News Center.

Today’s two decisions

The jury instructions on “commercial reasonableness” under U.C.C. Article 9

Regal Finance Company, Ltd. & Regal Finance Company II, Ltd. v. Tex Star Motors, Inc., No. 08-0148 (DDB)

This is a case about the deficiency that remained after a lender repossessed a vehicle under Article 9 of the U.C.C. and sold it at auction. The lender sued for the difference; the borrower contended that the lender had not followed “commercially reasonable” practices in the auction.

On appeal, the dispute boiled down to the jury instructions. They included this item (with emphasis added here by the Court):

Every aspect of the disposition, including method, manner, time, place and other terms must be commercially reasonable. A sale is commercially reasonable if it conforms to reasonable commercial practices among dealers in the type of property that was the subject of the sale.

The court of appeals concluded that this jury instruction made compliance with industry practice a requirement, not merely a safe harbor.

Voting 8-1, the Court reversed, holding that the word “if” in this instruction provided merely another way that a dealer could prove compliance. As such, the Court held that it matched the U.C.C.’s substantive provisions and that this dealer had introduced legally sufficient evidence. Justice Medina wrote the majority opinion.

Justice Johnson wrote a dissenting opinion. He would have interpreted the jury instruction to require proof of industry standards. For that reason, he would have held the lender to that standard even if the U.C.C. does not require it. (“[T]he Court does not adhere to the rule that sufficiency of the evidence must be measured against definitions as they are given in the jury charge, even if the definitions are incomplete or incorrect.”)

A contractor that installs a product on a house can sue the manufacturer for indemnity under Chapter 82 of the Civil Practice and Remedies Code

Fresh Coat, Inc. v. K-2, Inc., No. 08-0592 (DDB)

Texas law requires a “product” manufacturer to indemnify a “seller” of that product in certain circumstances when the seller has been sued by a buyer. This provision is embodied in Chapter 82 of the Texas Civil Practice and Remedies Code.

The dispute in this case involved synthetic stucco affixed to a house by a contractor. The question is whether the stucco attached in this way was still a “product” and whether the contractor (who provided installation services) was a “seller.”

The Court, writing through Justice Willett, concluded:

We answer yes to both, meaning Chapter 82 applies.

Chapter 82’s text does not limit “product” to exclude items that may later become part of a house wall. Also, a “seller” under Chapter 82 may include those who sell both products and services, so that a person who contracts to both provide and install a single product may be considered a seller of that product.

The Court also had to decide whether Chapter 82 applies when the contractor had agreed, by contract, to assume responsibility for the damage without being subjected to a typical product-liability tort suit.

On this issue, too, the Court sided with the contractor:

We also conclude that the manufacturer’s statutory obligation to indemnify the contractor covers a settlement payment made by the contractor to the homebuilder where the contractor may have been independently obligated by contract to indemnify the homebuilder.

Three new cases set for argument

On September 15, 2010

Out of today’s orders, I expect this to get the most news coverage. (The argument date falls before the election, which should also increase press interest.)

  • Tex. Dep’t of Pub. Safety v. Cox Tex. Newspapers, L.P., & Hearst Newspapers, L.L.C., No. 09-0530 DDB. An open-records case about the travel records of state troopers submitted for the Governor’s out-of-state trips.

On November 10, 2010 (in Amarillo)

  • Genesis Tax Loan Servs., Inc. & M. Suzanne Frossard v. Kody & Janet Kothmann & Kody Kothmann, No. 09?0828 DDB. A case about lien foreclosures.

  • In re Billy James Smith, No. 10?0048 DDB. A case about the reach of the Texas statute that compensates people who were wrongfully convicted.