Reversed, Rendered in part, and Remanded in part. Opinion Filed August 7, 2014.




                                              S
                                  Court of Appeals
                                                  In The


                           Fifth District of Texas at Dallas
                                          No. 05-12-01370-CV

                                VIEWPOINT BANK, Appellant
                                                     V.
      ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY,
                           Appellee

                           On Appeal from the 416th Judicial District Court
                                        Collin County, Texas
                               Trial Court Cause No. 416-03472-2012

                                              OPINION
                              Before Justices Moseley, Francis, and Lang
                                     Opinion by Justice Moseley

        In settlement of an insurance claim, Allied Property and Casualty Insurance Company

issued checks jointly payable to its insured, Optimum Deerbrook, LLC, and Optimum’s

mortgagor, ViewPoint Bank. 1           Without ViewPoint’s endorsement or consent, Optimum

deposited the checks and obtained payment. ViewPoint did not receive the proceeds of the

checks. ViewPoint sued Allied and several others to obtain payment on the checks or on the

underlying insurance obligation.         Allied and ViewPoint filed cross-motions for summary

judgment. The trial court granted Allied’s motion and denied ViewPoint’s. The trial court

severed ViewPoint’s claims against Allied from the claims against the other parties and rendered
        1
          The checks were also payable to Optimum’s adjuster, Adjuster’s International. Adjusters endorsed the
checks and delivered them to Optimum. For simplicity, we refer only to Optimum and ViewPoint.
a final summary judgment in favor of Allied.

       We conclude Allied was not discharged from its liability on the underlying obligation or

the checks and ViewPoint is entitled to summary judgment on the checks under article 3 of the

UCC. We reverse the trial court’s judgment, render judgment for ViewPoint, and remand this

case to the trial court to determine the amount of prejudgment interest, reasonable attorney’s

fees, and postjudgment interest.

                                        BACKGROUND

       The facts are undisputed. ViewPoint was a mortgage holder on Optimum’s property and

was a loss payee on Optimum’s property insurance policy issued by Allied. The property was

damaged when Hurricane Ike struck the Texas coast in 2008. Optimum submitted claims to

Allied for the damage. Allied approved the claims and tendered insurance checks jointly payable

to Optimum and ViewPoint. Optimum endorsed the checks and deposited them in its bank

without ViewPoint’s endorsement. ViewPoint did not consent to Optimum’s negotiation of the

checks and did not receive any of the proceeds. ViewPoint sued Allied for breach of the

insurance policy and later added a claim under article 3 of the UCC to recover on the checks.

See TEX. BUS. & COM. CODE ANN. §§ 3.101–.605 (West 2002 & Supp. 2013).

       ViewPoint raises two issues on appeal: (1) the trial court erred by granting summary

judgment for Allied and denying ViewPoint’s motion for summary judgment; and (2) the checks

were lost, destroyed, or stolen under UCC section 3.309 rendering Allied liable on the

instruments.

                                    STANDARD OF REVIEW

       We review the trial court’s summary judgment de novo. Provident Life & Accident Ins.

Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003).        The standards for reviewing summary

judgments are well established and we follow them in reviewing this appeal. See TEX. R. CIV. P.


                                               –2–
166a(c); Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985) (traditional

summary judgment standards of review). In a traditional motion for summary judgment, the

party moving for summary judgment has the burden of showing no genuine issue of material fact

exists and that it is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Nixon,

690 S.W.2d at 548.

        When both parties move for summary judgment, each party bears the burden of

establishing it is entitled to judgment as a matter of law. City of Garland v. Dallas Morning

News, 22 S.W.3d 351, 356 (Tex. 2000). When the trial court grants one motion and denies the

other, we review the summary judgment evidence presented by both parties and determine all

questions presented. Id. The reviewing court should render the judgment the trial court should

have rendered or reverse and remand if neither party has met its summary judgment burden. Id.;

Employers Reinsurance Corp. v. Am. Sw. Ins. Managers, Inc., 261 S.W.3d 432, 435–36 (Tex.

App.—Dallas 2008, pet. denied).

                                                 DISCUSSION

    A. Allied’s Motion

        Relying on this Court’s decision in Benchmark Bank v. State Farm Lloyds, 893 S.W.2d

649 (Tex. App.—Dallas 1994, no writ), Allied moved for summary judgment on ViewPoint’s

breach of contract and UCC article 3 claims. Allied argued it satisfied its obligation under the

insurance contract by making the checks payable jointly2 to Optimum and ViewPoint and

delivering them to Optimum. Allied argued an insurer discharges its obligations to pay a

mortgagee when it delivers a check to the insured which is made out jointly to the insured and

mortgagee, notwithstanding the mortgagee’s claim that the insured wrongfully converted the

        2
          In this opinion we use the phrase joint payee to refer to nonalternative payees on an instrument, e.g.,
payable to John and Mary, as opposed to alternative payees, e.g., payable to John or Mary. See TEX. BUS. & COM.
CODE ANN. § 3.110(d) & cmt. 4.


                                                      –3–
funds. See Benchmark, 893 S.W.2d at 651.

       The Texas Supreme Court recently addressed the Benchmark decision in McAllen

Hospitals, LP v. State Farm Mutual Insurance Company of Texas, No. 12-0983, 2014 WL

1998245 (Tex. May 16, 2014). The issue in McAllen Hospitals was whether the hospital’s

statutory lien against proceeds of a personal injury settlement was paid where the settlement

checks payable to the patients and the hospital jointly were delivered to the patients and the

patients presented the checks for payment without the hospital’s endorsement or knowledge.

McAllen Hosps., 2014 WL 1998245, at *2–3. The supreme court recognized the UCC applied to

resolving the dispute: “Because this case involves State Farm’s use of negotiable instruments to

satisfy its underlying obligations, we turn to the Uniform Commercial Code (UCC), as codified

in the Texas Business and Commerce Code, to evaluate the parties’ dispute.” Id. Then the court

framed the issue as: “whether issuance of a draft made out jointly to two nonalternative payees,

one of whom presented the draft for payment without the endorsement of the other, discharges

the drawer’s obligation to the payee whose endorsement was not obtained.” Id.

       In resolving this issue, the court discussed the holding in Benchmark:

       The court of appeals [in Benchmark] held that (1) possession of the draft by one
       joint payee constitutes constructive possession by the other, and (2) Benchmark
       had no further recourse against the drawer after the drafts were honored and paid.
       As discussed below, while we agree with the court’s first holding, we disagree
       with its conclusion that the copayee had no further recourse against the drawer.

McAllen Hosps., 2014 WL 1998245, at *3.

       The supreme court held delivery of a check to one of the joint payees is constructive

delivery to all. Id.; see also TEX. BUS. & COM. CODE ANN. § 3.420 cmt. 1 (West 2002) (“If a

check is payable to more than one payee, delivery to one of the payees is deemed to be delivery

to all of the payees.”). However, this does not end the analysis. Under the UCC, “an instrument

is paid to the extent payment is made by or on behalf of a party obliged to pay the instrument,


                                              –4–
and to a person entitled to enforce the instrument.” McAllen Hosps., 2014 WL 1998245, at *3

(quoting TEX. BUS. & COM. CODE ANN. § 3.602(a)). When a check is payable to nonalternative

joint payees, one payee “acting alone is not entitled to enforce, and thus may not discharge, the

instrument.” Id.; see TEX. BUS. & COM. CODE ANN. § 3.110(d) (“If an instrument is payable to

two or more persons not alternatively, it is payable to all of them and may be negotiated,

discharged, or enforced only by all of them.”); id. § 3.301 (defining persons entitled to enforce

an instrument are holders, persons with the rights of a holder, or persons entitled to enforce under

section 3.309 or 3.418(d)).

       Thus, one of the joint payees, “acting alone, cannot be the holder or the person entitled to

enforce or negotiate the instrument because neither, acting alone, is the identified person stated

in the instrument.” TEX. BUS. & COM. CODE ANN. § 3.110(d) cmt. 4; see id. § 1.201(b)(21)

(defining holder). Because a joint payee acting alone is not a person entitled to enforce the

instrument, payment to that person does not discharge the obligation to pay the instrument. See

TEX. BUS. & COM. CODE ANN. § 3.602(a); McAllen Hosps., 2014 WL 1998245, at *3–4.

       The Supreme Judicial Court of Massachusetts applying these principles reached the

opposite conclusion from Benchmark.          See McAllen Hosps., 2014 WL 1998245, at *4

(discussing Gen. Motors Acceptance Corp. v. Abington Cas. Ins. Co., 602 N.E.2d 1085 (Mass.

1992) (GMAC)). The Massachusetts court recognized that holding otherwise would result in

“‘no assurance that all the joint payees would receive payment’” and would dissolve any

distinction between drafts made out to alternative copayees and drafts made out to nonalternative

copayees.” McAllen Hosps., 2014 WL 1998245, at *4 (quoting GMAC, 602 N.E.2d at 1088).

The Texas Supreme Court adopted the approach in GMAC as “representative of the better view.”

Id.

       Thus, the supreme court in McAllen Hospitals rejected Benchmark’s conclusion that the

                                                –5–
non-endorsing copayee (like ViewPoint) has no further recourse against the drawer (like Allied):

         Other jurisdictions have cited GMAC with approval and adopted its reasoning.
         See State ex rel. N.D. Housing Fin. Agency v. Ctr. Mut. Ins. Co., 720 N.W.2d 425,
         429–30 (N.D. 2006) (holding that forged endorsement by nonalternative copayee
         did not discharge drawer’s obligation to other copayee); Crystaplex Plastics, Ltd.
         v. Redevelopment Agency of City of Barstow, 77 Cal.App.4th 990, 92 Cal.Rptr.2d
         197, 203–04 (2000) (payee could maintain cause of action against drawer under
         UCC after copayee cashed check with forged endorsement). We join these
         jurisdictions and hold that delivery of a check to one copayee constitutes
         constructive delivery to all. However, because payment to one nonalternative
         copayee without the endorsement of the other is not payment to a “holder,” it does
         not discharge the drawer of either his liability on the instrument or his underlying
         obligation.

McAllen Hosps., 2014 WL 1998245, at *4.

         Allied relies on section 3.310(b)(1) and contends its obligation was discharged because

the checks were “paid.” TEX. BUS. & COM. CODE ANN. § 3.310(b)(1). 3 However, section

3.602(a) defines payment: an instrument is paid only to the extent payment is made to a person

entitled to enforce the instrument. Id. § 3.602(a). One joint payee acting alone cannot be a

holder or person entitled to enforce an instrument. Id. § 3.110(d); McAllen Hosps., 2014 WL

1998245, at *4. “Thus, under Section 1-201(20) X or Y, acting alone, cannot be the holder or

the person entitled to enforce or negotiate the instrument because neither, acting alone, is the

identified person stated in the instrument.” TEX. BUS. & COM. CODE ANN. § 3.110(d) cmt. 4.

Therefore, the checks were not paid to a person entitled to enforce them and section 3.310(b)(1)

does not discharge Allied’s obligation on the checks.

         We follow the supreme court’s holding that, “payment of a check to one nonalternative

copayee without the endorsement of the other does not constitute payment to a ‘holder’ and thus

         3
           (b) . . . if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same
extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken,
and the following rules apply:
           (1) In the case of an uncertified check, suspension of the obligation continues until dishonor of the check or
until it is paid or certified. Payment or certification of the check results in discharge of the obligation to the extent
of the amount of the check.


                                                          –6–
does not discharge the drawer of either his liability on the instrument or the underlying

obligation.” McAllen Hosps., 2014 WL 1998245, at *6. 4 Thus, payment to Optimum without

ViewPoint’s endorsement or consent did not discharge Allied’s liability on the checks or the

underlying obligation. Id. Accordingly, Allied was not entitled to summary judgment and the

trial court erred by granting Allied’s motion for summary judgment.

    B. ViewPoint’s Cross-Motion

         ViewPoint’s cross-motion for summary judgment alleged it was entitled to judgment as a

matter of law on the checks under article 3 of the UCC. ViewPoint contends it may recover on

the checks even though it does not have possession of the checks.

         Under section 3.310(b) if an uncertified check is taken for an obligation, the obligation is

suspended until the check is dishonored, or paid or certified. Payment or certification of the

check results in discharge of the obligation to the extent of the amount of the check. TEX. BUS.

& COM. CODE ANN. § 3.310(b)(1). If the check is dishonored and the payee has possession of the

check, the payee may enforce either the check or the obligation. Id. § 3.310(b)(3). If the payee

no longer has possession of the check because it was lost, stolen, or destroyed, the payee may not

enforce the underlying obligation against the drawer to the extent of the amount of the check and

the payee’s rights against the drawer are limited to enforcement of the check. Id. § 3.310(b)(4).

This case involves the last situation because ViewPoint, although it once had constructive

possession, no longer has possession of the checks.

         4
           Allied argues in a letter brief that if this Court “decides to overrule Benchmark Bank in light of McAllen
Hospitals, the new rule announced in this case should apply only prospectively.” We disagree. The supreme court
expressly rejected the holding in Benchmark that the payee had no recourse against the drawer after the drafts were
paid. McAllen Hosps., 2014 WL 1998245, at *3, *6. A decision of the Texas Supreme Court “operates retroactively
unless this Court exercises its discretion to modify that application.” Bowen v. Aetna Cas. & Sur. Co., 837 S.W.2d
99, 100 (Tex. 1992) (per curiam); Bowles v. Clipp, 920 S.W.2d 752, 759 (Tex. App.—Dallas 1996, writ denied);
Dees v. Bowles, 907 S.W.2d 626, 627–28 (Tex. App.—Dallas 1995, no writ). Although Allied did not cite Bowen in
its argument, that decision is clearly binding precedent on this issue. See Dees, 907 S.W.2d at 628 n.2. The
supreme court in McAllen Hospitals did not indicate its holding should apply only prospectively. Accordingly, the
decision in McAllen Hospitals applies in this case.


                                                        –7–
         According to comment 4 to section 3.310, there was uncertainty under the former UCC

provision regarding the case where a check was stolen from the payee, the payee’s signature was

forged, and the forger obtained payment. The last sentence of section 3.310(b)(4) addresses the

issue:

         If the payor bank pays a person not entitled to enforce the instrument, as in the
         hypothetical case, the suspension of the underlying obligation continues because
         the check has not been paid. Section 3-602(a). The payee’s cause of action is
         against the depositary bank or payor bank in conversion under Section 3-420 or
         against the drawer under Section 3-309.

TEX. BUS. & COM. CODE ANN. § 3.310 cmt. 4 (emphasis added).

         In turn, section 3.309 provides a person who is not in possession of an instrument is

entitled to enforce the instrument if:

         (1) the person seeking to enforce the instrument:

                    (A) was entitled to enforce the instrument when loss of possession
                    occurred; . . .

         (2) the loss of possession was not the result of a transfer by the person or a lawful
         seizure; and

         (3) the person cannot reasonably obtain possession of the instrument because the
         instrument was destroyed, its whereabouts cannot be determined, or it is in the
         wrongful possession of an unknown person or a person that cannot be found or is
         not amenable to service of process.

TEX. BUS. & COM. CODE ANN. § 3.309(a). The person seeking to enforce the instrument must

prove the terms of the instrument and the person’s right to enforce the instrument. Id.

§ 3.309(b). 5 Once that proof is made, section 3.308 applies as if the person had produced the

instrument. Id. 6 The court must also find that the person required to pay the instrument is


         5
           See also TEX. BUS. & COM. CODE ANN. § 3.301 (“‘Person entitled to enforce’” an instrument means . . .
(iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to section
3.309.”).
         6
             Section 3.308 provides in part:
         (b) If the validity of signatures is admitted or proved and there is compliance with Subsection (a),
         a plaintiff producing the instrument is entitled to payment if the plaintiff proves entitlement to

                                                        –8–
adequately protected against loss that might occur by reason of a claim by another person to

enforce the instrument. Id.

        Allied argues ViewPoint’s only remedy is a cause of action in conversion against the

depositary bank or the payor bank. See TEX. BUS. & COM. CODE ANN. § 3.420 & cmt. 1.

However, the comment to section 3.310 indicates the payee also has a cause of action against

drawer under section 3.309. Id. at § 3.309 cmt. 4. Moreover, the supreme court rejected the

same argument in McAllen Hospitals. McAllen Hosps., 2014 WL 1998245, at *5 (“While the

Hospital could have attempted to pursue the payor bank for relief directly, its failure to do so

does not affect State Farm’s obligations under the UCC.”) (footnote omitted). 7 We conclude the

conversion remedy provided by section 3.420 is not exclusive under these circumstances.

        Allied does not dispute that the first two parts of section 3.309(a) are satisfied.

ViewPoint had constructive possession of the checks and the loss of possession was not the

result of a transfer by ViewPoint or a lawful seizure. See id.; McAllen Hosps., 2014 WL

1998245, at *3 (holding delivery to one joint payee is delivery to all). The terms of the checks

are undisputed. The total amount of all the checks is $341,290.40.

        Allied argues the specific requirements of section 3.309(a)(3) are not met because the

checks were not lost or destroyed, and they are not in the wrongful possession of an unknown

person or a person who cannot be found or served. It is undisputed the checks were processed

through the banking system and are now in Allied’s possession. Allied attached sworn copies of

the front and back of each check to its motion for summary judgment. Thus, Allied contends

section 3.309 cannot apply because the checks are in the possession of a known person. We

        enforce the instrument under Section 3.301, unless the defendant proves a defense or claim in
        recoupment.
TEX. BUS. & COM. CODE ANN. § 3.308(B).
        7
          See also TEX. BUS. & COM. CODE ANN. § 3.414 cmt. 2 (under the revised UCC, the liability of the drawer
of an unaccepted draft is treated as a primary liability).


                                                     –9–
disagree.

       This case is analogous to the hypothetical described in comment 4 to section 3.310, “the

case in which the check given for the obligation was stolen from the payee, the payee’s signature

was forged, and the forger obtained payment.” TEX. BUS. & COM. CODE ANN. § 3.310 cmt. 4. In

that hypothetical, the forger obtained payment on the check just as Optimum did here without

ViewPoint’s endorsement. The difference between a forged and a missing endorsement is not

significant here. See Sw. Bank v. Info. Support Concepts, Inc., 85 S.W.3d 462, 465 (Tex. App.—

Fort Worth 2002) (finding no relevant distinction between an instrument with a missing

endorsement and one with a forged endorsement), aff’d, 149 S.W.3d 104 (Tex. 2004); Longview

Bank & Trust Co. v. First Nat’l Bank of Azle, 750 S.W.2d 297, 299 (Tex. App.—Fort Worth

1988, no writ) (“The situation of paying on an instrument missing a necessary endorsement is

analogous to paying on an instrument with forged or unauthorized endorsements.”). In both

cases, a person not entitled to enforce the checks has obtained payment, improperly, from the

bank and the checks will have been processed through the banking system and returned to the

drawer.

       The mechanism for enforcing the drawer’s liability on the instrument is explained in

comment 4 to section 3.310: “In the latter case [suit against the drawer under section 3.309], the

drawer’s obligation under Section 3-414(b) is triggered by dishonor which occurs because the

check is unpaid. Presentment for payment to the drawee is excused under Section 3-504(a)(i)

and, under Section 3-502(e), dishonor occurs without presentment if the check is not paid.” Id.

“The payee cannot merely ignore the instrument and sue the drawer on the underlying contract.

This would impose on the drawer the risk that the check when stolen was indorsed in blank or to

bearer.” Id.

       The drawer’s liability is described by the sections cited in comment 4. The drawer is

                                              –10–
obligated to pay a draft according to its terms at the time it was issued if the draft is dishonored.

Id. § 3.414(b). The unpaid payee in this situation cannot with reasonable diligence present the

draft because it has been processed and paid, albeit improperly, to the forger.              See id.

§ 3.504(a)(1). Therefore, presentment is excused. Id. When presentment is excused, dishonor

occurs without presentment if the instrument is not duly accepted or paid. Id. § 3.502(e).

       Allied contends the checks were not dishonored because ViewPoint admitted in its

appellant’s brief the checks were “not dishonored; they were paid, albeit improperly, to

Optimum.” It appears ViewPoint used the term to indicate the banks improperly paid the checks

rather than return them. In its reply brief, ViewPoint explains that counsel misspoke by using the

technical term dishonor in an imprecise manner. In any event, the misuse of the term does not

change the legal effect of the undisputed facts in this case. The checks may have been paid, but

they were not properly paid. See TEX. BUS. & COM. CODE ANN. § 3.602(a); McAllen Hosps.,

2014 WL 1998245, at *3–4, 6. As a result, the checks were dishonored under section 3.502(e)

because they were not properly paid and presentment was excused under section 3.504(a)(i). See

TEX. BUS. & COM. CODE ANN. § 3.310 cmt. 4.

       Allied argues this analysis ignores specific language of section 3.309(a)(3) and renders

that language surplusage.    We disagree. The language of section 3.309(a)(3) is not rendered

surplusage because that provision applies in situations where the instrument is in the possession

of an unknown person or person who cannot be served. But in the situation presented here,

where the checks were improperly paid and returned to the drawer, comment 4 to section 3.310

explains how the cause of action against the drawer under section 3.309 may be enforced. Id.

§ 3.310 cmt. 4.

       We consider the statute as a whole rather than focusing upon individual provisions in

isolation. TGS–NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011); In re

                                               –11–
Curry, 407 S.W.3d 376, 379 (Tex. App.—Dallas 2013, orig. proceeding). As discussed above,

several sections in article 3 explain the drawer’s liability on an instrument and how it may be

enforced under the code. See TEX. BUS. & COM. CODE ANN. § 3.310 cmt. 4. Allied’s reading of

the last clause of section 3.309(a)(3) in isolation ignores the comprehensive scheme established

by the UCC and the official comments which “provide valuable guidance to the meaning and

purpose of the Code as enacted in Texas.” Morgan Bldgs. & Spas, Inc. v. Turn–Key Leasing,

Ltd., 97 S.W.3d 871, 880 (Tex. App.—Dallas 2003, pet. denied); see also Manley v. Wachovia

Small Bus. Capital, 349 S.W.3d 233, 239–40 (Tex. App.—Dallas 2011, pet. denied) (rejecting

argument that lender was not a holder because it did not possess the note as overly technical and

placing undue weight on physical possession where lender mistakenly returned unpaid

promissory note to borrower).

       Moreover, Allied’s argument leads to the absurd result that the drawer is not discharged

from liability on either the underlying obligation or the checks, but the payee cannot enforce

either liability because the underlying obligation is suspended under section 3.310 and the payee

cannot sue on the checks under Allied’s limited reading of section 3.309(a)(3).         McAllen

Hospitals makes clear the drawer is not discharged by the improper payment to a joint payee

without a necessary endorsement. McAllen Hosps., 2014 WL 1998245, at *4–5. Thus, we

conclude the payee may sue the drawer under section 3.309 to enforce the drawer’s obligation on

the instrument.

       This conclusion is consistent with jurisdictions that have addressed the issue. The UCC

must be “liberally construed and applied to promote its underlying purposes and policies.” TEX.

BUS. & COM. CODE ANN. § 1.103(a). Those underlying purposes and policies are: “(1) to

simplify, clarify and modernize the law governing commercial transactions; (2) to permit the

continued expansion of commercial practices through custom, usage and agreement of the

                                              –12–
parties; and (3) to make uniform the law among the various jurisdictions.” Id. § 1.103(a)

(emphasis added); see also TEX. GOV’T CODE ANN. § 311.028 (“A uniform act included in a code

shall be construed to effect its general purpose to make uniform the law of those states that enact

it.”); Sw. Bank v. Info. Support Concepts, Inc., 149 S.W.3d 104, 110 (Tex. 2004).

       In McAllen Hospitals, the Texas Supreme Court chose to follow jurisdictions concluding

the drawer is not discharged where a check payable to nonalternative copayees is paid without a

necessary endorsement. McAllen Hosps., 2014 WL 1998245, at *4 (citing State ex rel. N.D.

Housing, 720 N.W.2d at 429–30; GMAC, 602 N.E.2d at 1088; Crystaplex, 92 Cal.Rptr.2d at

203–04). Those jurisdictions also recognize the unpaid payee may enforce the checks against the

drawer under section 3.309. See State ex rel. N.D. Housing, 720 N.W.2d at 431 (“Applying the

rationale of GMAC and Crystaplex, we conclude Center Mutual is liable to NDHFA on the

instrument.”); GMAC, 602 N.E.2d at 1088–89 (under prior UCC); Crystaplex, 92 Cal.Rptr.2d at

204 (“We therefore conclude that Crystaplex has alleged a cause of action for recovery of the

amount of the check from the drawer of the check, defendant Redevelopment Agency. The

Redevelopment Agency may proceed to recover its loss from the subcontractor that apparently

forged the endorsement on the check, or against the bank that honored the forged check.”); see

also Impac Funding Corp. v. Amica Mut. Ins. Co., No. 1:12-CV-873-RWS, 2013 WL 1136860,

at *6–7 (N.D. Ga. Mar. 18, 2013).

       We follow these jurisdictions and construe the UCC to allow enforcement of the drawer’s

liability on the instruments where the instruments have improperly been paid on a missing

endorsement. To hold otherwise “would result in ‘no assurance that all the joint payees would

receive payment’ and would dissolve any distinction between drafts made out to alternative

copayees and drafts made out to nonalternative copayees.” McAllen Hosps., 2014 WL 1998245,

at *4 (quoting GMAC, 602 N.E.2d at 1088).

                                              –13–
          Allied cites two federal district court opinions which held on similar facts that a payee

could not hold the drawer liable on either the underlying obligation or the instruments under

section 3.309. See Bank of Am. Nat. Trust & Sav. Ass’n v. Allstate Ins. Co., 29 F. Supp. 2d 1129,

1144–45 (C.D. Cal. 1998); Ne. Bank v. Wells Fargo Bank, N.A., No. CIV. 11-3233 JNE/JJG,

2012 WL 2721635 at *3–4 (D. Minn. July 9, 2012). The Texas Supreme Court rejected both

conclusions in McAllen Hospitals and held the drawer was not discharged from “either his

liability on the instrument or the underlying obligation.” McAllen Hosps., 2014 WL 1998245, at

*6. We decline to follow Bank of America or Northeast Bank.

          We also conclude Allied is adequately protected against additional claims on the checks.

See TEX. BUS. & COM. CODE ANN. § 3.309(b). Allied is in possession of the checks and is in no

danger of them falling into the hands of a holder in due course. Thus, Allied is adequately

protected against loss from a claim by another person to enforce the checks. Furthermore, Allied

has remedies against the banks that paid the checks without the necessary endorsement. See

McAllen Hosps., 2014 WL 1998245, at *5 n.6 (drawee bank may not charge its customer’s

account on an instrument that is not properly authorized); State ex rel. N.D. Housing, 720

N.W.2d at 431–32 (drawer has right to demand reimbursement for improperly paid check from

drawee bank); GMAC, 602 N.E.2d at 1089 (drawer may bring conversion suit against drawee

bank for payment of the check on a missing endorsement); Crystaplex, 92 Cal. Rptr. 2d at 202–

03 (payee may maintain action against drawer leaving drawer to cross-complain against any or

all of the other banks involved in check cashing process). “The Uniform Commercial Code

envisions this remedy, rather than requiring the innocent loss payee whose endorsement was

forged to directly sue the forger or the depositary bank.” State ex rel. N.D. Housing, 720 N.W.2d

at 432.

          Under the undisputed facts in this case, we conclude Allied is obligated to pay the checks

                                                –14–
to ViewPoint under the provisions of article 3 of the UCC. Accordingly, the trial court erred by

denying ViewPoint’s cross-motion for summary judgment.

    C. Attorney’s Fees and Interest

        ViewPoint requested an award of its reasonable and necessary attorney’s fees under

chapter 38 of the civil practice and remedies code. See TEX. CIV. PRAC. & REM. CODE ANN.

§§ 38.001–.006; 1/2 Price Checks Cashed v. United Auto. Ins. Co., 344 S.W.3d 378, 392 (Tex.

2011) (claim on check is a contract claim under TEX. CIV. PRAC. & REM. CODE ANN. §

38.001(8)).

        The affidavit of ViewPoint’s attorney presents the opinion that a lump sum amount is a

reasonable and necessary fee for ViewPoint’s claims against Allied. The affidavit describes the

attorney’s experience, recites the factors described in Arthur Andersen & Co. v. Perry Equip.

Corp., 945 S.W.2d 812, 818 (Tex. 1997), and states the attorney considered those factors. The

affidavit gives a brief description of the kinds of work done, then the opinion that $89,000 is a

reasonable and customary fee through the filing of the motion for summary judgment, and

additional amounts for fees in case of appeal. However, the affidavit does not state the hourly

rates of the attorneys performing the services or the number of hours worked by those attorneys.

Allied did not challenge the affidavit or present evidence contradicting the amount of attorney’s

fees stated in the affidavit.

        It is not necessary that the record include evidence on each of the Arthur Andersen

factors. See Brockie v. Webb, 244 S.W.3d 905, 909–10 (Tex. App.—Dallas 2008, pet. denied).

While documentary evidence is not a prerequisite to an award of attorney’s fees, the claimant

must present evidence to support a finding that the amount of the fee is reasonable. See In re

A.B.P., 291 S.W.3d 91, 99 (Tex. App.—Dallas 2009, no pet.) (documentary evidence not a

prerequisite to award of attorney’s fees).


                                              –15–
       Generally, the nature and extent of the attorney’s services are expressed by the number of

hours worked and the hourly rate. Brockie, 244 S.W.3d at 909. However, there is no rigid

requirement that both facts be introduced into evidence to support a finding attorney’s fees are

necessary and reasonable. Id; Hays & Martin, L.L.P. v. Ubinas–Brache, M.D., 192 S.W.3d 631,

636 (Tex. App.—Dallas 2006, pet. denied). In Hays & Martin, this Court affirmed an award of

attorney’s fees where the evidence did not include evidence of the number of hours spent

working on the case. Hays & Martin L.L.P., 192 S.W.3d at 637. But the attorney in that case

testified to the hourly rates of the attorneys working on the case and the complexity of the case.

Id. Where a court has the total fee and either the hourly rates or the time necessary for the legal

tasks, it can easily calculate the missing term in determining the reasonableness of the fee. See

Hagedorn v. Tisdale, 73 S.W.3d 341, 353–54 (Tex. App.—Amarillo 2002, no pet.) (while court

did not have total number of hours spent on case by each lawyer, it had means to determine

approximate number of hours spent based on testimony as to the total fees and hourly rates of

each person who worked on case).

       The affidavit of a party’s attorney regarding reasonable attorney’s fees is expert

testimony that will support an award of attorney’s fees in a summary judgment proceeding. Ellis

v. Renaissance on Turtle Creek Condo. Ass’n, Inc., 426 S.W.3d 843, 857 (Tex. App.—Dallas

2014, pet. filed). And testimony from an interested witness that “is not contradicted by any other

witness, or attendant circumstances, and the same is clear, direct and positive, and free from

contradiction, inaccuracies, and circumstances tending to cast suspicion thereon, it is taken as

true, as a matter of law.” Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 547 (Tex. 2009)

(quoting Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990) (per

curiam)). This is especially true where the opposing party had the means and opportunity to

disprove the testimony but failed to do so. Id.; see also Garcia v. Gomez, 319 S.W.3d 638, 641

                                              –16–
(Tex. 2010) (“The attorney’s testimony is not objectionable as merely conclusory because the

opposing party, or that party’s attorney, likewise has some knowledge of the time and effort

involved and if the matter is truly in dispute, may effectively question the attorney regarding the

reasonableness of his fee.”).

       Here, while the affidavit gives a general description of the services performed, such as

conferring with the client, drafting pleadings, preparing and responding to discovery, researching

the applicable law, and preparing and responding to motions for summary judgment, it does not

state the number of hours expended or the hourly rates charged for the services. Thus, we have

only the total amount of the fee and no way to determine whether the time spent on specific tasks

was reasonable or the hourly rates charged were reasonable. Nor does the affidavit indicate the

fee was determined on some alternative billing arrangement, such as a flat-fee or percentage of

recovery, or whether that arrangement would be reasonable in this type of case.

       In Brockie, this Court held the evidence was factually insufficient to support the amount

of reasonable and necessary attorney’s fees incurred in defending a counterclaim because there

was no evidence of the number of hours expended, the hourly rates charged, or the specific

services performed. Brockie, 244 S.W.3d at 911. The only evidence regarding the fees for

defending the counterclaim was a lump sum amount on another attorney’s bill to the client and

that attorney’s testimony that the fees were reasonable and necessary. Id.

       Furthermore, uncontradicted testimony does not mandate an award of the amount claimed

in all cases. See Smith, 296 S.W.3d at 547–48; Ragsdale, 801 S.W.2d at 882. “[T]he fee, though

supported by uncontradicted testimony, was unreasonable in light of the amount involved and the

results obtained, and in the absence of evidence that such fees were warranted due circumstances

unique to this case.” Smith, 296 S.W.3d at 548.

       The affidavit in this case, even though not controverted, is not clear about the method

                                              –17–
used to determine the amount of attorney’s fees. The supreme court has cautioned that in many

cases generalities about an attorney’s services may not be sufficient to support a finding of the

amount of reasonable and necessary attorney’s fees. See Long v. Griffin, No. 11-1021, 2014 WL

1643271, at *2–3 (Tex. Apr. 25, 2014) (per curiam); City of Laredo v. Montano, 414 S.W.3d

731, 736–37 (Tex. 2013) (per curiam); El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 763 (Tex.

2012); see also In re Marriage of Pyrtle, 433 S.W.3d 152, 167 (Tex. App.—Dallas 2014, no. pet.

h.) (concluding evidence was insufficient to support attorney’s fees where record did “not show

the reasonableness of the hourly rate stated by [client], the ‘performance of specific tasks,’ the

‘time required for those tasks,’ or the ‘person who performed the work’”) (quoting El Apple, 370

S.W.3d at 765, 763).

       We conclude the summary judgment evidence fails to establish as a matter of law the

amount of reasonable and necessary attorney’s fees ViewPoint is entitled to recover.

Accordingly, we cannot render judgment for attorney’s fees and must remand the claim for

attorney’s fees to the trial court. See Long, No. 11-1021, 2014 WL 1643271, at *3; Montano,

414 S.W.3d at 736–37; El Apple, 370 S.W.3d at 764.

       ViewPoint requested an award of prejudgment interest in its cross-motion for summary

judgment. However, the record does not contain the information necessary to determine the

amount of prejudgment interest due on the check claim. See Long v. Castle Texas Prod. Ltd.

P’ship, 426 S.W.3d 73, 77 (Tex. 2014); Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc.,

962 S.W.2d 507, 531 (Tex. 1998) (prejudgment interest begins to accrue on the earlier of (1) 180

days after the date a defendant receives written notice of a claim or (2) the date suit is filed).

       ViewPoint failed to establish the amounts of reasonable and necessary attorney’s fees or

prejudgment interest to which it is entitled. Thus, it is not entitled to summary judgment for

these amounts.

                                                 –18–
                                        CONCLUSION

       We conclude the trial court erred by granting Allied’s motion for summary judgment and

denying ViewPoint’s cross-motion. We sustain ViewPoint’s issues in part and deny them in

part. We reverse the trial court’s judgment, render judgment ViewPoint recover the total amount

of the checks from Allied, and remand this cause to the trial court for determination of the

amount of reasonable and necessary attorney’s fees and pre- and post-judgment interest pursuant

to Chapter 304 of the Finance Code.




                                                 /Jim Moseley/
                                                 JIM MOSELEY
                                                 JUSTICE

121370F.P05




                                             –19–
                                        S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                        JUDGMENT

VIEWPOINT BANK, Appellant                           On Appeal from the 416th Judicial District
                                                    Court, Collin County, Texas
No. 05-12-01370-CV         V.                       Trial Court Cause No. 416-03472-2012.
                                                    Opinion delivered by Justice Moseley.
ALLIED PROPERTY AND CASUALTY                        Justices Francis and Lang participating.
INSURANCE COMPANY, Appellee

        In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and judgment is RENDERED that appellant VIEWPOINT BANK have judgment
against and recover from appellee ALLIED PROPERTY AND CASUALTY INSURANCE
COMPANY the total amount of $341,290.40.

        This cause is REMANDED to the trial court for determination of the amount of
reasonable and necessary attorney’s fees and pre- and post-judgment interest pursuant to Chapter
304 of the Finance Code.

       It is ORDERED that appellant VIEWPOINT BANK recover its costs of this appeal from
appellee ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY.


Judgment entered this 7th day of August, 2014.




                                             –20–
