The Defense of Substantial Truth to a Defamation Claim

DEFAMATION / LIBEL / SLANDER

AND (SUBSTANTIAL) TRUTH DEFENSE UNDER TEXAS LAW

To maintain a cause of action for defamation, a plaintiff must establish that the defendant (1) published a statement about the plaintiff; (2) that was defamatory; (3) while acting with either actual malice, if the plaintiff was a public official or public figure, or negligence, if the plaintiff was a private individual, regarding the truth of the statement. WFAA-TV v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998); Henriquez v. Cemex Management, Inc., 177 S.W.3d 241, 251 (Tex. App.--Houston [1st Dist.] 2005, pet. denied); Grotti v. Belo Corp., 188 S.W.3d 768, 774 (Tex. App.--Fort Worth 2006, pet. denied). "

ESTABLISHING TRUTH AND SUBSTANTIAL TRUTH TO DEFEAT DEFAMATION CLAIM

The truth of the statement in the publication on which an action for libel is based is a defense to the action." Tex. Civ. Prac. & Rem. Code Ann. § 73.005 (Vernon 2005).

A defendant may also defeat a libel claim by establishing the substantial truth of the statement. Grotti, 188 S.W.3d at 774 (citing McIlvain v. Jacobs, 794 S.W.2d 14, 15-16 (Tex. 1990)).

SUBSTANTIAL TRUTH ANALYSIS LOOK FOR "GIST" OF THE COMPLAINED-OF STATEMENT

To determine if a publication is substantially true, "we consider whether the alleged defamatory statement was more damaging to the plaintiff's reputation, in the mind of the average person, than a truthful statement would have been," and "[w]e look at the 'gist' of the publication "to determine whether it is substantially true." Id. (citations omitted).

The defense of truth does not require proof that the alleged defamatory statement is literally true in every detail; substantial truth is sufficient. Gustafson v. City of Austin, 110 S.W.3d 652, 656 (Tex. App.--Austin 2003, pet. denied); Howell v. Hecht, 821 S.W.2d 627, 631-32 (Tex. App.--Dallas 1991, writ denied).

SOURCE: 01-08-00856-CV (First Court of Appeals-Houston)(10/29/09) (ample evidence substantiating the "gist" of the complained-of statements contained in the internet article)(defamation claim barred by the affirmative defense of substantial truth)

Elements of common-law fraud claim in Texas

WHICH ELEMENTS HAVE TO BE PROVEN TO ESTABLISH A COMMON-LAW FRAUD CLAIM UNDER TEXAS LAW? To prevail on a fraud claim, a plaintiff must prove that (1) the defendant made a material representation that was false; (2) the defendant knew the representation was false or made it recklessly as a positive assertion without any knowledge of its truth; (3) the defendant intended to induce the plaintiff to act upon the representation; and (4) the plaintiff actually and justifiably relied on the representation, which caused injury. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001); Hartford Fire Ins. Co. v. C. Springs 300, Ltd., 287 S.W.3d 771, 781 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). SOURCE: 01-07-01004-CV (1st CoA Houston)(10/29/09)

Claim for LIQUIDATED and UNLIQUIDATED Damages in Default Judgment Context

   
EFFECT OF DEFAULT BY DEFENDANT WHO WAS PROPERLY SERVED
A defendant who defaults admits all allegations of facts except unliquidated damages. See Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992); Stoner v. Thompson, 578 S.W.2d 679, 684-85 (Tex. 1979).
 
WHEN CAN DEFAULT JUDGMENT BE HAD FOR LIQUIDATED DAMAGES?
When a plaintiff's claim is liquidated, and proven by an instrument in writing, the plaintiff may be awarded damages without the necessity of a hearing or the presentation of evidence. Burrows v. Bowden, 564 S.W.2d 474, 475 (Tex. Civ. App.-Corpus Christ 1978, no writ); Tex. R. Civ. P. 241.
 
WHAT MAKES A CLAIM "LIQUIDATED"?
A claim is liquidated if the amount of damages caused by the defendant can be accurately calculated from: (1) the factual, as opposed to conclusory, allegations in the petition, and (2) an instrument in writing. Freeman v. Leasing Assocs., Inc., 503 S.W.2d 406, 408 (Tex. Civ. App.-Houston [14th Dist.] 1973, no writ). A default judgment does not establish allegations pertaining to unliquidated damages. First Nat'l Bank of Irving v. Shockley, 663 S.W.2d 685, 689 (Tex. App.-Corpus Christi 1983, no writ). If damages are unliquidated or not proved by an instrument in writing, the court must hear evidence as to damages before a default judgment may be granted. Tex. R. Civ. P. 243.
 
ATTORNEYS FEES ARE UNLIQUIDATED (BUT CAN BE PROVEN UP BY AFFIDAVIT) Attorney's fees are by their very nature unliquidated. The reasonableness of attorney's fees, in the absence of a contract therefore, is a question of fact and is an unliquidated demand for which the trial court entering a default judgment should hear evidence. First Nat'l Bank of Irving, 663 S.W.2d at 691.
 
DEEMED ADMISSIONS MAY BE USED AS SUBSTITUTE FOR OTHER PROOF
A trial court may be able to ascertain the amount of damages and attorney's fees in a default judgment based on a request for admissions. Sherman Acquisition II LP v. Garcia, 229 S.W.3d 802, 813 (Tex. App.-Waco 2007, no pet.). A plaintiff may serve a request for admissions as part of its petition, and when the defendant fails to file an answer or other response, those requests are deemed admitted. Id. at 811-12 (citing Tex. R. Civ. P. 198.2(c)). Deemed admissions may be employed as proof, and once admissions are deemed admitted by operation of law and where the admissions fully support each element of a cause of action, including damages, they will fully support a judgment based thereon. This is because unanswered requests for admissions are deemed admitted without the necessity of a court order and any matter thus admitted is conclusively established as being true. Id. at 812-13 (citing Tex. Rs. Civ. P. 198.2(c), 198.3). Thus, the facts admitted may not be contradicted by evidence at the trial. Id. at 813 (citing Marshall v. Vise, 767 S.W.2d 699, 700 (Tex. 1989)).
 
SOURCE: 05-07-01730-CV (Dallas Court of Appeals)(10/26/2009) (credit card debt suit)

Elements of Breach of Contract (breach of credit card agreement in debt collection suit)

  
BREACH OF CONTRACT ELEMENTS (UNPAID DEBT ON CREDIT CARD)
 
The elements of a breach of contract claim are: (1) the existence of a valid contract; (2) performance or tender of performance; (3) breach by the defendant; and (4) damages resulting from the breach. Hussong v. Schwan's Sales Enters., Inc., 896 S.W.2d 320, 326 (Tex. App.-Houston [1st Dist.] 1995, no writ).
 
REASONABLE ATTORNEY'S FEES IN ADDITION TO PROVEN AMOUNT OF DEBT Reasonable attorney's fees may be recovered, in addition to the amount of a valid claim and costs, if the claim is for a written contract. Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8) (Vernon 2008). See id. § 38.002 (providing for recovery procedure).

SOURCE: DALLAS COURT OF APPEALS - No. 05-07-01730-CV (Tex.App.- Dallas Oct. 26, 2009)

What is a CASH PRICE VIOLATION (under the Texas Finance Code)?

CASH PRICE VIOLATION CLAIM UNDER THE TEX. FIN. CODE IN CONNECTION WITH PURCHASE OF CAR, TRUCK, MOTOR VEHICLE: When is it viable? When Not? A cash price violation occurs when a dealership establishes a cash price for the vehicle, but sells the vehicle for more than the price established. Collins v. Fred Haas Toyota, 21 S.W.3d 606, 607 (Tex. App.-Houston [1st Dist.] 2000, no pet.). The finance code defines cash price as the “price at which the retail seller offers in the ordinary course of business to sell for cash the goods or services that are subject to the transaction.” Tex. Fin. Code Ann. § 348.004(a) (Vernon 2006). The underlying purpose of a cause of action for a cash price violation is to prevent a dealership from charging a finance customer more than a cash customer for the same vehicle. Collins, 21 S.W.3d at 607. In Collins, the plaintiff entered into a financing agreement and purchased a car from the dealership. He later sued complaining of a cash price violation when he learned that on the same day that he purchased the car, the dealership advertised it for less than the price he had paid. Id. at 607. The trial court granted summary judgment for the dealership on the basis that an advertisement cannot establish a cash price unless it is relied upon. Id. The court of appeals reversed. The court held that reliance is not an element of a cash price violation. Id. at at 608. The cash price and the negotiated price agreed upon between the dealership and the buyer are not the same. The finance code provides that the retail installment contract must contain the “cash price of the retail installment transaction.” Tex. Fin. Code Ann. § 348.102(a)(5) (Vernon 2006). It is the negotiated price that the retail installment contract must contain, not the cash price that the dealership offered the vehicle in the ordinary course of business to all customers. As noted by the court in Collins, the cash price of the vehicle was the price the dealership “offered the vehicle in the ordinary course of business to all customers, not the price ultimately agreed on and stated in the contract.” Collins, 21 S.W.3d at 608. The trial court found a violation because the “negative equity that was rolled into this retail installment contract was not put in the proper location.” In his appellee's brief, Kuberski states “Bledsoe's inclusion of financed negative equity in Mr. Kuberski's contracted-for cash price violated the Texas Finance Code and federal disclosure requirements.” However, failure to separately disclose the negative equity is not relevant to a determination of a cash price violation. Moreover, the contracted-for cash price, alone, does not determine a cash price violation under the finance code. See Collins, 21 S.W.3d at 607. What qualifies as a "finance charge"? - Financing of Negative Equity to Pay off Loan on Trade-In Not Included The finance code does not define the term finance charge. The finance code provides that the disclosure requirements of Regulation Z under the Truth in Lending Act apply to retail installment contracts in Texas. See Tex. Fin. Code Ann. § 348.009 (Vernon 2006). Regulation Z defines finance charge as “any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit.” 12 C.F.R. § 226.4 (2003). Negative equity does not fit within this definition. SOURCE: 05-08-00071-CV (Dallas CoA) (1/30/09) (no cash-price violation based on inclusion of financed negative equity for trade-in in loan for new truck) CITE: Bledsoe Dodge, L.L.C. v. Kuberski, 279 S.W.3d 839 (Tex. App.-Dallas 2009, no pet.)

Inherently undiscoverable injury for purposes of the DISCOVERY RULE (SoL Tolling Theories)

   
DEFERRING CLAIM ACCRUAL DATE THROUGH THE DISCOVERY RULE

The discovery rule is a very limited exception to limitations and is construed strictly. See Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1994) (“the discovery rule, in application, proves to be a very limited exception to statutes of limitation.”); S.V. v. R.V., 933 S.W.2d 1, 25 (Tex. 1996) (“exceptions to the legal injury rule should be few and narrowly drawn”). [U]nder Texas law, the discovery rule applies when “the nature of the injury incurred is inherently undiscoverable and the evidence of injury is objectively verifiable.” See Computer Assocs. Int'l, Inc., 918 S.W.2d at 456.

HOW IS 'INHERENTLY UNDISCOVERABLE' CONSTRUED AND APPLIED BY COURTS IN TEXAS?

As the Texas Supreme Court explained in Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734-35 (Tex. 2001): An injury is inherently undiscoverable if it is, by its nature, unlikely to be discovered within the prescribed limitations period despite due diligence. S.V. v. R.V., 933 S.W.2d 1, 7 (Tex.1996) (citing Altai, 918 S.W.2d at 456). “Inherently undiscoverable” does not mean that a particular plaintiff did not discover his or her particular injury within the applicable limitations period. Id. Instead, we determine whether an injury is inherently undiscoverable on a categorical basis because such an approach “brings predictability and consistency to the jurisprudence.” Apex Towing Co. v. Tolin, 41 S.W.3d 118, 122 (Tex.2001) (citing S.V. v. R.V., 933 S.W.2d at 6); see also HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex.1998). Accordingly, the question [...] is not whether [parties] detected the alleged improper charges and resulting underpayment within the limitations period. Rather, we must decide whether theirs is “the type of injury that generally is discoverable by the exercise of reasonable diligence.” HECI, 982 S.W.2d at 886. The court also explained in Via Net, U.S. v. TIG Insurance Co., 211 S.W.3d 310, 314 (Tex. 2006), that whether an injury is inherently undiscoverable is a legal question “decided on a categorical rather than case-specific basis; the focus is on whether a type of injury rather than a particular injury was discoverable.” (Emphasis in original).

SOURCE: DALLAS COURT OF APPEALS - 05-07-01553-CV (Dallas CoA)(10/19/09)

SoL: When does a cause of action accrue? Under what circumstances can a later ACCRUAL DATE be claimed?

  
WHEN DOES AN ACTIONABLE CLAIM ACCRUE FOR LIMITATIONS PURPOSES?
    
Determining when a cause of action accrues typically is a question of law. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003).[1] “ As a general rule, a cause of action accrues and the statute of limitations begins to run when facts come into existence that authorize a party to seek a judicial remedy." Id. (citing Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 514 (Tex. 1998), and Murray, 800 S.W.2d at 828). “In most cases, a cause of action accrues when a wrongful act causes a legal injury, regardless of when the plaintiff learns of that injury or if all resulting damages have yet to occur." Knott, 128 S.W.3d at 221 (citing S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996)).
   
WHEN DOES A LATER ACCRUAL DATE APPLY? 
     
Accrual may be deferred if the cause of action (1) is not discovered as a result of fraud or fraudulent concealment; or (2) is “inherently undiscoverable." Kuzniar v. State Farm Lloyds, 52 S.W.3d 759, 760 (Tex. App.-San Antonio 2001, pet. denied) (en banc). [Party] did not plead these bases for deferring accrual of his cause of actions; did not assert them in his summary judgment response; and does not assert them on appeal. Therefore, [opposing party] was not required to negate these bases for deferring accrual in the trial court and they do not affect the analysis on appeal. See, e.g, Via Net v. TIG Ins. Co., 211 S.W.3d 310, 313 (Tex. 2006).
   
SOURCE: 14-08-00248-CV (14th Court of Appeals-Houston) (10/15/09)  
 

The DISCOVERY RULE in the context of a FIDUCIARY RELATIONSHIP and FIDUCIARY DUTY

WHEN DOES THE DISCOVERY RULE APPLY? EXISTENCE OF FIDUCIARY RELATIONSHIP AND FIDUCIARY DUTY IS RELEVANT A variation to the inherently undiscoverable element arises when applying the discovery rule to a fiduciary relationship. Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 456 (Tex. 1996); see also S.V. v. R.V. , 933 S.W.2d 1, 8 (Tex. 1996). In the fiduciary context, "a person to whom a fiduciary duty is owed is either unable to inquire into the fiduciary's actions or unaware of the need to do so." S V., 933 S.W.2d at 8. When a trustee breaches its duty to a beneficiary, the nature of the injury is considered inherently undiscoverable because of the fiduciary nature of the relationship. See id. However, the person owed a fiduciary relationship still must exercise reasonable diligence "when the fact of misconduct becomes [so] apparent it can no longer be ignored." (1) Id.; see also Computer Assocs. Int'l, 918 S.W.2d at 456; Slay v. Burnett Trust, 187 S.W.2d 377, 394 (Tex. 1945); G. Prop. Mgmt., Ltd. v. Multivest Fin. Servs. of Tex., Inc., 219 S.W.3d 37, 48-49 (Tex. App.--San Antonio 2006, no pet.). Because Jones owed fiduciary responsibilities to Polk Mechanical, the inherently undiscoverable requirement for applying the discovery rule is satisfied. See S V., 933 S.W.2d at 8. Moreover, the injury in this case is objectively verifiable as it can be objectively established through bank records and cancelled checks. See HECI Exploration Co., 982 S.W.2d at 886. Accordingly, we hold the discovery rule applied to Polk Mechanical's claim against Jones, and Jones was required to conclusively negate its application to be entitled to summary judgment. See Pustejovsky, 35 S.W.3d at 646. To conclusively negate the discovery rule, Jones was required to prove as a matter of law that there was no genuine issue of fact about when Polk Mechanical discovered or should have discovered the nature of the injury. See Potter, 137 S.W.3d at 704. Inquiries involving the discovery rule usually entail questions for the trier of fact because when a plaintiff knew or should have known of an injury is generally a fact question. Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex. 1998); Cadle Co. v. Wilson, 136 S.W.3d 345, 352 (Tex. App.--Austin 2004, no pet.). However, if reasonable minds could not differ about the conclusion to be drawn from the facts in the record, the start of the limitations period may be determined as a matter of law. Childs, 974 S.W.2d at 44; Cadle Co., 136 S.W.3d at 352; Zacharie v. U.S. Nat. Resources, Inc., 94 S.W.3d 748, 753 (Tex. App.--San Antonio 2002, no pet.). SOURCE: 04-08-00509-CV (4th Court of Appeals) (7/1/09, pet. denied Oct. 16, 2009)

The DISCOVERY RULE in the Context of Limitations (SoL)

 
LIMITATIONS & DISCOVERY RULE: WHAT IS ITS EFFECT WHEN IT APPLIES?

"The discovery rule has been applied in limited categories of cases to defer accrual of a cause of action until the plaintiff knew or, exercising reasonable diligence, should have known of the facts giving rise to a cause of action." HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex. 1998).

WHEN DOES THE DISCOVERY RULE TOLL THE RUNNING OF LIMITATIONS?

The application of the discovery rule is generally limited to those cases where the nature of the injury is inherently undiscoverable and the evidence of the injury is objectively verifiable. Id. The applicability of the discovery rule is determined categorically, i.e., not based on whether the particular injury in the case at hand may not have been discovered but whether the injury is of a type that generally is discoverable by the exercise of reasonable diligence. Id. 
 
SOURCE: (04-08-00509-CV (San Antonio Court of Appeals (7/1/09, pet. denied Oct. 16, 2009)

No RES JUDICATA where underlying judgment reversed or vacated

THE DEFENSE OF RES JUDICATA Res judicata bars a party from attempting to relitigate a claim or cause of action that a competent tribunal has finally adjudicated. Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 206 (Tex. 1999). For res judicata to apply, the following elements must be present: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) the same parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have been raised in the first action. Igal v. Brightstar Info. Tech. Group, Inc., 250 S.W.3d 78, 86 (Tex. 2008). FIRST ELEMENT OF RES JUDICATA DEFENSE: A PRIOR JUDGMENT ON THE MERITS Because of our holding that the motions for summary judgment in the first suit were erroneously granted, a prior final judgment on the merits does not exist on which Biela's and Alert can base their res judicata argument. Accordingly, the appellees cannot establish the first element of res judicata as a matter of law. The October 14, 2008 order granting summary judgment is therefore reversed, and the cause is remanded to the trial court for further proceedings. SOURCE: Nos. 04-08-00587-CV, 04-08-00857-CV (San Antonio Court of Appeals 6/10/09, pet. denied Oct 16, 2009)

Defamation claim based on job reference by former employer & qualified privilege, immunity defense

ELEMENTS OF DEFAMATION CLAIM To maintain a defamation cause of action, the plaintiff must prove that the defendant: (1) published a statement; (2) that was defamatory concerning the plaintiff; (3) while acting with either actual malice, if the plaintiff was a public official or public figure, or negligence, if the plaintiff was a private individual, regarding the truth of the statement. See Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989) (citing New York Times Co. v. Sullivan, 376 U.S. 254, 279-80 (1964)). To prevail on its motion for summary judgment, a defendant must disprove at least one essential element of the plaintiff's defamation claim or establish all of the elements of an affirmative defense as a matter of law. WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998); Montgomery, 669 S.W.2d at 310-11. Because it is dispositive, the first ground of Rosban's traditional summary judgment motion that we consider is the affirmative defense of immunity from Graham's defamation claim under the labor code. STATUTORY IMMUNITY FROM DEFAMATION LIABILITY FOR JOB REFERENCES "An employer may disclose information about a current or former employee's job performance to a prospective employer of the current or former employee on the request of the prospective employer or the employee." Tex. Lab. Code Ann. § 103.003 (West 2006). "Job performance" is defined as "the manner in which an employee performs a position of employment and includes an analysis of the employee's attendance at work, attitudes, effort, knowledge, behaviors, and skills." Id. § 103.002(3). Employers are immune from civil liability for making disclosures about current or former employees' job performance:

An employer who discloses information about a current or former employee under Section 103.003 is immune from civil liability for that disclosure or any damages proximately caused by that disclosure unless it is proven by clear and convincing evidence that the information disclosed was known by that employer to be false at the time the disclosure was made or that the disclosure was made with malice or in reckless disregard for the truth or falsity of the information disclosed. For purposes of this subsection, "known" means actual knowledge based on information relating to the employee, including any information maintained in a file by the employer or that employee. Id. § 103.004(a).

When a defendant seeks summary judgment based on qualified privilege, it is the defendant's burden to conclusively establish that his allegedly defamatory statement was made with an absence of actual malice. Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex. 1995).

In the defamation context, a statement is made with actual malice when it is made with knowledge of its falsity or with reckless disregard as to its truth. Id. at 646. Reckless disregard exists when "the defendant in fact entertained serious doubts as to the truth of his publication" or had a "high degree of awareness of . . . [the] probable falsity of his statements." Bentley v. Bunton, 94 S.W.3d 561, 591 (Tex. 2002) (quoting Harte-Hanks Commc'ns, Inc. v. Connaughton, 491 U.S. 657, 688 (1989)).

Actual malice with regard to a defamatory statement involves a higher level of culpability than mere ill will or animosity. Akin v. Santa Clara Land Co., 34 S.W.3d 334, 341 (Tex. App.--San Antonio 2000, pet. denied). Negligence, failure to investigate the truth or falsity of the statements prior to publication, or failure to act as a reasonable prudent person is insufficient. Id. at 341-42.

SOURCE: 03-07-00317-CV (Austin Court of Appeals) (10/14/09) (statement about former employee's refusal to take drug test not actionable) (evidence is sufficient to conclusively establish that [former employer's] statements were made without malice or reckless disregard for their truth or falsity. See New Times, Inc. v. Issacks, 146 S.W.3d 144, 164 (Tex. 2004) (affidavits from interested witnesses may negate actual malice as a matter of law if they are "clear, positive, and direct, otherwise credible and free from contradictions and inconsistencies, and [able to be] readily controverted. Tex. R. Civ. P. 166a(c)").

Effect of Absence of MATERIAL TERM from CONTRACT on enforceability

OMISSION OF MATERIAL TERM WOULD RENDER CONTRACT UNENFORCEABLE
 
A contract that lacks a material term is not an enforceable contract. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992) (stating that "[i] n order to be legally binding, a contract must be sufficiently definite in its terms so that a court can understand what the promisor undertook" and that "[w]here an essential term is open for future negotiation, there is no binding contract"); Sadeghi v. Gang, 270 S.W.3d 773, 776 (Tex. App.-Dallas 2008, no pet.) ("If a contract is not clear and certain as to all essential terms, it will fail for indefiniteness."); Miga v. Jensen, 25 S.W.3d 370, 376 (Tex. App.-Fort Worth 2000), aff'd in part and rev'd in part, 96 S.W.3d 207 (Tex. 2002). Thus, a party may defend a breach of contract action by asserting that the contract on which the claim is based is not enforceable as a matter of law and therefore cannot support a breach of contract action. See T.O. Stanley Boot Co., 847 S.W.2d at 221-22.
 
NATURE OF THE LEGAL ARGUMENT THAT ESSENTIAL TERMS IS MISSING FROM THE CONTRACT SUED ON
 
An assertion that the contract lacked a material term does not establish an independent reason why a plaintiff should not recover and is therefore not an affirmative defense. See Phillips v. Phillips, 820 S.W.2d 785, 791 (Tex. 1991) (stating that affirmative defense does not rebut facts asserted by plaintiff but rather seeks to establish independent reason why plaintiff should not recover).
 
QUESTION OF LAW NOT FOR THE JURY TO DECIDE

 [T]he question of whether the contract contained all essential terms for it to be enforceable is a question of law. Beal Bank, S.S.B., 124 S.W.3d at 654 n.8; Am.'s Favorite Chicken Co., 929 S.W.2d at 622. [T]he jury's answer to the question is therefore not determinative. Alcorn v. Brown, 536 S.W.2d 80, 82 (Tex. Civ. App- Fort Worth 1976, writ ref'd n.r.e.); see also Se. Pipe Line Co., Inc. v. Tichacek, 997 S.W.2d 166, 172 (Tex. 1999) (noting that a jury's answer to a question may be disregarded if question calls for a finding on a question of law). Alcorn, 536 S.W.2d at 82 (stating that trial court may disregard jury's answer to erroneously submitted question of law). 
   
SOURCE: 02-07-00355-CV (Fort Worth Court of Appeals) (5/28/09, pet. denied 10/16/09) (finding that the contract for sale/purchase of interest in house boat at issue contained all the material terms necessary for it to be enforceable).

What are the essential, material TERMS of a CONTRACT

WHICH ELEMENTS ARE ESSENTIAL TO ENFORCEABILITY OF A CONTRACT? - IT DEPENDS ON THE NATURE (OBJECT) OF THE CONTRACT
 
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) (stating that "[e]ach contract should be considered separately to determine its material terms" and that "[i]n a contract to loan money, the material terms will generally be: the amount to be loaned, maturity date of the loan, the interest rate, and the repayment terms").
 
ESSENTIAL TERMS 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." Kelly v. Rio Grande Computerland Group, 128 S.W.3d 759, 767 (Tex. App.-El Paso 2004, no pet.); John Wood Group USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 20 (Tex. App.-Houston [1st Dist.] 2000, pet. denied).
 
ESSENTIAL TERMS OF CONTRACT FOR LOANING OF MONEY 
 
In a contract to loan money, the material terms will generally be: the amount to be loaned, maturity date of the loan, the interest rate, and the repayment terms. T.O. Stanley Boot Co., 847 S.W.2d at 221.

RELATED CONCEPTS: missing, omitted material contract terms, indefiniteness of contract terms, meeting of the minds, agreement to agree, enforceability of contract.

 SOURCE: 02-07-00355-CV (Fort Worth CoA) (5/28/09, pet. denied 10/16/09)

AGREEMENT and CONTRACT Distinguished

IS THERE A DIFFERENCE BETWEEN A CONTRACT AND AN AGREEMENT? TEXAS COURT OF APPEALS SAYS "Yes" Although sometimes used interchangeably, the terms "agreement" and "contract" are not synonymous. "Agreement" refers to "a manifestation of mutual assent on the part of two or more persons," whereas the term "contract" refers to "a promise or a set of promises for the breach of which the law gives a remedy." Restatement (Second) of Contracts '' 1, 3 (1981) (emphasis added); Wiley v. Bertelsen, 770 S.W.2d 878, 882 (Tex. App.- Texarkana 1989, no writ) (noting that the term "agreement" is more broad than the term "contract" and that parties might have an agreement but not a contract). SOURCE: 02-07-00355-CV (Fort Worth Court of Appeals) (5/28/2009, pet. denied 10/16/09)

Discharge Defense to Suit to Enforce Personal Guaranty - Material Alteration of Contract without Guarantor's Consent

   
AFFIRMATIVE DEFENSE OF DISCHARGE AGAINST ENFORCEMENT OF PERSONAL GUARANTY FOR LIABILITY EVIDENCED BY PROMISSORY NOTE

To be entitled to discharge from liability, the guarantor must prove: (1) a material alteration of the underlying contract; (2) made without the guarantor's consent; (3) which is to the guarantor's detriment. Vastine v. Bank of Dallas, 808 S.W.2d 463, 464-65 (Tex. 1991) (per curiam); Old Colony Ins. Co. v. City of Quitman, 163 Tex. 144, 352 S.W.2d 452, 455 (1961).
 
We review a trial court's conclusions of law as a legal question. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).
   
DISCHARGE DEFENSE NOT ESTABLISHED
 
There is no evidence of any modification of the promissory note here. The evidence Byboth relies on concerns whether Wood breached the note, not whether it modified it. Moreover, the evidence also negates as a matter of law any damages resulting from the misapplication of the payments from 2-16 Holdings, Inc. It is undisputed that when Wood calculated the amount owed on the note at trial (or at least before judgment), it credited 2-16 Holdings, Inc. and Byboth with the amounts of the four payments. Byboth agreed that Wood was not seeking to recover under the guaranty more than 2-16 Holdings, Inc. owed under the terms of the promissory note. Therefore, any earlier misapplication of the payments due under the promissory note was corrected, and the judgment on the underlying obligation reflected the correction. Thus, the undisputed facts fail to show that Byboth should be discharged from liability.
 
SOURCE: 05-08-00915-CV (Dallas Court of Appeals) (5/21/09, pet. denied Oct 16, 2009)

Material Alteration of Contract and Discharge Defense
in Suit to Enforce Personal Guaranty