Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Monday, March 4, 2013

Litigating contracts: declaratory judgment vs. contract damages and enforcement

Different types of lawsuits may be brought relating to a contract. A suit seeking damages for breach is not the only variety.  

"A person interested under a . . . written contract. . . may have determined any question of construction or validity arising under the . . . contract . . . and obtain a declaration of rights, status, or other legal relations thereunder." TEX. CIV. PRAC. & REM. CODE ANN. § 37.004(a) (Vernon 2008). "A contract may be construed either before or after there has been a breach." Id. § 37.004(b).

Accordingly, a person can bring a declaratory judgment action following a breach of contract and have the rights under the contract declared. While such an action has much in common with a breach of contract action, they are distinct from each other. Specifically, a declaratory judgment action has the effect of determining liability without awarding damages, while a breach of contract action seeks both a determination of liability and an award of damages. See Intercontinental Group P'ship v. K.B. Home Lone Star, L.P., 295 S.W.3d 650, 660-61 (Tex. 2009).

"Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper." TEX. CIV. PRAC. & REM. CODE ANN. § 37.011 (emphasis added). "Necessary or proper" is disjunctive, not conjunctive. Additionally, the further relief available is not limited only to actions necessary to enforce the judgment. Instead, further relief is available for anything that "serve[s] to effectuate the underlying judgment." State v. Anderson Courier Service, 222 S.W.3d 62, 65 (Tex. App.-Austin 2005, pet. denied).

When a case is remanded for further proceedings, res judicata does not apply at all because there is no second action. Jay Petroleum, L.L.C. v. EOG Resources, Inc., 332 S.W.3d 534, 540 (Tex. App.-Houston [1st Dist.] 2009, pet. denied). Further relief sought under section 37.011 is not limited to claims brought in the same cause. Valley Oil, 499 S.W.2d at 336. Instead, it "may be sought in the same proceeding or in a later proceeding." Lakeside Realty, 202 S.W.3d at 191.

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013 – CBS Outdoor, Inc. v. Potter