Justia Contracts Opinion Summaries

Articles Posted in Supreme Court of Texas
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In this case, Bay, Ltd., a construction company, filed suit against The Most Reverend Wm. Michael Mulvey, Bishop of the Diocese of Corpus Christi, seeking to recover the value of unauthorized improvements made to a ranch leased from the Bishop by Michael Mendietta, a former Bay employee. Mendietta had used Bay's resources for these improvements without the company's consent. Bay also filed a separate lawsuit against Mendietta for damages related to his unauthorized actions, including the improvements to the ranch.Six years later, Bay and Mendietta entered into an agreement settling their claims. This agreement required Mendietta to pay Bay $750 per month to avoid a $1.9 million final judgment. The agreement allocated $175,000 of the settlement amount to Mendietta's homestead, but did not allocate specific values to the other injuries suffered by Bay, including the improvements to the ranch.After Bay dropped its claims against Mendietta and proceeded to trial against the Bishop alone, the jury awarded damages to Bay. However, the Bishop requested a settlement credit of $1.725 million (the total settlement amount minus the $175,000 allocated to Mendietta's homestead). The lower court denied this request, but the appellate court reversed, concluding that the unallocated amount of the settlement exceeded the jury's award to Bay.The Supreme Court of Texas affirmed the appellate court's decision, holding that the agreement between Bay and Mendietta constituted a $1.9 million settlement agreement. Because the agreement allocated $175,000 to an injury other than the one Bay sought to recover from the Bishop, the remaining $1.725 million was credited against the jury's verdict, resulting in a take-nothing judgment for Bay. View "BAY, LTD. v. MULVEY" on Justia Law

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In a dispute between Sealy Emergency Room, L.L.C., Dr. Kannappan Krishnaswamy, and Free Standing Emergency Room Managers of America, L.L.C. (FERMA), along with its doctors, the Supreme Court of Texas ruled on two issues regarding the finality and appealability of judgments. The case arose from a contractual dispute between Sealy ER and FERMA, with both parties filing various claims and counterclaims against each other. The trial court granted FERMA's motion for partial summary judgment, dismissing all of Sealy ER's claims, and later granted FERMA's motion to sever these claims into a separate action.The Supreme Court held that when claims are severed into separate actions, the test for finality applies to each action separately. Thus, any claims that remain pending in the original action are not relevant in deciding whether there is a final judgment in the severed action. Procedural errors in ordering a severance do not affect the finality of the judgment or appellate jurisdiction.Secondly, the court held that when a party seeks attorney’s fees as a remedy for a claim under a prevailing-party standard, a summary judgment against the party on that claim also disposes of its fee request. Therefore, the court’s failure to specifically deny the fee request will not prevent finality if the court’s orders in fact dispose of all parties and claims.In this case, the court concluded that the trial court’s order granting partial summary judgment disposed of all parties and claims that were later severed into a new action. As a result, the severed action became final when the severance order was signed, and Sealy ER timely appealed. The court of appeals erred in holding that it lacked appellate jurisdiction, so the Supreme Court reversed and remanded for the court of appeals to address the merits of the appeal. View "SEALY EMERGENCY ROOM, L.L.C. v. FREE STANDING EMERGENCY ROOM MANAGERS OF AMERICA, L.L.C." on Justia Law

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This case involves a dispute between a homeowner, Mario Rodriguez, and his insurance company, Safeco Insurance Company of Indiana. After a tornado damaged Rodriguez's home, Safeco issued a payment of $27,449.88, which Rodriguez accepted. Rodriguez's counsel then informed Safeco that it owed an additional $29,500 and threatened to sue. Rodriguez sued Safeco, bringing several claims, including breach of contract and statutory claims under the Insurance Code. Safeco invoked the insurance policy’s appraisal provision and subsequently issued a check to Rodriguez for $32,447.73, which it viewed as full payment of the appraisal amount due under the policy. Safeco also paid an additional $9,458.40, which it claimed would cover any interest possibly owed on the appraised amount.The Supreme Court of Texas was asked to answer a certified question from the United States Court of Appeals for the Fifth Circuit: “In an action under Chapter 542A of the Texas Prompt Payment of Claims Act, does an insurer’s payment of the full appraisal award plus any possible statutory interest preclude recovery of attorney’s fees?” The Supreme Court of Texas held that the answer is yes. When an insurer has fully discharged its obligations under the policy by voluntarily paying the appraised amount, plus any statutory interest, in compliance with the policy’s appraisal provisions, section 542A.007 of the Insurance Code prohibits an award of attorney’s fees. This is because there is no remaining “amount to be awarded in the judgment to the claimant for the claimant’s claim under the insurance policy,” which means no attorney’s fees are available under section 542A.007(a)(3)’s formula. View "RODRIGUEZ v. SAFECO INSURANCE COMPANY OF INDIANA" on Justia Law

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The Supreme Court reversed the judgment of the court of appeals reversing the trial court's judgment in this dispute over a particular provision in a land-improvement contract, holding that the court of appeals erred in concluding that the contract was ambiguous and could not be established as a matter of law.The trial court interpreted the disputed provision as a matter of law and instructed the jury accordingly. The court then entered judgment based on the jury's verdict, which resolved the issues of liability and damages. The court of appeals reached the same result as the trial court but nevertheless reversed, determining that, despite its analysis of the language of the contract, the provision was still ambiguous. The court then ordered a new trial so that a jury could determine the meaning of the contractual text. The Supreme Court reversed and remanded the case for further proceedings, holding that the trial court correctly construed the subject provision, and the court of appeals erred in ruling that the provision was ambiguous. View "U.S. Polyco, Inc. Texas Central Business Lines Corp." on Justia Law

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The Supreme Court reversed the judgment of the court of appeals in the underlying insurance dispute, holding that the insurance policy at issue did not incorporate the payout limits in an underlying service agreement.ExxonMobil Corporation hired Savage Refinery Services to work as an independent contractor at Exxon's Baytown refinery, and the parties memorialized their arrangement with a service agreement. Under the agreement, Savage promised to obtain at least a minimum stated amount of liability insurance for its employees and to name Exxon as an additional insured. Savage ultimately procured five different insurance policies, three of which were underwritten by National Union Fire Insurance Company and Starr Indemnity & Liability Insurance Company. After a workplace accident at the Baytown Refinery two injured employees sought compensation. Plaintiffs settled with Exxon for $24 million. When National Union and Starr denied Exxon coverage under their umbrella policies Exxon sued for breach of contract. The trial court ruled for Exxon. The court of appeals reversed, concluding that Exxon was not insured under National Union's umbrella policy. The Supreme Court reversed, holding that Exxon was an "insured" under National Union's umbrella policy and that the lower court's ruling with respect to Starr's bumbershoot policy was predicated on a similar error. View "ExxonMobil Corp. v. Nat'l Union Fire Insurance Co. of Pittsburgh, PA" on Justia Law

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The Supreme Court reversed the trial court's denial of Defendant's motion to compel arbitration, holding that remand was required for reconsideration in light of this Court's holdings in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694 (Tex. 2023).Lone Star Cleburne Autoplex filed this suit asserting that Alliance Auto Auctions of Dallas conspired with two of Lone Star's employees in order to embezzle money from Lone Star. Alliance moved to compel arbitration based on arbitration clauses contained in authorization agreements between Lone Star and a company Alliance used to verify and authorize car dealerships to buy and sell in the company's auctions. In opposing the motion Lone Star asserted that its claims fell outside the scope of the arbitration agreement. The trial court denied Alliance's motion to compel. The court of appeals affirmed. The Supreme Court reversed, holding that because the court of appeals decided this case without addressing arguments rejected in TotalEnergies, remand was required. View "Alliance Auto Auction of Dallas, Inc. v. Lone Star Cleburne Autoplex, Inc." on Justia Law

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The Supreme Court vacated the judgment of the court of appeals in this case involving the question of deed construction within the oil and gas context as to whether a royalty interest was fixed or floating, holding that further proceedings were required to evaluate this case in light of the framework articulated in Van Dyke v. Navigator Group, 668 S.W.3d 353 (Tex. 2023).The 1956 deed at issue expressly reserved an undivided 3/32's interest "(same being three-fourths (3/4's) of the usual one-eighth (1/8th) royalty)" in the oil, gas, and other minerals. The question before the Supreme Court was whether the reservation was a floating 3/4 interest of the royalty rather than a fixed 3/32 interest. The court of appeals concluded that the reservation was a floating 3/4 interest. Because the court of appeals' decision preceded Van Dyke, the Court's most recent double-fraction case, the Supreme Court granting the petition for review and vacated the lower court's decision, holding that this case must be remanded this case for further proceedings in light of Van Dyke. View "Thomson v. Hoffman" on Justia Law

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The Supreme Court reversed the judgment of the court of appeals in this case concerning whether Apache Corporation breached its purchase-and-sale agreements (PSAs) with Sellers, holding the court of appeals erred by failing to apply the default common-law rule of contractual construction to the parties' dispute and incorrectly construed other contractual provisions at issue.In the PSAs at issue, Sellers sold seventy-five percent of their working interests in 109 oil-and-gas leases to Apache. The trial court rendered final judgment for Apache on the grounds that Sellers had no evidence of damages and could not prevail on their claims. The court of appeals reversed in part. At issue was whether the default rule for treating contracts that use the words "from" or "after" a specified date to measure a length of time should be applied in this case. The Supreme Court reversed the judgment of the court of appeals as to the issues that the parties presented for review, holding that the parties' agreement in this case implicated the default rule without displacing it. View "Apache Corp. v. Apollo Exploration, LLC" on Justia Law

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In these two consolidated cases involving claims brought against the Electric Reliability Council of Texas, Inc. (ERCOT) the Supreme Court answered, among other questions, that ERCOT is a governmental unit as defined in the Texas Tort Claims Act and is thereby entitled to pursue an interlocutory appeal from the denial of a plea to the jurisdiction.CPS Energy sued ERCOT and several of its officers for, inter alia, breach of contract. The trial court denied ERCOT'S plea to the jurisdiction. Ultimately, the court of appeals held that ERCOT was a governmental unit entitled to take an interlocutory appeal. In the second case, Panda sued ERCOT for, inter alia, fraud. The trial court denied ERCOT's pleas to the jurisdiction. The court of appeals ultimately held that ERCOT was not entitled to sovereign immunity. The Supreme Court affirmed in the first case and reversed in the other, holding (1) ERCOT was entitled to pursue an interlocutory appeal from the denial of a plea to the jurisdiction; (2) the Public Utility Commission of Texas has exclusive jurisdiction over the parties' claims against ERCOT; and (3) ERCOT was entitled to sovereign immunity. View "CPS Energy v. Electric Reliability Council of Texas" on Justia Law

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In this case alleging defective design and development of a commercial property the Supreme Court reversed the judgment of the court of appeals concluding that the running of limitations was equitably tolled while the suit was on appeal, holding that there was no tolling.The suit in this breach of contract and negligence action was eventually dismissed for failure to file a certificate of merit. Plaintiff nonsuited its claims and refiled. The court of appeals held that the certificate of merit was deficient as to the breach of contract claim but complied with the statute with respect to the negligence claim. The Supreme Court reversed in part, holding that the certificate of merit failed to satisfy Tex. Civ. Prac. & Rem. Code 150.002 as to Plaintiff's negligence claim. The Supreme Court remanded the case for a determination of whether the dismissal should be with or without prejudice. Thereafter, Plaintiff filed a new suit against Defendant that included a new certificate of merit. The trial court granted summary judgment for Defendant on the grounds that Plaintiff's claims were time-barred. The court of appeals reversed, concluding that Plaintiff was entitled to equitable tolling. The Supreme Court reversed, holding that there was no tolling during the appeal of the earlier-filed lawsuit. View "Levinson Alcoser Associates, LP v. El Pistolon II, Ltd." on Justia Law