Legal Blog ("Blawg") on Causes of Action and Affirmative Defenses in Texas -- with Caselaw Snippets from Appellate Opinions, and Occasional Commentary on Decisions
Saturday, November 14, 2009
Integration Clause: Purpose and Effect of Merger Clause in Contracts
Enforcing unambiguous contract (breach of contract cause of action)
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.
CONTRACT CONSTRUCTION RULES
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.).
UNAMBIGUOUS CONTRACT CONSTRUED AS A MATTER OF LAW
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).
AMBIGUOUS CONTRACT CALLS FOR CONSIDERATION OF OTHER EVIDENCE TO ESTABLISH THE PARTIES' INTENT
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
Tuesday, November 10, 2009
Fraud in a Real Estate Transaction (statutory cause of action)
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
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 - COMMON-LAW CAUSE OF ACTION
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
Trust Fund Act: Civil Liabilty for Misapplication of Construction Trust Funds
STATUTORY CAUSE OF ACTION UNDER THE TEXAS CONSTRUCTION TRUST FUND ACT
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).
CIVIL LIABILITY FOR VIOLATION OF CONSTRUCTION TRUST FUND ACT
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)
ELEMENTS OF SUIT ON ACCOUNT IN TEXAS
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
ELEMENTS IN SUIT ON ACCOUNT CAN BE PROVEN IN SUMMARY JUDGMENT WHEN DEFENDANT FILES A SWORN DENIAL AND THUS CONTROVERTS PLAINTIFF'S PRIMA-FACIE CASE
“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
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).
HOW TO PROVE CONVERSION OF PERSONAL PROPERTY
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 CONTRACT UNDER TEXAS LAW
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
Wednesday, November 4, 2009
NEGLIGENCE: Negligent Creation of Dangerous Situation
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
Monday, November 2, 2009
Declaratory Judgment under the Texas UDJA (DJA)
UNDER WHAT CIRCUMSTANCES IS DECLARATORY RELIEF WARRANTED?
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).
Accord and Satisfaction as Affirmative Defense to Debt Claim
Clean vs Unclean Hands Doctrine
UNCLEAN HANDS MAY PRECLUDE EQUITABLE RELIEF
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.
WHEN IS INVOCATION AND APPLICATION OF THE UNCLEAN HANDS DOCTRINE PROPER?
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 PROFIT DAMAGES - HOW TO PROVE THEM
"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).
WHAT DEGREE OF PRECISION IS REQUIRED TO ESTABLISH LOSS OF PROFITS?
"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)
SPECIFIC PERFORMANCE REMEDY (breach of contract)
WHEN IS A PLAINTIFF ENTITLED TO SPECIFIC PERFORMANCE AS A REMEDY?
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).
ELEMENTS REQUIRED FOR AWARD OF SPECIFIC PERFORMANCE
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.
SPECIFIC PERFORMANCE IN CONTEXT OF SALE OF REAL ESTATE
"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)