A state appellate court in Texas affirmed a take-nothing judgment in favor of Jack in the Box, rejecting a bankruptcy trustee’s claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and various statutory and equitable claims. Garner v. Jack in the Box Inc., 2025 WL 2884213 (Tex. Ct. App. Oct. 9, 2025).
Jack in the Box terminated its franchise and lease agreements with multi-unit franchisee J&D, and sued J&D to force it to stop operating under the Jack in the Box marks and system. After J&D filed for bankruptcy, however, trustee Garner intervened in the suit, asserting eleven claims to recover for the bankruptcy estate. Garner generally alleged that Jack in the Box had failed to support the J&D restaurants when they were struggling and improperly withheld consent to proposed sales of those restaurants. Following two rounds of summary judgment and a multi-week jury trial, the jury rejected many of Garner’s claims but found for Garner on her implied-covenant claim and awarded $8 million in damages. After trial, the court set aside these damages, entered judgment notwithstanding the verdict, granted Jack in the Box’s request to disregard the jury’s findings, and signed a final judgment that Garner take nothing. Garner appealed.
The appellate court affirmed. It held that Jack in the Box owed no implied duty of good faith and fair dealing under the lease agreements governed by Texas law. In doing so, it cited precedent from the Supreme Court of Texas holding there is not an implied covenant of good faith and fair dealing in every contract under Texas law. The appellate court further held that Garner’s California implied-covenant theory was duplicative of her failed contract claim, and found no evidence supporting California Unfair Practices Act liability, as the alleged conduct was attributable to a separate Jack in the Box affiliate—but the jury question Garner submitted named the wrong Jack in the Box entity. The appellate court further upheld the jury’s and trial court’s rejection of Garner’s remaining claims.