Augustine Gonzales, Individually and on behalf of All Others Similarly Situated v. Bank One Texas, National Association--Appeal from 407th Judicial District Court of Bexar County

MEMORANDUM OPINION
No. 04-03-00409-CV
Augustine GONZALES, Individually and On Behalf of All Others Similarly Situated,
Appellants
v.
BANK ONE TEXAS, NATIONAL ASSOCIATION,
Appellee
From the 407th Judicial District Court, Bexar County, Texas
Trial Court No. 2001-CI-03555
Honorable Karen H. Pozza, Judge Presiding

Opinion by: Alma L. L pez, Chief Justice

Sitting: Alma L. L pez, Chief Justice

Paul W. Green, Justice

Karen Angelini, Justice

Delivered and Filed: January 14, 2004

AFFIRMED

The issue to be decided in this case is whether Bank One Texas, National Association ("Bank One") violated the Texas Business and Commerce Code by charging Augustine Gonzales ("Gonzales"), a non-customer, a fee for cashing a check drawn on a Bank One Account. (1) We affirm the trial court's summary judgment in favor of Bank One.

Background

A Bank One customer wrote a check in the amount of $75.00 payable to the order of Gonzales, who was not a customer of Bank One. Gonzales went to a Bank One branch to cash the check. The teller informed Gonzales that Bank One charged a $3.00 fee for cashing the check. Gonzales told the Bank One teller to proceed with cashing the check. The Bank One teller cashed the check for $75.00, subtracted the $3.00 fee, and paid the net amount to Gonzales. Gonzales later sued Bank One alleging various violations of the Texas Business and Commerce Code (referred to herein as the "UCC"). Bank One moved for summary judgment on numerous grounds, including that Gonzales's claims were preempted by federal law and that Bank One did not violate any duty owed to Gonzales under the UCC. The trial court granted the motion, and Gonzales appeals.

Discussion

In Moorehouse v. Chase Manhatten Bank, N.A., this court considered claims similar to those raised in this appeal. 76 S.W.3d 608 (Tex. App.--San Antonio 2002, no pet.). In that case, however, the UCC allegations appear to have been couched in claims for conversion, violation of the Texas Theft Liability Act, and fraud. Moorehouse, 76 S.W.3d at 612-14 (discussing UCC allegations in terms of claims for conversion, violation of Texas Theft Liability Act, and fraud). The analysis in the opinion focuses on the elements required to establish conversion, a violation of the Texas Theft Liability Act, and fraud. See id. Therefore, it does not appear that our decision in Moorehouse directly addressed whether Gonzales has a valid cause of action under the UCC, independent of a claim for conversion, violation of the Texas Theft Liability Act, or fraud.

Although we do not believe Moorehouse resolves the issues raised in this appeal, we agree with Bank One that if Gonzales had any viable UCC claim against Bank One arising from the charging of a check-cashing fee, the claim would be preempted by federal law. In Wells Fargo Bank of Texas NA v. James, 321 F.3d 488 (5th Cir. 2003), the Fifth Circuit considered whether federal law preempted Texas's par value statute, which prohibited banks in Texas, including national banks, from charging a fee for cashing a check that is drawn on an account that the bank itself holds. One of the policy considerations offered by Texas in support of the statute was the protection of the integrity of negotiable instruments. Id. at 490. Texas asserted that "if a check is subject to a redemption fee, the value of the check itself differs from its face value." Id.

The Fifth Circuit noted that the principal question before the court was "whether the Texas Par Value statute stands in irreconcilable conflict with, and is consequently preempted by, federal law." Id. at 491. The Fifth Circuit concluded that it was. Id.

The Fifth Circuit noted that Congress may reveal its preemptive intent in three ways, including the enactment of a law "which the state legislation irreconcilably conflicts." Id. In such an instance, "the intent to preempt contrary state law is ascribed to Congress, presuming as we do, that Congress intended to supercede those subsequent state regulations that conflict with the letter or frustrate the purpose of the federal regulatory scheme." Id. With regard to national banks, a state statute that interferes with a power which national banks are authorized to exercise "irreconcilably conflicts with the federal statute and is preempted by operation of the Supremacy Clause." Id. at 491-92.

In Wells Fargo, the Fifth Circuit concluded that national banks are authorized by federal regulation to charge non-account holding payees a check-cashing fee. Id. at 495. The Fifth Circuit then held that Texas's par value statute, which prohibited national banks from exercising a power expressly granted by federal law, was preempted by operation of the Supremacy Clause. Id.

In this case, the provisions of the UCC on which Gonzales relies to assert claims against Bank One do not expressly prohibit Bank One from charging a check-cashing fee. However, if we were to interpret the statute in the manner asserted by Gonzales, the effect of such an interpretation would frustrate the purpose of the federal regulatory scheme. Because federal law authorizes Bank One to charge a check-cashing fee, any claim under a state statutory provision that would prohibit such a fee from being charged or otherwise invalidate the procedure by which such a fee is charged is preempted by operation of the Supremacy Clause. The crux of Gonzales's complaint, regardless of how it is framed, is that the UCC does not permit Bank One to charge non-customers a check-charging fee. (2) Because such a complaint is preempted by federal law, the trial court did not err in granting summary judgment in favor of Bank One.

Conclusion

The judgment of the trial court is affirmed.

Alma L. L pez, Chief Justice

1. Gonzales also alleged claims for unjust enrichment and money had and received; however, he concedes in his brief that those claims are "premised upon [this] Court's finding that Bank One's practice violates Tex. Bus. & Comm. Code 3.501."

2. Gonzales asserts that he is not suing because Bank One is not entitled to charge a check-cashing fee but because Bank One deprived him of both possession of the check and full payment of the amount set forth on the face of the check in violation of section 3.501 of the UCC. Regardless of how the complaint is phrased, the core of the complaint is Bank One's ability to withhold a portion of the face amount of the check in satisfaction of the check-cashing fee.