author: FELIPE REYNA, Justice.

text:
    WELLS FARGO BANK, N.A., Appellant/Cross-Appellee, v. CITIZENS BANK OF TEXAS, N.A., Appellee/Cross-Appellant.
    No. 10-04-00268-CV.
    Court of Appeals of Texas, Waco.
    Nov. 23, 2005.

      Craig T. Enoch, Winstead Sechrest & Minick, Austin, for AppellanVCross-Appel-lee.
    Renee F. McElhaney & William F. Hulse IV, Cox Smith & Matthews Inc., San Antonio, for Appellee/Cross-Appel-lant.
    Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.
   OPINION

FELIPE REYNA, Justice.

Citizens Bank of Texas, N.A. filed suit against Pate & Pate Enterprises, Inc. and other related entities after the defendants engaged in a check kiting scheme involving accounts with Citizens Bank, Wells Fargo Bank Texas, N.A., and Wells Fargo Bank Ohio, N.A., resulting in overdrafts at Citizens Bank totaling $8,150,000. Citizens Bank amended its petition to name the Wells Fargo banks as defendants. Citizens Bank settled with the Pate defendants, and the court heard its remaining claims in a bench trial. The court rendered judgment in favor of Citizens Bank.

Wells Fargo Texas, through its successor in interest Wells Fargo Bank, N.A., contends in six issues that the court erred by: (1) holding Wells Fargo Texas liable for failing to timely return unpaid checks drawn on a Wells Fargo Ohio account; (2) finding that Wells Fargo Texas breached a duty of good faith to Citizens; (3) imposing duties on Wells Fargo Texas more stringent than the requirements of the U.C.C. or Regulation CC; (4) finding that Wells Fargo Texas breached a duty of ordinary care; (5) awarding damages for breach of duty of ordinary care; and (6) finding that $892,333 which had been garnished from Wells Fargo Texas was only a conditional setoff against the judgment.

Citizens Bank contends in its sole cross-issue that it established as a matter of law that Wells Fargo Texas promised to treat all checks drawn on any Wells Fargo bank as having been drawn on Wells Fargo Texas and that the court’s finding to the contrary is against the great weight and preponderance of the evidence.

We will reverse and render.

Factual Background

The Pate defendants are in the pipeline construction business. They have maintained accounts with Citizens Bank since the early 1990’s. Citizens Bank established a correspondent banking relationship with Wells Fargo Texas’s predecessor in interest Norwest Bank Texas, N.A. in 1997. Under this relationship, Norwest was responsible for processing checks deposited with Citizens Bank and handling those checks for collection. Wells Fargo Texas assumed these responsibilities when it consolidated with Norwest in 1999.

In 1998, Norwest established a “controlled disbursement account” for the Pate defendants. Wells Fargo Texas continued this account when it consolidated with Norwest. Under this arrangement, the Pate defendants wrote checks on a Wells Fargo Ohio bank account with a zero balance. Whenever a check was presented for payment from the Ohio account, Wells Fargo Services Co. would electronically transfer funds in that amount from the Pate defendants’ Wells Fargo Texas account to Wells Fargo Ohio to cover the check.

The parties dispute the purposes and legitimacy of controlled disbursement accounts. Nevertheless, it is undisputed that the effect of the Pate defendants’ controlled disbursement account was to extend the check collection process. This resulted from the manner in which Wells Fargo Texas processed checks written on the Ohio account. For the Ohio checks, Wells Fargo Texas delivered the checks to the Federal Reserve Bank in Houston, which forwarded the checks to the Federal Reserve Bank in Ohio. The Federal Reserve Bank in Ohio then presented the checks to Wells Fargo Ohio for payment. Thus, Wells Fargo Texas held funds in the Pate defendants’ account longer than it would have if the Pate defendants had written checks from a Wells Fargo Texas account.

The dispute in this case focuses on sixteen checks totaling $8,150,000 which the Pate defendants wrote on the Ohio account and deposited with Citizens Bank. Under the terms of the correspondent banking agreement, Citizens Bank delivered these checks to Wells Fargo Services Co., which handled check processing services for Wells Fargo Texas. Wells Fargo Services processed these checks via the Federal Reserve Banks in Houston and Ohio as described. Because of concerns that the Pate defendants were engaged in a check kiting scheme, Wells Fargo Texas decided to place a hold on the funds in the Pate defendants’ accounts.

Wells Fargo Ohio returned the checks to Citizens Bank unpaid. On receiving notice that these checks were dishonored, Citizens Bank was able to return $2,728,375 of the checks to Wells Fargo Texas. However, because of the delay resulting from the checks being processed through the controlled disbursement account in Ohio, Citizens Bank was unable to return nearly $3,000,000 of the checks. Citizens Bank suffered about $5,000,000 in losses from the Pate defendants’ overdrawn checks.

Procedural Background

Citizens Bank alleges that Wells Fargo Texas owed it a duty of good faith because of their correspondent banking relationship. Citizens Bank alleges that Wells Fargo Texas breached this duty by:

(1) implementing the controlled disbursement account which “encouraged and facilitated the possibility of bank fraud”;
(2) “failing to disclose to Citizens Bank the extra risk created by these accounts, and by intentionally shifting to Citizens Bank the losses they created by placing holds on the accounts, continuing to accept deposits and by returning checks unpaid to Citizens Bank, especially when there were funds remaining in the account to cover at least some of the checks returned”;
(3) using its superior knowledge of information about the Pate defendants and Citizens Bank to its advantage;
(4) failing to expedite the check collection process as required by contract and federal regulation; and
(5) giving Citizens Bank late notice of non-payment.

Citizens Bank contends that Wells Fargo Texas is strictly liable under the U.C.C. for:

(1) failing to give timely notice of nonpayment; and
(2) providing defective notice of nonpayment by listing one dishonored check as being in the amount of $50,000 rather than $500,000.

Citizens Bank also alleges that Wells Fargo Texas is liable for misrepresenting the status of the Pate Enterprises account and for breach of the warranty of presentment by presenting cashier’s checks to Citizens Bank for payment which had not been properly endorsed.

The court found that Wells Fargo Texas: (1) failed to timely return the checks; (2) breached the duty of good faith it owed under the U.C.C. and Regulation CC; and (3) breached the duty of disclosure it owed to Citizens Bank as its correspondent bank. The court rejected Citizens Bank’s breach of contract claim. The court awarded Citizens Bank $4,654,792 in damages, prejudgment interest, $870,676 in trial attorney’s fees, appellate attorney’s fees, and court costs. In the alternative (if the judgment is reversed on the theory that Wells Fargo Texas and Wells Fargo Ohio must be treated as separate legal entities), the court found that Wells Fargo Ohio acted as an agent for Wells Fargo Texas and awarded Citizens Bank $2,947,973, which represents the additional amount of checks Citizens Bank could have returned if it had received earlier notice that the checks had been dishonored.

Controlled Disbursement Accounts

The trial court found that “Wells Fargo Texas set up the Ohio account for the purpose of evading or extending the time limits set forth in the UCC and Reg[ulation] CC.” Thus, the court implicitly found that the Ohio account was a delayed disbursement account, which is disfavored by the Federal Reserve, rather than a controlled disbursement account as Wells Fargo Texas contends.

Under the typical scenario, a controlled disbursement account is a checking account with a zero balance held by a corporation. When a check written on this account is presented for payment, funds from an interest-bearing account are transferred to the zero balance account to pay the check. See e.g. Schering-Plough Healthcare Prods., Inc. v. NBD Bank, N.A., 98 F.3d 904, 910 (6th Cir.1996); RPM Pizza, Inc. v. Bank One Cambridge, 869 F.Supp. 517, 518-19 (E.D.Mich.1994).

Banks offering controlled disbursement services notify their corporate customers early in the day of the amount of the corporation’s check payments that have been presented that day so that the corporation can invest surplus balances or borrow additional funds, as necessary, while money markets are still active, U.S. money markets become progressively less liquid after noon Eastern Time.

Collection of Checks and Other Items by Federal Reserve Banks and Availability of Funds and Collection of Checks, 63 Fed. Reg. 12700, 12702 n. 6 (Mar. 16, 1998).

Controlled disbursement accounts are strikingly similar to delayed (or remote) disbursement accounts, the use of which was sharply criticized as “an abuse of the check collection system” by the Comptroller of the Currency in 1979. Comptroller of the Currency, Banking Circular No. 121, 1979 OCC CB LEXIS 11 at *1 (Feb. 7, 1979). The Federal Reserve continues to view such accounts with disfavor.

General policy. Delayed disbursement (sometimes referred to as “remote” disbursement) is the practice of issuing checks that are payable by, through, or at a bank located in a geographic area such that collection of the checks is generally delayed. For example, these arrangements may be designed to delay the collection and payment of checks by drawing checks on banks located substantial distances from the payee or outside of Federal Reserve cities when alternate and more efficient payment arrangements are available.
The Board is concerned that delayed disbursement practices reduce the efficiency of the check collection system. Drawing a check on a bank remote from the payee often increases the costs of handling the check. More institutions are likely to handle the check before it is finally paid, increasing processing costs, and higher transportation costs are incurred to move checks greater distances. In addition, delays in collection time can impose float costs on depositary banks. Furthermore, delayed disbursement practices delay the return of unpaid checks, increasing the possibilities for check fraud and other losses.
The Board believes the banking industry has a public responsibility not to design, offer, promote, or otherwise encourage the use of a service that is intended to delay payment and that exposes payment recipients and depositary banks to greater-than-ordinary risks. The Board urges the nation’s banks and check-related service providers to eliminate delayed disbursement practices intended to obtain extended float.
There is no intention to discourage corporate disbursement arrangements with banks that provide for improved control over daily cash requirements, provided that these arrangements do not result in the undesirable effects noted above. Banks should provide the cash management services needed by their customers through the use of payments [sic] methods that facilitate prompt funds availability to payment recipients and that protect banks from unnecessary risk.

Policy Statement on Delayed Disbursement, 64 Fed.Reg. 51762, 51762 (Sept. 24, 1999) (footnote omitted).

The differentiation between the disfavored delayed disbursement accounts and legitimate controlled disbursement accounts appears to lie in the intended purpose of the account when created. The former have been referred to as accounts which are “intended to obtain extended float” or “designed expressly to delay payment.” See id.; Banking Circular No. 121, 1979 OCC CB LEXIS 11 at *1. Conversely, the Federal Reserve has recognized that the aim of legitimate controlled disbursement accounts is “not the ability to generate float, but the ability to make investment and borrowing decisions early in the day based on knowledge of the value of that day’s check presentments.” Collection of Checks and Other Items by Federal Reserve Banks and Availability of Funds and Collection of Checks, 63 Fed.Reg. 68701, 68702 (Dec. 14, 1998).

Regardless of the characterization however, delayed disbursement accounts are not, strictly speaking, unlawful.

Standard of Review

Findings of fact in a bench trial have the same force and dignity as a jury’s verdict upon jury questions. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex.1991). When challenged on appeal, the findings are not conclusive on the appellate court if there is a complete reporter’s record, as there is here. Zac Smith & Co. v. Otis Elevator Co., 734 S.W.2d 662, 666 (Tex.1987); In re K.R.P., 80 S.W.3d 669, 673 (Tex.App.-Houston [1st Dist.] 2002, pet. denied). Generally, we will not disturb a trial court’s findings if there is evidence of probative force to support them. See Ski River Dev., Inc. v. McCalla, 167 S.W.3d 121, 136-37 (Tex.App.-Waco 2005, pet. filed); Barrientos v. Nava, 94 S.W.3d 270, 288 (Tex.App.-Houston [14th Dist.] 2002, no pet.).

Although we show deference to a trial court’s findings, those findings are reviewable for legal and factual sufficiency of the evidence by the same standards that are applied in reviewing evidence supporting a jury’s answers. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994); Dominguez v. Castaneda, 163 S.W.3d 318, 325 (Tex.App.-El Paso 2005, pet. denied). We review the trial court’s conclusions of law de novo. Dominguez, 163 S.W.3d at 325. Under de novo review, the reviewing court exercises its own judgment and redetermines each legal issue. Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex.1998).

A finding may be disregarded if it is not supported by the evidence or is immaterial. See S.E. Pipeline Co. v. Tichacek, 997 S.W.2d 166, 172 (Tex.1999); Anderson, Greenwood & Co. v. Martin, 44 S.W.3d 200, 216 (Tex.App.-Houston [14th Dist.] 2001, pet. denied). A finding on a question is immaterial if the question should not have been submitted to the factfinder or if it has been rendered immaterial by other findings. Id.

Payor Bank

Wells Fargo Texas contends in its first issue that the court erred by holding it liable for failing to timely return the unpaid checks because: (1) Wells Fargo Texas did not owe the duties of a payor bank for those checks as a matter of law; (2) Wells Fargo Texas and Wells Fargo Ohio were separate banks; and (3) Wells Fargo Texas and Wells Fargo Ohio were not a single business enterprise.

Because Wells Fargo Texas contends that it did not owe the duties of a payor bank “as a matter of law,” we construe its first issue as an assertion that there is no evidence to support the court’s express and implied findings pertinent to the role Wells Fargo Texas played in processing the checks in dispute and pertinent to the relationship between Wells Fargo Texas and Wells Fargo Ohio. See Beard v. Beard, 49 S.W.3d 40, 54-55 (Tex.App.Waco 2001, pet. denied).

Wells Fargo Texas contends that we should not look beyond the four corners of the checks to determine the identity of the payor bank. Citizens Bank responds that we should look beyond the face of the checks and consider the close relationship between Wells Fargo Texas and Wells Fargo Ohio.

A “payor bank” is “a bank that is the drawee of a draft.” Tex. Bus. & Com.Code Ann. § 4.105(3) (Vernon 2002). The “drawee” is the “person ordered in a draft to make payment.” Id. § 3.103(a)(2) (Vernon Supp.2004-2005). In this case, the “drafts” are the sixteen checks at issue. Id. 3.104(f) (Vernon 2002).

Regulation CC uses the term “paying bank” rather than “payor bank.” 12 C.F.R. § 229.2(z) (2005). Regulation CC defines a “paying bank” in pertinent part as “the bank at which a check is payable and to which it is sent for payment or collection.” Id. § 229.2(z)(2) The term “includes ... the bank whose routing number appears on a check in fractional or magnetic form and to which the check is sent for payment or collection.” Id. § 229.2(z).

Several courts have discussed the “four corners rule” advocated by Wells Fargo Texas. See Gathercrest, Ltd. v. First Am. Bank & Trust, 649 F.Supp. 106, 116-17 (M.D.Fla.1985), aff'd, 805 F.2d 995 (11th Cir.1986); SCADIF, S.A. v. First Union Natl. Bank, 208 F.Supp.2d 1352, 1368-69 (S.D.Fla.2002), aff'd, 344 F.3d 1123 (11th Cir.2003); Engine Parts, Inc. v. Citizens Bank of Clovis, 92 N.M. 37, 582 P.2d 809, 812-13 (1978); Bank of Am., N.T. & S.A. v. David W. Hubert, P.C., 153 Wash.2d 102, 101 P.3d 409, 414-15 (2004); see also Horney v. Covington County Bank, 716 F.2d 335, 338-39 (5th Cir.1983).

The rule which has emerged from these decisions is that courts should not stray from the four corners of a check to determine the respective roles of the parties to a check, unless the check is ambiguous on its face. See Gathercrest, 649 F.Supp. at 116-17; Engine Parts, 582 P.2d at 812-13. The actions of parties to a check transaction cannot alter the respective roles of the parties to an otherwise unambiguous document. See W. Air & Refrigeration, Inc. v. Metro Bank of Dallas, 599 F.2d 83, 90 (5th Cir.1979); Gathercrest, 649 F.Supp. at 116-17; Farmers Coop. Livestock Mkt., Inc. v. Second Natl. Bank of London, 427 S.W.2d 247, 249-50 (Ky.App.1968); Engine Parts, 582 P.2d at 812-13; Bank of Am., 101 P.3d at 414.

The checks at issue are unambiguous. Each orders Wells Fargo Ohio to pay the sum indicated, and each provides the physical address (city and state) of Wells Fargo Ohio, its MICR routing number, and the Pate defendants’ account number for the account maintained at Wells Fargo Ohio. Therefore, the record contains no evidence to support the court’s implied finding that Wells Fargo Texas is the “payor bank” for these checks under section 4.105(3). Id. For the same reasons, the record contains no evidence to support the court’s implied finding that Wells Fargo Texas is the “paying bank” under Regulation CC. See 12 C.F.R. § 229.2(z).

Nevertheless, Citizens Bank cites section 4.107 for the proposition that, because Wells Fargo Ohio did not “function as a separate -bank” from Wells Fargo Texas, Wells Fargo Ohio should not be accorded the time limits available to a separate bank for processing checks. Section 4.107 provides, “A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders must be given under this chapter and under Chapter 3.” Tex. Bus. & Com. Code Ann. § 4.107 (Vernon 2002).

Comment 4 to section 4.107 provides in part, “[I]f in its relations to customers a branch functions as a separate bank, notices and orders with respect to accounts of customers of the branch should be given at the branch.” Id. cmt. 4 (Vernon 2002). Citizens Bank contends that Wells Fargo Ohio does not function as a separate bank with respect to the Pate defendants’ account because the decision-making with respect to funding the Ohio account lies with Wells Fargo Texas.

However, the exercise of this decision-making function by the bank holding the funding account is precisely the manner in which controlled disbursement- accounts operate. See e.g. Schering-Plough Healthcare Prods., 98 F.3d at 910 (describing workings of zero balance controlled disbursement account). The focus of section 4.107 is on the operations of the bank alleged to not be a separate bank rather than on the “parent” bank.

. It is undisputed that Wells Fargo Ohio was a separately chartered bank or that it was a “real bank” with its own officers and tellers. Thus, Wells Fargo Ohio performed the functions of a separate bank and must be treated as a separate bank for purposes of determining the applicable deadlines for processing checks. See Tex. Bus. & Com.Code Ann. § 4.107; see also Pulaski Bank & Trust Co. v. Tex. Am. Bank/Fort Worth, N.A., 759 S.W.2d 723, 733 (Tex.App.-Dallas 1988, writ denied) (“[e]ven closely-related banks” are each entitled to 24 hours to process a check).

As stated, the actions of parties to a check transaction cannot alter the respective roles of the parties to an otherwise unambiguous document. See W. Air & Refrigeration, 599 F.2d at 90; Gathercrest, 649 F.Supp. at 116-17; Farmers Coop. Livestock Mkt., 427 S.W.2d at 249-50; Engine Parts, 582 P.2d at 812-13; Bank of Am., 101 P.3d at 414. The checks at issue are unambiguous. Thus, the court’s findings regarding the control Wells Fargo Texas exercised with regard to the Pate defendants’ account at Wells Fargo Ohio are immaterial. See S.E. Pipeline Co., 997 S.W.2d at 172; Anderson, Greenwood & Co., 44 S.W.3d at 216.

Wells Fargo Texas next challenges the court’s finding that Wells Fargo Ohio and Wells Fargo Texas “operated as a single business enterprise.” According to the single business enterprise theory, “when two corporations are not operated as separate entities but instead integrate their resources to achieve a common business purpose, it may be equitable, under exceptional circumstances, to hold each constituent corporation liable for the debts and liabilities incurred in the common enterprise.” N. Am. Van Lines, Inc. v. Emmons, 50 S.W.3d 103, 120 (Tex.App.-Beaumont 2001, pet. denied).

Citizens Bank is correct that the record contains evidence that Wells Fargo Texas and Wells Fargo Ohio acted jointly with respect to checks written on the Pate defendants’ account. However, the banks’ conduct in these transactions does not alter their respective roles with regard to the checks at issue. See W. Air & Refrigeration, 599 F.2d at 90; Gathercrest, 649 F.Supp. at 116-17; Farmers Coop. Livestock Mkt., 427 S.W.2d at 249-50; Engine Parts, 582 P.2d at 812-13; Bank of Am., 101 P.3d at 414. Thus, the court’s finding that Wells Fargo Texas and Wells Fargo Ohio acted as a single business enterprise is immaterial. See S.E. Pipeline Co., 997 S.W.2d at 172; Anderson, Greenwood & Co., 44 S.W.3d at 216.

Citizens Bank also suggests that the checks should be treated as “payable through” items under section 4.106. Section 4.106 provides in pertinent part:

(a) If an item states that it is “payable through” a bank identified in the item, the item:
(1) designates the bank as a collecting bank and does not by itself authorize the bank to pay the item; and
(2) may be presented for payment only by or through the bank.

Tex. Bus. & Com.Code Ann. § 4.106(a) (Vernon 2002).

As comment 1 to this section explains, Some items are made “payable through” a particular bank. Subsection (a) states that such language makes the bank a collecting bank and not a payor bank. An item identifying a “payable through” bank can be presented for payment to the drawee only by the “payable through” bank. The item cannot be presented to the drawee over the counter for immediate payment or by a collecting bank other than the “payable through” bank.

Id. cmt. 1 (Vernon 2002).

The checks at issue do not state that they are “payable through” Wells Fargo Ohio. Under section 4.106, “payable through” checks must be presented to the drawee bank by the payable through bank. Therefore, if Wells Fargo Ohio was a “payable through” bank for the checks, then the checks would have to be first routed through Wells Fargo Ohio for presentment and could not be presented to Wells Fargo Texas for payment by Citizens Bank. See id. It is undisputed that the checks were not processed in this manner. Thus; the record contains no evidence that the checks are “payable through” items or that the parties treated the checks as “payable through” items.

Accordingly, we sustain Wells Fargo Texas’s first issue.

Correspondent Bank

Wells Fargo Texas contends in its second issue that the court erred by holding that it breached a duty of expeditious return and a duty of good faith owed to Citizens Bank because (1) Wells Fargo Texas did not owe the duties of a payor bank as a matter of law and (2) Wells Fargo Texas had no contractual duty to expedite the collection of -the checks. Wells Fargo Texas contends in its third issue that the court erred by imposing duties on Wells Fargo Texas more stringent than the requirements of the U.C.C. or Regulation CC. Wells Fargo Texas contends in its fourth issue that there is no evidence or factually insufficient evidence to support the court’s finding, that it breached the duty of ordinary care it owed as a collecting bank.

Citizens Bank contends in its sole cross-issue that the evidence establishes as a matter of law that Wells Fargo Texas agreed to treat all Wells Fargo checks as being drawn on Wells Fargo Texas and that the court’s finding to the contrary is against the great weight and preponderance of the evidence.

We construe Wells Fargo Texas’s second issue as an assertion that there is no evidence to support the court’s findings that Wells Fargo Texas breached its duty of expeditious return under Regulation CC and its duty of good faith under the UCC.

We construe Wells Fargo Texas’s third issue as a challenge to the court’s conclusion of law that Wells Fargo Texas owed a 'duty of expeditious return under Regulation CC.

We have already determined that the record contains no evidence to support the court’s implied finding that Wells Fargo Texas is the “payor bank” (or paying bank) for these checks. To resolve these issues, we must determine: (1) the roles Wells Fargo Texas and Citizens Bank played in these transactions; (2) the nature of their correspondent banking relationship; (3) and the duties Wells Fargo Texas and Wells Fargo Ohio owed in these transactions.

When the Pate defendants deposited each of the sixteen Wells Fargo Ohio checks in their Citizens Bank account, Citizens Bank became the “depositary bank” as to each check. See Tex. Bus. & Com. Code Ann. § 4.105(2) (Vernon 2002); Pulaski Bank & Trust Co., 759 S.W.2d at 725. When Citizens Bank delivered the checks to Wells Fargo Texas for collection, Wells Fargo Texas became an “intermediary bank.” See Tex. Bus. & Com.Code Ann. § 4.105(4) (Vernon 2002); Pulaski Bank & Trust Co., 759 S.W.2d at 726. Citizens Bank and Wells Fargo Texas were both “collecting banks.” See Tex. Bus. & Com. Code Ann. § 4.105(5) (Vernon 2002); Pulaski Bank & Trust Co., 759 S.W.2d at 726. As we have already observed, Wells Fargo Ohio was the payor bank (but not a “collecting bank”). See Tex. Bus. & Com.Code Ann. § 4.105(3), (5); Pulaski Bank & Trust Co., 759 S.W.2d at 726.

Citizens Bank contends that its correspondent banking relationship with Wells Fargo Texas placed a higher duty on Wells Fargo than would otherwise be required as between banks engaged in an arms-length transaction. However, the weight of authority seems to be that “[a] correspondent bank relationship, standing alone, does not create an agency relationship.” Aaron Ferer & Sons, Ltd. v. Chase Manhattan Bank, N.A., 731 F.2d 112, 122 (2d Cir.1984); accord Banco Urquijo, S.A. v. Signet Bank/Md., 861 F.Supp. 1220, 1249 (M.D.Pa.1994); Peavy-Moore Lumber Co. v. First Natl. Bank of Beaumont, 133 Tex. 467, 128 S.W.2d 1158, 1162 (1939); Tillman County Bank v. Behringer, 113 Tex. 415, 257 S.W. 206, 206-08 (1923); see also Tex. Bus. & Com.Code Ann. § 4.201(a) (Vernon 2002). Nor does a correspondent bank relationship standing alone create a fiduciary relationship. Aaron Ferer & Sons, 731 F.2d at 122; Banco Urquijo, 861 F.Supp. at 1249; accord Peavy-Moore Lumber Co., 128 S.W.2d at 1162; Tillman County Bank, 257 S.W. at 206-08; see also Tex. Bus. & Com.Code Ann. § 4.201(a). Instead, the correspondent bank is the agent of the owner of any item forwarded to it for collection. See Tex. Bus. & Com.Code Ann. § 4.201(a).

From a review of the agreements between Citizens Bank and Wells Fargo Texas’s predecessor in interest Norwest Bank, this correspondent banking relationship essentially made Citizens Bank a depositor with Wells Fargo Texas. The relationship between a bank and its customer does not usually create a fiduciary relationship. Wil-Roye Inv. Co. II v. Wash. Mut. Bank, F.A., 142 S.W.3d 393, 410 (Tex.App.-El Paso 2004, no pet.); Fleming v. Tex. Coastal Bank of Pasadena, 67 S.W.3d 459, 461 (Tex.App.-Houston [14th Dist.] 2002, pet. denied).

There is caselaw to the effect that a depositary bank such as Citizens Bank in this case becomes the owner of a check if the bank gives the depositor unrestricted credit for the full amount of the check. See e.g. Schnitger v. Backus, 10 Wash.App. 754, 519 P.2d 1315, 1319 (1974); Pazol v. Citizens Natl. Bank of Sandy Springs, 110 Ga.App. 319, 138 S.E.2d 442, 445 (1964); S. End Bank & Trust Co. v. Nasin, 147 Conn. 215, 158 A.2d 591, 593 (1960); Commercial Natl. Bank of Hutchinson, Kan. v. Heid Bros., Inc., 226 S.W. 806, 809 (Tex.Civ.App.-El Paso 1920), rev’d on other grounds, 240 S.W. 908 (Tex. Comm’n App. 1922, holding approved). In this situation, an intermediary bank in the check collection process becomes the agent of the depositary bank (as owner of the check) rather than the agent of the depositor.

Here, Citizens Bank gave the Pate defendants immediate access to $1,475,000 of the $8,150,000 in dispute by issuing cashier’s checks in that amount. Thus, it could be argued that Wells Fargo Texas became the agent of Citizens Bank with respect to the $1,475,000 which the latter made available to the Pate defendants through cashier’s checks. However, the U.C.C. changed these common law principles regarding the ownership of items such as checks.

Section 4.201(a) provides:

(a) Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or sub-agent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of indorsement or lack of indorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a collecting bank, such as those resulting from outstanding advances on the item and rights of recoupment or setoff." If an item is handled by banks for purposes of presentment, payment, collection, or return, the relevant provisions of this chapter apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it.

Tex. Bus. & Com.Code Ann. § 4.201(a).

The Texas Supreme Court has construed section 4.201(a) to mean that, regardless of whether a bank permits the immediate withdrawal of funds for a check which has not yet been collected, ownership of the check remains with the depositor, and the bank is merely the agent for the depositor. Romo v. Austin Natl. Bank, 615 S.W.2d 168, 170 (Tex.1981); see also Alta Vista State Bank v. Kobliska, 897 F.2d 930, 933 (8th Cir.1990).

Therefore, in the collection process, Wells Fargo Texas acted as an agent for the Pate defendants and not for Citizens Bank. Nevertheless, Wells Fargo Texas had certain duties under the U.C.C. with respect to the collection of the checks.

Forward Collection

As a collecting bank, Wells Fargo Texas owed the duties provided by section 4.202.

(a) A collecting bank must exercise ordinary care in:
(1) presenting an item or sending it for presentment;
(2) sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank’s transferor after learning that the item has not been paid or accepted, as the case may be;
(3) settling for an item when the bank receives final settlement; and
(4) notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.
(b) A collecting bank exercises ordinary care under Subsection (a) by taking proper action before its midnight deadline following receipt of an item, notice, or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.
(c) Subject to Subsection (a)(1), a bank is not hable for the insolvency, neglect, misconduct, mistake, or default of another bank or person or for loss or destruction of an item in the possession of others or in transit.

Tex. Bus. & Com.Code ÁNN. § 4.202 (Vernon 2002).

The “ ‘[m]idnight deadline’ with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later.” Id. § 4.104(a)(10) (Vernon Supp.2004-2005).

The checks at issue were grouped in four batches. The first batch, checks 6922 through 6925, was deposited with Wells Fargo Texas on Monday, March 25 and forwarded by Wells Fargo Texas to the Federal Reserve Bank the next day. The second batch, checks 6926 and 6928 through 6930, was deposited on Tuesday, March 26 but not forwarded until Thursday, March 28 because of a computer malfunction. The third batch, checks 6933 through 6936, was deposited on Wednesday, March 27 and forwarded the next day. The fourth batch, checks 6938 through 6941, was deposited on Thursday, March 28 but not forwarded until Saturday, March 30.

Thus, it is undisputed that Wells Fargo Texas forwarded the first and third batches of checks to the Federal Reserve Bank before its midnight deadline. Therefore, there is no evidence that Wells Fargo Texas failed to “exercise ordinary care” with respect to these checks. See Tex. Bus. & Com.Code Ann. § 4.202(b).

With respect to the second batch, Wells Fargo Texas contends that the one-day delay in forwarding is excused because of the computer malfunction. Section 4.109(b) provides:

Delay by a collecting bank or payor bank beyond time limits prescribed or permitted by this title or by instructions is excused if:
(1) the delay is caused by interruption of communication or computer facilities, suspension of payments by another bank, war, emergency conditions, failure of equipment, or other circumstances beyond the control of the bank; and
(2) the bank exercises such diligence as the circumstances require.

Id. § 4.109(b) (Vernon 2002).

Wells Fargo Texas presented uncontro-verted evidence that its computer system was malfunctioning on the date the second batch of checks was deposited and that it exercised diligence in locating technicians to restore the system. Thus, although the record contains some evidence to support the court’s finding that Wells Fargo Texas failed to exercise ordinary care in forwarding the second batch of checks to the Federal Reserve Bank, the evidence is factually insufficient because the computer malfunction “excused” Wells Fargo Texas for the one-day delay in forwarding this batch of checks. Id.

With respect to the fourth batch of checks, which Wells Fargo Texas forwarded to the Federal Reserve Bank on the Saturday following its Friday midnight deadline, Wells Fargo Texas contends that its delay in forwarding this batch of checks is excused because the checks were still presented to Wells Fargo Ohio on the next banking day (Monday), just as they would have been if they had been forwarded to the Federal Reserve Bank on Friday.

To support this contention, Wells Fargo Texas cites 12 C.F.R. § 229.30(c), which provides an automatic extension of the paying bank’s deadline for return or notice of non-payment “to the time of dispatch” if the return or notice is received by the next bank on the next banking day. Wells Fargo Texas suggests that “[i]f such no-harm/ no-foul rule applies to the more rigorous return side of the check collection and processing system, surely as a matter of law, it should apply to the less rigorous check forwarding side of the process.”

Although this argument in the abstract is attractive, it finds no support in the plain language of section 4.202. Thus, the record contains some evidence and factually sufficient evidence to support the court’s finding that Wells Fargo Texas failed to exercise ordinary care in forwarding the fourth batch of checks to the Federal Reserve Bank.

The former section 1.203 provided, “Every contract or duty within this title imposes an obligation of good faith in its performance and enforcement.” Business and Commerce Code, 60th Leg., R.S., ch. 785, § 1, sec. 1.203, 1967 Tex. Gen. Laws 2343, 2352 (amended 2003) (current version at Tex. Bus. & Com.Code Ann. § 1.304 (Vernon Supp.2004-2005)). Citizens Bank contends that Wells Fargo Texas failed to act in good faith because it did not forward the checks by means of the most expeditious route available.

However, section 1.203 does not provide an independent cause of action. See N. Natl. Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 606-07 & n. 2 (Tex.1998); Fetter v. Wells Fargo Bank Tex., N.A., 110 S.W.3d 683, 689 (Tex.App.-Houston [14th Dist.] 2003, no pet.); John Wood Group USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 22 (Tex.App.-Houston [1st Dist.] 2000, pet. denied). Norcan a bank be said to violate its “obligation of good faith” under section 1.203 if it acts - in accordance with the requirements of the U.C.C. See Fetter, 110 S.W.3d at 691; Hill v. St. Paul Fed. Bank for Sav., 329 Ill.App.3d 705, 263 Ill.Dec. 562, 768 N.E.2d 322, 326 (2002).

As stated, Wells Fargo Texas delivered the first three batches of checks to the Federal Reserve Bank within the time limits required by the U.C.C. Thus, Wells Fargo Texas cannot be said to have violated its “obligation of good faith” with respect to these checks under section 1.203. Id.

Several cases suggest that a bank owes a heightened duty of care toward another batik only if: (1) the banks share a fiduciary or confidential relationship; (2) the banks have a contractual relationship; (3) a legal duty requires it; or (4) the defendant bank committed fraud or made a misrepresentation. See Frost Natl. Bank v. Midwest Autohaus, Inc., 241 F.3d 862, 874 n. 7 (7th Cir.2001); Cumis Ins. Society, Inc. v. Windsor Bank & Trust Co., 736 F.Supp. 1226, 1233 (D.Conn.1990); First Natl. Bank in Harvey v. Colonial Bank, 898 F.Supp. 1220, 1231 (N.D.Ill.1995).

Here, we have already concluded that the banks’ correspondent banking relationship standing alone did not create a fiduciary or confidential relationship. See Aaron Ferer & Sons, 731 F.2d at 122; Banco Urquijo, 861 F.Supp. at 1249; Peavy-Moore Lumber Co., 128 S.W.2d at 1162; Tillman County Bank, 257 S.W. at 206-08. We have already concluded that Wells Fargo Texas complied with its legal duties under the U.C.C. (at least with respect to the first three batches of checks). Citizens Bank does not contend that Wells Fargo Texas acted fraudulently or made a misrepresentation. We now examine the banks’ contractual relationship to determine whether it may impose a heightened duty of care on Wells Fargo Texas.

The Master Agreement for Cash Management Services Citizens Bank executed with Wells Fargo Texas’s predecessor in interest Norwest Bank provides in pertinent part:

Scope of the Services. The Bank shall provide the Company with the cash management services requested in writing and the Services agreed to by the Bank. The services are described in general terms in separate writings which are specifically incorporated into this Agreement (the “Product Descriptions”). The Company agrees to the terms and conditions contained in the applicable Product Description(s); the Bank’s user guide (the “Guide”), if any, for each Service it requests; and the Bank’s terms and conditions applicable to each account affected by the Services (the “Account Terms”).

Citizens Bank’s account agreement provides in pertinent part, “Any non-cash items tendered for deposit (including items drawn ‘on-us’) will be given provisional credit only until collection is final-”

Citizens Bank contends that Wells Fargo Texas effectively modified the terms of the account agreement by issuing an “Accelerated Availability Schedule” which states in pertinent part:

Wells Fargo checks drawn in all states are now treated as “On-Us.” See page 4 for details and deadlines. Financial Institution depositors receive 100% immediate availability for On-Us items deposited prior to Noon.

According to the funds availability schedule applicable to checks written on the Wells Fargo Ohio account, funds for a check deposited with- Wells Fargo Texas before 2:00 p.m. on a banking day would be “collected and available for use” on the next banking day.

Citizens Bank’s Executive Vice-President Debra Mitcham testified that Citizens Bank overrode the usual five-day holds on the Wells Fargo Ohio checks deposited by the Pate defendants because “we knew that they were Wells checks and we knew that they were clearing — or we thought they were clearing sooner.” When asked to explain why Citizens Bank thought this, Mitcham responded, “Because, Wells is Wells, it’s an ‘on-us’ item, and through conversations I had with Mike Moses [an officer at Wells Fargo Texas].”

Mitcham later recounted her conversation with Moses.

Q: Did you talk to Mr. Moses about how soon the checks written on the Ohio account would clear?
A: No.
Q: Go through the clearing process?
A: No, because he told me that they were Wells checks. I just assumed that everything was the same computer system and they would be clearing overnight....

For his part, Moses testified that he negotiated only with a certain Roger Lawrence when the correspondent banking relationship was established with Citizens Bank. He did not recall ever • having a conversation with Mitcham but conceded that it could have happened. However, Moses vehemently denied ever discussing with Mitcham the possibility of treating Wells Fargo Ohio checks as “on-us” items for purposes of settlement because “we would lose our shirt on something like that” and “no bank in the country would do that.”

Mitcham testified that she “assumed” the Pate defendants’ checks would be cleared sooner based on her conversation with Moses. Moses vehemently denied making any representations to this effect. Thus, Citizens Bank did hot establish as a matter of law that Wells Fargo Texas agreed to treat the Pate defendants’ Wells Fargo Ohio checks as being drawn on Wells Fargo Texas. Nor is the court’s finding to the contrary against the great weight and preponderance of the evidence.

Instead, the Cash Management Services agreement and Citizens Bank’s account agreement with Wells Fargo Texas reflect an arms-length correspondent banking relationship. Therefore, because the banks did not share a fiduciary or confidential relationship, because the banks’ contractual relationship established only an arms-length relationship, because Wells Fargo Texas fulfilled its legal duties under the U.C.C. (with respect to the first three batches of checks), and because Wells Fargo did not-commit fraud or misrepresentation with respect to Citizens Bank, we hold that Wells Fargo did not owe a heightened duty of care toward Citizens Bank with respect to the first three batches of checks. See Frost Natl. Bank, 241 F.3d at 874 n. 7; Cumis Ins. Society, 736 F.Supp. at 1233; First Natl. Bank in Harvey, 898 F.Supp. at 1231.

With regard to the forward collection process, the record contains no evidence and/or factually insufficient evidence to show that Wells Fargo Texas failed to exercise ordinary care or breached any duties it owed with respect to the first three batches of checks. However, the record contains some evidence and factually sufficient evidence to show that Wells Fargo Texas failed to exercise ordinary care in forwarding the fourth batch of checks.

Return of the Checks

Upon presentment, Wells Fargo Ohio was accountable for the full amount of the checks if it did “not pay or return [them] or send notice of dishonor until after its midnight deadline.” Tex. Bus. & Com.Code Ann. § 4.302(a)(1) (Vernon 2002); Pulaski Bank & Trust Co., 759 S.W.2d at 726. Items are considered “returned” when “sent to the bank’s customer or transferor or pursuant to instructions.” Tex. Bus. & Com.Code Ann. § 4.301(d)(2) (Vernon 2002).

Regulation CC provides for an extension of this return deadline in certain circumstances.

(c) Extension of deadline. The deadline for return or notice of nonpayment under the U.C.C. or Regulation J (12 CFR part 210), or § 229.36(f)(2) is extended to the time of dispatch of such return or notice of nonpayment where a paying bank uses a means of delivery that would ordinarily result in receipt by the bank to which it is sent—
(1) On or before the receiving bank’s next banking day following the otherwise applicable deadline by the earlier of the close of that banking day or a cutoff hour of 2 p.m. or later set by the receiving bank under U.C.C. 4-108, for all deadlines other than those described in paragraph (c)(2) of this section; this deadline is extended further if a paying bank uses a highly expeditious means of transportation, even if this means of transportation would ordinarily result in delivery after the receiving bank’s next cutoff hour or banking day referred to above; or
(2) Prior to the cut-off hour for the next processing cycle (if sent to a returning bank), or on the next banking day (if sent to the depositary bank), for a deadline falling on a Saturday that is a banking day (as defined in the applicable U.C.C.) for the paying bank.

12 C.F.R. § 229.30(c) (2005).

The court made two findings of fact pertinent to the alleged delay in the return of the checks by Wells Fargo Ohio.

42. After the Federal Reserve Bank delivered the checks to the processing center for Wells Fargo Ohio in Minneapolis, Wells Fargo Services Co. was responsible for delivering the checks to the Federal Reserve Bank of Minneapolis for return to Citizens Bank within the midnight deadline.... Wells Fargo Service Co. had copies of delivery receipts ... but could not match the receipts to particular items.... All that is known is that the items were delivered to the Federal Reserve Bank by 6:00 p.m. of the day following the midnight deadline (assuming Wells Fargo Ohio as the place of presentment).... The Federal Reserve Bank had records showing the times of delivery, but these were destroyed. Consequently, neither party had direct evidence regarding whether Wells Fargo Ohio timely returned the items in dispute to Citizens Bank.
43. Wells Fargo Texas and Wells Fargo Ohio contend they are entitled to a one-day extension of the midnight deadline under Reg. CC, 12 C.F.R. § 229.30_ The Court finds that the use of Reg. CC to extend the midnight deadline by the correspondent bank in the context of a check kite constitutes bad faith.... Wells Fargo Texas breached its duty of good faith by using Reg. CC as a means of extending the midnight deadline and [] this breach caused damages to Citizens Bank.

Warren Magnuson, who works in the return department for Wells Fargo Services Co. in Minnesota, testified that the checks were prepared for pickup by a courier at or near the midnight deadline for their return. He conceded that he did not know whether they were received by the Federal Reserve Bank before the midnight deadline. All he could say with certainty was that they were received before 6:00 p.m. the following day.

The first batch of checks was-presented to Wells Fargo Ohio on March 27. Wells Fargo Ohio returned this batch to the Federal Reserve Bank on March 29, one day after its midnight deadline. The second and third batches were presented to Wells Fargo Ohio on Friday March 29. Wells Fargo Ohio returned these batches on Tuesday April 2, one day late. The fourth batch was presented on April 1 and returned on April 3, one day late.

Wells Fargo Ohio’s return of the checks to the Federal Reserve Bank appears to fit within the extension provided by Regulation CC. The only reasons the trial court recited for declining to permit this extension were that Wells Fargo Texas (1) knew or suspected that the Pate defendants were engaged in a check kite and (2) should be held to a higher duty because of its correspondent banking relationship with Citizens Bank.

We have already rejected the latter of these rationales. The banks’ correspondent banking relationship standing alone did not create a fiduciary or confidential relationship which would impose higher than ordinary duties of care on Wells Fargo Texas. See Aaron Fever & Sons, 731 F.2d at 122; Banco Urquijo, 861 F.Supp. at 1249; Peavy-Moore Lumber Co., 128 S.W.2d at 1162; Tillman County Bank, 257 S.W. at 206-08. Accordingly, Wells Fargo Texas had no obligation toward Citizens Bank with respect to the former’s knowledge or suspicion that the Pate defendants were engaged in a check kite. See Frost Natl. Bank, 241 F.3d at 874; Alta Vista State Bank, 897 F.2d at 934; Cumis Ins. Society, 736 F.Supp. at 1233; First Natl. Bank in Harvey, 898 F.Supp. at 1231; Citizens Natl. Bank v. First Natl. Bank, 347 So.2d 964, 967 (Miss.1977).

We have also concluded that Wells Fargo Texas and Wells Fargo Ohio were separate banks entitled to separate deadlines for processing checks under the U.C.C. See Tex. Bus. & Com.Code Ann. § 4.107; see Pulaski Bank & Trust Co., 759 S.W.2d at 733. Thus, any knowledge or suspicions attributable to Wells Fargo Texas would not impact Wells Fargo Ohio’s deadlines for returning the checks. Accordingly, Wells Fargo Ohio timely returned the checks.

Nevertheless, Regulation CC also requires that a paying bank notify the depositary bank if it “determines not to pay a check in the amount of $2,500 or more.” 12 C.F.R. § 229.33(a) (2005). The notice requirement is as follows:

If a paying bank determines not to pay a check in the amount of $2,500 or more, it shall provide notice of nonpayment such that the notice is received by the depositary bank by 4:00 p.m. (local time) on the second business day following the banking day on which the check was presented to the paying bank. If the day the paying bank is required to provide notice is not a banking day for the depositary bank, receipt of notice on the depositary bank’s next banking day constitutes timely notice. Notice may be provided by any reasonable means, including the returned check, a writing (including a copy of the check), telephone, Fedwire, telex, or other form of telegraph.

Id.

Each of the checks at issue exceeded $2,500. The court found that Wells Fargo Texas and Wells Fargo Ohio “intentionally delayed giving notice of return.” However, it is undisputed that Wells Fargo Ohio gave notice of nonpayment within the time required by Regulation CC, though it did not give notice as soon as it could have. Because Wells Fargo Ohio and Citizens Bank were dealing at arms length, Wells Fargo Ohio did not act in bad faith by attempting to shift the loss to Citizens Bank. See Frost Natl. Bank, 241 F.3d at 874; First Natl. Bank in Harvey, 898 F.Supp. at 1231; Citizens Natl. Bank, 347 So.2d at 969.

Accordingly, the record contains no evidence that Wells Fargo Ohio faded to timely return the checks or failed to give timely notice of nonpayment.

For the foregoing reasons, we sustain Wells Fargo Texas’s third issue and overrule Citizens Bank’s sole cross-issue. We sustain Wells Fargo Texas’s second and fourth issues in part and overrule them in part because of Wells Fargo Texas’s failure to timely forward the fourth batch of checks.

Damages

Wells Fargo Texas contends in its fifth issue that there is no evidence or factually insufficient evidence to support the court’s finding that Citizens Bank suffered damages from Wells Fargo Texas’s breach of its duty of ordinary care.

Section 4.103(e) provides:

The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount that could not have been realized by the exercise of ordinary care. If there is also bad faith, it includes any other damages the party suffered as a proximate consequence.

Tex. Bus. & Com.Code Ann. § 4.103(e) (Vernon 2002).

Here, we focus on only the batch of checks which Wells Fargo Texas failed to timely deliver to the Federal Reserve Bank. Wells Fargo Texas should have delivered this batch to the Federal Reserve Bank on Friday, March 29, but it delivered them a day late. Despite Wells Fargo Texas’s delay in delivering this batch of checks, it was still presented to Wells Fargo Ohio on the next banking day, Monday, April 1. As we have held, Wells Fargo Ohio timely returned this batch of checks and gave timely notice of nonpayment.

Because the checks were presented to Wells Fargo Ohio on the next banking day, the failure of Wells Fargo Texas to deliver them to the Federal Reserve Bank until the Saturday following its midnight deadline had no effect on the timing of Wells Fargo Ohio’s decision to return them. Stated another way, Citizens Bank could not have recovered the sums represented by these checks even if Wells Fargo Texas had exercised ordinary care and delivered them to the Federal Reserve Bank on Friday, March 29. See id.; SCADIF, 208 F.Supp.2d at 1376-77; Pulaski Bank & Trust Co., 759 S.W.2d at 726. Thus, there is no evidence to support the court’s damages finding. Accordingly, we sustain Wells Fargo Texas’s fifth issue.

Set-Off

Wells Fargo Texas contends in its sixth issue that the court erred in finding that: (1) $892,333 garnished by Citizens Bank from the Pate defendants’ account with Wells Fargo Texas under an agreed order was only a conditional set-off against the judgment for failure to timely return the checks; and (2) these garnished funds were not a set-off against the alternative judgment.

Because we will reverse and render a take-nothing judgment in favor of Wells Fargo Texas, we need not address this issue.

Conclusion

Wells Fargo Texas and Wells Fargo Ohio were separate banks entitled to separate deadlines for processing checks. The correspondent banking relationship between Wells Fargo Texas and Citizens Bank did not create a fiduciary relationship or otherwise impose a heightened duty of care on Wells Fargo Texas. Although Wells Fargo Texas did not timely forward one batch of checks to the Federal Reserve Bank, Citizens Bank suffered no damages as a result of this delay. Wells Fargo Texas and Wells Fargo Ohio otherwise timely processed the Pate defendants’ checks. Accordingly, we reverse the judgment and render judgment that Citizens Bank take nothing.

(Chief Justice GRAY concurring in the result with a note: “Appellant’s motion for rehearing is denied. The opinion and judgment dated September 7, 2005 are withdrawn, and the opinion and judgment of even date herewith are substituted therefor.”)

      . Checks written from a Wells Fargo Texas account and presented to the same bank (other than "for immediate payment over the counter”) would be treated as "on-us" items. See Tex Bus. & Com.Code Ann. §§ 4.105(2), 4.302(a)(1) & cmt. 1 (Vernon 2002). The U.C.C. requires more expedited processing for "on-us” items.

      . [C]heck kiting occurs when a "kite artist” uses checks drawn on his or her account at one bank to cover checks written on his or her account at another bank, and vice ver-sa, so that a circle is created in which no money is actually being deposited in either bank. Check kiting is illegal, and it requires the grant of immediate credit from both banks on the deposited checks from the other bank. Once one of the banks refuses to grant immediate credit ..., the kite collapses.

        Tex. First Natl. Bank v. Ng, 167 S.W.3d 842, 849 n. 6 (Tex.App.-Houston [14th Dist.] 2005, no pet. h.).

      .Citizens Bank would have lost about $2,000,000 even if it had been able to return this additional $3,000,000 in checks.

      . Citizens Bank makes similar allegations against Wells Fargo Ohio, but we focus here on the allegations against Wells Fargo Texas, the sole appellant.

      . Because only "Wells Fargo Bank, N.A., successor in interest to Wells Fargo Bank Texas, N.A.” perfected an appeal, Citizens Bank contends that Wells Fargo Texas cannot complain of any adverse findings regarding Wells Fargo Ohio. We disagree. The court’s primary finding of liability focuses on the acts and omissions of Wells Fargo Texas both alone and through Wells Fargo Ohio (for which the court held Wells Fargo Texas liable under a single business enterprise theory). The court’s alternative finding, which assumes that Wells Fargo Texas and Wells Fargo Ohio must be treated as separate legal entities, likewise holds Wells Fargo Texas liable for the acts and omissions of Wells Fargo Ohio, this time under an agency theory. Because Wells Fargo Texas was held liable at least in part because of the acts and omissions of Wells Fargo Ohio, we conclude that Wells Fargo Texas may challenge any adverse findings regarding Wells Fargo Ohio.

      . Controlled disbursement accounts were devised in part because for-profit organizations are prohibited by statute from earning interest on checking accounts (i.e. demand deposits). See 12 U.S.C.A. § 1832(a)(2) (West 2001); Phillips v. Wash. Leg. Found., 524 U.S. 156, 161, 118 S.Ct. 1925, 1928, 141 L.Ed.2d 174 (1998); Paulsen v. St. Bar of Tex., 55 S.W.3d 39, 42 (Tex.App.-Austin 2001, pet. denied).

      . We construe Wells Fargo Texas’s first issue as challenging Findings of Fact No. 46 (single business enterprise), No. 48 (single bank entity; Wells Fargo Ohio not entitled to separate deadline for processing checks), and the court's implied finding that Wells Fargo Texas was the payor bank.

      . 12 C.F.R. pt. 229 (collectively referred to as “Regulation CC”) contains the regulations promulgated by the Federal Reserve to implement the Expedited Funds Availability Act, 12 U.S.C.A. §§ 4001-4010 (West 2001 & Supp. 2005). NBT Bank, N.A. v. First Natl. Community Bank, 393 F.3d 404, 410-11 (3d Cir.2004).

      . "MICR” stands for magnetic ink character recognition. IBP, Inc. v. Mercantile Bank of Topeka, 6 F.Supp.2d 1258, 1265 (D.Kan.1998). At the bottom of a check, "[t]he MICR encoding consists of a check number, the payor bank’s American Bankers Association transit routing number, and the drawer's account number.” Id.

      . Unless otherwise indicated, the term "section” as used hereinafter refers to a section of the Texas Business and Commerce Code.

      . The former section 1.201(7) (which applies to this case) defined a "branch” to include "a separately incorporated foreign branch of a bank.” Business and Commerce Code, 60th Leg., R.S., ch. 785, § 1, sec. 1.201(7), 1967 Tex. Gen. Laws 2343, 2348 (amended 2003) (current version at Tex. Bus. & Com.Code Ann. § 1.201(b)(7) (Vernon Supp.2004-2005)). The 2003 amendment only renumbered this statute. Under this definition, Wells Fargo Ohio would appear to qualify as a “branch” of Wells Fargo Texas.

      . We construe Wells Fargo Texas’s fourth issue as a challenge to Finding of Fact No. 41 ("Wells Fargo Texas delayed the forward collection process”).

      . The cross-issue appears to challenge Findings of Fact Nos. 60 through 65, inclusive.

      .We construe Wells Fargo Texas’s second issue as challenging Findings of Fact No. 43 (good faith) and No. 44 (expeditious return).

      . We construe Wells Fargo Texas’s second issue as challenging Conclusions of Law Nos. 77 through 85, to the extent these conclusions determine that Wells Fargo Texas owed a duty of expeditious return under Regulation CC and breached that duty.

      . " 'Depositary bank’ means the first bank to take an item even though it is also the payor bank, unless the item is presented for immediate payment over the counter.” Tex. Bus. & Com.Code Ann § 4.105(2) (Vernon 2002); see also 12 C.F.R. § 229.2(o) (2005) ("Depositary bank means the first bank to which a check is transferred even though it is also the paying bank or the payee.”).

      . " 'Intermediary bank’ means a bank to which an item is transferred in course of collection except the depositary or payor bank.” Id. § 4.105(4) (Vernon 2002).

      . " 'Collecting bank' means a bank handling an item for collection except the payor bank.” Id. § 4.105(5) (Vernon 2002); see also 12 C.F.R. § 229.2(rr) (2005) ("Collecting bank means any bank handling a check for forward collection, except the paying bank.”).

      . Regulation CC provides in pertinent part that “a collecting bank handling a check for forward collection may be liable to a prior collecting bank, including the depositary bank, and the depositary bank’s customer.” 12 C.F.R. § 229.36(d) (2005). However, the Federal Reserve’s interpretive commentary explains that section 4.202 is "not superseded” by Regulation CC and that section 4.202 ”continue[s] to apply to the forward collection of a check and may apply to the return of a check.” Id. pt. 229, app. E, § XXII(D) (2005). Thus, it does not appear that Regulation CC imposes different obligations on a collecting bank than section 4.202 does.

      . The 2003 amendment only renumbered this statute. Compare Tex. Bus. & Com.Code Ann. § 1.304 (Vernon Supp.2004-2005) with Business and Commerce Code, 60th Leg., R.S., ch. 785, § 1, sec. 1.203, 1967 Tex. Gen. Laws. 2343, 2352 (amended 2003). Because the checks at issue were processed in 2002, the amended version of the statute does not apply.

      . It is trae that Citizens Bank’s allegations about the intent with which Wells Fargo Texas established the Pate defendants’ controlled disbursement account (i.e., to create float and delay payment of checks) could be characterized as "fraudulent” within the general understanding of that term. However, to establish that a bank owes a heightened duty of care toward another bank because of fraud or misrepresentation, we believe that it must be shown that the fraud or misrepresentation was directed toward the other bank seeking to impose the heightened duty of care.

      . The omitted portions are references to the record or to legal authorities.

      . Wells Fargo Services Co. in Minnesota handled the return of checks dishonored by Wells Fargo Ohio.

      . We construe Wells Fargo Texas’s fifth issue as a challenge to Finding of Fact No. 50.


source: Caselaw Access Project

author: Opinion by Chief Justice MORRISS.

license: Public Domain

text:
    Deborah Hix HENDERSON f/k/a Deborah Hix, Appellant, v. Michael R. LOVE, Appellee.
    No. 06-05-00048-CV.
    Court of Appeals of Texas, Texarkana.
    Submitted Sept. 7, 2005.
    Decided Nov. 30, 2005.

      Paul E. Mansur, Denver City, for appellant.
    Michael R. Love, Houston, pro se.
    Before MORRISS, C.J., RQSS and CARTER, JJ..
   OPINION

Opinion by Chief Justice MORRISS.

In 1999, Deborah Hix Henderson agreed to purchase from Michael R. Love a house in Avinger, Marion County, Texas, under an executory contract of sale, also known as a contract for deed, which financed the principal sum of $38,500.00. At the time of the contract, neither the contract nor any law required an annual accounting statement by Love. In 2001, changes to Section 5.077 of the Texas Property Code became effective which required Love, beginning in January 2002, to provide Henderson with an annual report, briefing her on certain financial details of the contract and imposing “liquidated damages” of $250.00 per day after January 31 for each year such report was not provided. Apparently, Love failed to provide such a report. In 2004, Henderson sued Love and his co-owner, Sylvia Allison, alleging they were “jointly and severely [sic]” liable for the daily “liquidated damages” because of that failure. The trial court determined that, as applied in this case, the section was unconstitutional. Henderson appeals the resulting summary judgment that she take nothing from Love.

We reverse the summary judgment and remand this case for further proceedings because we hold Section 5.077 of the Texas Property Code is not unconstitutional as properly applied, given that Chapter 41 of the Texas Civil Practice and Remedies Code also applies, conditioning and limiting the potential recovery under Section 5.077. We come to that conclusion in three logical steps:

(1) Section 5.077, standing alone, is at least constitutionally suspect;
(2) Chapter 41 applies, conditioning and limiting recovery under Section 5.077; and
(3) The statutory scheme which includes Section 5.077 and Chapter 41 is constitutional.

(1) Section 5.077, Standing Alone, Is at Least Constitutionally Suspect

At the time the Love-Henderson contract was signed, Section 5.077 did not apply to it. The statute applied to only those executory contracts of sale involving land in certain economically depressed counties near the Texas-Mexieo border. It also provided sanctions for its violation proportionate to the size of a contract’s monthly payments and required that advance notice be given a seller before such sanctions could be exacted. The 2001 amendments dramatically changed all of that.

Love contends the application of statutes and the associated penalties, as amended after the contract was in effect, impaired his contract in violation of the Texas Constitution. Because of Section 5.077’s retroactivity, the trial court granted Love a summary judgment on the basis that Section 5.077, as applied to this case, violated Article I, Section 16 of the Texas Constitution. That constitutional provision outlaws any “bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts.” Tex. Const. art. I, § 16. For the purpose of this discussion, we will briefly examine the prohibition of a statute “impairing the obligation of contracts” and will also touch on Article I, Section 13 of the Texas Constitution prohibiting excessive fines.

(a) Does Pre-2005 Section 5.077 Impair the Obligation of this Contract?

As it was before the 2005 changes, Section 5.077 provided, in pertinent part,

(a) The seller shall provide the purchaser with an annual statement in January of each year for the term of the executo-ry contract. If the seller mails the statement to the purchaser, the statement must be postmarked not later than January 31.

(c) A seller who fails to comply with Subsection (a) is liable to the purchaser for:

(1) liquidated damages in the amount of $250 a day for each day after January 31 that the seller fails to provide the purchaser with the statement; and
(2) reasonable attorney’s fees.

Tex. PROp.Code AnN. § 5.077. Act of May-18, 2001, 77th Leg., R.S., ch. 693, § 1, 2001 Tex. Gen. Laws 1326.

The Love-Henderson contract was signed June 16,1999. The Texas Property Code, as it then existed, required that a seller provide an annual accounting report only when the real property was in a county meeting three criteria: a per capita income averaging twenty-five percent below the state average, an unemployment rate twenty-five percent above the state average, and a location within 200 miles of an international border. Tex. PROp.Code Akn. § 5.091, Act of May 27, 1995, 74th Leg., R.S., ch. 994, § 3, 1995 Tex. Gen. Laws 4983-84. Effective September 1, 2001, the Code was amended, deleting the income and border requirements, thereby making Section 5.077 applicable state-wide. Act of May 18, 2001, 77th Leg., R.S., ch. 693, § 1, 2001 Tex. Gen. Laws 1319 (also renumbering Section 5.091 as Section 5.062). At the same time, the statutory sanctions were dramatically changed. Before the change, the sanctions were set at fifteen percent of the monthly payments on the contract; afterward, they became “liquidated damages” set at $250.00 per day.

When the constitutionality of a retroactive statute is challenged, we start with a presumption that a legislative enactment is constitutional. Barshop v. Medina Co. Underground Water Conservation Dist., 925 S.W.2d 618, 629 (Tex.1996). We presume the Legislature “understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience, and that its discriminations are based upon adequate grounds.” Smith v. Davis, 426 S.W.2d 827, 831 (Tex.1968) (quoting Tex. Nat’l Guard Armory Bd. v. McCraw, 132 Tex. 613, 126 S.W.2d 627, 634 (1939)). The wisdom or expediency of a law is for the Legislature to determine, not this Court. Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931, 934 (Tex.1996); Smith, 426 S.W.2d at 831. Further, the party challenging the constitutionality of a statute bears the burden of demonstrating that the enactment fails to meet constitutional requirements. Spring Branch Indep. Sch. Dist. v. Stamos, 695 S.W.2d 556, 558 (Tex.1985).

Any statute that releases a part of the obligation to perform the contractual obligation, or that to any extent amounts to a material change, or modifies it, unconstitutionally impairs the contract under Article I, Section 16 of the Texas Constitution. Cardenas v. State, 683 S.W.2d 128, 131 (Tex.App.-San Antonio 1984, no writ). The “obligation of a contract,” for purposes of the constitutional prohibition of impairment of contractual obligations, is defined as the law which binds the parties to perform their agreement. Price Pfister, Inc. v. Moore & Kimmey, Inc., 48 S.W.3d 341 (Tex.App.-Houston [14th Dist.] 2001, pet. denied). The laws in effect at the time a contract is executed are considered part of that contract. Hutchings v. Slemons, 141 Tex. 448, 174 S.W.2d 487, 490 (1943); Langever v. Miller, 124 Tex. 80, 76 S.W.2d 1025 (1934)). “[W]hen a legislative act pertaining to the judicial enforcement of contract rights reaches the point where its effect is to impair the obligation of contracts, it is void.” Slemons, 174 S.W.2d at 490.

Article I, Section 29 of the Texas Constitution declares that government does not have the general power to impair the rights protected by Article I, Section 16 of the Texas Constitution. Travelers’ Ins. Co. v. Marshall, 124 Tex. 45, 76 S.W.2d 1007, 1011 (1934). This expressly limits the state’s police power. Id. The prohibition against impairing the obligation of contracts is “emphatic, unambiguous and without exception; it applies alike to all contracts and protects all obligations of contracts from destruction or impairment by subsequent legislation.” Id.

Section 5.077 as it existed between September 1, 2001, and September 1, 2005, has been examined in the recently issued Flores v. Millennium Interests Ltd., No. 04-1003, 2005 Tex. LEXIS 733 (Tex. Sept. 30, 2005). Flores arose from three certified questions posed to the Texas Supreme Court by the United States Court of Appeals for the Fifth Circuit: (1) whether the statutory liquidated damages were recoverable when a timely accounting statement provided part, but not all, of the information required by Section 5.077(b); (2) whether the purchaser was required to prove actual harm or injury to recover the liquidated damages; and (3) whether Section 5.077⅛ “liquidated damages” fell within the definition of “exemplary damages” in Chapter 41 of the Texas Civil Practice and Remedies Code so a Section 5.077 claimant had to comply with Chapter 41 of the Texas Civil Practice and Remedies Code in order to recover liquidated damages under Section 5.077.

The Flores court, in a 6-3 decision, concluded that, when a Section 5.077 annual statement was timely provided, the omission of some required information from the statement did not trigger the liquidated damages of Section 5.077. The court also held that the Section 5.077 liquidated damages constituted a penalty and that Section 5.077 did not require a purchaser to prove any actual damages as a predicate to recovery. Because its answers allowed Flores no recovery, the court decided it was unnecessary to answer the question concerning applicability of Chapter 41 of the Texas Civil Practice and Remedies Code. The issue of Section 5.077’s constitutionality was not before the Texas Supreme Court.

As amended in 2001, the language of Section 5.077 — considered alone — could support “liquidated damages” in excess of $750,000.00 through August 31, 2005. That figure stands in stark relief to this contract, which originally financed $38,500.00. Section 5.077 could thus exact on this contract a penalty grossly in excess of the value of the entire contract — a penalty of approximately three-quarters of a million dollars on a contract which financed little more than five percent of that potential penalty. Thus, the effect could be not only to consume the entire value of the contract, but also to leave in its place a potential liability in the range of $700,000.00. We conclude that Section 5.077, as applied here, is constitutionally suspect as a possible impairment of the obligation of the Love-Henderson contract.

(b) Does Section 5.077 Impose an Excessive Fine?

While not argued to the trial court or to this Court, Article I, Section 13 of the Texas Constitution prohibits the imposition of “excessive fines.” A “fine” under Section 13 includes a civil penalty. Pennington v. Singleton, 606 S.W.2d 682, 690 (Tex.1980); State v. Galveston, Houston, & San Antonio Ry. Co., 100 Tex. 153, 97 S.W. 71, 78 (1906), rev’d on other grounds, 210 U.S. 217, 28 S.Ct. 638, 52 L.Ed. 1031 (1908). A fine becomes constitutionally excessive only in an extraordinary case in which the fine “becomes so manifestly violative of the constitutional inhibition as to shock the sense of mankind.” Pennington, 606 S.W.2d at 690 (quoting State v. Laredo lee Co., 96 Tex. 461, 73 S.W. 951, 953 (1903)). The wide latitude the state has in imposing fines is exceeded and denies due process “only where the penalty prescribed is so severe and oppressive as to be wholly dispropor-tioned to the offense and obviously unreasonable.” Pennington, 606 S.W.2d at 690 (quoting St. Louis, Iron Mountain & S. Ry. Co. v. Williams, 251 U.S. 63, 66-67, 40 S.Ct. 71, 64 L.Ed. 139 (1919)); see Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 44-48 (Tex.1998) (due process analysis of punitive damages).

Pennington found the pre-1979 treble damages scheme of Section 17.50(b) of the Texas Deceptive Trade Practices Act did not impose a constitutionally excessive fine. In reaching its conclusion, the court recited that the recovery “increased in a fixed proportion to” the actual loss and noted that “the amount of liability bore some relation to the offense.” See Pennington, 606 S.W.2d at 691. In the case at hand, there is no relation between the so-called “liquidated damages” of Section 5.077 and any actual damages — which are not required under Section 5.077. Also, it is difficult to see any relation between the offense — failing to provide an annual financial report — and the potential liability under Section 5.077 as it was before the 2005 amendments. Section 5.077, as it was, is also constitutionally suspect as potentially imposing an excessive fine.

Thus, we find the 2001-05 version of Section 5.077, standing alone, constitutionally suspect. We need not decide its constitutionality, however, because Section 5.077 does not stand alone.

(2) Chapter 41 Applies, Conditioning and Limiting Recovery of Section 5.077’s “Liquidated Damages”

On September 1, 1995, when Section 5.077 was first effective, and on September 1, 2001, when it was amended to make it applicable state-wide and to provide the liquidated damages questioned here, Chapter 41 of the Texas Civil Practice and Remedies Code was in existence in much its current form. See Tex. Civ. PRAC. & Rem.Code ANN. §§ 41.001-013 (Vernon 1997 & Supp.2005). And, by its terms, Chapter 41 applies to a Section 5.077 claim.

Chapter 41 broadly “applies to any action in which a claimant seeks damages relating to a cause of action.” Tex. Civ. Prac. & Rem.Code Ann. § 41.002(a). It limits “damages that may be awarded in an action subject to this chapter, including an action for which damages are awarded under another law of this state.” Tex. Civ. Prac. & Rem.Code ANN. § 41.002(b) (emphasis added). Notably, Chapter 41 expressly declares that it will control in any conflict with any other state law, except four statutes not relevant here. Tex. Civ. Prao. & Rem.Code Ann. § 41.002(c), (d).

More to the point, Chapter 41 also covers exemplary damages, which it defines as “any damages awarded as a penalty.” Tex. Civ. Prao. & Rem.Code Ann. § 41.001(5). As has recently been made clear, the “liquidated damages” recoverable under Section 5.077 of the Texas Property Code constitute a penalty. Flores, 2005 WL 2397521, at *2-3, 2005 Tex. LEXIS 733, at *7. Thus, the Section 5.077 “liquidated damages” fall squarely within Chapter 41⅛ definition of exemplary damages. See id. (Brister, J., dissenting). Therefore, within the plain language of Chapter 41, it applies to Section 5.077 “liquidated damages.”

Even if the plain language of Chapter 41 did not require us to conclude that Chapter 41 limits Section 5.077 recoveries, the generally accepted rules of statutory interpretation would lead us there. A penal statute, such as Section 5.077, should be strictly construed. Brown v. De La Cruz, 156 S.W.3d 560 (Tex.2004). We interpret a statute to avoid absurd conclusions or unjust discrimination if the statute is subject to a different, more reasonable interpretation. C & H Nationwide, Inc. v. Thompson, 903 S.W.2d 315, 322 n. 5 (Tex.1994). “Unless there is no alternative, a statute will not be interpreted so as to lead to a foolish or absurd result.” McKinney v. Blankenship, 154 Tex. 632, 282 S.W.2d 691, 698 (1955).

If possible, we construe statutes to avoid constitutional infirmities. Marcus Cable Assocs., L.P. v. Krohn, 90 S.W.3d 697, 706 (Tex.2002); In re Bay Area Citizens Against Lawsuit Abuse, 982 S.W.2d 371, 380 (Tex.1998); see also Tex. Gov’t Code Ann. § 311.021(1) (Vernon 2005). We do this because we presume the Legislature intended compliance with state and federal constitutions. Brady v. Fourteenth Court of Appeals, 795 S.W.2d 712, 715 (Tex.1990).

Thus, we hold Chapter 41 applies to Section 5.077 claims.

(S) The Statutory Scheme Which Includes Section 5.077 and Chapter 41 Is Constitutional

Chapter 41 provides that, before exemplary damages—which include Section 5.077 “liquidated damages”—may be recovered, more-than-nominal actual damages must be awarded to the claimant. Tex. Civ. PRAC. & Rem.Code Ann. § 41.004(a). Chapter 41 also limits such exemplary damages to no more than the greater of (a) $200,000.00, or (b) any non-economic damages found by a jury not to exceed $750,000.00, plus double the amount of economic damages. Tex. Civ. Prac. & Rem.Code Ann. § 41.008(b). Those restrictions would dramatically limit the Section 5.077 penalty and impose as a condition precedent that actual damages be proven, thus making Section 5.077 clearly constitutional as it fits within the legislative scheme.

Since Section 5.077, in light of the applicable Chapter 41, is constitutional as applied here, the summary judgment was improper and must be reversed. Since our holding cannot dispose of the case, we remand this case to the trial court for further proceedings consistent with this opinion.

      . Pleadings allege that Love owns the property with Allison. Allison did not join the contract at issue in this appeal and is not part of this appeal. Henderson’s action against Allison is still pending in the trial court, having been severed from Love's summary judgment to allow this appeal.

      . There is no question in this instance that the Legislature intended for Section 5.077 of the Texas Property Code to be applied retroactively. The enacting language of the 2001 amendments provides,
      The changes in law made by the ... application of Subsections (a) and (b), Section 5.077, Property Code, as amended and re-designated by this Act, ... apply to an exec-utory contract on or after September 1, 2001, regardless of when the contract was entered into.
      Act of May 19, 2001, 77th Leg., R.S., ch. 693, § 3(g), 2001 Tex. Gen. Laws 1328.

      . Subsection (b) details the report’s required contents: "the amount paid under the contract[,] ... the remaining amount owed[, and] ... the number of payments remaining.” If the seller collects taxes or insurance premiums from the buyer, the statement must also include “the amounts paid to taxing authorities on the purchaser’s behalf” and "amounts paid to insure the property on the purchaser's behalf.” If the seller has received insurance payments because of damage to the property, the statement must account for the insurance proceeds applied to the properly. Finally, if the seller has changed insurance coverage, the report must be accompanied with documentation showing the new insurance coverage. Tex. Prop.Code Ann. § 5.077(b). The report’s required contents are not at issue here.

      . We also note that the 2005 amendments of this section have again altered the penalties— to a maximum of $100.00 total for each annual statement not provided timely. If, however, the seller has conducted two or more such transactions within a twelve-month period, the penalty is $250.00 per day, capped at the fair market value of the property. That amendment does not contain any language that would make it retroactive in nature, and the enacting language likewise does not address its retroactivity. Act of May 26, 2005, 79th Leg., R.S., ch. 978, § 5, 1995 Tex. Gen. Laws 3282.

      . Our calculation assumes reports due annually January 2002 through January 2005, and accumulates daily liquidated damages of $250.00 beginning February 1 of each such year on each such report.

      . Because the record contains no proof of any actual damages or that there were no actual damages, we do not know whether, under Chapter 41, exemplary damages might be recoverable once a trial is conducted.

      . We realize Flores held that Section 5.077 does not require proof of actual damages. See Flores, at *2, 2005 Tex. LEXIS 733, at *6; Marker v. Garcia, No. 04-04-00708-CV, 2005 WL 2860020, *6, 2005 Tex.App. LEXIS 9034, at *18 (Tex.App.-San Antonio Nov. 2, 2005, no pet. h.). But we believe the court was speaking just of Section 5.077 standing alone and not speaking to whether the provisions of Chapter 41 apply. We also note that no constitutionality issue was before the Flores court.


author: WANDA McKEE FOWLER, Justice.

text:
    Sam GRIFFIN, a.k.a. Sam Gross, Appellant, v. The STATE of Texas, Appellee.
    No. 14-04-00822-CR.
    Court of Appeals of Texas, Houston (14th Dist.).
    Dec. 8, 2005.

      Nicole Wignall DeBorde, Houston, for appellant.
    Peyton Peebles, III, Alan Curry, Houston, for appellee.
    Panel consists of Justices FOWLER, EDELMAN, and GUZMAN.
   OPINION

WANDA McKEE FOWLER, Justice.

Appellant, Sam Griffin, was convicted of the felony offense of bail jumping. A jury found true two enhancement paragraphs and sentenced him to the minimum time allowed, twenty-five years’ imprisonment in the Institutional Division of the Texas Department of Criminal Justice. Appellant appeals, arguing three points of error: (1) certain evidence of prior convictions was improperly admitted; (2) the evidence was legally insufficient as to one of the enhancement paragraphs; and (3) the State violated appellant’s Sixth Amendment right to counsel under the United States Constitution by improperly commenting on his failure to call a previously-hired attorney to testify at his trial. We affirm.

Factual and Procedural Background

On October 6, 2003, appellant, Sam Griffin, was scheduled to go to trial for failure to register as a sex offender. He arrived at court on time for that morning’s session. At 11:55 a.m., following the State’s voir dire, the court released everyone for lunch with the strict instruction that all were to return at 1:00 p.m. Appellant never returned. The court dismissed the panel, forfeited appellant’s bond on the State’s motion, and issued a capias warrant. According to appellant, he had a car accident while returning a car a friend lent him, and so was unable to return to the courthouse until approximately 2:00 p.m. However, appellant did not attempt to contact the judge and explain what happened. Instead, he simply left the courthouse and his whereabouts were unknown for weeks.

Appellant was released originally on $20,000 bond pending trial for failure to register. The bondsman attempted to locate appellant after he failed to return to court, but was unable to do so. After several weeks, the bondsman contracted with Crime Stoppers to offer a reward for information leading to appellant’s arrest. The Houston Chronicle and local television news programs ran appellant’s picture and information. One of appellant’s co-workers identified appellant and gave information leading to appellant’s arrest. Following that arrest, appellant was charged and convicted for felony bail jumping. He testified in his own defense, but did not offer any testimony from the attorney who represented him in the failure to register case — although appellant claims to have informed that attorney of the entire situation at the time — nor did appellant call the friend to testify who had allegedly lent the wrecked car. Moreover, neither appellant nor the State’s investigator was able to produce a citation or accident report corroborating appellant’s statement.

The jury convicted appellant of felony bail jumping. During the punishment phase, the State had to prove two specific prior felony convictions because appellant pleaded “not true” to the two enhancement paragraphs. As proof, the State produced penitentiary packets (“pen” packets) for both offenses along with judgments and sentences. However, the State was unable to locate any fingerprint cards in the pen packet from appellant’s burglary conviction. The court admitted the pen packet over appellant’s objection because there was other corroborating evidence — namely, a physical description of appellant, date of birth, name, and information relating to an identifying tattoo. Additionally, appellant admitted in the guilt/innocence phase of the trial that he was indeed convicted of the burglary charge.

Appellant timely filed notice of appeal. On appeal, he raises three points of error. Taking each in turn, we affirm.

Analysis

I. Admissibility of Evidence

In his first point of error, appellant challenges the admission of evidence relating to the previous burglary conviction. The prosecution offered the evidence — certified copies of judgments along with a pen packet — during the punishment phase to prove one of the enhancement paragraphs. We review the admission of evidence for abuse of discretion. Montgomery v. State, 810 S.W.2d 372, 391 (Tex.Crim.App.1991, op. on reh’g). So long as the court’s decision was within the zone of reasonable disagreement, we will not disturb it on appeal. Id. Because we are reluctant to reverse an exercise of discretion, we will uphold it if there is any basis to sustain the court’s ruling, even if not the basis upon which the court relied. Romero v. State, 800 S.W.2d 539, 543 (Tex.Crim.App.1990).

Appellant argues the trial judge erred in admitting a pen packet and two judgments from a previous burglary conviction used to prove an enhancement paragraph. Appellant contends the admitted evidence was not sufficiently linked to him so, it was irrelevant. Although appellant admits that there is no exclusive method for linking pen packets and judgments to a defendant, he essentially argues that the State did not offer independent evidence that appellant was the person convicted of that previous offense because it failed to offer fingerprint evidence. ' Because we disagree the State did not offer any independent evidence, we overrule appellant’s first point of error.

The State may introduce authenticated copies of state prison records and certified copies of a judgment and sentence to show that a defendant committed another crime. Beck v. State, 719 S.W.2d 205, 210 (Tex.Crim.App.1986). However, they are not enough evidence on their own. Id.; see also, Perez v. State, 21 S.W.3d 628, 630 (TexApp.-Houston [14th Dist.] 2000, no pet.) (stating that the State must tie documents to defendant in order to make them relevant). The State must come forward with independent supporting evidence to prove the defendant is the person described in those documents. Beck, 719 S.W.2d at 210. Typically, the State will present fingerprints included in the pen packet, have a fingerprinting expert take fresh fingerprints from the defendant, and then conclude from comparison that the defendant on trial is the same person convicted of the previous offense. Id. Yet there is no exclusive method or type of evidence required. Id. at 209-10.

The supporting evidence need not precede the admission of a pen packet or judgment and sentence. Id. Thus, the evidence offered during the punishment phase and evidence admitted during the guilt/innocence phase of the trial can be considered by the jury. There was no objection to the admission of that evidence, and appellant does not contend on appeal that it was improperly before the jury.

While we address the legal sufficiency of the State’s evidence below, discussion of the independent evidence is necessary to our analysis here. The State introduced evidence of appellant’s sex, color, height, date of birth, name, alias, eye color, hair color, and identifying tattoo. In addition, the documents reflected the specific cause numbers for the previous actions — which are unique to each action — conviction dates, and the specific crime involved. Appellant, while testifying in the guilt/innocence phase, admitted to having the burglary conviction listed in the challenged documents. Admissions in open court are sufficient for proving a prior conviction. Beck, 719 S.W.2d at 210. Put together, the State tied the evidence to appellant and the trial court did not err in admitting this evidence and leaving it to the jury to determine if the State met its burden of proving true the enhancement paragraph. We overrule appellant’s first point of error.

II. Legal Sufficiency

In his second point of error, appellant argues the evidence was legally insufficient to prove the truth of the second enhancement paragraph — that he committed the burglary discussed above. In a legal sufficiency challenge, we employ the familiar standard of viewing the evidence in the light most favorable to the verdict. King v. State, 29 S.W.3d 556, 562 (Tex.Crim.App.2000). If any rational trier of fact could have found the essential elements of the offense beyond a reasonable doubt, we will affirm. Id.

We have already listed the identifying characteristics the State proffered to prove appellant was convicted of the robbery as alleged in the enhancement paragraph. Appellant admitted to the conviction, and that admission was part of the evidence considered during the punishment phase. The pen packet and judgment and sentence, though not sufficient on their own, were corroborated with the identifying characteristics of appellant and his confession. Viewed in the light most favorable to the verdict, the evidence is sufficient. We overrule appellant’s second point of error.

III. Improper Commenting on Appellant’s Attorney-Client Privilege

In his final point of error, appellant claims the prosecutor violated his Sixth Amendment right to counsel by improperly commenting on his failure to call a previously-hired attorney to testify. Specifically, appellant contends the prosecutor improperly commented on appellant’s invocation of his attorney-client privilege. Citing no direct authority, appellant argues these comments were constitutional violations of such a magnitude that they require us to reverse. The State rebuts that this point of error is waived because appellant’s objection at trial was different than the point of error he raises on appeal. The State is correct that appellant clearly objected on a different ground than the one he urges on appeal. Because even constitutional violations may be waived, we agree that we must determine first if the point of error, though perhaps constitutional in nature, is waived.

We note initially that improper comments during jury argument generally can be waived, even if the error alleged is constitutional. See, e.g., McLendon v. State, 167 S.W.3d 503, 510 (Tex.App.-Houston [14th Dist.] 2005, no pet.) (holding that a defendant may waive any objection to a prosecutor’s improper comment on the right to remain silent). It is well established that “[a] party is not excused from the procedural requirements for objecting at trial merely because an error involves a constitutional right.” Jimenez v. State, 32 S.W.3d 233, 235 (Tex.Crim.App.2000). A specific objection is required unless the constitutional right violated — if indeed violated — is (1) waivable only, or (2) an absolute, systemic requirement. Saldano v. State, 70 S.W.3d 873, 889 (Tex.Crim.App.2002). Few rights fall into those two categories. See id. at 888 (listing rights that are waivable only as the right to counsel and trial by jury, and listing as absolute systemic requirements jurisdiction of the person, subject matter jurisdiction, and a penal statute’s need for compliance with the Separation of Powers section of the state constitution). We turn now to appellant’s argument to determine if it is the sort of waivable-only right or absolute systemic requirement that may be raised for the first time on appeal.

Appellant claims the following italicized language in the State’s closing argument improperly commented on his invocation of the attorney-client privilege:

Ms. Gostyla: [The State] We also talked about investigators and how he had an investigator looking at the offense report that he swore existed. Don’t think for a minute he couldn’t have found John [the friend with whom defendant allegedly left the wrecked car].
The defense also could have subpoenaed Lance Hamm, the defendant’s attorney, and required him to come to court.
Ms. Marshall: [defendant’s attorney] Objection, Lance Hamm was subpoenaed to come to court. Arguing outside the scope of testimony.
The Court: Overruled.
Ms. Gostyla: They could have required Lance Hamm to come to court and testify that the defendant was genuinely confused, or had a war [sic] wreck, or told him about a car uyreck, or something like that. He’s not hear [sic] to say anything about that.

Appellant analogizes these comments to improper comments on a defendant’s Fifth Amendment right to remain silent and thus argues there is a constitutional violation. In this case, appellant asks us to hold that commenting on the use of the attorney-client privilege — not using privileged communications — is a constitutional violation. Appellant has cited no authority, and we know of none, establishing that comments on the use of the privilege, without more, amount to prejudicial use. However we will assume, arguendo, that the prosecutor’s comments were a constitutional violation solely to determine whether or not they may be raised for the first time on appeal.

Because the complaints are similar in nature, we, as appellant does, draw an analogy from these comments to improper comments to the jury on a defendant’s decision to invoke her Fifth Amendment right to remain silent. The rule against commenting on a defendant’s invocation of her right to remain silent is well known. See, e.g., Bustamante v. State, 48 S.W.3d 761, 764 (Tex.Crim.App.2001). Neither the court nor the prosecutor may comment on that invocation. Id. However, though such comments are a constitutional violation, a defendant waives her right to complain on appeal if she fails to make a timely, specific objection to those comments. See McLendon, 167 S.W.3d at 510. In contrast with the absolute protection for the right to remain silent, the protection of privileged attorney-client communications is more limited. See Murphy v. State, 112 S.W.3d 592, 602-03 (Tex.Crim.App.2003) (requiring not only prosecutorial use of attorney-client privileged communications, but also prejudice to the defendant resulting from that use), cert. denied, 541 U.S. 940, 124 S.Ct. 1660, 158 L.Ed.2d 363 (2004). Indeed, we know of no case law stating that the mere reference to the privilege is a constitutional violation — only the use of those communications in limited circumstances. Certainly, given the more limited protection, the attorney-client privilege does not command greater respect or protection under the law than the Fifth Amendment right to remain silent.

If a defendant may waive a complaint for improper commenting on her constitutional right to remain silent, it follows that she also may waive a complaint for other prosecutor comments on rights that may be grounded in the Constitution. We know of no case law holding that allegedly improper comments on the attorney-client privilege may not be waived. Accordingly, this situation does not represent the sort of right that is waivable only, nor an absolute systemic requirement. We hold that, like the Fifth Amendment right to remain silent, commenting upon a defendant invoking the attorney-client privilege, if a constitutional violation, is waiva-ble. We overrule appellant’s third point of error.

Conclusion

For the foregoing reasons, we overrule each of appellant’s points of error and affirm the judgment of the trial court.

      . Appellant goes by two names, "Sam Griffin” and "Sam Gross.” For simplicity, we use only the name "Sam Griffin.”

      . Appellant claimed at trial that he had received a citation at the accident scene for having no insurance.

      . There was some discrepancy from one witness regarding the location of this tattoo. However, it is the jury’s province to resolve those inconsistencies. Additionally, the witness did provide an explanation for why she may have indicated the tattoo is on appellant’s right hand, whereas everyone else agreed it is on his left hand. Such arguments go to weight and credibility, not admissibility.

      . Appellant argues that there is a discrepancy between conviction dates because the enhancement paragraph alleges a burglary conviction entered on January 2, 1986, whereas other documents admitted to prove the enhancement place the conviction date at December 20, 1984, with a final conviction date of January 2, 1986. Appellant attempts to elevate form over substance. Appellant was convicted on December 20, 1984, and placed on probation. Probation was revoked and appellant was finally convicted on January 2, 1986. It is well settled that a probated sentence is not a final conviction for enhancement purposes unless revoked. Ex Parte Langley, 833 S.W.2d 141, 143 (Tex.Crim.App.1992). Thus, the relevant conviction date is the date of revocation — the date on which there is a "final conviction.” Here, that is January 2, 1986, and there is no discrepancy.

      . We recognize that the typical judicial admission in this context would be to plead "true” to the enhancement paragraph. However, appellant was under oath and admitted to having a final conviction for burglary on the date stated in the enhancement paragraph. This admission made in open court, under oath, and in front of the jury certainly qualifies as sufficient evidence to tie the conviction to appellant.

      . Appellant cites Hardie v. State, 807 S.W.2d 319, 322 (Tex.Crim.App.1991), for the proposition that the State generally cannot comment upon an defendant's invocation of the right to counsel. However, that case neither addresses directly the invocation of the attorney-client privilege, nor states that commenting upon the right to counsel — which is a separate question from ours — would be error not requiring an objection at trial.