This is a cross-post from 600Commerce, which follows the Dallas Court of Appeals.
One Dallas Court of Appeals case addresses the breach-of-contract defense of impracticability, Hewitt v Biscaro, 353 S.W.3d 304 (Tex. App.—Dallas 2011, no pet.). Relevant to the current crisis, it involves a government order that allegedly made performance more difficult. The Court examined whether:
the performance issue was a basic assumption of the contract;
the government’s action was an official order or regulation (in that case, the SEC’s contact with the defendant was not); and
the defendant was acting in good faith.
The Court relied on an earlier Texas Supreme Court case and the relevant Restatement (Second) of Contracts provision. Application of this opinion will be important in upcoming commercial disputes created by the novel coronavirus.
Henry McCall lived in a cabin on Homer Hillis’s property, occasionally helping Hillis with maintenance at the McCall’s bed-and-breakfast. While working on Hillis’s sink, a brown recluse spider bit McCall. The Texas Supreme Court found that the ferae naturae doctrine barred McCall’s lawsuit against Hillis: “[H]e owed no duty to the invitee because he was unaware of the presence of brown recluse spiders on his property and he neither attracted the offending spider to his property nor reduced it to his possession. Further, [McCall] had actual knowledge of the presence of spiders on the property.” Hillis v. McCall, No. 18-1065 (Tex. March 13, 2020). In addition to its impact on brown-recluse litigation, the reasoning of this opinion about liability for small, dangerous creatures well be relevant in any future litigation about coronavirus exposure.
“[Tex. R. Civ. P.] 91a limits a court’s factual inquiry to the plaintiff’s pleadings but does not so limit the court’s legal inquiry. In deciding a Rule 91a motion, a court may consider the defendant’s pleadings if doing so is necessary to make the legal determination of whether an affirmative defense is properly before the court. . . . Rule 91a permits motions to dismiss based on affirmative defenses [here, attorney immunity] ‘if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought.'” Bethel v. Quilling, Selander, No.18-0595 (Feb. 21, 2020).
Continuing the theme from its recent Energy Transfer opinion, the Texas Supreme Court’s opinion in Chalker Energy v. Le Norman Operating involved a “No Obligation” provision in the parties’ Confidentiality Agreement. Entered at the beginning of a bidding process for valuable oil-and-gas assets, the clause said: “The Parties hereto understand that unless and until a definitive agreement has been executed and delivered, no contract or agreement providing for a transaction between the Parties shall be deemed to exist and neither Party will be under any legal obligation of any kind whatsoever with respect to such transaction by virtue of this or any written or oral expression thereof, except, in the case of this Agreement, for the matters specially agreed to herein. For purposes of this Agreement, the term ‘definitive agreement’ does not include an executed letter of intent or any other preliminary written agreement or offer, unless specifically so designated in writing and executed by both Parties.”
This provision was sufficient to preclude the formation of a later contract through an exchange of emails: “If mere proposals that contemplate a later-executed PSA and the subsequent exchanging of unagreed-to drafts are sufficient to raise a fact question on the existence of a definitive agreement, No Obligation Clauses will be stripped of much of their meaning and utility. Even worse, these clauses would mislead parties operating under the assumption that they can freely engage in negotiations without binding themselves to proposals in an email exchange. By including the No Obligation Clause in the Confidentiality Agreement, the Sellers and LNO provided themselves with the freedom to negotiate without fear of being bound to a contract.” No. 18-0352 (Feb. 28, 2020).
“[T]he harm caused by the breach is incapable or difficult of estimation.” A contracting party’s testimony about fluctuations and uncertainties in the relevant market, at the time the agreement was made, can satisfy this requirement.
“[T]he amount of liquidated damages called for is a reasonable forecast of just compensation.” Similar proof can satisfy this requirement, especially when “[t]he contract provision neither multiplies actual damages nor penalizes dissimilar breaches with the same broad brush.”
If the first two requirements are satisfied, then “courts must also examine whether ‘the actual damages incurred were much less’ than the liquidated damages imposed, measured at the time of the breach.” In this case, this analysis required consideration of the plaintiff’s actual expectancy damages, as well as the potential effect of mitigation.
Copano Energy v. Bujnoch presents the application of a 343-year-old rule, the Statute of Frauds, with modern business based on the exchange of emails. Here: “The e-mails containing many of the alleged deal’s principal terms are part of a forward-looking request to negotiate a contract. Neither those e-mails nor any other writing evidences the defendant’s agreement to the particular terms stated in the e-mails. As a result, there is no ‘written memorandum which is complete within itself in every material detail,’ as required by the statute of frauds.” No. 18-0044 (Jan. 31, 2020).
Waiver occurs when (a) the defendants move for summary judgment on two grounds that each are an “independent basis” for judgment (limitations and release), (b) the trial court grants the motion without specifying a reason, and (c) “[o]n appeal, the plaintiff challenged the validity of the release in question but did not address the defendants’ statute-of-limitations argument.” In this situation, the trial court’s judgment “must stand, since it may have been based on a ground not specifically challenged by the plaintiff and since there was no general assignment that the trial court erred in granting summary judgment.” Malooly Bros., Inc. v. Napier, 461 S.W.2d 119 (Tex. 1970).
Waiver does not occur when – and a court may thus request supplemental briefing if that would be helpful – when the defendants seek dismissal based on two doctrines (standing and ecclesiastical abstention), the substance of which “significantly overlaps.” The supreme court found such an “overlap” in Flakes when consideration of both doctrines required review of the applicable church bylaws and church membership situation. Two other examples cited in Flakes involve arguments about equitable relief related to points about money damages (First United Pentecostal Church v. Parker, 514 S.W.3d 214 (Tex. 2017)), and an issue about the applicability of a specific case in a broader dispute about the right to terminate a lease (Rohrmoos Venture v. UTSW DVA Healthcare, 578 S.W.3d 469 (Tex. 2019)).
Supplemental briefing is discretionary under Flakes; cf.Horton v. Stovall, No.18-0925 (Tex. Dec. 20, 2019) (finding that an appellant should have been given the opportunity to cure the particular record-citation issues identified in that case).
In re Fox River Real Estate Holdings, not unlike King Kong v. Godzilla (right), involved a clash of titans in the form of competing venue statutes. The Court held that section 15.020, which allows agreed venue for “major transactions” “means what it says and indicates that the Legislature intended for it to control over other venue provisions within” the same title, and not necessarily over the provision in 65.023 that fixes venue in a defendant’s county of domicile in a suit primarily seeking injunctive relief. No. 18-0913 (Jan. 31, 2020)
