Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Tuesday, August 9, 2011

Collection of a Promissory Note - Multiple Instruments pertaining to the obligationa


Collection of a Promissory Note: Essential elements the creditor must prove 

To collect on a promissory note, a plaintiff m ust establish: (1) that the note exists; (2) that the defendant signed the note; (3) that the plaintiff is the owner and holder of the note; and (4) that a certain balance is due and owing on the note. Cadle Co. v. Regency Homes, Inc., 21 S.W.3d 670, 674 (Tex. App.—Austin 2000, pet. denied); see also Clark v. Dedina, 658 S.W.2d 293, 295–96 (Tex. App.—Houston [1st Dist.] 1983, writ dism’d).

Business and Commerce Code Section 3.117

Business and commerce code section 3.117, titled “Other Agreements Affecting Instrument,” states in relevant part that
the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument, if the instrument is issued or the obligation is incurred in reliance on the agreement or as part of the same transaction giving rise to the agreement. To the extent an obligation is modified, supplemented, or nullified by an agreement under this section, the agreement is a defense to the obligation.
Tex. Bus. & Com. Code Ann. § 3.117 (West 2002). “The separate agreement might be a security agreement . . . that contradicts the terms of the instrument.” Id. § 3.117 cmt. 1 (West Supp. 2010)

Multiple instruments / documents can be given effect as if they were one

Additionally, where two or more instruments, executed contemporaneously or at different times, pertain to the same transaction, the instruments will be read together, even though they do not expressly refer to each other. Bd. of Ins. Comm’rs v. Great S. Life Ins. Co., 150 Tex. 258, 267, 239 S.W.2d 803, 809 (1951); see also Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000) (stating that it is “well-established law that instruments pertaining to the same transaction may be read together to ascertain the parties’ intent”).

SOURCE: Fort Worth Court of Appeals - 02-10-00296-CV - 8/4/11

It was not possible to perform the contract ... is that a viable defense?

Impossibility of Performance as a defense: Will it fly in a court of law?

Subjective or objective impossibility? ... That is the question  

There are two general types of impossibility: (1) objective, and (2) subjective. Walston v. Anglo-Dutch Petroleum (Tenge) L.L.C., No. 14-07-00959-CV, 2009 WL 2176320, at *6 n.2 (Tex. App.—Houston [14th Dist.] July 23, 2009, no pet.) (mem. op.); Janak v. FDIC, 586 S.W.2d 902, 906–07 (Tex. Civ. App.—Houston [1st Dist.] 1979, no writ).

Objective impossibility relates solely to the nature of the promise. See Janak, 586 S.W.2d at 906–07. Something is objectively impossible if “the thing cannot be done,” such as an inability “to perform the promise to settle [a] claim by entering an agreed judgment in the lawsuit which had been dismissed” prior to the completion of the agreement. See Grayson v. Grayson Armature Large Motor Div., Inc., No. 14-09-00748-CV, 2010 WL 2361432, at *5 (Tex. App.—Houston [14th Dist.] June 15, 2010, pet. denied) (mem. op.).

Subjective impossibility is due wholly to the inability of the individual promisor. See id. Something is subjectively impossible if “I cannot do it,” such as when a promisor’s financial inability to pay makes it impossible for the promisor to perform. See id.

Objective impossibility can serve as a defense in a breach of contract suit. Janak, 586 S.W.2d at 906–07. However, a party cannot escape contract liability by claiming subjective impossibility; subjective impossibility neither prevents the formation of the contract nor discharges a duty created by a contract. See Grayson, 2010 WL 2361432, at *5; Walston, 2009 WL 2176320, at *6 n.2; Janak, 586 S.W.2d at 906–07.

SOURCE: Fort Worth Court of Appeals - 02-10-00296-CV - 8/4/11

Premises Liability Suit: Slip & Fall at Store - When is store owner liable for injuries sustained by customer?

PREMISES LIABILITY: SLIP & FALL INCIDENT AT STORE

What are the elements of a slip & fall premises liability claim?

To prevail on a premises liability suit, an invitee-plaintiff must prove: (1) a condition on the premises posed an unreasonable risk of harm; (2) the premises owner had actual or constructive knowledge of the danger; (3) the premises owner did not exercise reasonable care to reduce or eliminate the risk; and (4) the premises owner's failure to use such care proximately caused the plaintiff's injuries. See Wal-Mart Stores, Inc. v. Reece, 81 S.W.3d 812, 814 (Tex. 2002); Wal-Mart Stores, Inc. v. Gonzalez, 968 S.W.2d 934, 936 (Tex. 1998); Keetch v. Kroger Co., 845 S.W.2d 262, 264 (Tex. 1992).

SOURCE: Dallas Court of Appeals - 05-09-01310-CV - 8/8/11

Friday, August 5, 2011

Car Wreck suits: What is negligent entrustment (of motor vehicle)?

ELEMENTS OF NEGLIGENT ENTRUSTMENT
What does it take to prove that a vehicle involved in a collision was negligently entrusted to the driver?

To establish negligent entrustment of an automobile, a plaintiff must show the following: (1) entrustment of a vehicle by the owner; (2) to an unlicensed, incompetent, or reckless driver; (3) whom the owner knew or should have known to be unlicensed, incompetent, or reckless; (4) the driver was negligent on the occasion in question; and (5) the driver's negligence proximately caused the accident. Schneider v. Esperanza Transmission Co., 744 S.W.2d 595, 596 (Tex. 1987).

Express permission is that which is affirmatively stated, while implied permission may be inferred from conduct between the parties in which there is acquiescence or lack of objection signifying consent which is shown by usage and practice of the parties over a period of time preceding the occasion on which the automobile was being used. Royal Indem. Co. v. H.E. Abbott & Sons, Inc., 399 S.W.2d 343, 345 (Tex. 1966).

SOURCE: Corpus Christi Court of Appeals - 13-10-00351-CV - 7/28/11  

Thursday, August 4, 2011

Can home owner offer valid testimony on reasonable cost or value of repairs?

  
Testimony to support or challenge reasonble and necessary & costs of repair: Exception to the Property Owner Rule

Eastland Court of Appeals says property owners not qualified to opine on repair cost even if qualified to offer opinion on the value of the property itself under the property owner rule; Rule does not cover repairs; expert testimony it therefore required.    
A party seeking to recover damages measured by the cost of repair must present competent evidence so that the trier of fact is justified in finding that the repairs are necessary to restore the property to its former condition and that the cost of repairs is reasonable and fair. See Hernandez v. Lautensack, 201 S.W.3d 771, 776-77 (Tex. App.—Fort Worth 2006, pet. denied); Ebby Halliday Real Estate, Inc. v. Murnan, 916 S.W.2d 585, 589 (Tex. App.—Fort Worth 1996, writ denied); Liptak v. Pensabene, 736 S.W.2d 953, 958 (Tex. App.—Tyler 1987, no writ). The magic words “reasonable” and “necessary” need not be used as long as there is sufficient evidence for the trier of fact to conclude that the repairs are necessary and the cost is reasonable. Ron Craft Chevrolet, Inc. v. Davis, 836 S.W.2d 672, 677 (Tex. App.—El Paso 1992, writ denied); Carrow v. Bayliner Marine Corp., 781 S.W.2d 691, 694 (Tex. App.—Austin 1989, no writ).

Some courts have held that evidence pertaining to the necessity and reasonableness of repair costs falls within the exclusive domain of an expert. See Legacy Motors, LLC v. Bonham, No. 02-07-00065-CV, 2007 WL 2693863, at *4 (Tex. App.—Fort Worth Sept. 13, 2007, no pet.) (mem. op.); Ha v. W. Houston Infiniti, Inc., No. 01-94-00884-CV, 1995 WL 516993, at *2 (Tex. App.—Houston [1st Dist.] Aug. 31, 1995, writ denied) (op. on reh’g) (not designated for publication); see also Executive Taxi/Golden Cab v. Abdelillah, No. 05-03-01451-CV, 2004 WL 1663980, at *1 (Tex. App.—Dallas July 19, 2004, pet. denied) (mem. op.) (stating that an estimate without the testimony of the person making the estimate or other expert testimony is no evidence of the necessity of the repair or the reasonableness of the costs of the repair) (citing Jordan Ford, Inc. v. Alsbury, 625 S.W.2d 1, 3 (Tex. Civ. App.—San Antonio 1981, no writ)). As a general rule, matters involving specialized or technical knowledge require expert testimony. See FFE Transp. Servs., Inc. v. Fulgham, 154 S.W.3d 84, 90-91 (Tex. 2004). The necessity of subsequent, total roof replacements performed immediately after the work performed by and on behalf of Wortham Bros. and the reasonableness of the cost of the subsequent roof replacements are matters of a specialized and technical nature. Accordingly, we conclude that expert testimony was required to establish the necessity and reasonableness of the subsequent roof replacements.

We disagree with the trial court’s determination that the Haffners’ status as property owners qualifies them to offer an opinion on the necessity and reasonableness of repair costs. Under the “Property Owner Rule,” a property owner is generally qualified to testify as to the value of his or her property even if he or she is not an expert and would not be qualified to testify as to the value of other property. Reid Road Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 S.W.3d 846, 852-53 (Tex. 2011); see Porras v. Craig, 675 S.W.2d 503, 504 (Tex. 1984). This rule is based on the presumption that an owner will be familiar with his or her own property and know its value. Reid Road Mun. Util. Dist. No. 2, 337 S.W.3d at 853. This presumption does not extend to the reasonable cost of repairing the owner’s property particularly when those repairs are of a technical or specialized nature.

SOURCE: Eastland Court of Appeals - 11-09-00190-CV - 7/28/11

We disagree with the trial court’s determination that the Haffners’ status as property owners qualifies them to offer an opinion on the necessity and reasonableness of repair costs. Under the “Property Owner Rule,” a property owner is generally qualified to testify as to the value of his or her property even if he or she is not an expert and would not be qualified to testify as to the value of other property. Reid Road Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 S.W.3d 846, 852-53 (Tex. 2011); see Porras v. Craig, 675 S.W.2d 503, 504 (Tex. 1984). This rule is based on the presumption that an owner will be familiar with his or her own property and know its value. Reid Road Mun. Util. Dist. No. 2, 337 S.W.3d at 853. This presumption does not extend to the reasonable cost of repairing the owner’s property particularly when those repairs are of a technical or specialized nature.

Negligence 101: Was the Defendant under a legal duty?

DUTY AS AN ESSENTIAL ELEMENT OF A NEGLIGENCE CLAIM

What does it take to establish liability for negligence?

To prevail on a negligence cause of action, a plaintiff must prove (1) the existence of a legal duty, (2) breach of the duty, and (3) injury proximately caused by the defendant’s breach. Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1991). Whether a duty exists is a question of law for the court to decide based on the facts surrounding the occurrence in question. Id.

Duty concerns not subjecting others to an unreasonable, foreseeable risk of harm. Tex. Home Mgmt., Inc. v. Peavy, 89 S.W.3d 30, 39 (Tex. 2002); Otis Eng’g Corp. v. Clark, 668 S.W.2d 307, 311 (Tex. 1984) (discussing unreasonable risk of harm as component of duty analysis); see also Keck, Mahin & Cate v. Nat. Union Fire Ins. Co., 20 S.W.3d 692, 702 (Tex. 2000) (noting contributory negligence is that which creates an unreasonable risk of harm to oneself). “As Dean Prosser has observed . . . [‘n]o better general statement can be made, than the courts will find a duty where, in general, reasonable men would recognize it and agree that it exists.’” Otis Eng’g Corp., 668 S.W.2d at 310. (quoting W. Prosser, The Law of Torts § 56 (4th ed. 1971)). A reviewing court balances several related factors to determine whether a defendant owed a plaintiff a duty, including the risk, foreseeability, and likelihood of injury weighed against the social utility of the defendant’s conduct, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendant. Phillips,

SOURCE: Corpus Christi Court of Appeals - 13-10-00355-CV - 7/28/11

Wednesday, August 3, 2011

Reasonableness of attorney's fee must be proven

Court of Appeals may overturn fee award even if authorized by statute when the fee claimant did not support the amount of the fees sought with proper evidence of reasonableness through her attorney.
   ATTORNEY FEE EVIDENCE: SHOWING OF REASONABLENESS REQUIRED 

As a prerequisite to the recovery of attorney’s fees for any underlying cause of action, the party seeking fees must prove the reasonableness of the fees. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998).

Reasonableness of fees must be supported by competent evidence. Peeples v. Peeples, 562 S.W.2d 503 (Tex.Civ.App.--San Antonio 1978, no writ). Here, there were no findings of fact entered to support the award of attorney's fees and costs. We must therefore presume the trial court made all findings necessary to support its order. Holt Atherton Industries, Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992).

Factors considered by the court when determining the amount of reasonable fees include: (1) the time and labor required, novelty and difficulty of the question presented, and the skill required; (2) the likelihood that acceptance of employment precluded other employment; (3) the fee customarily charged for similar services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer performing the services; and (8) whether the fee is fixed or contingent. Arthur Anderson & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997).

[Attorney in this case] did not testify, nor did she present an affidavit, itemized statements, exhibits, or any other offer of proof as to the reasonableness of her fees. The record is devoid of evidence relating to her experience, the time and labor involved, the difficulty of the task, her hourly rates, rates customarily charged for similar services, or her fee agreement with [ client ]. While a party need not offer proof of all the factors above, [ attorney ] did not offer proof under any of them. She referenced a “case ledger” presumably detailing her time spent preparing the motions and fees incurred. But it was not offered as an exhibit, was not introduced into evidence and does not appear in the record. We have only her request for fees of $518.10.

Under these facts, we are not persuaded [ party clainming fees ] provided more than a scintilla of evidence as to the reasonableness of the amount of fees requested. Finding legally insufficient evidence to support the award, we must conclude that the trial court abused its discretion. We sustain Issue Seven and reverse and render that [ fee claimant ] take nothing.

SOURCE: El Paso Court of Appeals - 08-10-00149-CV - 7/29/11

Waiver of contractual right to arbitrate under the Supremes' wholistic Perry-Cull standard

 
What is the test for waiver of the right to arbitrate? Under Texas Supreme Court precedent, it's anything but clear, but the standard is pretty high. Courts of appeals will continue to make their own calls in light of the kitchen-sink "totality of the circumstances" standard that allows for consideration of just about any arguably relevant factor to either compel or deny arbitration. See Perry Homes vs. Cull (Tex. 2008)
  
WHEN and HOW is the RIGHT TO ARBITRATE waived?
  
“Waiver is a question of law that this Court reviews de novo.” Small v. Specialty Contractors, Inc., 310 S.W.3d 639, 644 (Tex. App.-Dallas 2010, no pet.). “[A] party waives an arbitration clause by substantially invoking the judicial process to the other party's detriment or prejudice.” Perry Homes v. Cull, 258 S.W.3d 580, 589 (Tex. 2008). “Due to the strong presumption against waiver of arbitration, this hurdle is a high one.” Id. To decide whether a party substantially invoked the judicial process, we look to the “totality of the circumstances.” Id. at 591. In reviewing the totality of the circumstances, we consider “factors such as when the movant knew of the arbitration clause; how much discovery has been conducted; who initiated it; whether it related to the merits rather than arbitrability or standing; how much of it would be useful in arbitration; and whether the movant sought judgment on the merits.” Id. at 591-92. “[W]aiver can be implied from a party's conduct, although that conduct must be unequivocal.” Id. at 593. In close cases, the “strong presumption against waiver” should govern. Id. “Even substantially invoking the judicial process does not waive a party's arbitration rights unless the opposing party proves that it suffered prejudice as a result.” Id. at 594. Prejudice is defined as “the inherent unfairness in terms of delay, expense, or damage to a party's legal position that occurs when the party's opponent forces it to litigate an issue and later seeks to arbitrate that same issue.” Id. at 597.

The court in Perry Homes deemed the following acts, standing alone, insufficient to amount to waiver: filing suit; requesting initial discovery; noticing, but not taking a deposition; and taking four depositions. Perry Homes, 258 S.W.3d at 590; see also Small, 310 S.W.3d at 645. On the other hand, the Texas Supreme Court stated in another case that the combined acts of conducting full discovery, filing motions going to the merits, and seeking arbitration “only on the eve of trial” would constitute substantially invoking the judicial process. Perry Homes, 258 S.W.3d at 590 (citing In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 764 (Tex. 2006)). Because this case does not fit squarely into the circumstances described in either of those cases, we “must review relevant factors in the context of the totality of the circumstances.” Small, 310 S.W.3d at 645 (citing Perry Homes, 258 S.W.3d at 591-92).

SOURCE: Dallas Court of Appeals - 05-11-00115-CV - 8/2/11

First, we look at “when the movant knew of the arbitration clause.” Id. at 645 n.2, 646.

Tuesday, August 2, 2011

Civil Death Penalty Sanctions in Texas [striking of pleadings & dismissal for bad litigation conduct]

   
Texas is famous (or infamous, depending on viewpoint) for the use of the death penalty. But the term is also used in civil litigation -- to refer to sanctions that essentially terminate a lawsuit or -- as in the case from which the snippets below are taken -- strike a counterclaim. That's also why there is "death-penalty case law" from the Texas Supreme Court, even though that court does not hear appeals in criminal cases, much less capital cases.    

DEATH PENALTY SANCTIONS: When are they proper; when not?

Standard of Review on Appeal

A trial court’s sanctions order under Texas Rule of Civil Procedure 215.2(b) is reviewed for abuse of discretion. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). The test for an abuse of discretion is not whether, in the opinion of the reviewing court, the facts present an appropriate case for the trial court’s action, but whether the court acted without reference to any guiding rules or legal principles. Cire, 134 S.W.3d at 838; K-Mart Corp. v. Honeycutt, 24 S.W.3d 357, 360 (Tex. 2000). The trial court’s discretion in imposing sanctions is limited by the standards set out in the applicable Rules of Civil Procedure and TransAmerican Natural Gas Corp. v. Powell, 811 S.W. 2d 913 (Tex. 1991).

Basis for imposition of discovery sanctions

Rule 215.2 of the Texas Rules of Civil Procedure authorizes a trial court to sanction a party for failure to comply with a discovery order or request. Tex.R.Civ.P. 215.2. A list of possible sanctions is found in Rule 215.2(b). Pertinent to this case, an order striking pleadings is one of the sanctions available to the court. Tex.R.Civ.P. 215.2(b)(5). The Texas Supreme Court defines “death penalty sanctions” as “sanctions that terminate a party’s right to present the merits of its claims.” State v. Bristol Hotel Asset Co., 65 S.W.3d 638, 647 (Tex. 2001). Such sanctions include striking a party’s pleadings, dismissing its action, or rendering a default judgment against a party for abusing the discovery process. Id. Death penalty sanctions must be reserved for circumstances in which a party has so abused the rules of procedure, despite imposition of lesser sanctions, that the party’s position can be presumed to lack merit and it would be unjust to permit the party to present the substance of that position before the court. TransAmerican, 811 S.W.2d at 918.

The proportionality criterion   

A trial court may not impose sanctions that are more severe than necessary to satisfy legitimate purposes. Cire, 134 S.W.3d at 839. Further, Rule 215.2(b) explicitly requires that any sanction under this rule be “just.” Tex.R.Civ.P. 215.2(b). The Supreme Court’s decision in TransAmerican set out a two-part test for determining whether a particular sanction is just. Spohn Hospital v. Mayer, 104 S.W.3d 878, 882 (Tex. 2003); TransAmerican, 811 S.W.2d at 917.

First, there must be a direct relationship between the offensive conduct and the sanction imposed. TransAmerican, 811 S.W.2d at 917. A just sanction must be directed against the abuse and toward remedying the prejudice caused to the innocent party, and the sanction should be visited upon the offender. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917. The trial court should make some attempt to determine whether fault for discovery abuse lies with the party, its counsel, or both. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917.

Second, just sanctions must not be excessive. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917. In assessing the second standard, the sanction should be no more severe than necessary to satisfy its legitimate purposes, which include securing compliance with discovery rules, deterring other litigants from similar misconduct, and punishing violators. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917. The court must consider less stringent sanctions and whether such lesser sanctions will fully promote compliance, deterrence, and discourage further abuse. Spohn Hospital, 104 S.W.3d at 882; TransAmerican, 811 S.W.2d at 917. Death penalty sanctions may be imposed in exceptional cases where they are clearly justified and it is apparent that no lesser sanctions would promote compliance with the rules. Spohn Hospital, 104 S.W.3d at 882.

Discovery sanctions that are so severe as to inhibit presentation of the merits of the case should be reserved to address a party’s flagrant bad faith or counsel’s callous disregard for the responsibilities of discovery under the rules. Spohn Hospital, 104 S.W.3d at 883.

SOURCE: El Paso Court of Appeals - 08-09-00239-CV - 7/29/11

MSJ involving a contract: Unambiguous vs. ambiguous contracts

Whether enforcement of contract terms via summary judgment is appropriate depends on whether the contract is unambiguous or ambiguous, and whether consequently it can be construed as a matter of law.

PRINCIPLES OF CONTRACT INTERPRETATION: 

Contract construction as a question of law vs. resolution of fact issues with the aid of extrinsic evidence by the fact finder   

The interpretation of an unambiguous contract is a question of law, which we review de novo. See MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650-51 (Tex. 1999). When the parties disagree over the meaning of an unambiguous contract, the court must determine the parties' intent by examining and considering the entire writing in an effort to give effect to the parties' intentions as expressed in the contract. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); Nicol v. Gonzales, 127 S.W.3d 390, 394 (Tex. App.-Dallas 2004, no pet.).

The parties' intent must be taken from the agreement itself, and the agreement must be enforced as written. Wells Fargo Bank, Minn., N.A. v. N. Cent. Plaza I, L.L.P., 194 S.W.3d 723, 726 (Tex. App.-Dallas 2006, pet. denied); Nicol, 127 S.W.3d at 394; see also Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) (only where contract is first determined to be ambiguous may courts consider parties' interpretation or admit extraneous evidence to determine true meaning of instrument). Further, under the “Four Corners Rule,” the parties' intent must be “ascertained from the instrument as a whole and not from isolated parts thereof.” Calpine Producer Servs., L.P. v. Wiser Oil Co., 169 S.W.3d 783, 787 (Tex. App.-Dallas 2005, no pet.).

All writings that pertain to the same transaction will be considered together, even if they were executed at different times. DeWitt Cnty. Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 102 (Tex. 1999). Unless the agreement shows that the parties used a term in a technical or different sense, we give the terms their plain, ordinary, and generally accepted meaning. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). “Courts will not declare a forfeiture unless they are compelled to do so by language which can be construed in no other way.” Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987).

When a contract contains an ambiguity, the granting of a motion for summary judgment is improper because the interpretation of the instrument becomes a fact issue. See Harris v. Rowe, 593 S.W.2d 303, 306 (Tex. 1979). If a written instrument is so worded that it can be given “a certain or definite legal meaning or interpretation,” then it is not ambiguous. Coker, 650 S.W.2d at 394. “A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation.” Las Colinas Obstetrics-Gynecology-Infertility Ass'n, P.A. v. Villalba, 324 S.W.3d 634, 640 (Tex. App.-Dallas 2010, no pet.); accord Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006). A disagreement over the meaning of a contract provision does not render the provision ambiguous. See Nicol, 127 S.W.3d at 394. The question of whether a contract is ambiguous is a question of law, which is reviewed de novo. See MCI Telecomms. Corp., 995 S.W.2d at 650.

SOURCE: Dallas Court of Appeals - 05-09-00962-CV - 8/2/11

An appellate court reviews a trial court’s construction of an unambiguous contract de novo. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999). In performing a de novo review, we exercise our own judgment and redetermine each legal issue. Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1999). When construing a written contract, courts ascertain the intent of the parties as expressed in the instrument. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). Courts examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). If there is no ambiguity in the instrument, its construction is a question of law for the court. See id. Interpretation of a contract becomes a fact issue, to be resolved by extrinsic evidence, only when application of pertinent rules of construction leaves a genuine uncertainty as to which of two meanings is proper. Id. at 393-94.

SOURCE: Tyler Court of Appeals - 12-10-00342-CV - 7/29/11

Monday, August 1, 2011

What is an indemnity agreement?

INDEMNITY DEFINED

Legally speaking: What is indemnity all about?

“An indemnity agreement is a promise to safeguard or hold the indemnitee harmless against either existing and/or future loss liability” and provides the indemnitee with a cause of action to recover against the indemnitor. Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex. 1993).

Most contract provisions involve a certain degree of risk-shifting, but some provisions involve such an “extraordinary shifting of risk” that courts impose additional fair notice requirements to make the provision enforceable. Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 387 (Tex. 1997); Dresser, 853 S.W.2d at 508; Amtech Elevator Serv. Co. v. CSFB 1998-P1 Buffalo Speedway Office Ltd., 248 S.W.3d 373, 377 (Tex. App.—Houston [1st Dist.] 2007, no pet.).

The fair notice requirements are (1) the express negligence doctrine and (2) the conspicuousness requirement. Amtech Elevator Serv., 248 S.W.3d at 377.

Express negligence doctrine

The express negligence doctrine dictates that a party’s intent to be released or indemnified from its own future negligence must be clear and unambiguous. Green Int’l, 951 S.W.2d at 386.

Conspicuousness requirement

The conspicuousness requirement means that “something must appear on the face of the [contract] to attract the attention of a reasonable person.” Storage & Processors, Inc. v. Reyes, 134 S.W.3d 190, 192 (Tex. 2004) (quoting Dresser, 853 S.W.2d at 508)).

The fair notice requirements apply when “one party exculpates itself from its own future negligence.” Green Int’l, 951 S.W.2d at 387; DDD Energy, Inc. v. Veritas DGC Land, Inc., 60 S.W.3d 880, 885 (Tex. App.—Houston [14th Dist.] 2001, no pet.) (holding fair notice does not apply “where an indemnitee is seeking indemnification from claims not based on the negligence of the indemnitee.”). In DDD Energy Inc., the indemnity clause required each contracting party to indemnify the other for its individual negligence resulting from claims by a third party. DDD Energy, 60 S.W.3d at 884. Nothing in the indemnity clause shifted responsibility for DDD Energy’s negligence onto the other contracting party. Id. The court of appeals affirmed summary judgment and held that the fair notice requirements identified in Dresser are limited to claims for indemnity based on the indemnitee’s own negligence. Id. at 885. See also English v. BGP Int’l, Inc., 174 S.W.3d 366, 375 (Tex. App.—Houston [14th Dist.] 2005, no pet.).


SOURCE: Houston Court of Appeals - 01-10-00489-CV 7/28/11

More Lawyer Lingo: The Parol Evidence Rule - No, not that kind of parole ...

 
THE PAROL EVIDENCE RULE

 
-- Nota bene:  it's not spelled parole - No 'e' at the end

 
“The parol evidence rule provides that the terms of a written contract cannot be contradicted by evidence of an earlier, inconsistent agreement.” Baroid Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 13 (Tex. App.—Houston [1st Dist.] 2005, pet. denied). The application of the parol evidence rule is a question of law that we review de novo. DeClaire v. G & B McIntosh Family Ltd., 260 S.W.3d 34, 45 (Tex. App.—Houston [1st Dist.] 2008, no pet.). The rule particularly applies when the written contract includes a merger clause or similar language. Baroid Equip., 184 S.W.3d at 13.

We may consider parol evidence, however, “to show want or failure of consideration, and to establish the real consideration given for an instrument.” DeLuca v. Munzel, 673 S.W.2d 373, 376 (Tex. App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.). See also RESTATEMENT (SECOND) OF CONTRACTS §§ 213 cmt. d, 214(d) (1981). We may consider parol evidence to determine if consideration exists “even though the parties have reduced their agreement to a writing which appears to be a completely integrated agreement.” RESTATEMENT (SECOND) OF CONTRACTS § 218(2).

We may also consider parol evidence to determine whether the parties intended a written agreement as a memorialization of their agreement (and therefore only had one contract) or a modification of the prior oral contract (and therefore had two contracts, each of which needed independent consideration as discussed below). See id. at § 210(3) (“Whether an agreement is completely or partially integrated is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.”); Mark K. Glasser & Keith A. Rowley, On Parol: The Construction and Interpretation of Written Agreements and the Role of Extrinsic Evidence in Contract Litigation, 49 BAYLOR L. REV. 657, 705–707 (1997).

SOURCE: Houston Court of Appeals - 01-10-00489-CV - 7/28/11

A rear-ender accident: Whose fault? What kind'a lawsuit?

Got hit from behind - Got a lawsuit against the other driver, right? - Not so fast ...

Sounding a cautionary note, Houston Court of Appeals explains:

The mere occurrence of a rear-end collision is not of itself evidence of negligence as a matter of law. See, e.g., Benavente v. Granger, 312 S.W.3d 745, 749 (Tex. App.—Houston [1st Dist.] 2009, no pet.); Neese v. Dietz, 845 S.W.2d 311, 314 (Tex. App.—Houston [1st Dist.] 1992, writ denied).

The plaintiff must prove specific acts of negligence on the part of the defendant driver and must prove proximate cause. Neese, 845 S.W.2d at 314. With regard to rear-end collisions, “standards of ordinary care cannot be fixed with any degree of certainty but must be left in large measure to the trier of the facts.” Id. Conflicts in the witnesses’ testimony present credibility questions for the jury to resolve. Id. at 314–15.

SOURCE: Houston Court of Appeals - 01-10-00473-CV - 7/28/11 

[ Plaintiff-Driver-in-front ] contends that the "undisputed evidence was that at the time of the accident [he] was lawfully stopped with his left turn signal blinking and brake lights on waiting for traffic to clear." Relying, in part, on section 545.062 of the Transportation Code, he argues that the evidence of Nguyen’s negligence was conclusive because she rear-ended his vehicle and admitted to being 100% at fault. Section 545.062(a) provides:


TEX. TRANSP. CODE ANN. § 545.062(a) (West 2011).

But [ Defendant-Driver-behind ] did not admit fault, and there was disputed evidence suggesting [ Plaintiff-Driver-in-front ]’s negligence. [ Plaintiff-Driver-in-front ] testified that he had been completely stopped for approximately 60 seconds before Nguyen’s vehicle collided with his, but[ Defendant-Driver-behind ]testified otherwise, stating that [ Plaintiff-Driver-in-front ] stopped suddenly and without warning. She stated that she saw [ Plaintiff-Driver-in-front ]’s brake lights come on when he made a sudden stop, and that she applied her brakes, but she was unable to avoid colliding with [ Plaintiff-Driver-in-front ]’s vehicle.

[ Plaintiff-Driver-in-front ] also testified that he was making a left turn into an apartment complex. He testified that he was leaning to the right, talking to a pedestrian through the passenger-side window, and trying to find a pen in his center console. [ Defendant-Driver-behind ]recalled seeing the pedestrian to her right and stated that [ Plaintiff-Driver-in-front ]’s vehicle had passed the entry for the apartment complex and was at the intersection. She testified that [ Plaintiff-Driver-in-front ]’s vehicle was "pulled to the right" and that he was not positioned to make a left turn. She also testified that the left-rear side of [ Plaintiff-Driver-in-front ]’s bumper was damaged, as opposed to the center or right-rear side, in the collision.

The jury could have concluded based upon [ Plaintiff-Driver-in-front ]’s and Nguyen’s testimony that [ Plaintiff-Driver-in-front ] stopped suddenly or that he was distracted by a conversation with a pedestrian. The jury is the sole judge of the credibility of the witnesses and the weight accorded to their testimony. City of Keller, 168 S.W.3d at 819. When viewed in the light most favorable to the jury’s finding, the evidence raises an issue as to whether [ Plaintiff-Driver-in-front ] acted negligently. See McDonald v. Dankworth, 212 S.W.3d 336, 340–45 (Tex. App.—Austin 2006, no pet.). Therefore, we hold that the evidence was legally sufficient to support the jury’s finding that [ Plaintiff-Driver-in-front ] was negligent and that his negligence was a proximate cause of the collision.

With respect to apportionment of fault, the jury is given wide latitude in determining the negligent parties’ proportionate responsibility. Hagins v. E-Z Mart Stores, Inc., 128 S.W.3d 383, 392 (Tex. App.—Texarkana 2004, no pet); Rosell v. Cent. W. Motor Stages, Inc., 89 S.W.3d 643, 659–60 (Tex. App.—Dallas 2002, pet. denied.). As with our review of the sufficiency of the evidence to support the negligence finding, we consider the evidence in the light most favorable to the finding under review and indulge every reasonable inference that would support it. City of Keller, 168 S.W.3d at 822. If the evidence is sufficient to support the jury’s negligence finding, the Court may not substitute its judgment for that of the jury, even if the evidence could support a different percentage allocation. Rosell, 89 S.W.3d at 659–60; Samco Props., Inc. v. Cheatham, 977 S.W.2d 469, 478 (Tex. App.—Houston [14th Dist.] 1998, pet. denied). Having found sufficient evidence that both [ Plaintiff-Driver-in-front ] and[ Defendant-Driver-behind ]were at fault, we find no basis for interfering with the jury’s assignment of 40% responsibility to [ Plaintiff-Driver-in-front ].

SOURCE: Houston Court of Appeals - 01-10-00473-CV - 7/28/11

An operator shall, if following another vehicle, maintain an assured clear distance between the two vehicles so that, considering the speed of the vehicles, traffic, and the conditions of the highway, the operator can safely stop without colliding with the preceding vehicle or veering into another vehicle, object, or person on or near the highway.

TRCP 91 - Failure to state viable cause of action is properly raised through special exceptions

  
Special exceptions under TRCP 91 are the procedural vehicle to challenge deficiencies in the opponent's pleadings, but may also be used to assert that the Plaitniff has not pleaded a valid cause of action at all. Trial court must generally provide an opportunity to amend upon sustaining special exceptions, at least when it would not be obviously futile.
  
SPECIAL EXCEPTIONS PROCEDURE UNDER THE TEXAS RULES OF PROCEDURE
 

  
A party is generally required to file a special exception to challenge a defective pleading. Connolly v. Gasmire, 257 S.W.3d 831, 839 (Tex. App.—Dallas 2008, no pet.); see also TEX. R. CIV. P. 90 (providing that "[g]eneral demurrers shall not be used" and that any "defect, omission or fault in a pleading" is waived if not presented in writing to trial court prior to instruction or charge to the jury or, in non-jury case, prior to trial court signing the judgment). Texas Rule of Civil Procedure 91 provides:

A special exception shall not only point out the particular pleading excepted to, but it shall also point out intelligibly and with particularity the defect, omission, obscurity, duplicity, generality, or other insufficiency in the allegations in the pleading excepted to.TEX. R. CIV. P. 91. 
The purpose of special exceptions is to furnish a party with a medium to force clarification of an adverse party’s pleadings when they are not clear or sufficiently specific. Connolly, 257 S.W.3d at 839.

Special exceptions may also be used to determine whether the plaintiff has stated a cause of action permitted by law. Mowbray v. Avery, 76 S.W.3d 663, 677 (Tex. App.—Corpus Christi 2002, pet. denied) (citing TEX. R. CIV. P. 91).

Standard of review of ruling on special exceptions

When reviewing a trial court’s dismissal of a cause of action following the sustaining of special exceptions, we review the propriety of both the trial court’s decision to sustain the special exceptions and the trial court’s order of dismissal. Perry v. Cohen, 285 S.W.3d 137, 142 (Tex. App.—Austin 2009, pet. denied) (citing Cole v. Hall, 864 S.W.2d 563, 566 (Tex. App.—Dallas 1993, writ dism’d w.o.j.) (en banc)).

We review the pleadings to determine whether the trial court abused its discretion in granting special exceptions. Id. (citing Cole, 864 S.W.2d at 566 and Muecke v. Hallstead, 25 S.W.3d 221, 224 (Tex. App.—San Antonio 2000, no pet.)). The trial court has broad discretion in granting special exceptions to order more definite pleadings as a particular case may require. Id. (citing Burgess v. El Paso Cancer Treatment Ctr., 881 S.W.2d 552, 554 (Tex. App.—El Paso 1994, writ denied)). A trial court abuses its discretion when it acts without reference to any guiding rules or principles. Id. (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985)). When reviewing the trial court’s decision on special exceptions, we accept as true all the material factual allegations and statements reasonably inferred from the allegations set forth in the pleadings. Id. (citing Sorokolit v. Rhodes, 889 S.W.2d 239, 240 (Tex. 1994)).

If we determine that the trial court’s decision to grant the special exceptions was proper, we then review whether the decision to dismiss was appropriate. Connolly, 257 S.W.3d at 838 (citing Cole, 864 S.W.2d at 566).

Special exceptions must be specific 

Rule 91 requires that special exceptions "point out intelligibly and with particularity" the alleged defect or omission in the pleadings. TEX. R. CIV. P. 91. If special exceptions lack specificity in pointing out how the plaintiff’s allegations are faulty, they constitute a general demurrer, and general demurrers are prohibited by the Rules of Civil Procedure. See TEX. R. CIV. P. 90; see also Castano v. San Felipe Ag. Mfg. & Irrigation Co., 147 S.W.3d 444, 453 (Tex. App.—San Antonio 2004, no pet.) (holding that special exceptions failed "to state with specificity the elements lacking in [plaintiff’s] petition" and thus was general demurrer prohibited under rules and that grant of those special exceptions "would . . . permit the [defendants] to circumvent the protective features of the special exception procedure").

SOURCE: Houston Court of Appeals - 01-10-00412-CV - 7/28/11

Mere nonperformance ("nonfeasance") of contractual obligation not a tort

CAN A BREACH OF CONTRACT ALSO BE A TORT?

“Although a party’s actions may breach duties in tort, contract, or both, Texas jurisprudence has long recognized that ‘mere nonfeasance under a contract creates liability only for breach of contract.’” Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 301 (Tex. App.—Dallas 2009, no pet.) (quoting Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 13 (Tex. 1996)).

Economic Loss rule

Generally, tort damages are not recoverable unless the plaintiff suffered an injury that is independent and separate from the economic losses recoverable under a breach of contract claim. Id. (citing Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 45–47 (Tex. 1998)).

SOURCE: Houston Court of Appeals - 01-10-00412-CV - 7/28/11
(Duties all ran from the official Loan Documents. Because the Plaintiffs did not plead any fraud in the inducement of those documents, they did not allege an independent tort. See Formosa Plastics, 960 S.W.2d at 47. Trial court did not err in sustaining Defendant's special exceptions.)

Sunday, July 31, 2011

Equitable interest claim with respect to land / real estate

Equitable Interest in Real Property

When is such a claim viable, when not? 

A person owns an “equitable interest” in property by virtue of “an equitable title or claim [] on equitable grounds, such as the interest held by a trust beneficiary.” Longoria v. Lasater, 292 S.W.3d 156, 165 (Tex. App.-San Antonio 2009, pet. denied ).

Equitable vs. legal tilte to real property

“Equitable title” is “a title that indicates a beneficial interest in property and that gives the holder the right to acquire formal legal title.” Id. On the other hand, a “legal interest” is “an interest recognized by law, such as legal title.” Id. “Legal title” is “a title that evidences apparent ownership but does not necessarily signify full and complete title or a beneficial interest.” Id.

As a general rule, a judgment lien attaches only to the interest in the land owned by the judgment debtor. Martin v. Cadle Co., 133 S.W.3d 897, 906 (Tex. App.-Dallas 2004, pet. denied). An equitable title is superior to legal title to the property and may be asserted as a complete defense against the lien of a debtor's judgment creditor. Cadle Co. v. Harvey, 46 S.W.3d 282, 287 (Tex. App.-Fort Worth 2001, pet. denied ).

“Equitable rights in real property owned by someone other than the debtor, which rest in parol, will be protected against a judgment lien.” Gaona v. Gonzales, 997 S.W.2d 784, 787 (Tex. App.-Austin 1999, no pet. ); Carlisle v. Holland, 289 S.W.116, 118 (Tex. Civ. App.-El Paso 1926, writ ref'd); see First State Bank of Amarillo v. Jones, 107 Tex. 623, 183 S.W. 874, 876 (1916).

Does a Contract for Sale of land create an equitable interest?

A contract for the sale of real estate is an agreement that binds the purchaser to buy and the seller to sell in accordance with the terms of the contract. Greve v. Cox, 683 S.W.2d 535, 536 (Tex. Civ. App.-Dallas 1984, no writ). The purchaser under a contract for conveyance of property does not acquire equitable title to the property until he pays the purchase price and fully performs the obligations under the contract. Johnson v. Wood, 138 Tex. 106, 109-10, 157 S.W.2d 146, 148 (1941); Cullins v. Foster, 171 S.W.3d 521, 534 (Tex. App.-Houston [14th Dist. 2005, pet. denied). Upon such performance, he becomes vested with equitable title to the property. Cullins, 171 S.W.3d at 534. Until such time, however, the purchaser has only an equitable right to acquire title by carrying out the agreement. See Wood, 157 S.W.2d at 148.

Resulting trust: what is it and how does it relate to equitable interest claims?

A resulting trust is an equitable remedy arising by operation of law when title is conveyed to one person but the purchase price or a portion thereof is paid by another. Cohrs v. Scott, 338 S.W.2d 127, 130 (Tex. 1960); Smith v. Deneve, 285 S.W.3d 904, 912 (Tex. App.-Dallas 2009, no pet.). The parties are presumed to have intended that the grantee hold title for the use of the person who paid the purchase price and whom equity deems to be the true owner. Cohrs, 338 S.W.2d at 130; Troxel v. Bishop, 201 S.W.3d 290, 298 (Tex. App.-Dallas 2006, no pet.). The trust arises out of the transaction and must arise at the time when the title passes. Cohrs, 338 S.W.2d at 130; Smith, 285 S.W.3d at 912. The doctrine of resulting trusts is invoked to prevent unjust enrichment. Nolana Dev. Ass'n v. Corsi, 682 S.W.2d 246, 250 (Tex. 1984).

Legal effect of recorded abstract of judgment - judgment lien

An abstract of judgment recorded in accordance with the provisions of the property code, if the judgment is not dormant, “constitutes a lien on the real property of the defendant located in the county in which the abstract is recorded and indexed, including real property acquired after such recording and indexing.” Tex. Prop. Code Ann. § 52.001 (West Supp. 2010). The property code requires the county clerk to record properly authenticated abstracts of judgment in the county real property records and, at the same time, enter on the alphabetical index to the real property records the name of each plaintiff and each defendant, and the volume and page or instrument number in the records in which the abstract is recorded. Tex. Prop. Code Ann. § 52.004(a)-(b) (West 2007).

Recordation of abstract of judgment and lien priorty

Because a judgment lien is created by statute, substantial compliance with the statutory requirements is mandatory before a judgment creditor's lien will attach. Murray v. Cadle Co., 257 S.W.3d 291, 296 (Tex. App.-Dallas 2008, pet. denied). The purpose of the index is to provide notice to subsequent purchasers of the existence of the judgment and to indicate the source from which the full information about the judgment may be obtained. Id. at 296-97. When properly recorded and indexed, an abstract of judgment creates a judgment lien that is superior to the rights of subsequent purchasers and lienholders. Wilson v. Dvorak, 228 S.W.3d 228, 233 (Tex. App.-San Antonio 2007, pet. denied). The party seeking to foreclose a judgment lien has the burden of proving the abstract of judgment was properly recorded and indexed. Murray, 257 S.W.3d at 296. A party has constructive notice of instruments properly recorded in the proper county. Tex. Prop. Code Ann. § 13.002 (West 2004); AMC Mortg. Servs., Inc. v. Watts, 260 S.W.3d 582, 586 (Tex. App.-Dallas 2008, no pet.).

SOURCE: Dallas Court of Appeals - 05-09-00581-CV - 7/29/11

RELATED LEGAL TERMS: equitable vs. legal title, contract for sale of land, resulting trust, lien and lien priority, judgment lien, recorded lien, instrument, contructive notice of lien, interest in property, encumbrances

Lawyer lingo: What is the meaning of novation?

 
CONTRACT LAW: NOVATION DEFINED
   
What is novation?
 
“Novation is the creation of a new obligation in the place of an old one, by which the parties agree that a new obligor will be substituted to perform the duties agreed upon by the old contract, while the original obligor is released from performing those duties.” Vandeventer v. All Am. Life & Cas. Co., 101 S.W.3d 703, 712 (Tex. App.-Fort Worth 2003, no pet.).
 
Elements of novation as a defense
  
A party that raises the affirmative defense of novation must prove (1) the validity of a previous obligation; (2) an agreement among all parties to accept a new contract; (3) the extinguishment of the previous obligation; and (4) the validity of the new agreement. Vickery v. Vickery, 999 S.W.2d 342, 356 (Tex. 1999).

SOURCE: Dallas Court of Appeals - 05-10-00234-CV - 7/29/11

Breach of oral contract vs agreement in writing: is there a difference?

ORAL CONTRACT - CONTRACT IN WRITING
SAME ELEMENTS (though different evidence may be needed as proof)

The elements of a breach of contract claim are: (1) a valid contract, (2) plaintiff performed or tendered performance, (3) defendant breached the contract, and (4) plaintiff was damaged as a result of the breach. Critchfield v. Smith, 151 S.W.3d 225, 233 (Tex. App.-Tyler 2004, pet. denied); Richter v. Wagner Oil Co., 90 S.W.3d 890, 898 (Tex. App.-San Antonio 2002, no pet.).
The following elements are required for the formation of a valid and binding contract: (1) an offer, (2) acceptance in strict compliance with the terms of the offer, (3) a meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Cessna Aircraft Co. v. Aircraft Network, L.L.C., 213 S.W.3d 455, 465 (Tex. App.-Dallas 2006, pet. denied) ; Hubbard v. Shankle, 138 S.W.3d 474, 481 (Tex. App.-Fort Worth 2004, pet. denied).

The elements of written and oral contracts are the same and must be present for a contract to be binding. Critchfield, 151 S.W.3d at 233. In determining the existence of an oral contract, the court looks to the communications between the parties and to the acts and circumstances surrounding the communications. Cessna Aircraft Co., 213 S.W.3d at 465.

SOURCE: Dallas Court of Appeals - 05-10-00041-CV - 7/29/11 (evidence found legally and factually sufficient to support claim for breach of oral contract)

Friday, July 29, 2011

Legal lingo: Consideration in the context of a contract

CONSIDERATION AS AN ESSENTIAL ELEMENT OF A VALID CONTRACT

Generally, a contract must be supported by consideration to be enforceable. Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 659 (Tex. 2006).

What constitutes consideration?

Consideration consists of a benefit to the promisor or a detriment to the promisee. N. Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998). Consideration for a promise may be either a performance or a return promise bargained for in a present exchange. Johnson, 209 S.W.3d at 659 (citing Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991); Restatement (Second) of Contracts § 71(1) (1981)).

Lack of consideration may defeat contract claim

Lack of consideration for a contract is an affirmative defense to its enforcement; therefore, [ LITIGANT ] was required to raise a fact issue on lack of consideration. See Tex. R. Civ. P. 94; Kaye/Bassman Intern. Corp. v. Help Desk Now, Inc., 321 S.W.3d 806, 814 (Tex. App.—Dallas 2010, pet. denied).

Consideration for execution of promissory note

[A] written instrument reciting a consideration imports one, and with such a recitation we presume the consideration [to be] sufficient. Hoagland v. Finholt, 773 S.W.2d 740, 743 (Tex. App.—Dallas 1989, no writ). However, parol evidence is admissible to show want or failure of consideration and establish the actual consideration given for the instrument. DeLuca v. Munzel, 673 S.W.2d 373, 376 (Tex. App.—Houston [1st Dist.] 1984, writ ref‘d n.r.e.) (citing Fire Ins. Ass’n v. Wickham, 141 U.S. 564, 579–82 (1891); Gaines Motor Sales Co. v. Hastings Mfg. Co., 104 S.W.2d 548, 551 (Tex. Civ. App.—Fort Worth 1937, writ dism‘d)).

To constitute consideration, . . . [t]he performance or return promise . . . may be given by the promisee or by some other person. Restatement (Second) of Contracts § 71 (1981) (emphasis added). ―It matters not from whom the consideration moves or to whom it goes. If it is bargained for and given in exchange for the promise, the promise is not gratuitous. Id. cmt. c.

SOURCE: Houston Court of Appeals - 14-09-00312-CV - 7/26/11 - McLernon v. Dynegy Inc.

Avoiding contract based on fraud in the inducement

FRAUDULENT INDUCEMENT AS DEFENSE TO ENFORCEMENT OF CONTRACT

A contract is subject to avoidance on the ground of fraud. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990); see Cecil v. Zivley, 683 S.W.2d 853, 857 (Tex. App.—Houston [14th Dist.] 1984, no writ).

To prevail on a fraudulent-inducement contention, a party must establish the elements of fraud ―as they relate to an agreement between the parties. Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001).

The elements of fraud are (1) a material misrepresentation, (2) made with knowledge of its falsity or without any knowledge of the truth and as a positive assertion, (3) made with the intention that it should be acted on by the other party, and (4) the other party acts in reliance on the misrepresentation and thereby suffers injury. See Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47–48 (Tex. 1998).

SOURCE: Houston Court of Appeals - 14-09-00312-CV - 7/26/11 - McLernon v. Dynegy Inc.

Thursday, July 28, 2011

What is Judicial Immunity?

THE JUDICIAL IMMUNITY DEFENSE BELONGS TO JUDGES

The immunity defense that judicial offers may invoke when made defendants in a civil suit - similar to the official-immunity defense applicable to government agents generally -  must not  be confused with judicial proceedings privilege, which is sometimes also referred as "immunity" and provides a defense in suits complaining of conduct or communications made by others in the course of a court proceeding.


JUDICIAL IMMUNITY DEFENSE

Judges acting in their official judicial capacity have immunity from liability and suit [Fn3] for judicial acts performed within the scope of their jurisdiction. Twilligear v. Carrell, 148 S.W.3d 502, 504 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) (citing Dallas Cnty v. Halsey, 87 S.W.3d 552, 554 (Tex. 2002)).

Fn3: Mireles v. Waco, 502 U.S. 9, 11 (1991).

This immunity extends to actions that are taken in error, maliciously, and even in excess of the judge‘s authority. Id. (citing Stump v. Sparkman, 435 U.S. 349, 356–57 (1978)). Immunity is overcome only for actions that are: (1) nonjudicial, i.e., not taken in the judge‘s official capacity; or (2) taken in the complete absence of all jurisdiction. Id. (citing Mireles v. Waco, 502 U.S. 9, 11–12 (1991)).

Whether an act is judicial or nonjudicial for this purpose is determined by the nature of the act — whether it is a function normally performed by a judge and to the expectations of the parties — as contrasted from other administrative, legislative, orexecutive acts that simply happen to be done by judges. Mireles, 502 U.S. at 11–12; Forrester v. White, 484 U.S. 219, 227 (1988); Twilligear, 148 S.W.3d at 504-05.

Judicial acts include those performed by judges in adjudicating, or otherwise exercising their judicial authority over, proceedings pending in their courts. Twilligear, 148 S.W.3d at 505.

Conversely, nonjudicial acts include other tasks, even though essential to the functioning of courts and required by law to be performed by a judge, such as: (1) selecting jurors for a county‘s courts; (2) promulgating and enforcing a code of conduct for attorneys; and (3) making personnel decisions regarding court employees and officers. Id. (citing Forrester, 484 U.S. at 228–31).

SOURCE: Houston Court of Appeals - 14-10-00900-CV - 7/26/11

Attorney-Client: What is the nature of the relationship between lawyer and client?

NATURE OF THE ATTORNEY-CLIENT RELATIONSHIP:

Contractual and fiduciary


How does Texas law view the relationship between a lawyer and his or her retained client?

An attorney-client relationship is a contractual agreement that can be created by an express contract or implied from the actions of the parties. See Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, L.L.P., 105 S.W.3d 244, 254 (Tex. App.-Houston [14th Dist.] 2003, pet. denied). In determining whether a contract which creates an attorney-client relationship should be implied, the court should use an objective standard, looking at what the parties said and did, and does not consider their unstated, subjective beliefs. See Span Enterprises v. Wood, 274 S.W.3d 854, 857-58 (Tex. App.-Houston [1st Dist.] 2008, no pet.).

In certain formal relationships, such as an attorney-client relationship, a fiduciary duty arises as a matter of law. See Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 303 (Tex. App.-Dallas 2008, no pet.).

SOURCE: Dallas Court of Appeals - 05-10-00856-CV - 7/26/11

Wednesday, July 27, 2011

Premises Liability as to Invitees

ELEMENTS OF PREMISES LIABILITY CLAIM BY INVITEE 
& STANDARD OF PROOF

In a premises liability case, the plaintiff must establish (1) a legal duty owed to the plaintiff, (2) breach of that duty, and (3) damages proximately caused by the breach. See Del Lago Partners, Inc. v. Smith, 307 S.W.3d 762, 767 (Tex. 2010).

Status of Plaintiff with respect to the property on which injury happened or accident occurred 

The scope of the duty owed to plaintiff depends on the status of the plaintiff at the time the incident occurred. See Western Investments, Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005); M.O. Dental Lab, 139 S.W.3d at 675.

Invitee Status

When [...] the plaintiff is an invitee, a property owner has a duty to use ordinary care to reduce or eliminate an unreasonable risk of harm created by a premises condition about which the property owner knew or should have known. Del Lago Partners, 307 S.W.3d at 767.

SOURCE: Dallas Court of Appeals - 05-10-00123-CV - 7/26/11

Does shareholder have the right to sue for injury to corporation, decline in value of stock?

   
GENERAL RULE REGARDING SHAREHOLDER STANDING IN TEXAS
  
"The general rule in Texas is that 'individual shareholders have no separate and independent right of action for injuries suffered by the corporation which merely result in the depreciation of the value of their stock.'" Perry v. Cohen, 285 S.W.3d 137, 144 (Tex.App.--Austin 2009, pet. denied) (quoting Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex. 1990)).[Fn4]


"[A] cause of action for injury to the property of a corporation or for impairment or destruction of its business is vested in the corporation, as distinguished from its shareholders, even though the harm may result indirectly in the loss of earnings to the shareholders." Redmon v. Griffith, 202 S.W.3d 225, 233 (Tex.App.--Tyler 2006, pet. denied).


As a result, to recover for wrongs done to the corporation, a shareholder must bring the suit derivatively in the name of the corporation to ensure that each shareholder is made whole if the corporation obtains compensation from a wrongdoer. Swank v. Cunningham, 258 S.W.3d 647, 661 (Tex.App.--Eastland 2008, pet. denied). If a claim belongs to the corporation, shareholders lack standing to seek redress in their individual capacities, because individual shareholders have no separate and independent right of action for wrongs to the corporation that merely result in depreciation in the value of their stock. Id. at 662; Redmon, 202 S.W.3d at 233.


Fn4: This general rule applies even if the corporation is wholly-owned. Lamajak, Inc. v. Frazin, 230 S.W.3d 786, 794 (Tex.App.--Dallas 2007, no pet.).


SOURCE: Amarillo Court of Appeals - NO. 07-10-0027-CV - 7/26/11


RELATED LEGAL TERMS: Shareholder derivative action, derivative actions, suit against corporate directors, executives.  

Summary Judgment Based on Guaranty Agreement

ELEMENTS OF SUIT ON PERSONAL OR CORPORATE GUARANTY AGREEMENT

To obtain summary judgment on a guaranty agreement, a party must conclusively prove: (1) the existence and ownership of the guaranty contract, (2) the performance of the terms of the contract by plaintiff, (3) the occurrence of the condition on which liability is based, and (4) guarantor's failure or refusal to perform the promise. Barclay v. Waxahachie Bank & Trust Co., 568 S.W.2d 721, 723 (Tex.Civ.App.--Waco 1978, no writ).

SOURCE: Amarillo Court of Appeals - 07-10-0027-CV - 7/26/11


RELATED TERMS AND PHRASES: guaranteeing payment, signing loan documents for another, agreeing to be held liable for the debt of a loan applicant, borrower in the event of default

Proving common-law negligence cause of action in Texas

ELEMENTS OF COMMON-LAW NEGLIGENCE CLAIM

The essential elements of a common law negligence cause of action are duty, breach of that duty, and damages proximately caused by the breach. D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). Whether or not a breach has occurred is determined by comparison to the applicable standard of care. See Doe v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472, 477 (Tex. 1995).

The “ordinary care” standard is generally defined as that which an ordinarily prudent person, exercising ordinary care would have done under the same circumstances. See Lincoln Prop. Co. v. DeShazo, 4 S.W.3d 55, 61 (Tex.App.--Fort Worth 1999, pet. denied).

SOURCE: El Paso Court of Appeals - 08-09-00192-CV - 7/20/11

Monday, July 25, 2011

Settled claims and governmental immunity: Can governments be held to their agreements upon settling a case


Can a governmental unit settle a claim against it and then assert immunity to avoid performing the terms of the settlement, and defeat the plaintiff's cause of action for breach of settlement agreement based on governmental immunity?


City Hall - City of Houston
GOVERNMENTAL IMMUNITY - WAIVERS -  AND SETTLEMENT OF CLAIMS NOT BARRED BY IMMUNITY

City of Houston v. Rhule    

EXCERPT FROM 14TH COURT OF APPEALS OPINIONS
  
Governmental immunity has two components—immunity from liability and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). A unit of state government is immune from suit and liability unless the state consents. Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). Immunity from suit defeats a trial court’s subject matter jurisdiction and is properly asserted in a plea to the jurisdiction. Id. at 639. Immunity from liability protects the state from money judgments even if the Legislature has expressly given consent to sue. Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 853 (Tex. 2002).

B. Waiver of Immunity

By entering into a contract, a governmental entity waives its immunity from liability for breach of the contract, "but does not, merely by entering into a contract, waive immunity from suit." Tex. A&M Univ.–Kingsville v. Lawson, 87 S.W.3d 518, 520 (Tex. 2002); Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001). When a state contracts, it is liable on contracts made for its benefit as if it were a private person. Little-Tex Insulation Co., 39 S.W.3d at 594 (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997)). However, a plurality of the supreme court has held that "when a governmental entity is exposed to suit because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it cannot be sued." Lawson, 87 S.W.3d at 521. Thus, "enforcement of a settlement of a liability for which immunity is waived should not be barred by immunity." Id.

Here, by entering into the agreement settling Rhule’s worker’s compensation claim, the City has waived its immunity from liability under that agreement. See id. at 520. Furthermore, the Legislature’s waiver of the City’s immunity from suit for the purposes of Rhule’s original worker’s compensation claim also waives the City’s immunity from suit for Rhule’s suit to enforce the Settlement Agreement. Id. at 521; see also City of La Porte v. Barfield, 898 S.W.2d 288, 294 (Tex. 1995) (recognizing legislature’s "express waiver" of governmental unit’s immunity from liability and suit for worker’s compensation benefits claims).

However, the City argues that this waiver of immunity from suit is limited and that "[t]he scope of the waiver in connection with a breach of the [Settlement Agreement] should be limited to the initial scope of the waiver. Specifically, the waiver provided by the [Worker’s Compensation] Act." Thus, the City argues that its liability should be limited to the benefits that were authorized by the Worker’s Compensation Act and that the trial court lacked subject matter jurisdiction over Rhule’s claims for damages falling outside those limits.

The City cites Reata Construction v. City of Dallas to support its claim. See 197 S.W.3d 371 (Tex. 2006). However, Reata Construction is distinguishable from the present case as it involved the City of Dallas’s waiver of its immunity by seeking affirmative relief. See id. at 373. This case is more analogous to cases interpreting the effect of limitations on breach of contract damages under section 271.153 of the Local Government Code. In City of Mesquite v. PKG Contracting, Inc., the Dallas Court of Appeals concluded that "statutory limitations on PKG’s recoverable damages do not deprive the trial court of subject matter jurisdiction to adjudicate PKG’s breach of contract claims." 263 S.W.3d 444, 448 (Tex. App—Dallas 2008, pet. denied); see also Kirby Lake Dev. Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 840 (Tex. 2010) ("The purpose of section 271.153. is to limit the amount due by a governmental agency on a contract once liability has been established, not to foreclose the determination of whether liability exists."); City of Houston v. S. Elec. Servs., Inc., 273 S.W.3d 739, 744 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (holding pleadings alleged sufficient facts to establish waiver of immunity from suit and to defeat plea to jurisdiction and declining to determine plaintiff’s damage claim through plea to jurisdiction).

As we have already discussed, in the instant case, Rhule established that the City waived its immunity from suit on his claim for breach of the Settlement Agreement. See Jones, 8 S.W.3d at 638–39; S. Elec. Servs., Inc., 273 S.W.3d at 744. Any alleged limitations on Rhule’s recoverable damages did not deprive the trial court of subject matter jurisdiction to adjudicate Rhule’s breach of contract claims. See PKG Contracting, 263 S.W.3d at 448. Thus, the trial court had subject matter jurisdiction over the entirety of the suit and it did not err in denying the City’s plea to the jurisdiction.

We overrule the City’s first issue.

SOURCE: Houston Court of Appeals - 01-09-01079-CV - 7/21/11

MAJORITY OPINION

["Firefighter" substituted for Appellee's name]  

In 1990, appellant, the City of Houston (“the City”), and appellee, Christopher Rhule ["Firefighter"], a former firefighter for the Houston Fire Department, entered an agreed judgment settling their dispute regarding Firefighter’s worker’s compensation claim. The City subsequently breached the settlement agreement, and Firefighter filed suit to enforce it. The City now appeals the jury verdict in Firefighter’s favor for damages of $127,500 for the City’s breach of the settlement agreement.

In four issues, the City argues that (1) the trial court lacked subject matter jurisdiction over Firefighter’s damages to the extent that the requested damages exceeded remedies allowed by the Worker’s Compensation Act, and, thus, the trial court erred in denying the City’s plea to the jurisdiction; (2) the trial court erred in submitting a question to the jury that allowed it to award Firefighter damages for physical pain as a result of the City’s breach of the settlement agreement; (3) the trial court erred in entering judgment on the jury’s award of damages for mental anguish because there was no evidence of Firefighter’s propensity for mental anguish at the time the parties entered into the settlement agreement; and (4) the trial court’s award of attorney’s fees was erroneous because Firefighter failed to establish any damages that would support an award of attorney’s fees, or, alternatively, Chapter 38 of the Civil Practice and Remedies Code does not authorize an award of attorney’s fees against a municipality.


We modify the judgment of the trial court and affirm as modified.


Background


Firefighter’s back was injured in 1988 while he was acting within the course and scope of his duties with the Houston Fire Department. A dispute about his workers’ compensation benefits was handled through the administrative process in place at that time. The City appealed the results of the administrative proceedings to the 281st District Court of Harris County in cause number 89-26686.


The parties reached a settlement agreement in which the City agreed to pay Firefighter $36,000 and reasonable and necessary medical care for his lifetime for the injuries he had sustained in exchange for Firefighter’s release of all claims against the City (the “Settlement Agreement”). The trial court entered an agreed judgment to this effect for cause number 89-26686 on August 31, 1990 (the “Agreed Judgment”). The Agreed Judgment set aside the final award made in the administrative proceedings and reflected that Firefighter was to receive $36,000 and that the City was discharged and released from any claim Firefighter might have for worker’s compensation benefits or for other claims arising from his injury, “except that CHRISTOPHER A. FIREFIGHTER shall receive lifetime open reasonable and necessary medical [expenses] for the injuries made the basis of this claim as provided by the Texas Worker’s Compensation Act with a mutually agreed upon doctor beginning as of the date of execution of Mr. Firefighter’s Affidavit.”


More than a decade later, Firefighter and the City again began to disagree regarding Firefighter’s entitlement to payment for his medical care related to his 1988 injury. Specifically, the City determined that the pain pump and other medications and treatments sought by Firefighter and his physician were not reasonable, necessary, and related to the 1988 work injury.


Firefighter eventually filed a second suit against the City in the 281st District Court of Harris County, cause number 2005-79440. Firefighter alleged a breach of contract action against the City, seeking damages for “out-of-pocket expenses, incidental expenses, loss of the ‘benefit of the bargain,’ cost of reasonable medical care and treatment in the past, cost of medical care and treatment which will in all reasonable medical probability be required in the future, physical pain and suffering in the past . . . , mental anguish damages . . . , nominal damages, attorney’s fees necessary to bring and prosecute this action, [and] costs of court.” Alternatively, Firefighter sought specific performance of the Agreed Judgment and actual damages, costs of court, and attorney’s fees. Firefighter also sought a declaratory judgment to clarify his rights under the existing agreement between himself and the City, specifically including his right to ongoing lifetime medical expenses relating to his injury. Firefighter also specifically sought attorney’s fees under Chapters 37 and 38 of the Civil Practice and Remedies Code.


The City filed a plea to the jurisdiction, arguing that Firefighter’s breach of contract claim and request for declaratory relief were barred. The trial court denied the plea to the jurisdiction and the parties proceeded to a trial before a jury.[1] The jury found that the City failed to comply with its settlement agreement with Firefighter, and it determined that Firefighter was entitled to $50,000 for past physical pain, $75,000 for past mental anguish, and $2,500 for out of pocket expenses. The jury also found that Firefighter was entitled to attorney’s fees in the amount of $53,000 for trial, $10,000 for an appeal to the Court of Appeals, and $20,000 for an appeal to the Texas Supreme Court.


The City filed a motion for judgment notwithstanding the verdict, asking the trial court to eliminate the award for past physical pain and past mental anguish and to enter judgment that “Firefighter recover mental anguish damages, out of pocket expenses, and attorney’s fees only.” The City argued that damages for physical pain cannot be recovered on a breach of contract claim and that Firefighter had failed to provide any evidence to show that he was entitled to mental anguish damages for breach of contract. The trial court denied the City’s motion and entered judgment on the verdict.


Plea to the Jurisdiction


In its first issue, the City argues that the trial court lacked subject matter jurisdiction over Firefighter’s damages to the extent that the requested damages exceeded remedies allowed by the Worker’s Compensation Act and that, therefore, the trial court erred in denying the City’s plea to the jurisdiction. Specifically, the City argues that its conduct in handling the medical treatment for Firefighter’s worker’s compensation injury is protected by governmental immunity and that the scope of the waiver of that governmental immunity is limited to compensation Firefighter would have been entitled to under the Worker’s Compensation Act. Thus, the City argues, the trial court erred in denying the City’s plea to the jurisdiction on Firefighter’s claims for attorney’s fees, physical pain, and mental anguish damages.


A. Standard of Review


A plea to the jurisdiction challenges the trial court’s subject matter jurisdiction to hear the case. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). Subject matter jurisdiction is essential to the authority of a court to decide a case and is never presumed. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993). The existence of subject matter jurisdiction is a question of law. State Dep’t of Hwys & Pub. Transp. v. Gonzales, 82 S.W.3d 322, 327 (Tex. 2002). Therefore, we review the trial court’s ruling on a plea to the jurisdiction de novo. Id.


Governmental immunity has two components—immunity from liability and immunity from suit. Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006). A unit of state government is immune from suit and liability unless the state consents. Tex. Dep’t of Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). Immunity from suit defeats a trial court’s subject matter jurisdiction and is properly asserted in a plea to the jurisdiction. Id. at 639. Immunity from liability protects the state from money judgments even if the Legislature has expressly given consent to sue. Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 853 (Tex. 2002).


B. Waiver of Immunity


By entering into a contract, a governmental entity waives its immunity from liability for breach of the contract, “but does not, merely by entering into a contract, waive immunity from suit.” Tex. A&M Univ.–Kingsville v. Lawson, 87 S.W.3d 518, 520 (Tex. 2002); Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 594 (Tex. 2001). When a state contracts, it is liable on contracts made for its benefit as if it were a private person. Little-Tex Insulation Co., 39 S.W.3d at 594 (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 405 (Tex. 1997)). However, a plurality of the supreme court has held that “when a governmental entity is exposed to suit because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it cannot be sued.” Lawson, 87 S.W.3d at 521. Thus, “enforcement of a settlement of a liability for which immunity is waived should not be barred by immunity.” Id.


Here, by entering into the agreement settling Firefighter’s worker’s compensation claim, the City has waived its immunity from liability under that agreement. See id. at 520. Furthermore, the Legislature’s waiver of the City’s immunity from suit for the purposes of Firefighter’s original worker’s compensation claim also waives the City’s immunity from suit for Firefighter’s suit to enforce the Settlement Agreement. Id. at 521; see also City of La Porte v. Barfield, 898 S.W.2d 288, 294 (Tex. 1995) (recognizing legislature’s “express waiver” of governmental unit’s immunity from liability and suit for worker’s compensation benefits claims).


However, the City argues that this waiver of immunity from suit is limited and that “[t]he scope of the waiver in connection with a breach of the [Settlement Agreement] should be limited to the initial scope of the waiver. Specifically, the waiver provided by the [Worker’s Compensation] Act.” Thus, the City argues that its liability should be limited to the benefits that were authorized by the Worker’s Compensation Act and that the trial court lacked subject matter jurisdiction over Firefighter’s claims for damages falling outside those limits.


The City cites Reata Construction v. City of Dallas to support its claim. See 197 S.W.3d 371 (Tex. 2006). However, Reata Construction is distinguishable from the present case as it involved the City of Dallas’s waiver of its immunity by seeking affirmative relief. See id. at 373. This case is more analogous to cases interpreting the effect of limitations on breach of contract damages under section 271.153 of the Local Government Code. In City of Mesquite v. PKG Contracting, Inc., the Dallas Court of Appeals concluded that “statutory limitations on PKG’s recoverable damages do not deprive the trial court of subject matter jurisdiction to adjudicate PKG’s breach of contract claims.” 263 S.W.3d 444, 448 (Tex. App—Dallas 2008, pet. denied); see also Kirby Lake Dev. Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 840 (Tex. 2010) (“The purpose of section 271.153. is to limit the amount due by a governmental agency on a contract once liability has been established, not to foreclose the determination of whether liability exists.”); City of Houston v. S. Elec. Servs., Inc., 273 S.W.3d 739, 744 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (holding pleadings alleged sufficient facts to establish waiver of immunity from suit and to defeat plea to jurisdiction and declining to determine plaintiff’s damage claim through plea to jurisdiction).


As we have already discussed, in the instant case, Firefighter established that the City waived its immunity from suit on his claim for breach of the Settlement Agreement. See Jones, 8 S.W.3d at 638–39; S. Elec. Servs., Inc., 273 S.W.3d at 744. Any alleged limitations on Firefighter’s recoverable damages did not deprive the trial court of subject matter jurisdiction to adjudicate Firefighter’s breach of contract claims. See PKG Contracting, 263 S.W.3d at 448. Thus, the trial court had subject matter jurisdiction over the entirety of the suit and it did not err in denying the City’s plea to the jurisdiction.


We overrule the City’s first issue.

Recoverable Damages


In its second and third issues, the City argues that Firefighter was not entitled to damages for past physical pain or for mental anguish. The City argues in its second issue that the trial court erred in submitting a jury question permitting an award of damages for physical pain on Firefighter’s breach of contract claim. In its third issue, the City argues that the evidence was insufficient to support the jury’s award of mental anguish damages on Firefighter’s breach of contract claim.


The City first argues that it can only be liable for damages to the same extent it would have been liable under the worker’s compensation act in effect at the time it settled its claim with Firefighter. The City argues that this is so because the courts of this State defer to the legislature regarding waiver of immunity and the legislature waives immunity only sparingly. We acknowledge that we must defer to the legislature on the issue of waiver of immunity—in the context of a claim for a breach of contract, the legislature must have waived immunity from suit as to the claim in question by clear and unambiguous language. See TEX. GOV’T CODE ANN. § 311.034 (Vernon 2008) (providing that statute shall not be construed as a waiver of sovereign immunity unless waiver is effected by clear and unambiguous language); Tooke, 197 S.W.3d at 332–33 (requiring clear and unambiguous language to waive governmental immunity).


However, we have already determined that the legislature’s waiver of a governmental entity’s immunity from suit on a worker’s compensation claim also applies to waive immunity from suit for enforcement of a settlement of that claim. See Lawson, 87 S.W.3d at 521–22; see Barfield, 898 S.W.2d at 294. Having determined that the City was susceptible to suit on Firefighter’s breach of contract claim, we recognize that “[w]hen the state contracts, it is liable on contracts made for its benefit as if it were a private person.” Little Tex. Insulation Co., 39 S.W.3d at 594. Furthermore, the court in Lawson addressed the reasoning the City uses here. See 87 S.W.3d at 521–22. The supreme court acknowledged that “a suit for breach of a settlement agreement is separate and apart from the suit on the settled claim” and reasoned that “[a]llowing suit against the government for breach of an agreement settling a claim for which immunity has been waived does not interfere with the Legislature’s policy choices.” The supreme court further stated,


This all assumes, of course, that a governmental entity would not, in settling a suit for which immunity has been waived, undertake an obligation that exposes it to liability much greater or different than that which it faced from the original claim. But we think this assumption is a realistic one. A settlement of a claim trades unknowns—such as what the evidence will be, and how a jury will view it—for knowns—obligations that are more accurately assessable. In reaching a settlement, the government is guided by local counsel to help gauge the degree of exposure to liability and the fairness of the settlement. Once the Legislature has decided to waive immunity for a class of claims, the inclusion of settlements within the waiver is consistent with that decision. Id. at 522.


Thus, we conclude that the City is liable for its breach of the Settlement Agreement just as any private entity would be. See id.; Little Tex. Insulation Co., 39 S.W.3d at 594; see also Liberty Mut. Fire Ins. Co. v. Crane, 898 S.W.2d 944, 948 (Tex. App.—Beaumont 1995, no writ) (stating, in context of breach of settlement agreement of worker’s compensation claim, “This suit is based on a settlement agreement that was incorporated into an agreed judgment. Because a consent judgment is a written agreement, it should be interpreted as a contract with general rules relating to construction of contracts applicable.”).


Generally, the measure of damages for breach of contract is that which restores the injured person to the economic position he would have enjoyed if the contract had been performed. Mood v. Kronos Prods., Inc., 245 S.W.3d 8, 12 (Tex. App.—Dallas 2007, pet. denied). Consequential damages are those damages that “result naturally, but not necessarily, from the defendant’s wrongful acts.” Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex. 1998) (per curiam) (quoting Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997)). Consequential damages are not recoverable unless the parties contemplated at the time they made the contract that such damages would be a probable result of the breach. Id. Thus, to be recoverable, consequential damages must be foreseeable and directly traceable to the wrongful act and must result from it. Id.
A. Propriety of Jury Charge on Physical Pain Damages


We review the trial court’s submission of instructions and jury questions for an abuse of discretion. Moss v. Waste Mgmt. of Tex., Inc., 305 S.W.3d 76, 81 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). A trial court abuses its discretion when it acts in an arbitrary or unreasonable manner, or if it acts without reference to any guiding rules or principles. Id. A trial court has wide discretion in submitting instructions and jury questions. Id.


Here, the City objected to the charge question allowing the jury to find an amount of damages to compensate Firefighter for his physical pain resulting from the City’s breach of the Settlement Agreement. Firefighter argues that the City’s refusal to comply with its obligation to pay for his medical expenses denied him access to the pain pump, which had been managing his pain effectively and allowing him to work and perform other day-to-day tasks. Thus, because he could not afford the pain pump on his own and was forced to rely on other, less-effective pain management treatments, he suffered unnecessary pain while he was required to wait for his dispute with the City to be resolved, and thus his physical pain was actual damage that resulted from the City’s breach of the agreement.


However, damages for physical pain are not traditionally recovered in a breach of contract suit. See Mood, 245 S.W.3d at 12 (holding that measure of damages for breach of contract is that which restores injured person to economic position he would have enjoyed if contract had been performed) (emphasis added). Thus, we conclude that the trial court abused its discretion in submitting a question to the jury allowing it to assess damages for physical pain. See Moss, 305 S.W.3d at 81.


We reverse the judgment of the trial court awarding Firefighter $50,000 for physical pain sustained as a result of the City’s breach of the Settlement Agreement.


We sustain the City’s second issue.


B. Sufficiency of Evidence Supporting Mental Anguish Damages


In its third issue, the City complains that the evidence supporting the jury’s award for mental anguish damages was insufficient, and the trial court should have granted the City’s judgment notwithstanding the verdict.


A trial court may disregard a jury verdict and render a judgment notwithstanding the verdict if no evidence supports the jury finding on an issue. TEX. R. CIV. P. 301; Tiller v. McLure, 121 S.W.3d 709, 713 (Tex. 2003). We may sustain a “no-evidence” or legal sufficiency challenge only when (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or rules of evidences from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In determining whether there is legally sufficient evidence to support the finding under review, we must consider evidence favorable to the finding if a reasonable fact-finder could and disregard evidence contrary to the finding unless a reasonable fact-finder could not. Id. at 807, 827.


The jury charge stated, “What sum of money, if any, if paid now in cash, would fairly and reasonably compensate [Firefighter] for his damages if any, that resulted from [the City’s] failure to comply [with the Settlement Agreement]? . . . Only include such amounts for mental anguish that you find would have been within the contemplation of the City at the time the contract was made.”


The City did not object before the trial court to this portion of the charge. The City now argues on appeal that “[t]here was absolutely no evidence, or the evidence was so weak that it did nothing more than create a surmise or suspicion, the Firefighter had a particular susceptibility to emotional distress and the City knew about his particular susceptibility.” It relies on Lions Eye Bank of Tex. v. Perry, 56 S.W.3d 872 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) to support its claims. However, because the City did not object to the portion of the charge instructing the jury on mental anguish damages, we evaluate the sufficiency of the evidence based on the charge and instructions that were actually submitted to the jury.[2] See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000). Thus, we must determine whether there was any evidence that would allow the jurors to conclude that mental anguish damages were within the contemplation of the City at the time it entered into the Settlement Agreement with Firefighter.


In response to the damages question, the jury answered that Firefighter was entitled to $75,000 for his mental anguish. Thus, to overturn the jury’s award, we must determine that there was no evidence that mental anguish damages would have been within the contemplation of the City at the time it entered into the Settlement Agreement with Firefighter. See City of Keller, 168 S.W.3d at 810; Tiller, 121 S.W.3d at 713; see also Osterberg, 12 S.W.3d at 55 (holding that when there is no relevant objection to jury charge, we evaluate sufficiency of evidence based on charge and instructions that were submitted to jury).


At trial, Firefighter testified, regarding the Settlement Agreement with the City, that it was important to him that he receive lifetime medical treatment for his back injury because the doctor told him that he had an ongoing problem that would require treatment for the rest of his life. Firefighter testified that when the City originally decided to file suit appealing the administrative proceeding determination that he was entitled to lifetime medical expenses, he was very concerned because the City only wanted to give him ten years’ worth of medical expenses. Firefighter testified that he eventually settled his claim with the City under the terms related in the Agreed Judgment.[3] He further testified that he relied on the payment of his medical expenses to effectively manage his pain, including the City’s approval of his first pain pump. He testified that when the City denied the replacement of the battery in his pain pump, and eventually denied other forms of treatment as well, he experienced significant pain, fear that he would never be able to adequately treat the pain he was suffering if the City did not pay his expenses, difficulty sleeping, eating and digestion problems, and other stress-related and psychological problems. Finally, Firefighter testified that he was seeking $108,000 for his mental anguish—a number he arrived at because it was “three times what they paid [him] many years ago for [his] mental anguish.”


Firefighter’s testimony and other documents indicated that the City was aware from the time of the original Settlement Agreement of the nature and severity of Firefighter’s injury and of the fact that he would require extensive treatment for his injury. We conclude, therefore, that Firefighter’s testimony that it was important to him that he receive lifetime medical treatment for his injury, that he was not willing to accept the City’s offer of ten years’ medical expenses because his doctor had already told him his back injury would require care for the rest of his life, and that he did suffer mental anguish when the City subsequently refused to pay his medical expenses, combined with the City’s awareness of the severity of his injury, is sufficient to show that mental anguish damages would have been a foreseeable consequence of the City’s breach of the Settlement Agreement that was within the contemplation of the City at the time it entered into the Settlement Agreement with Firefighter.


We overrule the City’s third issue.


Attorney’s Fees


In its fourth issue, the City argues that Firefighter was not entitled to an award of attorney’s fees. However, the City did not make any objection to the award of attorney’s fees in the trial court, and it affirmatively stated in its motion for judgment notwithstanding the verdict that the trial court should enter judgment for Firefighter awarding “mental anguish damages, out of pocket expenses, and attorney fees only.” SeeTEX. R. APP. P. 33.1; Marcus v. Smith, 313 S.W.3d 408, 417 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (“In order to preserve certain complaints regarding an award of attorney’s fees, a party must make a timely and sufficiently specific objection to such an award in the trial court.”). Therefore, the City waived any complaint regarding attorney’s fees.


We overrule the City’s fourth issue.


Conclusion


We modify the trial court’s judgment by deleting the portion of the judgment awarding Firefighter $50,000 in damages for physical pain. We affirm the judgment of the trial court as modified.
Evelyn V. Keyes


Justice

Panel consists of Justices Keyes, Sharp, and Massengale.
Justice Massengale, dissenting.

________________________________________


[1] The record does not contain the trial court’s ruling on the plea to the jurisdiction, and it is not clear when or how the declaratory judgment claims were dropped. The case was tried on Firefighter’s breach of contract claims, and no declaratory judgment was issued.


[2] We note that mental anguish damages generally are not recoverable for breach of contract claims. Latham v. Castillo, 972 S.W.2d 66, 72 (Tex. 1998). However, the City failed to present this argument to the trial court or to this Court on appeal, and the City instead argues that the evidence of mental anguish was insufficient. In our review of the trial court’s proceedings, we are limited to considering issues objected to in the trial court and properly presented to this Court on appeal. See TEX. R. APP. P. 33.1, 38.1. This opinion should not be interpreted as attempting to expand damages typically available for breach of contract claims.

We also note that application of the traditional measure of damages for breach of contract—that which restores the injured person to the economic position he would have enjoyed if the contract had been performed—limits the damages a litigant generally can obtain in prosecuting a claim against a governmental unit for breach of a settlement agreement. See Mood v. Kronos Prods., Inc., 245 S.W.3d 8, 12 (Tex. App.—Dallas 2007, pet. denied) (providing general measure of damages). This inherent limitation on breach of contract damages addresses the dissent’s argument that our holding in this case will discourage governmental entities from settling cases with agreements to provide lifetime medical benefits due to the fear of being subjected to mental anguish and other remedies not recoverable under the statutory scheme that originally waived their liability from suit. SeeTex. A&M Univ.–Kingsville v. Lawson, 87 S.W.3d 518, 521–22 (Tex. 2002) (making “realistic” assumption that “a governmental entity would not, in settling a suit for which immunity has been waived, undertake an obligation that exposes it to liability much greater or different than that which it faced from the original claim” and holding that “when a governmental entity is exposed to suit because of a waiver of immunity, it cannot nullify that waiver by settling the claim with an agreement on which it cannot be sued”).


[3] As Firefighter’s counsel was questioning him at trial, and Firefighter began to testify regarding the circumstances surrounding the original suit and Settlement Agreement, counsel for the City interjected, “Your Honor, he’s getting into settlement negotiations which, I think, are inadmissible, 408.” Thus the City’s argument on appeal that neither Firefighter’s original attorney or the City’s original attorney testified regarding the circumstances surrounding the formation of the settlement agreement is misleading.