Court of Appeals of Texas, Third District, Austin
THE COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY NO.
C-1-CV-15-004361, HONORABLE TODD T. WONG, JUDGE PRESIDING
Justices Puryear, Field, and Bourland.
K. Field, Justice.
Federal Credit Union appeals from the trial court's
judgment that it take nothing in its suit to recover the
balance due on a motor vehicle installment sales contract.
The trial court concluded that Amplify's claim against
Jason Garcia for the balance due on the contract was barred
by the statute of limitations. See Tex. Bus. &
Com. Code § 2.725(a) (action for breach of any contract
for sale must be commenced within four years after cause of
action has accrued); Tex. Civ. Prac. & Rem. Code §
16.004(a)(3) (four-year limitations period for suit on debt).
Amplify asserts that its claim is governed by the six-year
limitations period applicable to actions on negotiable
instruments. See Tex. Bus. & Com. Code §
3.118 (six-year limitations period for action on negotiable
instrument). We will affirm.
AND PROCEDURAL BACKGROUND
December 2008, Garcia signed a "Motor Vehicle
Installment Sales Contract Simple Finance Charge"
pursuant to which he agreed to purchase a 2009 Dodge Ram 1500
truck from Mac Haik Dodge Chrysler Jeep. The sales contract
sets out a description of the vehicle purchased as well as
Garcia's agreement to pay 84 monthly payments of $742.50
for a total sale price of $62, 370. Mac Haik Dodge Chrysler
Jeep assigned its interest in the sales contract to Amplify.
In March 2010, Amplify notified Garcia that it had exercised
its right to repossess the vehicle for nonpayment and was
going to sell it at a private sale and apply the proceeds to
the balance due on the sales contract. Shortly thereafter,
Amplify notified Garcia that it had sold the vehicle and that
the deficiency balance on the sales contract was $20, 711.88,
which would continue to accrue interest charges in the amount
of $7.09 daily.
2015, Amplify sued Garcia to recover $35, 562.66, the amount
it alleged was due and owing under the sales contract.
Amplify also sought to recover attorneys' fees and pre-
and post-judgment interest. Garcia filed a general denial and
pleaded as an affirmative defense that Amplify's claim
was barred by the statute of limitations. Amplify and Garcia
both moved for summary judgment. The trial court granted
Amplify's motion and rendered judgment in its favor.
Garcia then filed a motion for new trial in which he argued
that the trial court improperly rendered judgment on a claim
barred by limitations. Amplify responded to the motion and,
for the first time, argued that the sales contract was a
negotiable instrument subject to a six-year statute of
limitations. See id. After a hearing, the trial
court granted Garcia's motion for new trial and rendered
a take-nothing judgment against Amplify. This appeal
issue, Amplify argues that the trial court erred in
concluding that its claim was barred by a four-year statute
of limitations. Amplify argues that the sales contract is a
negotiable instrument subject to the six-year statute of
limitations provided in section 3.118 of the Texas Business
and Commerce Code. See id. To be subject to chapter
three of the Texas Business and Commerce Code, an instrument
must be "negotiable." See id. §
3.102(a) ("This chapter applies to negotiable
instruments."). An instrument is negotiable if it is a
written unconditional promise to pay a sum certain in money,
upon demand or at a definite time, and is payable "to
bearer" or "to order" at the time it is issued
or first comes into possession of a holder. Id.
§ 3.104(a). Whether an instrument is negotiable is a
question of law we review de novo. See FFP Mktg. Co.,
Inc. v. Long Lane Master Trust IV, 169 S.W.3d 402, 407
(Tex. App.-Fort Worth 2005, no pet.).
in the case of checks, to be negotiable, an instrument must
contain words of negotiability. See Tex. Bus. &
Com. Code § 3.104(a)(1), (c). Specifically, an
instrument must be "payable to bearer or to order."
Id. § 3.104(a)(1). Uniform Commercial Code
comment 2 explains:
Total exclusion from Article 3 of other promises or orders
that are not payable to bearer or to order serves a useful
purpose. It provides a simple device to clearly exclude a
writing that does not fit the pattern of typical negotiable
instruments and which is not intended to be a negotiable
instrument. If a writing could be an instrument despite the
absence of "to order" or "to bearer"
language and a dispute arises with respect to the writing, it
might be argued that the writing is a negotiable instrument
because the other requirements of subsection [3.104(a)] are
somehow met. Even if the argument is eventually found to be
without merit it can be used as a litigation ploy. Words
making a promise or order payable to bearer or to order are
the most distinguishing feature of a negotiable instrument
and such words are frequently referred to as 'words of
negotiability.' Article 3 is not meant to apply to
contracts for the sale of goods or services or the sale or
lease of real property or similar writings that may contain a
promise to pay money. The use of words of negotiability in
such contracts would be an aberration. Absence of the words
precludes any argument that such contracts might be
Id. cmt. 2.
3.109 provides that an instrument is payable to bearer if it
(1) states that it is payable to bearer or to the order of
bearer or to anyone who is in possession of the promise or
order; (2) does not state a payee; or (3) states that it is
payable to or to the order of cash or is not to an identified
person. Id. § 3.109(a). The sales contract at
issue in this case does not state that it is payable to
bearer or to the order of bearer or to anyone who is in
possession of it. Nor does it state that it is payable to the
order of cash. The sales contract identifies a payee, Mac
Haik Dodge Chrysler Jeep, by stating that Garcia
"agree[s] to pay us the Amount Financed, Finance Charge,
and any other charges in this contract" and by defining
"us" as "the Seller, " which was Mac Haik
Dodge Chrysler Jeep. Thus, the sales contract is not an
instrument "payable to bearer."
promise that is not payable to bearer is payable to order if
it is payable (1) to the order of an identified person (i.e.,
"Pay to the order of J. Smith") or (2) to an
identified person or order (i.e., "Pay to J. Smith or
order."). See id. § 3.109(b). The sales
contract at issue in this case does not state that it is
payable "to the order" of an identified person or
that it is payable to an identified person "or
order." Rather, it provides only that Garcia promises to
pay Mac Haik Dodge Chrysler Jeep, the seller, the sales price
for the vehicle set forth in the sales
contract. Although the sales price is payable to a
specific payee, the sales contract lacks the words of