Articles Posted in Texas Supreme Court

by
Bill Head, doing business as Bill Head Enterprises (Head), hired Petroleum Solutions, Inc. to manufacture and install an underground fuel system at the truck stop Head owned and operated. After a major diesel-fuel leak occurred, Respondents sued Petroleum Solutions for its damages. The trial rendered judgment in favor of Head and in favor of third-party defendant Titeflex, Inc., the alleged manufacturer of a component part incorporated into the fuel system, on Titeflex’s counterclaim against Petroleum Solutions for statutory indemnity. The court of appeals affirmed. The Supreme Court (1) reversed the judgment as to Head, holding that the trial court abused its discretion in imposing the sanctions of charging the jury with a spoliation instruction and striking Petroleum Solutions’ statute-of-limitations defense, and the trial court’s abuse of discretion was harmful; and (2) affirmed the judgment as to Titeflex’s indemnity claim, holding that Titeflex was entitled to statutory indemnity from Petroleum Solutions. Remanded for further proceedings between Respondents and Petroleum Solutions. View "Petroleum Solutions, Inc. v. Head" on Justia Law

by
A lessee leased a marina from a governmental entity providing that the premises be used only as a "marina, restaurant, gasoline and sundry sales and as a recreational facility.” When the governmental entity terminated the lease the business sued for breach of contract. The government entity filed a plea to the jurisdiction asserting governmental immunity. At issue in this case was whether Chapter 271 of the Texas Local Government Code waived the governmental entity’s immunity from suit. The trial court concluded that it did, and the court of appeals agreed. The Supreme Court disagreed with the lower courts and dismissed the lessee’s claims for lack of jurisdiction, holding that the parties’ lease agreement did not constitute a written contract stating the essential terms of an agreement for providing goods or services to a local government entity, and therefore, Chapter 271 did not waive the governmental entity’s immunity from suit. View "Lubbock County Water Control & Improvement Dist. v. Church & Akin, LLC" on Justia Law

by
An owner contracted with an Architect to prepare plans and specifications for the construction of a light rail. A General Contractor was awarded the contract to construct the project. The Architect and General Contractor had no contract with each other. Because the Architect’s plans were full of errors, the General Contractor lost nearly $14 million on the project. The General Contractor filed a tort suit against the Architect, alleging negligent misrepresentation. The trial court rendered judgment for the General Contractor for $2.25 million plus interest. The Architect appealed, arguing that the economic loss rule barred the General Contractor’s claim. The Supreme Court reversed, holding that the economic loss rule applied in this case to preclude the General Contractor from recovering delay damages from the Architect. View "LAN/STV v. Martin K. Eby Constr. Co., Inc." on Justia Law

by
Plaintiffs sued Ford Motor Company for injuries they sustained in a roll-over accident. The case was submitted to a jury. After the jury began its deliberations, the parties agreed to settle the case. Ford, however, later refused to pay the settlement amount to Plaintiffs, and Plaintiffs sued for breach of contract. After hearing all of the evidence, the jury found the settlement agreement was invalid because of fraudulent inducement and mutual mistake. The court of appeals reversed the trial court’s take-nothing judgment, concluding that the circumstantial evidence of fraud in the case was legally insufficient. The Supreme Court reversed the court of appeals’ judgment and reinstated the judgment of the trial court, holding that the circumstantial evidence was legally sufficient to support the jury’s verdict. View "Ford Motor Co. v. Castillo" on Justia Law

by
Respondents sold a collection of insurance companies to Petitioners in an agreement that contained an arbitration clause. Petitioners later invoked arbitration, alleging breach of contract. After Respondents complained about Petitioners’ first and second choice arbitrators the American Arbitration Association (AAA) struck the arbitrators. Petitioners’ third appointee was not challenged, and the arbitration proceeding resulted in an award in Respondents’ favor. When Respondents filed a motion to confirm the award in the trial court, Petitioners renewed their previous objection to the disqualification of their first-choice arbitrator. Ultimately, the court of appeals held that the arbitration panel was properly appointed under the terms of the arbitration agreement and the AAA rules. The Supreme Court reversed, holding (1) because the AAA disqualified Petitioners’ first-choice arbitrator for partiality, the arbitration panel was formed contrary to the express terms of the arbitration agreement; (2) therefore, the arbitration panel exceeded its authority when it resolved the parties’ dispute; and (3) accordingly, the arbitration award must be vacated. View "Americo Life, Inc. v. Myer" on Justia Law

by
Borrower borrowed $696,000 from Lenders. The note was secured by a deed of trust covering real property. Guarantor guaranteed the loan under a guaranty agreement that included a general waiver of defenses. Borrower subsequently defaulted on the loan, and Purchaser purchased the secured property in a nonjudicial foreclosure sale for $487,200. The fair market value of the property was $840,000. Purchaser sued Guarantor to recover the $266,748 balance remaining on the note after applying all credits and the proceeds from the sale. Guarantor argued that under Tex. Prop. Code Ann. 51.003 any deficiency owed should be offset by the difference between the fair market value and the foreclosure price. The trial court granted summary judgment for Guarantor. The court of appeals reversed, holding (1) section 51.003 creates an affirmative defense, and (2) by agreeing to a general waiver of defenses in the guaranty agreement Guarantor waived his right of offset. The Supreme Court affirmed, holding that Guarantor waived his statutory right to an offset. View "Mehrdad v. Interstate 35/Chisam Road, L.P." on Justia Law

by
Plaintiffs, two groups of cotton farmers, filed suits against the cooperative of which they were members under contract, alleging that they were fraudulently induced to join the cooperative. Plaintiffs’ agreements with the cooperative provided for the arbitration of all disputes under the Federal Arbitration Act (FAA). The cooperative filed a motion to stay the litigation and a motion to compel arbitration. The trial court denied the motions, concluding that the parties’ arbitration agreement was unconscionable. The court of appeals affirmed, reasoning that the agreements were unconscionable because they forced the farmers to “forego substantive rights and remedies afforded by statute.” The Supreme Court reversed, holding that the limitation of statutory remedies was insufficient to defeat arbitration under the FAA. Remanded. View "Venture Cotton Coop. v. Freeman" on Justia Law

by
After Plaintiff purchased a used yacht, the yacht’s starboard engine failed beyond repair. Plaintiff sued Defendant-manufacturer, alleging several causes of action, including breach of the implied warranty of merchantability. The jury found Defendant liable only on the implied warranty claim. The trial court granted Defendant’s motion for judgment notwithstanding the verdict because Plaintiff was a subsequent purchaser of the used yacht and because Defendant disclaimed any implied warranty at the time of the first sale. The court of appeals reversed, holding that someone who knowingly buys used goods may still rely on an implied warranty from the manufacturer to the original buyer since the warranty passes with the goods. The Supreme Court affirmed, holding (1) Defendant could not rely on its purported express disclaimer of implied warranties issued at the first sale because it did not properly raise that defense in the trial court; (2) an implied warranty of merchantability, unless properly disclaimed, passes to subsequent buyers; and (3) therefore, Plaintiff was entitled to recover on his implied-warranty claim. View "MAN Engines & Components, Inc. v. Shows" on Justia Law

by
The Gobellans retained Law Firm to defend them and bring suit. Associate was assigned to the case. Associate later left Law Firm and took several clients, including Gobellans, with him. Law Firm sued Associate over client contingency fees, and later settled. Law Firm also sued Gobellans, and moved to compel the dispute to arbitration pursuant to an arbitration clause in the contingency fee agreement between Law Firm and Gobellans. The trial court and court of appeals denied Law Firm’s motion to compel arbitration, concluding that because Law Firm had litigated the fee issue with Associate, it waived its right to arbitrate claims stemming from its fee agreement with Gobellans. The Supreme Court reversed, holding (1) because Law Firm’s litigation conduct involved suing Associate, with whom it had no arbitration agreement, and filing limited pleadings against Gobellans, the conduct did not substantially invoke the litigation process against Gobellans or prejudice them; and (2) thus, Law Firm did not waive its right to arbitrate its dispute with Gobellans. View "Hodges, LLP v. Gobellan" on Justia Law

by
Plaintiff and Defendant were competitors. Plaintiff sued Defendant for tortious interference with Plaintiff’s non-solicitation agreements with employees. Five days after receiving a settlement offer from Defendant, Plaintiff filed its designation of expert witnesses. After Defendant filed its own expert designations, Plaintiff sent a letter “accepting” Defendant’s settlement offer. Defendant refused to pay the previously agreed-to amount based on fraudulent inducement and failure of consideration. Plaintiff amended its pleadings to assert a breach of contract claim based on the alleged settlement agreement. The trial court granted Plaintiff’s summary judgment motion on the breach of contract claim. The court of appeals reversed, concluding that no settlement agreement existed because Plaintiff had not accepted all of the offer’s material terms. The Supreme Court reversed, holding that the evidence established that Plaintiff accepted Defendant’s offer. Remanded. View "Amedisys, Inc. v. Kingwood Home Health Care, LLC" on Justia Law