We delivered goods to a customer under an agreement,
and the customer refused to pay part of the bill. Our contract claim failed at
trial, but the jury awarded us the value of the goods anyway. Can we keep that
award?
The Supreme Court of Texas took up a version of that
question in Champion Food Service, Inc. v. ProAlamo Foods, L.L.C.,
No. 25-0297 (Tex. June 19, 2026). Two meat suppliers delivered frozen
product to a distributor over several months, each shipment accompanied by an
invoice reflecting price, quantity, and delivery terms. The distributor left
roughly $73,000 in invoices unpaid, asserting the product had spoiled. The
suppliers sued for breach of contract and, alternatively, in quantum meruit.
The jury found no breach by the distributor, but found for the suppliers on
quantum meruit and awarded about $46,000; it also found the suppliers’
reasonable attorney’s fees to be $0. The trial court disregarded the fee
finding and awarded $219,674 in fees, and the court of appeals affirmed. The
Supreme Court reversed and rendered judgment that the suppliers take nothing.
Quantum meruit is an equitable theory that allows recovery
of the reasonable value of goods or services furnished and accepted when no
enforceable agreement governs the transaction. Texas courts have long held that
the theory is unavailable where a valid express contract covers the same
subject matter. Woodward v. Sw. States, Inc., 384 S.W.2d 674, 675 (Tex.
1964); Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988); Fortune
Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000); Hill v.
Shamoun & Norman, LLP, 544 S.W.3d 724, 737 (Tex. 2018). Recognized
exceptions exist — for work performed and accepted that falls outside the
contract’s scope, and in certain partial-performance situations — but the Court
found none of them implicated.
The opinion does not announce a new rule, but it does
appear to sharpen how the existing one operates. The Court characterized the
question whether a contract covers the goods or services at issue as a legal
one, reviewed de novo, rather than a fact question implicitly resolved by a
jury’s quantum meruit finding. Because the parties did not dispute that
agreements on price, quantity, and delivery existed — agreements that suffice
to form a contract under Texas Business and Commerce Code § 2.204 — the Court concluded
those agreements covered the deliveries, and the quantum meruit award could not
stand. The Court also addressed the suppliers’ argument that handwritten
changes the distributor made on the invoices showed the deliveries fell outside
any agreement. It reasoned that disputes over credits, price adjustments, or
the quality of goods concern breach and damages, not the existence of a
contract, offering the example of a customer who crosses out the price on a
bakery receipt: the bakery’s remedy lies in contract, not in equity. Finally,
the Court observed that “when the existence or scope of a contract is in
dispute, the jury should be asked whether a contract exists” — an indication
that a plaintiff wishing to preserve quantum meruit as a genuine alternative
may need to secure a jury finding on that threshold question rather than rely
on the equitable finding alone.
With the quantum meruit recovery gone, the attorney’s fees
followed. Recovery under Chapter 38 of the Civil Practice and Remedies Code
requires both prevailing on a claim for which fees are authorized and
recovering damages. Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390
(Tex. 1997); MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d
660, 666 (Tex. 2009).
Chief Justice Blacklock, joined by Justice Sullivan,
concurred to raise a point the majority left for another day: the trial court’s
decision to replace the jury’s $0 fee finding with an award nearly five times
the damages, in a case where the plaintiff had lost its principal claim and
been found to have breached itself. The concurrence questioned why the law
treats a jury’s zero finding on fees with more suspicion than a zero finding on
damages, and suggested the issue “should not go unaddressed for much longer.”
The majority added a footnote expressing similar reservations. Whether and how
the Court takes up that question may be worth watching.
For businesses that sell goods or services on informal
terms, the opinion suggests that the presence of an agreement — even an oral
one memorialized only by invoices — will likely channel any payment dispute
into contract, and that arguing about the bill is not the same as denying the
deal. It also suggests that a claim in quantum meruit, though routinely pleaded
in the alternative, may not serve as a fallback where the existence of the
contract is not itself in question.
See also our earlier posts on quantum
meruit and its statute
of limitations.
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