Saturday, November 14, 2009

Integration Clause: Purpose and Effect of Merger Clause in Contracts

"ENTIRE AGREEMENT" CLAUSE & THE PAROL EVIDENCE RULE The purpose of an integration clause is to invoke the parol evidence rule when appropriate. Burleson State Bank v. Plunkett, 27 S.W.3d 605, 615 (Tex. App.-Waco 2000, pet. denied). An unambiguous contract will be enforced as written, and parol evidence will not be received for the purpose of creating an ambiguity or to give the contract a meaning different from that which its language imparts. See David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008). SOURCE: 13-08-00264-CV (Thirteenth Court of Appeals) (November 12, 2009) (agreement contained an integration clause, providing that the written agreement constituted the entire agreement between the parties)

Enforcing unambiguous contract (breach of contract cause of action)

PROVING BREACH OF CONTRACT CAUSE OF ACTION (ambiguous vs. unambiguous contracts)

In order to succeed on a breach of contract claim, [Plaintiff] would have had to prove that: (1) a valid contract existed; (2) it performed or tendered performance; (3) [Defendant] breached the contract; and (4) [Plaintiff] sustained damages as a result of the defendant's breach. Adams v. H & H Meat Prods., Inc., 41 S.W.3d 762, 771 (Tex. App.-Corpus Christi 2001, no pet.).

Netrana contends that it performed its obligations under the contract by "standing ready, willing, and able to perform professional services" and that TXU breached the guaranteed minimum payment provision of the contract. Thus, we look to the contract under our well recognized rules of contract construction to determine if a minimum payment provision existed in the amended agreement.


In construing a written contract, the primary concern is to ascertain and to give effect to the parties' intentions as expressed in the document. Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 311-12 (Tex. 2005). We consider the entire writing and attempt to harmonize and to give effect to all of the contract's provisions. Id. at 312.

We construe contracts "'from a utilitarian standpoint bearing in mind the particular business activity sought to be served'" and "'will avoid when possible and proper a construction which is unreasonable, inequitable, and oppressive.'" Id. (quoting Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987)). "

The language in a contract is to be given its plain grammatical meaning unless doing so would defeat the parties' intent." Amtech Elevator Servs. Co. v. CSFB 1998-P1 Buffalo Speedway Office Ltd. P'ship, 248 S.W.3d 373, 379 (Tex.App.-Houston [1st Dist.] 2007, no pet.).


If, after the pertinent rules of construction are applied, the contract can be given a definite or certain legal meaning, it is unambiguous, and we construe it as a matter of law. Frost Nat'l Bank, 165 S.W.3d at 312. However, if after such rules are applied, the meaning of the contract remains uncertain or is susceptible to more than one reasonable interpretation, it is ambiguous. Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995); Coker v. Coker, 650 S.W.2d 391, 393-94 (Tex. 1983).


If a contract is ambiguous, the contract's interpretation becomes a fact issue to be resolved by deciding the parties' true intent, for which the fact finder may consider extraneous evidence of intent. See Nat'l Union Fire Ins. Co., 907 S.W.2d at 520; Coker, 650 S.W.2d at 394-95.

Whether a contract is ambiguous is a question of law to be determined "by looking at the contract as a whole in light of the circumstances present when the contract was entered." Coker, 650 S.W.2d at 394.

SOURCE: 13-08-00264-CV (13th Court of Appeals) (Nov. 12, 2009)

Intentional Misrepresentation akin to Fraud

ELEMENTS OF INTENTIONAL MISREPRESENTATION TORT A claim of intentional misrepresentation has the same elements as a fraud claim. See Smith v. Tilton, 3 S.W.3d 77, 82 n.3 (Tex. App.-Dallas 1999, no pet.). The elements of a cause of action for fraud are: (1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party suffered injury as a result. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001). [Also see --> fraudulent misrepresentation] BREACH OF CONTRACT AND FRAUD DISTINGUISHED A promise to do an act in the future constitutes fraud only when made with no intention of performing the promise at the time the promise was made. Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex.1998). NON-PERFORMANCE UNDER CONTRACT, WITHOUT MORE, NOT FRAUD The mere failure to perform a contract is not evidence of fraud. Id. Fraudulent intent may be established by either direct or circumstantial evidence, and the subsequent failure to perform the promise, while not alone dispositive, can be considered with other factors to establish intent. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434-35 (Tex. 1986). SOURCE: 13-08-00264-CV (Corpus Christi-Edinburg Court of Appeals)(11/12/09)

Tuesday, November 10, 2009

Fraud in a Real Estate Transaction (statutory cause of action)

Real Estate Fraud

Section 27.01 of the business and commerce code provides:

(a) Fraud in a transaction involving real estate . . . consists of a

(1) false representation of a past or existing material fact, when the false representation is

(A) made to a person for the purpose of inducing that person to enter into a contract; and

(B) relied on by that person in entering into that contract . . . .

Tex. Bus. & Com. Code Ann. § 27.01 (West 2009).

Statute of Frauds: Sale of Real Property, Real Estate Transactions

Statute of Frauds (Real Estate Sales Transaction) To be enforceable, a contract for the sale of real estate must comply with the statute of frauds. Tex. Bus. & Com. Code Ann. § 26.01(b)(4) (West 2009); Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978). Section 26.01 of the business and commerce code provides: (a) A promise or agreement described in Subsection (b) of this section is not enforceable unless the promise or agreement, or a memorandum of it, is (1) in writing; and (2) signed by the person to be charged with the promise or agreement or by someone lawfully authorized to sign for him. (b) Subsection (a) of this section applies to: . . . (4) a contract for the sale of real estate . . . . Tex. Bus. & Com. Code Ann. § 26.01. Whether a contract meets the requirements of the statute of frauds is a question of law. Bratcher v. Dozier, 346 S.W.2d 795, 796 (Tex. 1961); West Beach Marina, Ltd. v. Erdeljac, 94 S.W.3d 248, 264 (Tex. App.--Austin 2002, no pet.). [T]he statute of frauds bars a fraud claim to the extent that the plaintiff seeks to recover as damages the benefit of a bargain that cannot otherwise be enforced because it fails to comply with the statute of frauds. Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001). This is because "the Statute exists to prevent fraud and perjury in certain kinds of transactions by requiring agreements to be set out in a writing signed by the parties. But that purpose is frustrated and the Statute easily circumvented if a party can use a fraud claim essentially to enforce a contract the Statute makes unenforceable. The statute of frauds may not bar a common-law fraud claim to the extent the plaintiff seeks out-of-pocket damages incurred in relying upon the defendant's alleged misrepresentations because "[w]ith respect to such damages, [the plaintiff] is not attempting to enforce the otherwise unenforceable contract. . . . These kinds of damages are not part of the benefit of any alleged bargain between the parties." Haase v. Glazner, 62 S.W.3d 795, 799-800 (Tex. 2001). We need not address the type of damages Joseph seeks because statutory real estate fraud requires the existence of a contract. SOURCE: 03-07-00197-CV (Austin Court of Appeals (11/6/09) (Because there is no enforceable contract that satisfies the statute of frauds, the trial court did not err in granting appellees' motion for summary judgment.)

Monday, November 9, 2009

Conversion and Civil Theft Claim Under Texas Statute


The theft liability act creates liability for damages resulting from a theft and defines a theft as "unlawfully appropriating property or unlawfully obtaining services" as described in the penal code, and specifically includes section 31.03. Tex. Civ. Prac. & Rem. Code Ann. §§ 134.002-.003 (West 2005); Tex. Penal Code Ann. § 31.03 (West Supp. 2009). Referring to section 31.03, section 31.02 provides:

Theft as defined in Section 31.03 constitutes a single offense superseding the separate offenses previously known as theft, theft by false pretext, conversion by a bailee, theft from the person, shoplifting, acquisition of property by threat, swindling, swindling by worthless check, embezzlement, extortion, receiving or concealing embezzled property, and receiving or concealing stolen property.

Tex. Penal Code Ann. § 31.02 (West 2003).


Conversion is [...] a cause of action similar to theft or one means by which a person "unlawfully appropriates property with intent to deprive the owner of property." See id. § 31.03. Even though Karbach did not expressly allege a violation of the theft liability act in his original petition, he did allege conversion, and the district court granted summary judgment on that claim. As Karbach's amended petitions merely asserted the same claim in a different form, the district court's judgment was effective against Karbach's later-pleaded theft liability act claim. See Wortham, 179 S.W.3d at 202; Lampasas, 988 S.W.2d at 435-37.

SOURCE: 03-06-00636-CV (3rd CoA - Austin) (Nov. 6, 2009)

Fraudulent Inducement Claim Is Similar to Fraud

FRAUDULENT INDUCEMENT (OF CONTRACT, ETC.) Fraudulent inducement is a type of fraud and, like any cause of action for fraud, requires (1) a material misrepresentation, (2) which was false, (3) which was either known to be false when made or was asserted without knowledge of its truth, (4) which was intended to be acted upon, (5) which was relied upon, and (6) which caused injury. See Formosa Plastics, 960 S.W.2d at 47; Texas S. Univ. v. State St. Bank & Trust Co., 212 S.W.3d 893, 914 (Tex. App.--Houston [1st Dist.] 2007, pet. denied). FRAUDULENT INDUCEMENT AND FRAUD: SHARED ELEMENTS [C]ourts have held that a summary judgment motion--if directed at the element of one cause of action--can be effective against even subsequently pleaded claims if they share that same element. See Wortham v. Dow Chem. Co., 179 S.W.3d 189, 202 (Tex. App.--Houston [14th Dist.] 2005, no pet.); Lampasas v. Spring Center, Inc., 988 S.W.2d 428, 435-37 (Tex. App.--Houston [14th Dist.] 1999, no pet.). Consequently, even though Karbach did not specifically use the term "fraudulent inducement" in his original petition, the district court's order granting summary judgment as to each of Karbach's claims, including fraud, was effective against his later-pleaded fraudulent inducement claim. Even considering the tri-party loan agreement as the basis of the fraudulent inducement claim, as we have discussed, our analysis does not change. SOURCE: 03-06-00636-CV (Third Court of Appeals - Austin) (11/6/09)

Trust Fund Act: Civil Liabilty for Misapplication of Construction Trust Funds


The Texas Construction Trust Fund Act makes construction funds "trust funds" if the payments are made to a contractor or subcontractor or to an officer, director, or agent of a contractor or subcontractor, under a construction contract for the improvement of specific real property in this state. Tex. Prop. Code Ann. § 162.001 (West Supp. 2009). Beneficiaries of the trust fund include artisans, laborers, mechanics, contractors, subcontractors, or materialmen who furnish labor or material for the construction or repair of an improvement. Id. § 162.003 (West Supp. 2009).


A party who misapplies trust funds under the Trust Fund Act is subject to civil liability to trust fund beneficiaries whom the Act was designed to protect. Id. § 162.031 (West Supp. 2009); Dealers Elec. Supply Co. v. Scoggins Constr. Co., 52 Tex. Sup. Ct. J. 1088, 2009 Tex. LEXIS 475, at *16-17 (Tex. July 3, 2009).

SOURCE: 03-06-00636-CV (Austin Court of Appeals (11/6/09)

Elements of Suit on (Sworn) Account (Tex. R. Civ. P. 185)


The elements of a cause of action on a sworn account are (1) a sale and delivery of the goods; (2) that the amount of the account is just, that is, that the prices are charged in accordance with an agreement or, in the absence of an agreement, they are the usual customary and reasonable prices for those goods; and (3) that the amount is unpaid. See Site Work Group, Inc. v. Chem. Lime Ltd., 171 S.W.3d 512, 513–14 (Tex. App.-Waco 2005, no pet.); PennWell Corp. v. Ken Assocs. Inc., 123 S.W.3d 756, 766 (Tex.App.-Houston [14th Dist.] 2003, pet. denied


 “A defendant’s verified denial of the correctness of a plaintiff’s sworn account, in the form required by Rule 185, destroys the evidentiary effect of the itemized account and forces the plaintiff to put on proof of its claim.” Site Work Group, Inc. v. Chem. Lime Ltd., 171 S.W.3d 512, 513 (Tex. App.—Waco 2005, no pet.) (citing Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860, 862 (Tex. 1979)). However, even when a defendant verifies its sworn denial to a suit on a sworn account, a plaintiff may properly obtain a summary judgment on its sworn account claim by filing “legal and competent summary judgment evidence establishing the validity of its claim as a matter of law.” PennWell Corp. v. Ken Assocs., Inc., 123 S.W.3d 756, 765 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (citing United Bus. Machs. v. Entm’t Mktg., Inc., 792 S.W.2d 262, 264 (Tex. App.—Houston [1st Dist.] 1990, no writ)).

 SOURCE: 01-08-00890-CV (Houston Court of Appeals - 1st District) (11/5/09)

Rule 185 of the Texas Rules of Civil Procedure 

Sunday, November 8, 2009

Tortious Interference with Prospective Business

PROVING TORTIOUS INTERFERENCE To establish tortious interference with a prospective business relationship, a plaintiff must prove (i) a reasonable probability that the plaintiff would have entered into a business relationship; (ii) an independently tortious or unlawful act by the defendant that prevented the relationship from occurring; (iii) the defendant did such act with a conscious desire to prevent the relationship from occurring or the defendant knew the interference was certain or substantially certain to occur as a result of the conduct; and (iv) the plaintiff suffered actual harm or damages as a result of the defendant's interference. See Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001); Baty v. Protech Ins. Agency, 63 S.W.3d 841, 860 (Tex. App.--Houston [14th Dist.] 2001, pet. denied). Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001); Bradford v. Vento, 48 S.W.3d 749, 757-58 (Tex. 2001); Richardson-Eagle, Inc. v. William M. Mercer, Inc., 213 S.W.3d 469, 475 (Tex. App.--Houston [1st Dist.] 2006, pet. denied); Bright v. Addison, 171 S.W.3d 588, 598 (Tex. App.--Dallas 2005, pet. denied); Baty v. Protech Ins. Agency, 63 S.W.3d 841, 860 (Tex. App.--Houston [14th Dist.] 2001, pet. denied). SOURCE: 03-09-00114-CV (Austin Court of Appeals) (11/06/09)

Friday, November 6, 2009

CONVERSION of personal property TORT in Texas


"The unauthorized and wrongful assumption and exercise of dominion and control over the personal property of another, to the exclusion of or inconsistent with the owner's rights, is in law a conversion." Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 447 (Tex. 1971).


To establish a claim for conversion of personal property, a plaintiff must prove that: (1) the plaintiff owned or had legal possession of the property or entitlement to possession; (2) the defendant unlawfully and without authorization assumed and exercised dominion and control over the property to the exclusion of, or inconsistent with, the plaintiff's rights as an owner; (3) the plaintiff demanded return of the property; and (4) the defendant refused to return the property. See Smith v. Maximum Racing, Inc., 136 S.W.3d 337, 341 (Tex. App.--Austin 2004, no pet.).

SOURCE: 03-09-00114-CV (Austin Court of Appeals) (11/6/09)

Oral Contract and Contract in Writing: The Meeting of the Minds on Essential Terms Element


The elements of a valid contract are (1) an offer, (2) an acceptance, (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. Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). 

The elements of written and oral contracts are the same and must be present for a contract to be binding. Wal-Mart Stores, Inc. v. Lopez, 93 S.W.3d 548, 555 (Tex. App.—Houston [14th Dist.] 2002, no pet.). For an agreement to be enforceable, there must be a meeting of the minds with respect to its subject matter and essential terms. Id. at 556. 

The determination of a meeting of the minds, and thus offer and acceptance, is based on the objective standard of what the parties said and did. Id. The execution of a contract includes the performance of all acts necessary to render it complete as an instrument. Verson Allsteel Press Co. v. Carrier Corp., 718 S.W.2d 300, 303 (Tex. App.—Tyler 1985, writ ref’d n.r.e.) (per curiam). The question of whether a contract contains all the essential terms for it to be enforceable is a question of law. Beal Banks, S.S.B. v. Schleider, 124 S.W.3d 640, 654 n.8 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). What terms are material or essential to a contract are determined on a contract-by-contract basis, depending on the subject matter of the contract at issue. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992) (“Each contract should be considered separately to determine its material terms.”). 

 SOURCE: 01-09-00030-CV (First Court of Appeals) (11/5/09)  

Elements of contract for sale

Three essential elements of a contract for sale are “(1) the thing sold, which is the object of the contract; (2) the consideration or price to be paid for the thing sold; and (3) the consent of the parties to exchange the thing for the price.” John Wood Group USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 20 (Tex. App.—Houston [1st Dist.] 2000, pet. denied). SOURCE: 01-09-00030-CV Stewart & Stevenson, L.L.C. v. Galveston Party Boats, Inc. (Tex.App.- Houston [1st Dist.] Nov. 5,2009)

Wednesday, November 4, 2009

NEGLIGENCE: Negligent Creation of Dangerous Situation

Is there a legal duty to control the actions of others to prevent harm? - It depends. NEGLIGENCE WITH RESPECT TO ACTS OF THIRD-PARTIES

A cause of action for negligence arises when an actor breaches a legal duty and the breach proximately causes damages. Columbia Med. Ctr. of Las Colinas, Inc. v. Hogue, 271 S.W.3d 238, 246 (Tex. 2008). Texas law generally imposes no duty to control the acts of another person to prevent harm to third parties absent certain special relationships or circumstances. Providence Health Ctr. v. Dowell, 262 S.W.3d 324, 331 (Tex. 2008); Torrington Co. v. Stutzman, 46 S.W.3d 829, 837 (Tex. 2000); see also Restatement (Second) of Torts § 315 (1965).

Examples of relationships that have been recognized as giving rise to a duty to control include employer/employee, parent/child, and independent contractor/contractee. Greater Houston Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990). A party who agrees to attempt to help someone else has a duty to provide that help without negligently harming the person in need. Torrington, 46 S.W.3d at 837-38; see also Restatement (Second) of Torts § 323. (2)

A party who negligently creates a dangerous situation has a duty to attempt to prevent injury to others if it reasonably appears or should appear to him that others in the exercise of their lawful rights may be injured thereby. SmithKline Beecham Corp. v. Doe, 903 S.W.2d 347, 353 (Tex. 1995) (citing Buchanan v. Rose, 159 S.W.2d 109, 110 (Tex. 1942)). However, a mere bystander who did not create a dangerous situation generally is not required to intervene and prevent injury to others. See id.; see also Restatement (Second) of Torts § 314 ("The fact that [an] actor realizes or should realize that action on his part is necessary for another's aid or protection does not of itself impose upon him a duty to take such action.").

Whether a legal duty exists is a question of law for the court. Trammell Crow Cent. Tex., Ltd. v. Gutierrez, 267 S.W.3d 9, 12 (Tex. 2008). In determining whether the defendant was under a duty, the court will consider several interrelated factors, including the risk, foreseeability, and likelihood of injury weighed against the social utility of the actor's conduct, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendant. Phillips, 801 S.W.2d at 525.

Courts have also considered whether one party has superior knowledge of the risk, and whether a right to control the actor whose conduct precipitated the harm exists. Graff v. Beard, 858 S.W.2d 918, 920 (Tex. 1993). Appellants do not cite any authority establishing a legal duty by individuals to control the actions of a companion who is under the influence of drugs or similar behavior-altering substances. (3) Therefore, to hold that there is a duty in this case, we must interpret an existing duty to include the behavior described in the plaintiffs' pleadings or recognize a new duty under Texas law.

SOURCE: 03-07-00251-CV (Austin Court of Appeals)(11/4/09)

Statute of Frauds: Conveyance of Mineral Interest

CONTRACT FOR SALE OF LAND OR INTEREST IN LAND MUST BE IN WRITING [C]ontracts for the sale of real estate are required to be written and signed by the party to be charged. Tex. Bus. & Com. Code Ann. §26.01(b)(4) (Vernon 2009). And, an agreement to convey a working interest in a mineral lease is such a contract. Exxon Corp. v. Breezevale, Ltd., 82 S.W.3d 429, 437 (Tex. App. –Dallas 2002, pet. denied); see also Long Trusts v. Griffin, 222 S.W.3d 412, 416 (Tex. 2006) (stating that a contract for the transfer or assignment of an interest in an oil and gas lease is a real property interest subject to the statute of frauds). So, any alleged oral agreement by Sofamco to convey the working interest Beverly demanded would be unenforceable. STATUTE OF FRAUDS MUST BE PLEADED BY DEFENDANT [T]he Statute of Frauds [is] an affirmative defense. See La Cour v. Lankford Co., Inc., 287 S.W.3d 105, 110 (Tex. App.–Corpus Christi 2009, pet. denied) (holding that a defendant who seeks to prove an affirmative defense via a motion for summary judgment has the burden to prove the elements of the defense). SOURCE: 07-08-0387-CV (Amarillo Court of Appeals) (10/30/09)

Monday, November 2, 2009

Declaratory Judgment under the Texas UDJA (DJA)


The Declaratory Judgments Act is a procedural device for deciding cases that are within the trial court's jurisdiction. State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994). The stated purpose of the Act is "to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations." Tex.Civ.Prac.&Rem.Code Ann. § 37.002(b)(Vernon 2008); Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995).
A declaratory judgment is appropriate only where there is a justiciable controversy about the rights and status of the parties and the declaration will resolve the controversy. Bonham State Bank, 907 S.W.2d at 467.
To constitute a justiciable controversy, there must exist a real and substantial controversy involving genuine conflict of tangible interests and not merely a theoretical dispute. Id. The Act does not empower courts to issue advisory opinions. Brooks v. Northglen Association, 141 S.W.3d 158, 164 (Tex. 2004).


In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney's fees as are equitable and just.
Tex.Civ.Prac.&Rem.Code Ann. § 37.009.
In a declaratory judgment action, the decision to grant or deny attorney's fees is solely within the discretion of the trial court. Neeley v. West Orange-Cove Consolidated Independent School District, 176 S.W.3d 746, 799 (Tex. 2005).
Under Section 37.009, a trial court may exercise its discretion to award attorney's fees to either the prevailing or the nonprevailing party. See Barshop v. Medina County Underground Water Conservation District, 925 S.W.2d 618, 637-38 (Tex. 1996). The requirements that fees be reasonable and necessary are matters of fact, while the requirements that fees be equitable and just are matters of law. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998).

SOURCE: 08-07-00074-CV (El Paso Court of Appeals) (10/28/09)


Accord and Satisfaction as Affirmative Defense to Debt Claim

WHAT IS "ACCORD AND SATISFACTION" AS A LEGAL CONCEPT? The affirmative defense of accord and satisfaction is a type of contractual modification that rests upon a new contract, express or implied, in which the parties agree to the discharge of the existing obligation by means of a lesser payment tendered and accepted. Jenkins v. Henry C. Beck Co., 449 S.W.2d 454, 455 (Tex. 1969). A modification of a contract must satisfy the elements of a contract: a meeting of the minds supported by consideration. Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 228 (Tex. 1986). Whether a contract is modified depends on the parties' intentions and is a question of fact. Id. at 228-29. ACCORD AND SATISFACTION REQUIRES AGREEMENT ON MODIFICATION OF ORIGINAL CONTRACT AND CONSIDERATION The burden of proving modification rests on the party asserting the modification. Id. at 229. Because a valid accord and satisfaction depends upon an agreement, it "only occurs when the parties mutually assent to it," and their intention is a controlling element. McCarty v. Humphrey, 261 S.W. 1015, 1016 (Tex. Comm'n App. 1924, judgm't adopted). The trial court found that there was no mutual assent or “meeting of the minds” necessary for an accord and satisfaction. We defer to the trial court’s findings of fact that there was not sufficient intent that a new agreement was formed. We find that the trial court did not err in its finding of no accord and satisfaction as a matter of law and that this finding is not against the great weight of the evidence. SOURCE: 10-07-00362-CV (Tenth Court of Appeals-Waco) (10/28/2009)

Clean vs Unclean Hands Doctrine


One who seeks equity must do equity and must come to court with clean hands. See Dunnagan v. Watson, 204 S.W.3d 30, 41 (Tex. App.—Fort Worth 2006, pet. denied); Flores v. Flores, 116 S.W.3d 870, 876 (Tex. App.—Corpus Christi 2003, no pet.). Whether equitable relief should be denied based on unclean hands is left to the discretion of the trial court. Dunnagan, 204 S.W.3d at 41; Flores, 116 S.W.3d at 876.

Mustang argues that Sinclair has unclean hands because he purportedly owned the Carter liens through prior dealings with Carter and that he also solicited perjured testimony regarding whether he was ready, willing, and able to perform under the contract. 
The clean hands doctrine should not be applied unless the party asserting the doctrine has been seriously harmed and the wrong complained of cannot be corrected without the application of the doctrine. Dunnagan, 204 S.W.3d at 41.

Even if we agreed that Sinclair had unclean hands, Mustang has made no claim or argument to this Court regarding any serious harm due to the misconduct, if any, of Sinclair. Therefore, Mustang’s claim of unclean hands must fail. 

SOURCE: 10-07-00362-CV (Waco Court of Appeals) (10/28/09)

Tortious (not tortuous) Interference with Business Relations (prospective) and Lost-Profit Damages


Tortious Interference with Business Relations (in the future - as opposed to interfering with existing contract) The elements of tortious interference with prospective business relations are: (1) a reasonable probability that the plaintiff would have entered into a contractual relationship; (2) an independently tortious or unlawful act by the defendant that prevented the relationship from occurring; (3) the defendant did the act with a conscious desire to prevent the relationship from occurring or with knowledge that the interference was certain or substantially certain to occur as a result of his conduct; and (4) the plaintiff suffered actual harm or damage as a result of the interference. See Ash v. Hack Branch Distrib. Co., 54 S.W.3d 401, 414-15 (Tex. App.—Waco 2001, pet. denied). See also Finlan v. Dallas Indep. Sch. Dist., 90 S.W.3d 395, 412 (Tex. App.—Eastland 2002, pet. denied).


"Lost profits are damages for the loss of net income to a business measured by reasonable certainty." Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002). See also Bossier Chrysler Dodge II, Inc. v. Rauschenberg, 201 S.W.3d 787, 808 (Tex. App.—Waco 2006) rev'd in part, 238 S.W.3d 376 (Tex. 2007) (per curiam). "Net profits" is defined as "what remains in the conduct of a business after deducting from its total receipts all of the expenses incurred in carrying on the business." Turner v. PV Int'l Corp., 765 S.W.2d 455, 465 (Tex. App.—Dallas 1988, writ denied) (citing R. A. Corbett Transp., Inc. v. Oden, 678 S.W.2d 172, 176 (Tex. App.—Tyler 1984, no writ).


 "Exact calculations" are not required to recover for lost profits. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 504 (Tex. 2001). "At a minimum [however], opinions or lost-profit estimates must be based on objective facts, figures, or data from which the lost-profits amount may be ascertained." Id.

SOURCE: 10-07-00362-CV (Tenth Court of Appeals in Waco, TX) (Oct 28, 2009)  



The equitable remedy of specific performance may be awarded upon a showing of a breach of contract. Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.—Dallas 2007, pet. denied).

However, a party seeking specific performance must plead and prove (1) compliance with the contract including tender of performance unless excused by the opposing party's breach or repudiation and (2) the readiness, willingness, and ability to perform at relevant times. DiGiuseppe v. Lawler, 269 S.W.3d 588, 593-94, 601 (Tex. 2008); see also 17090 Parkway, Ltd. v. McDavid, 80 S.W.3d 252, 258 (Tex. App.—Dallas 2002, pet. denied). It is required that both elements be proved prior to an award of specific performance unless the requirement of tender is excused. DiGiuseppe, 269 S.W.3d at 599.


"Generally speaking, it is a prerequisite to the equitable remedy of specific performance that the buyer of land shall have made an actual tender of the purchase price . . . [unless] actual tender would have been a useless act . . . ." DiGiuseppe, 269 S.W.3d at 594 (citing Wilson v. Klein, 715 S.W.2d 814, 822 (Tex. App.—Austin 1986, writ ref'd n.r.e.). See also McMillan v. Smith, 363 S.W.2d 437, 442-43 (Tex. 1962). The exception to the general rule that actual tender of performance is a prerequisite to obtaining specific performance is grounded in the notion that actual pre-suit tender of performance should be excused when it would be a "useless act, an idle ceremony, or wholly nugatory." DiGiuseppe, 269 S.W.3d at 594; Wilson, 715 S. W.2d at 822. The issue of whether a party to a contract is "ready, willing, and able" to perform presents a question of fact, not a question of law. See DiGiuseppe, 269 S.W.3d at 596. See also Holt v. Elliott Indus., Inc., 711 S.W.2d 435, 437 (Tex. App.—Fort Worth 1986, no writ). Additionally, whether a plaintiff would have performed his contractual obligations when they came due but for the defendant’s breach or repudiation of the contract is also a question of fact. DiGiuseppe, 269 S.W.3d at 600.

SOURCE: 10-07-00362-CV (Waco Court of Appeals) (10/28/09)  

Elements of Negligence Claim in Texas

WHAT DOES IT TAKE TO PROVE NEGLIGENCE? To prevail on its negligence claim, [Plaintiff] had to prove the existence of a legal duty, a breach of that duty, and damages proximately caused by the breach. See D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002). Thus, among the other elements of its negligence cause of action, [Plaintiff] had to show it was injured by [Defendant's] actions. See generally A.B.F. Freight Sys., Inc. v. Austrian Import Serv., Inc., 798 S.W.2d 606, 615 (Tex. App.-Dallas 1990, writ denied) (recognizing that establishing the fact of damage is a prerequisite to establishing the amount of damages to be awarded). SOURCE: 09-08-00083-CV (Beaumont Court of Appeals)(10/29/09)

ATTORNEY'S FEES: The American Rule (and its exceptions)

The American Rule with Regard to Fees: Loser Pays? - No, but there are plenty of exceptions It has long been the rule in Texas that attorney’s fees paid to prosecute or defend a lawsuit cannot be recovered in that suit absent a statute or contract that allows for their recovery. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006) (“Absent a contract or statute, trial courts do not have inherent authority to require a losing party to pay the prevailing party’s fees.”); Wm. Cameron & Co. v. Am. Sur. Co. of N.Y., 55 S.W.2d 1032, 1035 (Tex. Comm’n App. 1932, judgm’t adopted) (“It is settled law in this state that, unless provided for by statute or by contract between the parties, attorneys’ fees incurred by a party to litigation are not recoverable against his adversary either in an action in tort or a suit upon a contract.”); Sherrick v. Wyland, 37 S.W. 345, 345 (Tex. Civ. App. 1896) (“It has often been ruled, in this state and elsewhere, that fees of counsel, incurred in prosecuting a suit for or defending against a wrong, are not ordinarily recoverable as actual damages, because they are not considered proximate results of such wrong.”). The rule is known as the American Rule. See Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health and Human Res., 532 U.S. 598, 602 (2001) (“[P]arties are ordinarily required to bear their own attorney’s fees—the prevailing party is not entitled to collect from the loser.”); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718 (1967). SOURCE: Akin, Gump, Strauss, Hauer & Feld, LLP vs. National Development and Research Corp. No. 07-0818 (Tex. Oct. 30, 2009) (Opinion by Phil Johnson) (legal malpractice, attorney's caused by malpractice recoverable as damages despite the American Rule)

When is a broken promise actionable as fraud, rather than merely as a breach of contractual obligation?

TEXAS SUPREME COURT FINDS OCCASION TO RESTATE FRAUD ELEMENTS: The elements of fraud are: (1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001) (citing Formosa Plastics Corp. v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998)). BROKEN PROMISES: BREACH OF CONTRACT VS. FRAUD "A promise of future performance constitutes an actionable misrepresentation if the promise was made with no intention of performing at the time it was made.” Formosa Plastics, 960 S.W.2d at 48. “Proving that a party had no intention of performing at the time a contract was made is not easy, as intent to defraud is not usually susceptible to direct proof.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 305 (Tex. 2006) (citing Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 435 (Tex. 1986)). While breach of the contract alone is not evidence that a party did not intend to perform, “breach combined with ‘slight circumstantial evidence’ of fraud” is some evidence of fraudulent intent, enough to support a verdict. Id. “[A] party’s intent is determined at the time the party made the representation, [but] it may be inferred from the party’s subsequent acts after the representation is made.” Spoljaric, 708 S.W.2d at 434 (citing Chicago, T. & M.C. Ry. Co. v. Titterington, 19 S.W. 472, 474 (1892)). SOURCE: Aquaplex, Inc v. Rancho Law Valencia, Inc., No. 08-0280 (Tex. Oct 30, 2009) (per curiam) (fraud damages, proving amount of damages, remittiture by court of appeals or new trial)

Construction of Insurance Policy Is Analogous to Contract Interpretation

INTERPRETING INSURANCE POLICY IS A FORM OF CONTRACT CONSTRUCTION The interpretation of an insurance contract is generally subject to the same rules of construction as other contracts. Nat’l Union Fire Ins. Co. of Pittsburg, PA v. Crocker, 246 S.W.3d 603, 606 (Tex. 2008). Contract language that can be given a certain or definite meaning is not ambiguous and is construed as a matter of law. DeWitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999). The primary objective is to determine the parties’ intent as reflected in the policy’s terms, Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23 (Tex. 2008), and our review of an unambiguous contract, like any other legal question, is de novo. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). SOURCE: Chrysler Ins. Co., v. Greenspoint Dodge of Houston, Inc., No. 08-0780 (Tex. Oct. 30, 2009)(per curiam)