Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Tuesday, June 21, 2011

Elements of Negligence cause of action

What are the elements of a cause of action for negligence under Texas law? A negligence cause of action has three elements: (1) a legal duty owed by one person to another, (2) a breach of that duty, and (3) damages proximately caused by the breach. D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). No duty of care - No viable lawsuit based on negligence The threshold inquiry in a negligence case is duty. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995); Mathis v. RKL Design/Build, 189 S.W.3d 839, 844 (Tex. App.—Houston [1st Dist.] 2006, no pet.). When does duty exist - when not? The existence of duty is a question of law for the court to decide from the facts surrounding the occurrence at issue. Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex. 1998); Siegler, 899 S.W.2d at 197; Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990). “The nonexistence of a duty ends the inquiry into whether negligence liability may be imposed.” Van Horn, 970 S.W.2d at 544. Generally, no duty exists to take action to prevent harm to others absent certain special relationships or circumstances. Torrington Co. v. Stutzman, 46 S.W.3d 829, 837 (Tex. 2000). SOURCE: Houston Court of Appeals - 01-10-00078-CV - 6/9/11 RELATED LEGAL TERMS: negligent conduct, omission, failure to act, exercise care, tort claims, claims sounding in tort, no fiduciary relationship, duty of care

Monday, June 20, 2011

Legal Malpractice - Elements of claim by client against attorney

When is lously lawyering actionable? Elements of legal malpractice in Texas: To recover on a claim of legal malpractice a plaintiff must prove: (1) the attorney owed the plaintiff a duty; (2) the attorney breached that duty; (3) the breach proximately caused the plaintiff’s injuries; and (4) damages occurred. Alexander v. Turtur & Associates, Inc., 146 S.W.3d 113, 117 (Tex. 2004); Peeler v. Hughes & Luce, 909 S.W.2d 494, 496 (Tex. 1995). Privity, which refers to the contractual connection or relationship existing between attorney and client, is directly related to the existence of duty and is necessary for a plaintiff to have standing to bring a legal malpractice claim. Thompson v. Vinson & Elkins, 859 S.W.2d 617, 621 (Tex.App.--Houston [1st Dist.] 1993, writ denied). SOURCE: El Paso Court of Appeals - 08-10-00168-CV - 615/11 RELATED LEGAL TERMS: attorney malpractice, legal malpractice, grievance, professsional competence, incompetence, inadequate or incompetent legal representation, former client's suits against lawyer

What constitutes gross negligence under Texas law?

LEGAL DEFINITION OF GROSS NEGLIGENCE When does negligent conduct amount to gross negligence? Gross negligence is “an act or omission involving subjective awareness of an extreme degree of risk, indicating conscious indifference to the rights, safety, or welfare of others.” State v. Shumake, 199 S.W.3d 279, 287 (Tex. 2006) (citing Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 21 (Tex. 1994)). Gross negligence, as applied under the recreational-use statute, involves two components: (1) viewed objectively from the actor's standpoint, the act or omission must involve an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and (2) the actor must have actual, subjective awareness of risk involved, but nevertheless proceeds in conscious indifference to the rights, safety, or welfare of others. See Miranda, 133 S.W.3d at 225. Extreme Degree of Risk Gross negligence involves not only actual knowledge of a risk, but knowledge of an extreme degree of risk, considering the probability and magnitude of potential harm to others. Miranda, 133 S.W.3d at 225; see also Moriel, 879 S.W.2d at 22 (“extreme degree of risk” for gross negligence not satisfied by remote possibility of injury or high probability of minor harm, but rather “likelihood of serious injury”). SOURCE: Dallas Court of Appeals - 05-10-00511-CV - 6/14/11 (Plaintiff failed to create a fact issue as to his allegations of gross negligence in suit against governmental entity)

Saturday, June 18, 2011

Mental anguish damages

How to properly prove mental anguish damages An award of mental anguish damages will survive a legal sufficiency challenge when the plaintiff has introduced (1) "direct evidence of the nature, duration, or severity of [plaintiff's] anguish, thus establishing a substantial disruption in the plaintiff's daily routine"; or (2) other evidence of "a high degree of mental pain and distress that is more than mere worry, anxiety, vexation, embarrassment, or anger." Parkway Co. v. Woodruff, 901 S.W.2d 434, 444 (Tex. 1995). Direct evidence may be in the form of the parties' own testimony, that of third parties, or experts. Id. "There must also be some evidence to justify the amount awarded"; Saenz v. Fid. & Guar. Ins. Underwriters, 925 S.W.2d 607, 614 (Tex. 1996), and the amount awarded must be fair and reasonable. Id. SOURCE: Generally, an award of mental anguish damages must be supported by direct evidence that the nature, duration, and severity of mental anguish was sufficient to cause, and caused, either a substantial disruption in the plaintiff’s daily routine or a high degree of mental pain and distress. Bentley v. Bunton, 94 S.W.3d 561, 606 (Tex. 2002). Citing Parkway Co. v. Woodruff, 901 S.W.2d 434, 444 (Tex. 1995) SOURCE: Tex. 2011 - 6/17/11 Service Corporation International [SCI] v. Guerra, No. 09-0941 (Tex. Jun 17, 2011)(Opinion by Phil Johnson) (insufficienct evidence of mental anguish damages)

Federal Preemption [affirmative defense against state-law claim]

When federal law overrides state law A state law that conflicts with federal law is preempted and has no effect. U.S. CONST. art. VI, cl. 2; Maryland v. Louisiana, 451 U.S. 725, 747 (1981); BIC Pen, 251 S.W.3d at 504. State law may be preempted in three ways: (1) expressly, by a federal law specifically preempting state law; (2) impliedly, by the scope of a federal law or regulation indicating Congress intended the federal law or regulation to exclusively occupy the field; or (3) impliedly, by the state law conflicting with a federal law or regulation to the extent it is impossible to comply with both or by the state law obstructing Congress’s objectives as reflected by the federal law. BIC Pen Corp. v. Carter, 251 S.W.3d 500, 504 (Tex. 2008) SOURCE: Texas Supreme Court - 6/17/11 - Bic Pen Corp. v. Carter II, No. 09-0039 (Tex. June 17, 2011)(Johnson)(product liability, cigarette lighter safety for children)

Tuesday, June 14, 2011

UDJA Fees when the case becomes moot

Statutory Legal Fees under the Texas version of the UDJA Attorneys' fees under the Declaratory Judgments Act [UDJA or DJA], chapter 37 of the Texas Civil Practice and Remedies Code. The Act provides, “In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney's fees as are equitable and just.” Tex. Civ. Prac. & Rem. Code Ann. § 37.009 (West 2008). A party to a declaratory-judgment action need not prevail in order to recover an award of attorneys' fees. Martin v. Cadle Co., 133 S.W.3d 897, 906-07 (Tex. App.-Dallas 2004, pet. denied); accord City of Temple v. Taylor, 268 S.W.3d 852, 858 (Tex. App.-Austin 2008, pet. denied). Mootness Doctrine “A case becomes moot if a controversy ceases to exist or the parties lack a legally cognizable interest in the outcome.” Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005). “A case is not rendered moot simply because some of the issues become moot . . . .” In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (orig. proceeding). “The mootness doctrine implicates subject matter jurisdiction.” City of Dallas v. Woodfield, 305 S.W.3d 412, 416 (Tex. App.-Dallas 2010, no pet.). “[W]hen a case becomes moot the only proper judgment is one dismissing the cause.” Polk v. Davidson, 196 S.W.2d 632, 633 (Tex. 1946); see also Woodfield, 305 S.W.3d at 416 (“If a case is moot, the appellate court is required to vacate any judgment or order in the trial court and dismiss the case.”). Texas Supreme Court authorities on fees and mootness The Texas Supreme Court has decided three cases that address the question of whether an outstanding claim for attorneys' fees will prevent the dismissal of an otherwise moot case. The first is Camarena v. Texas Employment Commission, 754 S.W.2d 149 (Tex. 1988). Camarena and others sued the Commission, seeking a declaratory judgment that a statute excluding most agricultural workers from the Texas Unemployment Compensation Act was unconstitutional. Id. at 150. The trial court granted Camarena the declaration he sought, but it denied his request for attorneys' fees based on sovereign immunity. Id. The legislature amended the statute to give farm workers phased- in unemployment coverage, and the trial court rendered an amended judgment holding the new statute constitutional. Id. The Commission appealed, contending that the case had become moot, and Camarena cross-appealed the denial of attorneys' fees. Id. The court of appeals held that the case was moot and that immunity barred Camarena's claim for fees. Id. at 150-51. The Texas Supreme Court, however, held that the claim for attorneys' fees was a live claim that prevented the case from becoming moot. Id. at 151. It further held that the fee claim was not barred because chapter 106 of the civil practice and remedies code waived sovereign immunity. Id. at 151-52. Thus, Camarena supports the proposition that a claim for attorneys' fees can prevent a case from becoming moot. Next, the supreme court decided Speer v. Presbyterian Children's Home & Service Agency, 847 S.W.2d 227 (Tex. 1993), a case heavily relied on by the Hansens in this appeal. In Speer, Speer sued the Agency under the Texas Commission on Human Rights Act for refusing to hire her as an adoption worker because of her religion. Id. at 228. She sought only declaratory and injunctive relief. Id. The trial court ruled for the Agency, this Court affirmed, and Speer appealed to the Texas Supreme Court. Id. While the case was pending in the supreme court, the Agency ceased offering adoption services and abolished the position for which Speer had applied. Id. The supreme court held that the case was therefore moot and had to be dismissed. Id. at 230. The court distinguished Camarena, holding that because Speer's declaratory and injunction claims had become moot, she could never be a prevailing party under the Texas Commission on Human Rights Act and therefore could never recover her attorneys' fees and costs. Id. at 229-30. The El Paso Court of Appeals subsequently elaborated on the distinction between Camarena and Speer. Citing Camarena, the court of appeals held that a claim for attorneys' fees can keep a declaratory-judgment case alive despite substantive mootness because a party does not have to prevail in order to recover its attorneys' fees under the Declaratory Judgments Act. Labrado v. Cnty. of El Paso, 132 S.W.3d 581, 589-91 (Tex. App.-El Paso 2004, no pet.). Speer was distinguishable because Speer sued under the Texas Commission on Human Rights Act, which required her to prevail in order to recover her attorneys' fees. Id. at 590. Because the mootness of her substantive TCHRA claim meant she could never prevail, a claim for fees could not keep her claim alive. Id. at 590-91. Finally, in the Allstate Insurance Co. case, the supreme court reaffirmed that a dispute over attorneys' fees under the Declaratory Judgments Act is a “live controversy” even if the substance of the case becomes moot during its pendency. Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005). In that case, Hallman was sued for property damage. Id. at 641. Her liability insurer, Allstate, provided her with a defense under a reservation of rights but commenced a declaratory- judgment action against Hallman contesting coverage of the property-damage claim. Id. The trial court granted summary judgment for Allstate and denied both sides their attorneys' fees, but this Court reversed, held that the claim was covered, and remanded for consideration of Hallman's claim for attorneys' fees. Id. at 642. While the case was on further appeal to the Texas Supreme Court, Hallman won the underlying property-damage case, and Allstate disclaimed any intention of seeking to recoup from Hallman its costs of defending the underlying case. Id. The supreme court cited Camarena and held that Hallman's continuing claim for attorneys' fees kept the case from becoming moot. Id. at 643 (“Hallman's remaining interest in obtaining attorney's fees 'breathes life' into this appeal and prevents it from being moot.”). Accordingly, the court proceeded to decide the merits of the coverage question because of the live attorneys' fees issue. Id. at 643-45. Thus, Allstate Insurance Co. confirms that a claim for attorneys' fees under the Declaratory Judgments Act will keep a case alive even if the request for substantive declaratory relief becomes moot. SOURCE: Dallas Court of Appeals - 05-09-01001-CV - 6/13/11 We conclude that Camarena and Allstate Insurance Co. stand for the proposition that a case under the Declaratory Judgments Act remains a live controversy, even if all requests for substantive declaratory relief become moot during the action's pendency, as long as a claim for attorneys' fees under the Act remains pending. See Tex. Dep't of Transp. v. Tex. Weekly Advocate, No. 03-09- 00159-CV, 2010 WL 323075, at *3 (Tex. App.-Austin Jan. 29, 2010, no pet.) (mem. op.) (“An appeal from the grant or denial of attorney's fees, at least with respect to a UDJA claim, is usually a separate controversy and can persist even when the underlying controversy is moot.”) (emphasis added) (citing Allstate Insurance Co. and Camarena in support). Thus, Chase's and Cramer's claims for attorneys' fees under the Declaratory Judgments Act kept this case from becoming moot even though the Hansens dropped their objection to the sale of the house and the house was actually sold. Speer does not apply to cases under the Declaratory Judgments Act, and the Hansens' reliance on Speer is thus misplaced. In support of their mootness argument, the Hansens also rely on cases such as MBM Financial Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660 (Tex. 2009), and City of Carrollton v. RIHR Inc., 308 S.W.3d 444 (Tex. App.-Dallas 2010, pet. denied). These cases are not on point. In each case, the appellate court concluded that a party could not use the Declaratory Judgments Act as a vehicle for recovering attorneys' fees when the declaratory-judgment claims merely duplicated other claims already before the trial court. See MBM Fin. Corp., 292 S.W.3d at 669-71; RIHR Inc., 308 S.W.3d at 454-55. The instant case, by contrast, was an action solely for declaratory judgment, so Chase's declaratory-judgment claims were not duplicative of any other claims. Accordingly, MBM Financial Corp. and similar cases are distinguishable. The Hansens also rely on two other cases that predate Allstate Insurance Co. These cases are not persuasive. In Ware v. Miller, the Amarillo Court of Appeals held that a plaintiff's claim for declaratory judgment “was rendered moot” during its pendency, and it therefore vacated the trial court's judgment (which awarded the plaintiff his attorneys' fees) and dismissed the appeal. 134 S.W.3d 381, 384-85 (Tex. App.-Amarillo 2003, pet. denied). It appears that the Ware court did not consider the possibility that the plaintiff's claim for fees under the Declaratory Judgments Act might have prevented the case from becoming moot. See id. In Kenneth Leventhal & Co. v. Reeves, Reeves sued the defendants for breach of contract and declaratory judgment, and he obtained a judgment awarding him no relief except for attorneys' fees. 978 S.W.2d 253, 256-57 (Tex. App.-Houston [14th Dist.] 1998, no pet.). The court of appeals reversed and rendered a take- nothing judgment against Reeves, holding that the judgment for fees could not be sustained under the Declaratory Judgments Act for two reasons. Id. at 258-60. First, Reeves's claim for declaratory judgment was duplicative of his claim for breach of contract, and so it could not enable him to recover fees that were otherwise not recoverable. Id. at 258-59. We agree with this reasoning. Second, the court concluded that Reeves's claim for declaratory relief had become moot during its pendency and therefore would not support an award of attorneys' fees to either side. Id. at 259-60. This reasoning is contrary to Allstate Insurance Co., which is binding on us, and so we decline to follow Reeves. Neither side cited our recent opinion in City of Richardson v. Gordon, 316 S.W.3d 758 (Tex. App.-Dallas 2010, no pet.). In Gordon, we addressed a fact-specific issue concerning attorneys' fees in relation to the Declaratory Judgments Act and governmental immunity. We conclude that Gordon is limited to its facts and should not be construed beyond its application to the discrete facts of that case. SOURCE: Dallas Court of Appeals - 05-09-01001-CV - 6/13/11

When are attorney's fees available in Texas?

TEXAS FOLLOWS THE "AMERICAN RULE" ON ATTORNEY FEES

Attorney's fees are recoverable only when provided for by statute or by the parties' agreement. Doss v. Homecomings Fin. Network, Inc., 210 S.W.3d 706, 711 (Tex. App.-Corpus Christi 2007, pet. denied) (citing Dallas Cent. Appraisal Dist. v. Seven Inv. Co., 835 S.W.2d 75, 77 (Tex. 1992)).

SOURCE: Houston Court of Appeals - 01-09-00816-CV - 5/28/11

Fees under Chapter 38 of the CPRC

An award of attorney's fees in a breach of contract claim is appropriate only if a party prevails and recovers damages. See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (West 2008) (allowing recovery of attorney's fees in valid claims involving oral or written contracts); State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 437 (Tex. 1995). SOURCE: Corpus Christi Court of Appeals - 13-09-00355-CV - 6/9/11

Fees under Chapter 37 of the CPRC UDJA FEES - Uniform Declaratory Judgment Act ("UDJA").

Reasonable and necessary attorney's fees may be awarded in any proceeding utilizing the UDJA if they are equitable and just. Id. at 711-12; see TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (Vernon 2008) ("In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney's fees as are equitable and just.").[2] "The UDJA is a procedural device for deciding cases already within a court's subject matter jurisdiction." Doss, 210 S.W.3d at 712 (citing TEX. CIV. PRAC. & REM. CODE ANN. §§ 37.001—.011 (Vernon 2008) and State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994)). "A litigant's request for declaratory relief cannot confer jurisdiction on the court, nor can it change the basic character of a suit." Id. (citing Morales, 869 S.W.2d at 947). The UDJA provides: A person interested under a deed, will, written contract, or other writings constituting a contract or whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder. TEX. CIV. PRAC. & REM. CODE ANN. § 37.004.

Appellate review of fee awards

We review a trial court's award of attorney's fees for an abuse of discretion. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998); see also Gilbert v. City of El Paso, 327 S.W.3d 332, 336 (Tex. App.-El Paso 2010, no pet.) ("An award of attorney's fees under the UDJA is within the trial court's discretion."). A trial court abuses its discretion when it acts without regard for any guiding rules or principles. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998). In Tony Gullo Motors I, L.P. v. Chapa, the Texas Supreme Court held that parties claiming attorney's fees must "segregate fees between claims for which they are recoverable and claims for which they are not" and are "required to show that attorney's fees were incurred while suing the defendant sought to be charged with the fees on a claim which allows recovery of such fees." 212 S.W.3d 299, 311 (Tex. 2006) (quoting Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991)). "Intertwined facts" do not make fees for unrecoverable claims recoverable. Id. at 313-14. "[I]t is only when discrete legal services advance both a recoverable and unrecoverable claim that they are so intertwined that they need not be segregated." Id. Thus, "[i]f any attorney's fees relate solely to a claim for which such fees are unrecoverable, the claimant must segregate recoverable from unrecoverable fees." 7979 Airport Garage, L.L.C. v. Dollar Rent A Car Sys., Inc., 245 S.W.3d 488, 506 (Tex. App.-Houston [14th Dist.] 2007, pet. denied) (citing Chapa, 212 S.W.3d at 313-14). The supreme court in Chapa further stated,
There may, of course, be some disputes about fees that a trial or appellate court should decide as a matter of law. For example, to prevail on a contract claim a party must overcome any and all affirmative defenses (such as limitations, res judicata, or prior material breach), and the opposing party who raises them should not be allowed to suggest to the jury that overcoming those defenses was unnecessary. But when, as here, it cannot be denied that at least some of the attorney's fees are attributable only to claims for which fees are not recoverable, segregation of fees ought to be required. . . .
Chapa, 212 S.W.3d at 314 (emphasis added).
Attorneys are not required to keep separate time records when drafting parts of a petition or completing other tasks that relate to claims for which attorney's fees are unrecoverable. 7979 Airport Garage, 245 S.W.3d at 506 (citing Chapa, 212 S.W.3d at 313-14). Rather, an attorney may testify, for example, "that a given percentage of the drafting time would have been necessary even if the claim for which attorney's fees are nonrecoverable had not been asserted." Id. The party seeking to recover attorney's fees bears the burden of demonstrating that segregation is not required. See Hong Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 455 (Tex. App.-Houston [1st Dist.] 2007, no pet.). [2] We also note that attorney's fees are recoverable for claims arising out of an oral or written contract. See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (Vernon 2008) ("A person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for . . . an oral or written contract.").

SOURCE: Houston Court of Appeals - 01-09-00816-CV - 5/28/11

Monday, June 13, 2011

Money Had and Received (MHnR) Theory of Recovery for Debt


MONEY HAD AND RECEIVED

Alternative theory for a debt suit when there is no contract or no prove of it

   
To recover on a claim for money had and received, a plaintiff must show that the defendant holds money that in equity and good conscience belongs to him. Staats v. Miller, 243 S.W.2d 686, 687 (Tex. 1951); Edwards v. Mid-Continent Office Distribs., L.P., 252 S.W.3d 833, 837 (Tex. App.-Dallas 2008, pet. denied).

A cause of action for money had and received is not based on wrongdoing, but, instead, "looks only to the justice of the case and inquires whether the defendant has received money which rightfully belongs to another." Everett v. TK-Taito, L.L.C., 178 S.W.3d 844, 860 (Tex. App.-Fort Worth 2005, no pet.); Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex. App.-El Paso 1997, no writ). In short, it is an equitable doctrine applied to prevent unjust enrichment. Hunt v. Baldwin, 68 S.W.3d 117, 132 (Tex. App.-Houston [14th Dist.] 2001, no pet.); Phippen v. Deere & Co., 965 S.W.2d 713, 725 (Tex. App.-Texarkana 1998, no pet.).

In defending against such a claim, a defendant may present any facts and raise any defenses that would deny the claimant's right or show that the claimant should not recover. Best Buy Co. v. Barrera, 248 S.W.3d 160, 162 (Tex. 2007).

SOURCE: Dallas Court of Appeals - 05-09-01397-CV- 4/22/11

MONEY-HAD-AND-RECEIVED CASELAW CLIP(S) AND CITES FROM OTHER COURTS OF APPEALS

"An action for money had and received is an equitable doctrine that courts apply to prevent unjust enrichment." London v. London, 192 S.W.3d 6, 13 (Tex. App.-Houston [14th Dist.] 2005, pet. denied) (citing Miller-Rogaska, Inc. v. Bank One, 931 S.W.2d 655, 662 (Tex. App.-Dallas 1996, no writ). "The cause of action is not premised on wrongdoing, but looks to the justice of the case and inquires whether the party has received money that rightfully belongs to another." Id. (citing Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex. App.-El Paso 1997, no writ). The question in an action for money had and received is to which party does the money, in equity and law, belong. Id. (citing Staats v. Miller, 150 Tex. 581, 243 S.W.2d 686, 687 (1951); Tri-State Chems., Inc. v. W. Organics, Inc., 83 S.W.3d 189, 194-95 (Tex. App.-Amarillo 2002, pet. denied)).
ALTERNATIVE CAUSES OF ACTION ON DEBT: breach of contract, credit card agreement or promissory note; open account, account stated, sworn account under TRCP 185, common law debt claim, suit on account

DISTINGUISH FROM: civil cause of action for theft, misappropriation, and conversion 

Friday, June 10, 2011

Temporary Injunction – When can the trial court judge grant immediate injunctive relief?

   
TEMPORARY INJUNCTION REQUIREMENTS 
 
Elements of claim for temporary injunctive relief A trial court has broad discretion in deciding whether to deny a temporary injunction. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). We review the denial of a temporary injunction for a clear abuse of discretion without addressing the merits of the underlying case. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993). We will uphold the trial court’s determination against issuing injunctive relief unless the trial court’s action was so arbitrary that it exceeded the bounds of reasonable discretion. Butnaru, 84 S.W.3d at 204. In reviewing the trial court’s exercise of discretion, the appellate court must draw all legitimate inferences from the evidence in the light most favorable to the trial court’s decision. EMS USA, Inc. v. Shary, 309 S.W.3d 653, 657 (Tex. App.—Houston [14th Dist.] 2010, no pet.). When, as here, no findings of fact or conclusions of law are filed, the trial court’s determination of whether to grant or deny a temporary injunction must be upheld on any legal theory supported by the record. Id. An applicant for a temporary injunction seeks extraordinary relief. In re Tex. Natural Res. Conservation Comm’n, 85 S.W.3d 201, 204 (Tex. 2002). The sole issue before the trial court in a temporary injunction hearing is whether the applicant may preserve the status quo of the litigation’s subject matter pending trial on the merits. Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978). The status quo is the last actual, peaceable, noncontested status which preceded the pending controversy. RP & R, Inc. v. Territo, 32 S.W.3d 396, 402 (Tex. App.—Houston [14th Dist.] 2000, no pet.) What must the applicant for temporary injunctive relief show? To obtain a temporary injunction, the applicant must plead a cause of action against the defendant and show both a probable right to recover on that cause of action and a probable, imminent, and irreparable injury in the interim. EMS USA, Inc. v. Shary, 309 S.W.3d 653, 657 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (citing Butnaru, 84 S.W.3d at 204). To show a probable right of recovery, the applicant must plead and present evidence to sustain the pleaded cause of action. Id. An injury is irreparable when the injured party cannot be adequately compensated in damages or if damages cannot be measured by any certain pecuniary standard. Id. An existing legal remedy is adequate if it is as complete, practical, and efficient to the ends of justice and its prompt administration as is equitable relief. Hilb, Rogal & Hamilton Co. of Texas v. Wurzman, 861 S.W.2d 30, 32 (Tex. App.—Dallas 1993, no writ.). There is no adequate remedy at law if the plaintiff cannot calculate damages or if a defendant is incapable of responding in damages. Id. The party applying for a temporary injunction has the burden of production, which is the burden of offering some evidence that establishes a probable right to recover and a probable interim injury. Dallas Anesthesiology Associates, P.A. v. Texas Anesthesia Group, P.A., 190 S.W.3d 891, 897 (Tex. App.—Dallas 2006, no pet.). If an applicant does not discharge its burden, it is not entitled to injunctive relief. Id. The applicant for a temporary injunction bears the burden to present evidence sufficient to demonstrate a probable, imminent, and irreparable injury. The harm is irreparable when the injured party cannot be adequately compensated in damages or if the damages cannot be measured by any certain pecuniary standard. EMS USA, 309 S.W.3d at 657. Based on the evidence in the appellate record, the trial court could have reasonably concluded that monetary damages would adequately compensate appellant for any alleged loss of investment if it prevailed at trial. Daily Int’l Sales Corp. v. Eastman Whipstock, Inc., 662 S.W.2d 60, 64 (Tex. App.—Houston [1st Dist.] 1983, no writ). An applicant for a temporary injunction has the burden to establish all of the requirements for a temporary injunction. A trial court has broad discretion to determine whether the applicant met that burden. Hilb, Rogal & Hamilton Co. of Texas, 861 S.W.2d at 33. [The appellate court concludes] that, when viewed in the light most favorable to the trial court’s order, the evidence supports the trial court’s refusal to grant injunctive relief. Therefore, [the reviewing court ] concludes the trial court did not abuse its discretion by denying appellant’s application for a temporary injunction.

 SOURCE: Houston Court of Appeals - 14-10-00992-CV – 6/9/11
 
RELATED LEGAL TERMS: temporary injunction, restraining order, TRO, permanent injunction, injunctive relief


Thursday, June 9, 2011

Substantial Performance Doctrine in contract dispute

CONSTRUCTION LAW:
The Substantial Performance Doctrine
Substantial performance is defined as "performance of the primary, necessary terms of an agreement." Black's Law Dictionary 1252 (9th ed. 2009).
The doctrine of substantial performance is not available to a party when that party has made a willful departure from the terms of an agreement or omitted essential points of a project. See E.P. Towne, 242 S.W.3d at 125; Smith v. Smith, 112 S.W.3d 275, 279 (Tex. App.--Corpus Christi 2003, pet. denied).
The substantial performance doctrine originated and is still mostly used in the context of construction contracts. See Vance v. My Apartment Steak House, Inc., 677 S.W.2d 480, 482 (Tex. 1984); Turner, Collie & Braden, Inc. v. Brookhollow, Inc., 642 S.W.2d 160, 164 (Tex. 1982); RAJ Partners, Ltd. v. Darco Constr. Corp., 217 S.W.3d 638, 643 (Tex. App.--Amarillo 2006, no pet.); Beard Family P'ship v. Commercial Indem. Ins. Co., 116 S.W.3d 839, 844 (Tex. App.--Austin 2003, no pet.).
But the doctrine has also been expanded to other types of contracts. See, e.g., E.P. Towne Ctr. Partners, L.P. v. Chopsticks, Inc., 242 S.W.3d 117, 124-25 (Tex. App.--El Paso 2007, no pet.) (applied to settlement agreement); Geotech Energy Corp. v. Gulf States Telecomms. & Info. Sys. Inc., 788 S.W.2d 386, 390 (Tex. App.--Houston [14th Dist.] 1990, no writ) (applied to contract for sale and installation of telephone system); Continental Dredging, Inc. v. De-Kaizered, Inc., 120 S.W.3d 380, 394 (Tex. App.--Texarkana 2003, pet. denied) (applied to contract for dredging services). The down payment and purchase price of property set forth in an agreement are considered essential terms of that agreement. See Liberto v. D.F. Stauffer Biscuit Co., 441 F.3d 318, 324 (5th Cir. 2006) (noting that Texas courts generally construe essential terms of contract to include price to be paid). SOURCE: Austin Court of Appeals - 03-09-00713-CV - 6/3/11
Related terms: construction law, contractors, sub-contractors, draws, retainage

Quantum Meruit & Clean Hands Doctrine

QUANTUM MERUIT AS THEORY OF RECOVERY DEFINED Quantum meruit is an equitable remedy that "'is based upon the promise implied by law to pay for beneficial services rendered and knowingly accepted.'" Vortt Exploration, Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990) (quoting Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988)). Founded on unjust enrichment, quantum meruit "will be had when non-payment for the services rendered would 'result in an unjust enrichment to the party benefitted by the work.'" Id. (quoting City of Ingleside v. Stewart, 554 S.W.2d 939, 943 (Tex. Civ. App.—Corpus Christi 1977, writ ref'd n.r.e.)). CLEAN HANDS REQUIRED FOR RELIEF IN EQUITY A party seeking an equitable remedy, such as quantum meruit, must come to court with "clean hands." In re Gamble, 71 S.W.3d 313, 325 (Tex. 2002) (Baker, J., concurring); Truly, 744 S.W.2d at 938; Omohundro v. Matthews, 161 Tex. 367, 381, 341 S.W.2d 401, 410 (1960). This clean hands doctrine requires that one who seeks equity, does equity; equitable relief is not warranted when the plaintiff has engaged in unconscionable, unjust, or inequitable conduct with regard to the issue in dispute. In re Francis, 186 S.W.3d 534, 551 (Tex. 2006); Thomas v. McNair, 882 S.W.2d 870, 880 (Tex. App.—Corpus Christi 1994, no writ). WHEN IS (UN) CLEAN HANDS DOCTRINE APPLIED? WHEN NOT? The clean hands doctrine is not, however, absolute. Omohundro, 341 S.W.2d at 410. It should not be applied unless the party asserting the doctrine has been harmed and the wrong complained of cannot be corrected without the application of the doctrine. City of Fredericksburg v. Bopp, 126 S.W.3d 218, 221 (Tex. App.—San Antonio 2003, no pet.); Thomas, 882 S.W.2d at 880; see also Omohundro, 341 S.W.3d at 410 (setting out that the party complaining that his opponent is in court with "unclean hands . . . must show that he himself has been injured by such conduct" and "the wrong must have been done to the defendant himself and not to some third party"); Afri Carib Enters., Inc. v. Mabon Ltd., 287 S.W.3d 217, 222 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (explaining that the trial court cannot apply the clean hands doctrine unless "the misconduct at issue is connected to the subject of the litigation and the party asserting the defense has been seriously harmed by the misconduct"). SOURCE: Corpus Christi Court of Appeals - 13-09-00355-CV - 6/9/11 UNCLEAN HANDS CASE LAW CITES FROM OTHER COURTS, INCLUDING TEXAS SUPREME COURT Truly v. Austin, 744 S.W.2d 934, 938 (Tex. 1988) ("It is well-settled that a party seeking an equitable remedy must do equity and come to court with clean hands."). A party seeking to invoke this equitable doctrine must show that he has been seriously harmed and the wrong complained of cannot be corrected without applying the doctrine. City of Fredericksburg v. Bopp, 126 S.W.3d 218, 221 (Tex. App.-San Antonio 2003, no pet.). A party seeking an equitable remedy must do equity and come to court with clean hands. Truly v. Austin, 744 S.W.2d 934, 938 (Tex.1988); Crown Constr. Co. v. Huddleston, 961 S.W.2d 552, 559 221*221 (Tex.App.-San Antonio 1997, no pet.). The doctrine of unclean hands applies to a litigant whose own conduct in connection with the same matter or transaction has been unconscientious, unjust, marked by a want of good faith or violates the principles of equity and righteous dealing. Crown Constr. Co., 961 S.W.2d at 559; Thomas v. McNair, 882 S.W.2d 870, 880 (Tex.App.-Corpus Christi 1994, no writ). A party seeking to invoke this equitable doctrine must show that he has been seriously harmed and the wrong complained of cannot be corrected without applying the doctrine. Thomas, 882 S.W.2d at 880. A party seeking to invoke this equitable doctrine must show that he has been seriously harmed and the wrong complained of cannot be corrected without applying the doctrine. City of Fredericksburg v. Bopp, 126 S.W.3d 218, 221 (Tex. App.-San Antonio 2003, no pet.). RELATED LEGAL TERMS: equitable claims and remedies, clean and unclean hands doctrine, equitable estoppel

Suing for Negligence: Elements that must be proven

ESSENTIAL ELEMENTS OF NEGLIGENCE CLAIM A negligence cause of action has three elements: (1) a legal duty owed by one person to another, (2) a breach of that duty, and (3) damages proximately caused by the breach. D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). The threshold inquiry in a negligence case is duty. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995); Mathis v. RKL Design/Build, 189 S.W.3d 839, 844 (Tex. App.—Houston [1st Dist.] 2006, no pet.). The existence of duty is a question of law for the court to decide from the facts surrounding the occurrence at issue. Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex. 1998); Siegler, 899 S.W.2d at 197; Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990). “The nonexistence of a duty ends the inquiry into whether negligence liability may be imposed.” Van Horn, 970 S.W.2d at 544. Generally, no duty exists to take action to prevent harm to others absent certain special relationships or circumstances. Torrington Co. v. Stutzman, 46 S.W.3d 829, 837 (Tex. 2000). SOURCE: Houston Court of Appeals - 01-10-00078-CV - 6/9/11

Wednesday, June 8, 2011

The nature of Expunction: A statutory remedy

GETTING CRIMINAL RECORDS EXPUNGED 

Expunction: A creature of the Legislature 
 
Expunction is neither a constitutional nor common law right, but a statutory privilege. Ex parte S.C., 305 S.W.3d 258, 260 (Tex. App.—Houston [14th Dist.] 2009, no pet.). Where a cause of action is created by statute, all of its provisions are mandatory and exclusive, requiring strict compliance for the action to be sustained. Harris Cnty. Dist. Att’y v. Lacafta, 965 S.W.2d 568, 569 (Tex. App.—Houston [14th Dist.] 1997, no pet.). The trial court has no power to extend equitable relief beyond the clear meaning of Article 55.01. See J.H.J., 274 S.W.3d at 806. Although the expunction statute is situated in the Code of Criminal Procedure, an expunction proceeding is civil in nature, and the petitioner carries the burden of proving that all statutory conditions have been met. Harris Cnty. Dist. Attorney’s Office v. M.G.G., 866 S.W.2d 796, 798 (Tex. App.—Houston [14th Dist.] 1993, no pet.).
 
SOURCE: Houston Court of Appeals - 14-10-00532-CV - 6/7/11 
   
RELATED LEGAL TERMS: Expungment of arrest records, indictments, criminal court records, lawsuit petition for expunction
   
RECENT EXPUNCTION CASE LAW CLIPS FROM OTHER COURTS OF APPEALS 
  
The right to expunction is a statutory privilege. In re Expunction of Ramirez, 143 S.W.3d 856, 858 (Tex.App.-El Paso 2004, no pet.). Article 55.01 of the Texas Code of Criminal Procedure controls a criminal defendant's right to have all records and files related to the arrest expunged. See Tex.Code Crim.Proc.Ann. art. 55.01(a)(Vernon Supp. 2010). The burden of proof for compliance with the statute in an expunction proceeding rests with the petitioner. Collin County Criminal Dist. Attorney's Office v. Dobson, 167 S.W.3d 625, 626 (Tex.App.-Dallas 2005, no pet.). Article 55.01 requires strict compliance, leaving courts without equitable power to expunge criminal records. See Texas Dept. of Pub. Safety v. Wiggins, 688 S.W.2d 227, 229 (Tex.App.-El Paso 1985, no writ). The right to expunction is a statutory privilege. In re E.R.W., 281 S.W.3d 572, 573 (Tex.App.-El Paso 2008, pet. denied); In re C.V., 214 S.W.3d 43, 44 (Tex.App.-El Paso 2006, no pet.). The statute gives people the opportunity to have all records of an arrest expunged provided certain requirements are met. Tex.Code Crim.Proc.Ann. art. 55.01 (West Supp. 2010); In re E.R.W., 281 S.W.3d at 573; In re C.V., 214 S.W.3d at 44. All provisions in a statutory cause of action are mandatory and exclusive, and all conditions must be met before a person is entitled to expunction. In re E.R.W., 281 S.W.3d at 573; In re C.V., 214 S.W.3d at 44. A statutory expunction proceeding is civil rather than criminal in nature, and the petitioner bears the burden of proving compliance with the statute. In re E.R.W., 281 S.W.3d at 573; In re C.V., 214 S.W.3d at 44. Article 55.01 provides, in pertinent part: (a) A person who has been placed under a custodial or noncustodial arrest for commission of either a felony or misdemeanor is entitled to have all records and files relating to the arrest expunged if: . . . (2) each of the following conditions exist: (A) an indictment or information charging the person with commission of a felony has not been presented against the person for an offense arising out of the transaction for which the person was arrested or, if an indictment or information charging the person with commission of a felony was presented, the indictment or information has been dismissed or quashed, and: (i) the limitations period expired before the date on which a petition for expunction was filed under Article 55.02; or (ii) the court finds that the indictment or information was dismissed or quashed because the person completed a pretrial intervention program authorized under Section 76.011, Government Code, or because the presentment had been made because of mistake, false information, or other similar reason indicating absence of probable cause at the time of the dismissal to believe the person committed the offense or because it was void; (B) the person has been released and the charge, if any, has not resulted in a final conviction and is no longer pending and there was no court ordered community supervision under Article 42.12 for any offense other than a Class C misdemeanor; and (C) the person has not been convicted of a felony in the five years preceding the date of the arrest. Tex.Code Crim.Proc.Ann. art. 55.01(a)(2).


Accord and Satisfaction

THE AFFIRMATIVE DEFENSE OF ACCORD AND SATISFACTION: What is accord and satisfaction as a legal concept? Under Texas common law, the affirmative defense of accord and satisfaction is based on an express or implied contract under which the parties agree to discharge an existing obligation by means of a lesser payment that is tendered and accepted. Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 863 (Tex. 2000). What does it take to successfuly assert this defense? To prevail on this defense, [ Defendant ] had to produce evidence establishing (1) a dispute between the parties, and (2) that the parties specifically and intentionally agreed to discharge [ the Defendant's ] prior obligations. See id. An alleged agreement is sufficiently definite if a court is able to determine the respective legal obligations of the parties thereunder. Playoff Corp. v. Blackwell, 300 S.W.3d 451, 455 (Tex. App.—Fort Worth 2009, pet. denied) (citing T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992)). Stated conversely, if an alleged agreement is so indefinite as to make it impossible to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. Id. (citing Restatement (Second) of Contracts § 33(2) (1981)). The very nature of an accord and satisfaction is that the obligee under an agreement agrees to accept less than owed under the original agreement in return for extinguishing the obligations under that agreement. See Lopez, 22 S.W.3d at 863. SOURCE: Houston Court of Appeals - 14-10-00081-CV - 6/7/11 Related legal terms: settlement agreement, release, Rule 11 agreement to compromise claims

Tuesday, June 7, 2011

Does the Statute of Frauds apply? - Selling of real estate vs. lease contract

STATUTE OF FRAUDS: Contract for sale of real property vs. lease contract While a contract for the sale of real property becomes invalid under the statute of frauds if there is an invalid legal description of the property, see Jones v. Kelley, 614 S.W.2d 95, 99 (Tex. 1981); Republic Nat'l Bank of Dallas v. Stetson, 390 S.W.2d 257, 261 (Tex. 1965); Nguyen v. Yovan, 317 S.W.3d 261, 267 (Tex. App.--Houston [1st Dist.] 2009, pet. filed), a contract for the lease of the property does not necessarily become invalid under the same circumstances. Rather, when a contract for the lease of property is ambiguous, extraneous evidence is admissible to determine the meaning of the contract. See Towers of Tex., Inc. v. J & J Sys., Inc., 834 S.W.2d 1, 2 (Tex. 1992) (trial court did not err in deeming property description in lease ambiguous and considering further evidence to resolve the issue); United Interests, Inc. v. Brewington, Inc., 729 S.W.2d 897, 903 (Tex. App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.) (trial court did not err in determining that certain paragraphs in sublease were ambiguous and then admitting parole evidence to determine parties' intent). SOURCE: Austin Court of Appeals - 03-09-00713-CV - 6/3/11 RELATED LEGAL CONCEPTS: admissibility of parol evidence, extraneous extrinsic evidence, testimony

Monday, June 6, 2011

No enforceable contract when essential terms are missing

DEFINITIVENESS REQUIRED: Breach of contract claim may fail if alleged contract does not include agreement on essential terms Whether an agreement has all the essential terms to be an enforceable agreement is a question of law. See America's Favorite Chicken Co. v. Samaras, 929 S.W.2d 617, 625 (Tex. App.-San Antonio 1996, writ denied). Each contract should be considered separately to determine its material terms. See T. O. Stanley Boot Co., 847 S.W.2d at 221 (citing Bridewell v. Pritchett, 562 S.W.2d 956, 958 (Tex. Civ. App.-Fort Worth 1978, writ ref'd n.r.e.)). To be enforceable, a contract must be sufficiently definite in its terms that a court can understand what the promisor undertook. T. O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). The material terms of the contract must be agreed on before a court can enforce it. Id. If an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. University Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex. App.-San Antonio 1989, no writ). A lack of definiteness in an agreement may concern various elements, including time of performance, price to be paid, work to be done, or service to be done. Gannon v. Baker, 830 S.W.2d 706, 709 (Tex. App.-Houston [1st Dist.] 1992, writ denied); Terrell v. Nelson Puett Mortgage Co., 511 S.W.2d 366, 369 (Tex. Civ. enApp.-Austin 1974, writ ref'd n.r.e.). SOURCE: DKH Homes, LP v. Kilgo, No. 03-10-00656-CV - 5/11/11 (no contract formed, essential terms missing) ("We conclude that the Agreement at issue does not include terms essential to an agreement to construct a house.") RELATED LEGAL TERMS: enforceability of contract, challenge to contract validity, contention that there is no contract, lack of meeting of the minds on essential terms, contractual rights and duties of the parties not sufficiently defined OLDER CASELAW CLIPS ON SUFFICIENCY OF CONTRACTUAL TERMS Mere Agreement to Agree on some terms yet to be specified is not enough It is established law that a writing need not have all the stipulations between the parties to be considered a contract. Osborn v. Moore, 247 S.W.2d 498 (Tex. 1923). Rather, a contract need only have the essential elements. Id. A contract can also exist even though there are terms on which the parties have not agreed and which they expect further negotiation. Scott v. Ingle Bros. Pacific Inc., 489 S.W.2d 554, 555 (Tex. 1972). Nevertheless, when an essential term is left open for future negotiation, there is no binding contract. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). An agreement to make a future agreement is enforceable only if it contains all essential terms. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). Thus, to decide whether the agreement is enforceable, the Court must first determine what the material elements of the contract are, and then whether those elements are included in the Letter Agreement. What terms are material may vary depending on the type of contract, subject matter Contracts must be read separately to determine the necessary material terms. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992) (citing Bridewell v. Pritchett, 562 S.W.2d 956, 958 (Tex. Civ. App.Fort Worth 1978)). Material terms are those that the parties would reasonably regard as vitally important elements of their bargain. Potcinske v. McDonald Property Investments, Ltd., 245 S.W.3d 525, 531 (Tex. App.-Houston [1st Dist.] 2007) (citing Neeley v. Bankers Trust Co., 757 F.2d 621, 628 (5th Cir. 1985)). Additionally, a contract must define its essential terms with enough precision to enable the court to determine the obligations of the parties. Central Texas Micrographics v. Leal, 908 S.W.2d 292, 296-297 (Tex. App.-San Antonio 1995) (citing Weitzman v. Steinberg, 638 S.W.2d 171, 175 (Tex. App.-Dallas 1982)). It is well established that the terms of an oral contract must be clear, certain, and definite. Haden Co. v. Riggs, 84 S.W.2d 789, 798 (Tex.Civ.App.—Galveston 1935), affd, 127 Tex. 314, 94 S.W.2d 152 (1936). If an alleged agreement is so indefinite that it is impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. Moore v. Dilworth, 142 Tex. 538, 179 S.W.2d 940, 942 (1944); University Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex.App.—San Antonio 1989, no writ). A lack of definiteness in an agreement may concern the time of performance, the price to be paid, the work to be done, the service to be rendered or the property to be transferred. University Nat'l Bank, 773 S.W.2d at 710 With respect to an oral agreement to transfer stock, terms must state the specific quantity of shares and the specific price in order to be considered "clear, certain, and definite." Consolidated Petroleum Indus, v. Jacobs, 648 S.W.2d 363, 366 (Tex.App.— Eastland 1983, writ ref'd n.r.e.). Courts are barred from rewriting a contract for the parties, but if a provision is too vague to be enforced, courts will not enforce it. See John Wood USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 21 (Tex.App.-Houston [1st Dist.] 2000, pet. denied); University Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex.App.-San Antonio 1989, no writ) ("If an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract.") If an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constitute an enforceable contract. Moore v. Dilworth, 142 Tex. 538, 179 S.W.2d 940, 942 (1944); Weitzman v. Steinberg, 638 S.W.2d 171, 175 (Tex.App. —Dallas 1982, no writ). A lack of definiteness in an agreement may concern the time of performance, the price to be paid, the work to be done, the service to be rendered or the property to be transferred. Terrell v. Nelson Puett Mortgage Co., 511 S.W.2d 366, 369 (Tex.Civ.App.—Austin 1974, writ ref'd n.r.e.). There is no authority to ask a jury to supply an essential term in the contract which the parties were unable to complete by mutual agreement. Weitzman, 638 S.W.2d at 175.

Aiding & Abetting Breach of Fiduciary Duty (BoFD)

AIDING AND ABETTING BREACH OF FIDUCIARY DUTY When a defendant knowingly participates in the breach of a fiduciary duty, he becomes a joint tortfeasor and is liable as such. Kastner v. Jenkens & Gilchrist, P.C., 231 S.W.3d 571, 580 (Tex. App.--Dallas 2007, no pet.); see also Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 513-14 (Tex. 1942). Knowing participation in actionable conduct A cause of action based on a contribution to a breach of fiduciary duty must involve the defendant's knowing participation in such a breach. Kaster, 231 S.W.3d at 580; Cox Tex. Newspapers, L.P. v. Wootten, 59 S.W.3d 717, 722 (Tex. App.--Austin 2001, pet. denied). A claim that a defendant knowingly participated in a breach of fiduciary duty by a third party necessarily hinges on the existence of a fiduciary duty owed by the third party to the plaintiff. Cox Tex. Newspapers, 59 S.W.3d at 722. In addition to the existence of a fiduciary duty, the plaintiff must show the defendant knew of the fiduciary relationship and was aware of his participation in the third party's breach of its duty. Id. SOURCE: Dallas Court of Appeals - 05-10-00369-CV - 5/26/11

Fraud by non-disclosure: Essential elements

FRAUD BY NONDISCLOSURE The elements of fraud by nondisclosure are: (1) the defendant failed to disclose facts to the plaintiff; (2) the defendant had a duty to disclose those facts; (3) the facts were material; (4) the defendant knew the plaintiff was ignorant of the facts and the plaintiff did not have an equal opportunity to discover the facts; (5) the defendant was deliberately silent when it had a duty to speak; (6) by failing to disclose the facts, the defendant intended to induce the plaintiff to take some action or refrain from acting; (7) the plaintiff relied on the defendant’s nondisclosure; and (8) the plaintiff was injured as a result of acting without that knowledge. Bright v. Addison, 171 S.W.3d 588, 599 (Tex. App.—Dallas 2005, pet. denied). SOURCE: Waco Court of Appeals - 10-10-00354-CV - 5/4/11

Injunctions as a Remedy: What elements must be satisfied?

PERMANENT INJUNCTIONS AS A FORM OF JUDICIAL RELIEF To obtain a permanent injunction, a plaintiff must prove (1) the existence of a wrongful act, (2) the existence of imminent harm, (3) the existence of irreparable injury, and (4) the absence of an adequate remedy at law. Jim Rutherford Investments Inc. v. Terramar Beach Community Ass'n., 25 S.W.3d 845, 849 (Tex. App.—Hous. [14 Dist.] 2000, pet. den’d). SOURCE: Waco Court of Appeals - 10-09-00276-CV - 5/11/11 TEMPORARY VS. PERMANENT INJUNCTIONS: Different rules apply Rule 683 does not apply to permanent injunctions In his final point of error, [ appellant ] argues that the trial court’s order granting permanent injunction is void because it fails to comply with the requirements of Rule 683 of the Texas Rules of Civil Procedure in that it “fails to set forth any reason for its issuance” and “fails to describe in reasonable detail . . . the act or acts sought to be restrained.” Rule 683 states that “[e]very order granting an injunction . . . shall set forth the reasons for its issuance; shall be specific in terms; shall describe in reasonable detail and not by reference to the complaint or other document, the act or acts sought to be restrained.” Tex. R. Civ. P. 683. The requirements of Rule 683 are mandatory and must be strictly followed. Qwest Commc’ns Corp. v. AT & T Corp., 24 S.W.3d 334, 337 (Tex. 2000) (per curiam); InterFirst Bank San Felipe, N.A. v. Paz Constr. Co., 715 S.W.2d 640, 641 (Tex. 1986) (per curiam); Monsanto Co. v. Davis, 25 S.W.3d 773, 788 (Tex. App.—Waco 2000, pet. dism’d w.o.j.). If an injunction order fails to comply with the requirements of Rule 683, it is void. Qwest Commc’ns Corp., 24 S.W.3d at 337; AutoNation, Inc. v. Hatfield, 186 S.W.3d 576, 581 (Tex. App.—Houston [14th Dist.] 2005, no pet.). However, it is well-established that Rule 683 applies only to temporary or ancillary injunctions and does not apply to permanent injunctions. Vaughn v. Drennon, 202 S.W.3d 308, 321 (Tex. App.—Tyler 2006, no pet.); Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882, 892 (Tex. App.—Dallas 2004, pet. denied); Shields v. State, 27 S.W.3d 267, 273 (Tex. App.—Austin 2000, no pet.); Spinuzzi v. Town of Corinth, 665 S.W.2d 530, 534 (Tex. App.—Fort Worth 1983, no writ). SOURCE: Texarkana Court of Appeals - No. 06-10-00113-CV - 5/26/11 ("Because the trial court granted a permanent injunction in this case, rather than a temporary injunction, Rule 683 does not apply. Accordingly, we overrule this point of error.")

Elements of False Imprisonment Claim

FALSE IMPRISONMENT – CIVIL CAUSE OF ACTION The essential elements of false imprisonment are: (1) willful detention; (2) without consent; and (3) without authority of law. Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002) (quoting Sears, Roebuck & Co. v. Castillo, 693 S.W.2d 374, 375 (Tex. 1985)). ―[I]f the alleged detention was performed with the authority of law, then no false imprisonment occurred. Wal-Mart Stores, Inc. v. Resendez, 962 S.W.2d 539, 540 (Tex. 1998). ―Legal authority or legal justification is met either by the procurement of an arrest warrant or by the showing of existence of probable cause. Wal-Mart Stores, Inc. v. Odem, 929 S.W.2d 513, 519 (Tex. App.—San Antonio 1996, writ denied). SOURCE: Beaumont Court of Appeals - 09-10-00587-CV 5/12/11

Sunday, June 5, 2011

When is covenant not to compete enforceable in Texas?

ENFORCEABILITY OF CONVENANT NOT TO COMPETE (law governing non-competes)

Whether a covenant not to compete is enforceable is a question of law for the court. Fielding, 289 S.W.3d at 848. Likewise, what constitutes sufficient consideration for a contract is generally a question of law, but can be a question of fact. Burges v. Mosley, 304 S.W.3d 623, 629 (Tex. App.-Tyler 2010, no pet.) (question of law); Roark v. Stallworth Oil and Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991) (holding factual questions remained on consideration issue in summary judgment case due to failure to produce conclusive proof).

Covenant-not-to-compete Law 

A covenant not to compete is enforceable if it is (1) ancillary to or part of an otherwise enforceable agreement at the time the agreement is made and (2) reasonable, not imposing a greater restraint than is necessary to protect the goodwill or other business interest of the employer. TEX. BUS. & COM. CODE ANN. § 15.50(a) (Vernon 2011).
 
The first element can be broken down into two inquiries: (1) is there an "otherwise enforceable agreement," and (2) was the covenant not to compete "ancillary to or part of" that agreement at the time the otherwise enforceable agreement was made. Fielding, 289 S.W.3d at 849. With regard to the first inquiry, "otherwise enforceable agreements" can emanate from at-will employment so long as the consideration for any promise is not illusory. Id. As to the second inquiry, for a covenant not to compete to be "ancillary to or part of" an otherwise enforceable agreement, the employer must establish both "(1) that the consideration given by the employer in the otherwise enforceable agreement [gives] rise to the employer's interest in restraining the employee from competing; and (2) that the covenant [was] designed to enforce the employee's consideration or return promise in the otherwise enforceable agreement." Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 649 (Tex. 2006).

Business goodwill and confidential or proprietary information are examples of interests that can be, in appropriate circumstances, worthy of protection by a covenant not to compete. Id. However, for a covenant not to compete to be enforceable, the agreement must be designed to enforce the return promises made by the employee. Id. Prior to Sheshunoff, there was confusion about whether the employer's promise to provide confidential and proprietary information could create a unilateral contract upon actual performance of that promise by the employer. Sheshunoff answered that question in the affirmative. See id. at 651. In Fielding, the Texas Supreme Court clarified its holding in Sheshunoff as follows: In Sheshunoff, an employee signed an at-will employment agreement containing a covenant not to compete. In the agreement, the employer promised to provide the employee access to confidential information and the employee promised not to disclose such information. The employer then gave the employee access to confidential information throughout his employment. We followed and confirmed our analysis in Light, with the exception of Light's footnote six.

We concluded that under section 15.50, a covenant not to compete is not invalid simply because the otherwise enforceable agreement to which the covenant is ancillary is not enforceable at the time the agreement is made. Rather, the covenant not to compete need only be "ancillary to or part of" the agreement at the time the agreement is made. Thus, the requirement that there be an "otherwise enforceable agreement" can be satisfied by the employer actually performing its illusory promise to provide an employee with confidential information. Fielding, 289 S.W.3d at 849-50 (internal citations omitted). However, for a covenant not to compete to be enforceable, it must still be supported by consideration. Powerhouse Prods., Inc. v. Scott, 260 S.W.3d 693, 696 (Tex. App.-Dallas 2008, no pet.) (citing Sheshunoff, 209 S.W.3d at 651). Past consideration is insufficient. Id. at 697 (citing Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452, 463 (Tex. App.-Austin 2004, pet. denied)).

"The covenant cannot be a stand-alone promise from the employee lacking any new consideration from the employer." Id. (quoting Sheshunoff, 209 S.W.3d at 651). In Powerhouse Productions, Eric Scott went to work for Howard Gibson, Jr., in 1993. When he began his employment, he signed a seven year employment agreement containing a covenant not to compete. Id. at 694. In 1996 or 1997, Gibson incorporated and formed Powerhouse Productions, Inc., but did not require Scott to sign a new employment agreement. Id. Although the original agreement expired in 2000, Scott remained employed with Powerhouse, and the parties operated under the prior agreement. Id. In 2004, Scott entered into a new agreement with Powerhouse whereby Scott agreed not to compete with Powerhouse for a five-year period should they sever their employment relationship. Scott and Powerhouse ended their relationship later that same year. Id. Scott went to work for a competitor, and Powerhouse sued him to enforce the 2004 covenant not to compete. The trial court and the Dallas Court of Appeals rejected Powerhouse's argument that confidential information and training provided to Scott before 2004 could serve as consideration for the 2004 covenant not to compete. Id. at 697-98. In doing so, the court reasoned that "past consideration is not competent consideration for contract formation." Id. at 697. 
 
SOURCE: Tyler Court of Appeals - 12-09-00204-CV – 4/29/11 RELATED TERMS, PHRASES: consideration as essential element of valid contract, illusory promise, enforceability of contract, covenant

Saturday, June 4, 2011

What is specific performance? When can it be granted as a remedy in a contract dispute?

   
WHAT KIND OF REMEDY IS SPECIFIC PERFORMANCE?

Specific performance is an equitable remedy that may be awarded upon a showing of breach of contract. Blue Moon Venture, L.L.C. v. Horvitz, No. 14-09-00459-CV, 2010 WL 4013533, at *1 (Tex. App.-Houston [14th Dist.] Oct. 14, 2010, no pet.) (mem. op.) (citing Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.-Dallas 2007, pet. denied)).

ELEMENTS OF CLAIM FOR SPECIFIC PERFORMANCE AS REMEDY
 
A party seeking specific performance must plead and prove (1) compliance with the contract including tender of performance unless excused by the defendant's breach or repudiation and (2) it was ready, willing, and able to perform at relevant times. Id. (citing DiGiuseppe v. Lawler, 269 S.W.3d 588, 593-94, 601 (Tex. 2008)). Whether to award specific performance is a matter committed to the trial court's discretion. Chapman v. Olbrich, 217 S.W.3d 482, 491 (Tex. App.-Houston [14th Dist.] 2006, no pet.) (citing Bell v. Rudd, 144 Tex. 491, 191 S.W.2d 841, 843 (1946); Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex. App.-Austin 2003, pet. denied)). A trial court abuses its discretion when it acts in an arbitrary or unreasonable manner or, stated differently, without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). Further, a clear failure by the trial court to analyze or apply the law correctly constitutes an abuse of discretion. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). 

SOURCE: Houston Court of Appeals - 14-08-00329-CV - 5/26/11

CASELAW CLIPS ON SPECIFIC PERFORMANCE AS EQUITABLE REMEDY IN BREACH OF CONTRACT CASES FROM OTHER COURTS OF APPEALS
 
Specific performance is an equitable remedy that may be awarded upon a showing of breach of contract. Kress v. Soules, 152 Tex. 595, 597, 261 S.W.2d 703, 704 (1953); Living Christ Church, Inc. v. Jones, 734 S.W.2d 417, 419 (Tex.App.-Dallas 1987, writ denied).

Not a cause of action in its own right

Specific performance is not a separate cause of action, but rather it is an equitable remedy used as a substitute for monetary damages when such damages would not be adequate. See Scott v. Sebree, 986 S.W.2d 364, 368 (Tex. App.-Austin 1999, pet. denied).
 
Grant of remedy discretionary 
 
Specific performance is an equitable remedy committed to the trial court's discretion. Bell v. Rudd, 144 Tex. 491, 191 S.W.2d 841, 843 (1946); Roundville Partners, L.L.C. v. Jones, 118 S.W.3d 73, 79 (Tex. App.-Austin 2003, pet. denied); Scott, 986 S.W.2d at 368 (Tex.App.-Austin 1999, pet. denied). A party seeking specific performance must demonstrate that they have performed, or tendered performance, of their obligations under the contract. Am. Apparel Prods., Inc. v. Brabs, Inc., 880 S.W.2d 267, 269 (Tex.App.-Houston [14th Dist.] 1994, no writ).
 
Not if there is an adequate remedy, such as monetary damages
 
A contract will not be specifically enforced if there is an adequate remedy at law. Id. However, specific performance may be awarded when the personal property has a "special, peculiar, or unique value or character." Madariaga v. Morris, 639 S.W.2d 709, 711 (Tex.App.-Tyler 1982, writ ref'd n.r.e.). Further, when a closely-held corporation's stock has no ascertainable value, the party may seek specific performance to enforce a stock purchase agreement. Miga v. Jensen, 96 S.W.3d 207, 217 (Tex.2002) (citing Bendalin v. Delgado, 406 S.W.2d 897, 900 (Tex. 1966) (plaintiff could seek specific performance to enforce stock purchase agreement 536*536 where corporation was closely held and stock had no market value)). The doctrine of unclean hands operates as a bar to the equitable relief of specific performance. Lazy M Ranch, Ltd. v. TXI Operations LP, 978 S.W.2d 678, 683 (Tex.App.-Austin 1998, pet. denied).
 
SOURCE: Dallas Court of Appeals - 05-06-00545-CV - 8/14/07 - 231 S.W.3d 530 (2007)
 
Specific performance is an equitable remedy that may be awarded upon a showing of breach of contract. Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex.App.-Dallas 2007, pet. denied) (citing Kress v. Soules, 152 Tex. 595, 261 S.W.2d 703, 704 (1953)). The essential elements of a breach of contract claim are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. Valero Mktg. & Supply Co. v. Kalama Int'l, 51 S.W.3d 345, 351 (Tex.App.-Houston [1st Dist.] 2001, no pet.). A party seeking specific performance must show that he is ready, willing, and able to perform the contract. Stafford, 231 S.W.3d at 535 (citing Am. Apparel Prods., Inc. v. Brabs, Inc., 880 S.W.2d 267, 269 (Tex.App.-Houston [14th Dist.] 1994, no writ)); Chessher v. McNabb, 619 S.W.2d 420, 421 (Tex.Civ. App.-Houston [14th Dist.] 1981, no writ). However, when the other party clearly refuses to perform his part of a contract, the party who seeks specific performance need not tender performance before bringing suit. 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d 252, 256 (Tex.App.-Dallas 2002, pet. denied). Even when tender of performance is excused, a party must plead and prove he is ready, willing, and able to perform. Id.; Chessher, 619 S.W.2d at 421; Hendershot v. Amarillo Nat'l Bank, 476 S.W.2d 919, 920 (Tex.Civ. App.-Amarillo 1972, no writ). When a party seeks to prove it is ready, willing, and able to perform under the terms of a contract, but is unable to prove it has a firm commitment for financing, that party is not entitled to specific performance of the contract. Hendershot, 476 S.W.2d at 921.

SOURCE: Houston Court of Appeals - 01-07-00080-CV - 9/4/8 - 274 S.W.3d 140 (2008)

A contract is subject to specific performance if it contains the essential terms of a contract, expressed with such certainty and clarity that it may be understood without recourse to parol evidence. Johnson v. Snell, 504 S.W.2d 397, 398 (Tex.1973); Rus-Ann Dev., Inc. v. ECGC, Inc., 222 S.W.3d 921, 927-28 (Tex.App.-Tyler 2007, no pet.) (holding that lack of closing date in option contract did not preclude enforcement by specific performance). Specific performance is an equitable remedy that may be awarded at the trial court's discretion upon a showing of breach of contract. Kress v. Soules, 152 Tex. 595, 261 S.W.2d 703, 704 (1953); Bell v. Rudd, 144 Tex. 491, 191 S.W.2d 841, 843 (1946); Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex.App.-Dallas 2007, pet. denied). Specific performance is not a separate cause of action, but rather it is an equitable remedy used as a substitute for monetary damages when such damages would not be adequate. Stafford, 231 S.W.3d at 535; Scott v. Sebree, 986 S.W.2d 364, 368 (Tex.App.-Austin 1999, pet. denied).

SOURCE: Fort Worth Court of Appeals - 02-07-443-CV - 9/11/08 - 266 S.W.3d 559 (2008)


Lack of Consideration vs. Failure of Consideration in Contract Law


FAILURE OF CONSIDERATION AFTER CONTRACT FORMATION vs. LACK OF CONSIDERATION AB INITIO (from the beginning)

Failure of consideration occurs when, due to a supervening cause after an agreement is reached, the promised performance fails. (2) See City of The Colony v. North Tex. Mun. Water Dist., 272 S.W.3d 699, 733 (Tex. App.--Fort Worth 2008, pet. dism'd); U.S. Bank, N.A. v. Prestige Ford Garland Ltd. P'ship, 170 S.W.3d 272, 279 (Tex. App.--Dallas 2005, no pet.). In other words, failure of consideration occurs because of subsequent events. See The Colony, 272 S.W.3d at 733. For example, one party's failure to perform its obligations under the agreement may result in the other party's failure to receive the consideration set forth in the agreement. See id.; U.S. Bank, 170 S.W.3d at 279. To establish the affirmative defense of failure of consideration, the defendant must offer summary-judgment proof establishing: (1) the consideration for the property at the inception of the agreement; and (2) that the consideration later failed. See, e.g., National Bank of Commerce v. Williams, 84 S.W.2d 691, 692 (Tex. 1935). 2. It is a general rule in Texas that a party must show that he has complied with his obligations under the contract to be entitled to specific performance. DiGiuseppe v. Lawler, 269 S.W.3d 588, 594 (Tex. 2008). Thus, a plaintiff seeking specific performance, as a general rule, must actually tender performance as a prerequisite to obtaining specific performance. Id. SOURCE: Austin Court of Appeals - 03-09-00713-CV - 6/3/11
 
RELATED CASELAW CLIPS FROM OTHER COURTS OF APPEALS: 

Lack of Consideration 

Consideration is a fundamental element of every valid contract. Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 408 (Tex. 1997). Consideration is a present exchange bargained for in return for a promise and consists of benefits and detriments to the contracting parties. Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex.1991). The detriments must induce the parties to make the promises, and the promises must induce the parties to incur the detriments. Id. Lack of consideration occurs when the contract, at its inception, does not impose obligations on both parties. Michol O'Connor, O'CONNOR'S TEXAS CAUSES OF ACTION 86 (2009). The contract lacking consideration lacks mutuality of obligation and is unenforceable. Fed. Sign, 951 S.W.2d at 409. Lack of consideration is an affirmative defense. Doncaster v. Hernaiz, 161 S.W.3d 594, 603 (Tex.App.-San Antonio 2005, no pet.). The existence of a written contract, however, presumes consideration for its execution. Id. Therefore, the party alleging lack of consideration has the burden of proof to rebut this presumption. Id.; see also Edlund v. Bounds, 842 S.W.2d 719, 724 (Tex.App.-Dallas 1992, writ denied) (op. on reh'g) ("A sworn plea of no consideration placed the burden of proof on Edlund to show there was none."). Only a party without the burden of proof at trial may move for summary judgment on the ground that there is no evidence of one or more essential elements of a claim or defense. See TEX.R. CIV. P. 166a(i).

Failure of Consideration 

Failure of consideration, an affirmative defense, occurs when, because of some supervening cause after a contract is formed, the promised performance fails. See TEX.R. CIV. P. 94; U.S. Bank, N.A. v. Prestige Ford Garland Ltd. P'ship, 170 S.W.3d 272, 279 (Tex.App.-Dallas 2005, no pet.). Above, we explained that there is a "lack of consideration" where a purported contract lacks mutuality of obligation. Thus, there is a clear distinction between "lack of consideration" and "failure of consideration." Although the issue of consideration is to be determined as a matter of law, the recital of consideration in a written instrument is not conclusive, and the nature of the real consideration may be shown by parol evidence. Lakeway Co. v. Leon Howard, Inc., 578 S.W.2d 163, 166 (Tex.Civ.App.-Tyler), writ ref'd n.r.e., 585 S.W.2d 660 (Tex.1979) (per curiam).

SOURCE: Burges v. Mosley, 304 S.W.3d 623, 628 (Tex. App.-Tyler 2010, no pet.)

Failure of consideration occurs when, due to a supervening cause after an agreement is reached, the promised performance fails. City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 733 (Tex. App.-Fort Worth 2008, pet. dism'd); U.S. Bank, N.A. v. Prestige Ford Garland Ltd. P'ship, 170 S.W.3d 272, 279 (Tex. App.-Dallas 2005, no pet.). In other words, failure of consideration occurs because of subsequent events. See City of The Colony, 272 S.W.3d at 733; U.S. Bank, N.A., 170 S.W.3d at 279. For example, one party's failure to perform its obligations under the agreement may result in the other party's failure to receive the consideration set forth in the agreement. See City of The Colony, 272 S.W.3d at 733; U.S. Bank, N.A., 170 S.W.3d at 279. There is a clear distinction between lack of consideration and failure of consideration. Burges, 304 S.W.3d at 628. In order to show a failure of consideration there should be evidence that a contract had been formed and that the performance of one of the parties failed. Id. In other words, for consideration to fail, it must have been valid at one point and later fail. Johnson v. Bond, 540 S.W.2d 516, 520 (Tex. App.-Fort Worth 1976, writ ref'd n.r.e.). Lack of consideration, on the other hand, means that there was never consideration. Id.

SOURCE: Corpus Christi Court of Appeals - 13-10-245-CV - 10/21/10

No Consideration as part of the contract to begin with 

Lack of consideration occurs when the contract, at its inception, does not impose obligations upon both parties. Burges v. Mosley, 304 S.W.3d 623, 628 (Tex. App.-Tyler 2010, no pet.). The existence of a written contract presumes consideration for its execution. Id.

Failure of consideration after the contract is entered into A failure of consideration occurs when the plaintiff fails to perform a condition precedent to the defendant's duty to perform. See Nat'l Bank of Commerce v. Williams, 125 Tex. 619, 84 S.W.2d 691, 692 (1935). The doctrine assumes the contract is already in existence. Consideration consists of either a benefit to the promisor or a detriment to the promisee. See Tamez v. Southwestern Motor Transp., Inc., 155 S.W.3d 564, 571 (Tex. App.-San Antonio 2004, no pet.).

SOURCE: El Paso Court of Appeals - 08-07-00090-CV – 2/10/10 - 323 S.W.3d 203 (2010)

Friday, June 3, 2011

At-will tenancy and holdover tenants – What is the meaning of these legal terms in landlord-tenant law?

HOLDOVER TENANCY DEFINED: What makes a person who rents property a holdover tenant? A tenant who continues to occupy the premises after expiration of a lease is a holdover tenant. Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 908 (Tex. 2007). We look at the lease itself to determine whether the terms of the lease continue in the event of a holdover tenancy. Bockelmann v. Marynick, 788 S.W.2d 569, 571-72 (Tex. 1990). A holdover tenant is presumed to be bound by covenants that were binding on him during the term of the lease. Barragan v. Munoz, 525 S.W.2d 559, 561 (Tex. Civ. App.--El Paso 1975, no writ). Even when the lease does not contain a holdover provision, if the tenant remains in possession and rent continues to be accepted by the landlord, the terms of the expired lease are presumed to continue unless there is an agreement to the contrary. Id. at 562; see also Carrasco v. Stewart, 224 S.W.3d 363, 368 (Tex. App.--El Paso 2006, no pet.). TENANT AT WILL VS. TENANT AT SUFFERANCE: What is the difference? When no new lease is formed and a tenant continues in possession of land covered by a prior lease, that tenant is either a tenant at will or a tenant at sufferance. See Bockelmann, 788 S.W.2d at 571; ICM Mortgage Corp. v. Jacob, 902 S.W.2d 527, 530 (Tex. App.--El Paso 1994, writ denied). A tenant at will is one who is in lawful possession of premises by permission of the owner or landlord and for no fixed duration. See Fandey v. Lee, 880 S.W.2d 164, 169 (Tex. App.--El Paso 1994, writ denied); Virani v. Syal, 836 S.W.2d 749, 751-52 (Tex. App.--Houston [1st Dist.] 1992, writ denied); Black's Law Dictionary 1604 (9th ed. 2009). A tenant at sufferance is a person who has been in lawful possession of property but who wrongfully remains as a holdover after his right to possession has expired. See ICM Mortgage, 902 S.W.2d at 530; Black's Law Dictionary 1604 (9th ed. 2009). "A tenant at will, in contrast to a tenant at sufferance, possesses the property with the owner's consent." ICM Mortgage, 902 S.W.2d at 530. TENANCY AT WILL ANALOGOUS TO EMPLOYMENT AT WILL: Terminable by either party [lessor or lessee] A tenancy at will is terminable at the will of either party upon fair notice. See ICM Mortgage, 902 S.W.2d at 530; Black's Law Dictionary 1604 (9th ed. 2009). LEASE DEFINED A "lease" for real property is an agreement by which a person owning property grants to another the right to use and occupy the property for a specified period of time in exchange for a periodic payment of a stipulated price, which is usually referred to as rent. Franklin v. Jackson, 847 S.W.2d 306, 308 (Tex. App.--El Paso 1992, writ denied); Black's Law Dictionary 970 (9th ed. 2009). SOURCE: Austin Court of Appeals - 03-09-00713-CV – 6/3/11 (Agreement required periodic payments in the form of monthly payments from [ party ] to [ party ] in the amount of $989.44. The term of the Agreement was thirty-six months. In the Agreement, the parties referred to [ party ] as the "Lessor" and [ party ] as the "Lessee." Thus, the Agreement met all the elements of a lease. See Franklin, 847 S.W.2d at 308; Black's Law Dictionary 970 (9th ed. 2009)). RELATED LEGAL TERMS: landlord-tenant, residential / commercial lease, rent, eviction, right to possession, forcible entry and detainer

Not every relationship involving trust entails fiduciary duty

CONFIDENTIAL RELATIONSHIP OF TRUST: Does it give rise to fiduciary duty? Fiduciary duties arise as a matter of law in certain formal relationships, such as attorney-client or trustee relationships. See Meyer v. Cathey, 167 S.W.3d 327, 330 (Tex. 2005) (per curiam); Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 593-94 (Tex. 1992). In addition, an informal fiduciary duty may arise from a moral, social, domestic, or purely personal relationship of trust and confidence. Associated Indem. Corp. v. Cat Contracting Co., 964 S.W.2d 276, 287-88 (Tex. 1998). However, "not every relationship involving a high degree of trust and confidence rises to the stature of a fiduciary relationship." Meyer, 167 S.W.3d at 330 (quoting Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 176-77 (Tex. 1997)). The existence of a confidential relationship giving rise to an informal fiduciary duty is ordinarily a question of fact, but it becomes a question of law when there is no evidence of such a relationship. Crim Truck & Tractor, 823 S.W.2d at 594. The existence of fiduciary relationship must be based on "actual facts of the relationship between the persons," rather than subjective beliefs. Trostle v. Trostle, 77 S.W.3d 908, 914 (Tex. App.--Amarillo 2002, no pet.) SOURCE: Austin Court of Appeals - 03-09-00452-CV - 6/3/11

Thursday, June 2, 2011

Inverse Condemnation and Takings Claims

INVERSE CONDEMNATION Generally, “„[i]nverse condemnation‟ occurs when property is taken, damaged, or destroyed for public use without process or without proper condemnation proceedings, and the property owner attempts to recover compensation.” Patel v. City of Everman, 179 S.W.3d 1, 7 (Tex. App.—Tyler 2004, pet. denied) (Patel I). “A city is not required to make compensation for losses occasioned by the proper and reasonable exercise of its police power.” City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 804 (Tex. 1984). Whether the exercise of a police power is proper or whether it constitutes a compensable taking is a question of law and not of fact. Id. A municipality may, by ordinance, require the demolition of a dilapidated building that is a hazard to the public‟s health, safety, and welfare. See Tex. Loc. Gov‟t Code Ann. § 214.001(a)(1) (West Supp. 2010). Generally, when a city has determined that a building constitutes a public nuisance, the city‟s administrative determination may be challenged by a judicial review for substantial evidence. See Patel v. City of Everman, No. 2-07-303-CV, 2009 WL 885916, *6 (Tex. App.—Fort Worth Apr. 2, 2009, pet. filed) (mem. op.) FEDERAL FIFTH AMENDMENT TAKINGS CLAIM [ Property owner ] also challenges the trial court‟s dismissal of her federal “takings” claim. See U.S. Const. amends. V, XIV. Generally, the Fifth Amendment‟s Just Compensation Clause grants to a landowner the right to seek compensation for land taken by the State. U.S. Const. amend. V (“[N]or shall private property be taken for public use, without just compensation.”). Nevertheless, not every State action in taking property violates the Just Compensation Clause. “[I]f a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.” Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 195, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985) (In a zoning case, landowner‟s federal taking and due process claims were not ripe because the landowner had not sought a variance). Compensation is generally not required when the State takes property to protect the public safety and health. The United States Supreme Court has stated: “The power which the states have of prohibiting such use by individuals of their property, as will be prejudicial to the health, the morals, or the safety of the public, is not, and, consistently with the existence and safety of organized society, cannot be, burdened with the condition that the state must compensate such individual owners for pecuniary losses they may sustain, by reason of their not being permitted, by a noxious use of their property, to inflict injury upon the community.” Mugler v. Kansas, 123 U.S. 623, 669, 8 S.Ct. 273, 31 L.Ed. 205 (U.S. 1887). “The government may not be required to compensate an owner for property which it has already lawfully acquired under the exercise of governmental authority other than the power of eminent domain.” Bennis v. Michigan, 516 U.S. 442, 452, 116 S.Ct. 994, 134 L.Ed.2d 68 (1996) “Courts have consistently held that a State need not provide compensation when it diminishes or destroys the value of property by stopping illegal activity or abating a public nuisance.” Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 492 n.22, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987). SOURCE: Beaumont Court of Appeals - 09-10-00192-CV - 6/2/11 (City engaged in a valid exercise of its police power to abate a nuisance that existed on landowner's property. See Tex. Loc. Gov‟t Code Ann. § 214.0012.)

Friday, May 27, 2011

When is a liquidated damages clause valid and enforceable?

  
WHAT IS A LIQUIDATED DAMAGES PROVISION IN A CONTRACT?
 
A valid liquidated damages clause estimates in advance the just compensation a party will accrue if the other party to the contract fails to perform. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 664 (Tex. 2005). “Whether a contractual provision is an enforceable liquidated damages provision or an unenforceable penalty is a question of law[.]” Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex. 1991).
 
ENFORCEABILITY OF CONTRACTUAL LIQUIDATED DAMAGES PROVISION
 
In determining whether a liquidated damages clause is enforceable, courts examine (1) whether the harm caused by the prospective breach of the contract is incapable or difficult of estimation and (2) whether the amount of liquidated damages called for is a reasonable forecast of just compensation. Id. If either element is lacking, the liquidated damages clause is unenforceable. Arthur’s Garage, Inc. v. Racal-Chubb Sec. Sys., Inc., 997 S.W.2d 803, 810 (Tex. App.—Dallas 1999, no pet.).
  
Evidence regarding the difficulty of estimating damages and whether the amount of liquidated damages is a reasonable forecast of just compensation, must be viewed as of the time the contract was executed. Baker v. Int’l Record Syndicate, Inc., 812 S.W.2d 53, 55 (Tex. App.—Dallas 1991, no writ) (op. on reh’g); see also Oetting v. Flake Unif. & Linen Serv., Inc., 553 S.W.2d 793, 796 (Tex. App.—Fort Worth 1977, no writ). “If the liquidated damages are proven to be disproportionate to the actual damages, the liquidated damages can be declared a penalty and recovery limited to actual damages.” TXU Portfolio Mgmt. Co., L.P. v. FPL Energy, LLC, 328 S.W.3d 580, 589 (Tex. App.—Dallas 2010, pet. filed) (citing Baker, 812 S.W.2d at 55).
  
The burden of proving a penalty defense is on the party challenging the liquidated damages clause. Baker, 812 S.W.2d at 55; see also Urban Television Network Corp. v. Creditor Liquidity Solutions, L.P., 277 S.W.3d 917, 919 (Tex. App.—Dallas 2009, no pet.). Generally, the party asserting this defense must prove the amount of the other party’s actual damages, if any, to show that the liquidated damages set forth in the agreement were not an approximation of actual loss. Baker, 812 S.W.2d at 55; TXU Portfolio, 328 S.W.3d at 589. SOURCE: Beaumont Court of Appeals - 09-10-00361-CV - 5/19/11 (Thus, the liquidated damages provision for the payment of $20,000 was not a reasonable forecast of just compensation for any allowable damages resulting from [ PARTY'S ] breach of the agreement. We hold the liquidated damages clause is unenforceable.)
 
RELATED CASELAW CLIPS:
 
We enforce a liquidated damages clause if (1) the harm caused by the breach is incapable or difficult of estimation, and (2) the amount of liquidated damages is a reasonable forecast of just compensation. See Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex. 1991). An assertion that a liquidated damages provision constitutes an unenforceable penalty is an affirmative defense, and the party asserting penalty bears the burden of proof. See Urban Television Network Corp. v. Liquidity Solutions, 277 S.W.3d 917, 919 (Tex. App.-Dallas 2009, no pet.); Fluid Concepts, Inc. v. DA Apts., LP, 159 S.W.3d 226, 231 (Tex. App.-Dallas 2005, no pet.). Generally, that party must prove the amount of actual damages, if any, to demonstrate that "the actual loss was not an approximation of the stipulated sum." Baker v. Int'l Record Syndicate, Inc., 812 S.W.2d 53, 55 (Tex. App.-Dallas 1991, no writ). If the amount stipulated in the liquidated damages clause is "shown to be disproportionate to actual damages," we should declare that the clause is a penalty and limit recovery to actual damages. Johnson Eng'rs, Inc. v. Tri-Water Supply Corp., 582 S.W.2d 555, 557 (Tex. Civ. App.-Texarkana 1979, no writ); see also TEX. BUS. & COM. CODE ANN. § 2.718(a) (Vernon 2009) ("A term fixing unreasonably large liquidated damages is void as a penalty.").
 
Whether a liquidated damages clause is an unenforceable penalty is a question of law for the court, but sometimes factual issues must be resolved before the court can decide the legal question. See Phillips, 820 S.W. 2d at 788. For example, in Phillips, the Texas Supreme Court observed that "to show that a liquidated damages provision is unreasonable because the actual damages incurred were much less than the amount contracted for, a defendant may be required to prove what the actual damages were." Id. SOURCE: Houston Court of Appeals - 01-09-00155-CV - 10/21/10 Whether a liquidated damages provision is an enforceable contractual provision or an unenforceable penalty is a question of law. Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex. 1991). To find a liquidated damages provision enforceable, a court must find that (1) the harm caused by the breach is incapable or difficult of estimation, and (2) the amount of liquidated damages called for is a reasonable forecast of just compensation. Phillips, 820 S.W.2d at 788 (quoting Rio Grande Valley Sugar Growers, Inc. v. Campesi, 592 S.W.2d 340, 342 n.2 (Tex. 1979)). The difficulty of estimation of harm must have existed at the time the contract was executed. See Murphy v. Cintas Corp., 923 S.W.2d 663, 666 (Tex. App.-Tyler 1996, writ denied).

SOURCE: Austin Court of Appeals - 03-09-00063-CV - 6/11/10

A valid liquidated damage provision estimates in advance the just compensation to a party accruing from the failure to perform certain contractual obligations. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 664 (Tex.2005); Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484, 486 (1952). In general, the issue of whether a contractual provision is an enforceable liquidated damage clause or an unenforceable penalty is a question of law for the court. See Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex.1991). In making this determination, we examine whether the harm caused by the prospective breach of the contract is incapable or difficult of estimation and whether the amount of liquidated damages is a reasonable forecast of just compensation. Id.; Baker v. Int'l Record Syndicate, Inc., 812 S.W.2d 53, 55 (Tex.App.-Dallas 1991, no writ). The evidence concerning the difficulty of estimation and the reasonableness of the damages forecast must be viewed as of the time the contract was executed. Baker, 812 S.W.2d at 55. The party asserting that the provision is an unenforceable penalty has the burden of proof. See Fluid Concepts, Inc. v. DA Apartments Ltd., P'ship, 159 S.W.3d 226, 230-31 (Tex.App.-Dallas 2005, no pet.). Where, as here, the parties have filed cross-motions for summary judgment, we may reverse and render the judgment that the trial court should have rendered. See CU Lloyd's of Tex. v. Feldman, 977 S.W.2d 568, 568 (Tex. 1998) (per curiam).
 
SOURCE: Dallas Court of Appeals - 05-08-01584-CV 7/27/10