Arrow Industries, Inc. v. Zions First National Bank

ZIMMERMAN, Justice:

(concurring in the result).

I agree that this case should be remanded to the trial court because there were adequate allegations in the complaints to warrant further proceedings, under either tort or contract rubric, that could lead to the recovery of the damages spelled out in section 70A-4-103 of the Commercial Code. See Utah Code Ann. § 70A-4-103 (1981); U.C.C. § 4-103 (1978). However, I would make it clear that the question of whether the bank failed to act in good faith is quite a different issue than whether it failed to exercise ordinary care.

Section 70A-4-103 governs the remedies available in this case as a result of either a failure to exercise ordinary care or actions taken in bad faith. Section 70A-4-103(5) permits the collection of consequential (but not punitive) damages when “bad faith” is shown, but when nothing more is proven than a “failure to exercise ordinary care,” one may recover only “the amount of the item reduced by an amount which could not have been realized by the use of ordinary care.” 1 Utah Code Ann. § 70A-4-103(5) (1981). The concepts of “good faith” and its opposite, “bad faith,” as well as that of “ordinary care,” should not be casually smeared together under the rubric of “good faith and ordinary care,” as the majority appears to do at places in its opinion. This sort of casual use of terminology invites conceptual misunderstandings by the Bar, trial courts, and juries. In articulating the law, we should do so with some analytical precision. That is one of our primary obligations as an appellate court. See Johnson v. Rogers, 763 P.2d 771, 785 (Utah 1988) (Zimmerman, J., concurring in part, joined by Hall, C.J., Howe, A.C.J., and Stewart, J.).

. Because the damages specified in section 70A-4-103(5) are specially tailored for UCC violations and are more limited than what might be available at common law, the result of this statutory tailoring of damages is to make the contract or tort designation of the cause of action rather academic. Cf. Beck v. Farmers’ Ins. Exch., 701 P.2d 795, 801-02 (Utah 1985) (comparing range of damages available in tort and contract).