Can one sue to make another party perform a contract that it has breached?
Generally, the remedy for a breach of contract is money damages sufficient to place the non-breaching party in the position that it would have been in but for the breach. However, the equitable remedy of specific performance is an exception to this general rule. The doctrine of specific performance may provide a means to make another party perform under the contract. “Specific performance is an equitable remedy that may be awarded at the trial court’s discretion upon a showing of breach of contract. Paciwest, Inc. v. Warner Alan Props., LLC, 266 S.W.3d 559, 571 (Tex. App.– Fort Worth 2008, pet. denied). Specific performance is not a separate cause of action, but rather is an equitable remedy used as a substitute for monetary damages when damages would not be adequate. Paciwest, 266 S.W.3d at 571; Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.–Dallas 2007, pet. denied). Because specific performance is an equitable remedy available only when the legal remedy of damages is insufficient, when one brings a breach of contract suit, one must elect to sue for either money damages or specific performance. See Carrico v. Kondos, 111 S.W.3d 582, 588 (Tex. App.–Fort Worth 2003, pet. denied).” Kleberg County v. URI, Inc., 13-14-00158-CV, 2016 WL 363114, at *11 (Tex. App. Corpus Christi Jan. 28, 2016).
"On Texas Law" Developments and Commentary on Texas Civil Litigation, Contracts, Trade Secrets, Tortious Interference, and Procedure
Showing posts with label Damages. Show all posts
Showing posts with label Damages. Show all posts
Monday, March 14, 2016
Friday, March 11, 2016
Recovery of Lost Profits for a New Business
Can a new business that does not have an established track record recover lost profits as part of a breach of contract claim?
Assuming the losses are a natural, probable, and foreseeable consequence of the defendant’s breach, then under Texas law, the answer depends upon a fact intensive inquiry, which focuses on the experience of the people involved in the business, the nature of the business, and the relevant market. See Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 280 (Tex.1994). “To recover damages for breach of contract, a plaintiff must show that he suffered a pecuniary loss as a result of the breach. To recover lost profit damages, a plaintiff must show the loss by competent evidence and with reasonable certainty.” Peterson Group, Inc. v. PLTQ Lotus Group, L.P., 417 S.W.3d 46, 64 (Tex. App. Hous. [1st Dist.] 2013). “Lost profits are damages for the loss of net income to a business and, broadly speaking, reflect income from lost business activity, less expenses that would have been attributable to that activity. As a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Lost profits cannot be based on pure speculation or wishful thinking.” Peterson Group, Inc. v. PLTQ Lotus Group, L.P., 417 S.W.3d 46, 64-65 (Tex. App. Hous. [1st Dist.] 2013) (citations and quotation marks omitted) citing Tex. Instruments, 877 S.W.2d at 279. “Profits which are largely speculative, as from an activity dependent on uncertain or changing market conditions, or on chancy business opportunities, or on promotion of untested products or entry into unknown or unviable markets, or on the success of a new and unproven enterprise, cannot be recovered. Factors like these and others which make a business venture risky in prospect preclude recovery of lost profits in retrospect . . . . The mere hope for success of an untried enterprise, even when that hope is realistic, is not enough for recovery of lost profits.” Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279-80 (Tex.1994). However, the fact that a business is new does not absolutely preclude recovery of lost profits. See id. at 280. Recovery will depend upon the experience of the people involved in the business, the nature of the business, and the relevant market. See Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 280 (Tex.1994).
Assuming the losses are a natural, probable, and foreseeable consequence of the defendant’s breach, then under Texas law, the answer depends upon a fact intensive inquiry, which focuses on the experience of the people involved in the business, the nature of the business, and the relevant market. See Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 280 (Tex.1994). “To recover damages for breach of contract, a plaintiff must show that he suffered a pecuniary loss as a result of the breach. To recover lost profit damages, a plaintiff must show the loss by competent evidence and with reasonable certainty.” Peterson Group, Inc. v. PLTQ Lotus Group, L.P., 417 S.W.3d 46, 64 (Tex. App. Hous. [1st Dist.] 2013). “Lost profits are damages for the loss of net income to a business and, broadly speaking, reflect income from lost business activity, less expenses that would have been attributable to that activity. As a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Lost profits cannot be based on pure speculation or wishful thinking.” Peterson Group, Inc. v. PLTQ Lotus Group, L.P., 417 S.W.3d 46, 64-65 (Tex. App. Hous. [1st Dist.] 2013) (citations and quotation marks omitted) citing Tex. Instruments, 877 S.W.2d at 279. “Profits which are largely speculative, as from an activity dependent on uncertain or changing market conditions, or on chancy business opportunities, or on promotion of untested products or entry into unknown or unviable markets, or on the success of a new and unproven enterprise, cannot be recovered. Factors like these and others which make a business venture risky in prospect preclude recovery of lost profits in retrospect . . . . The mere hope for success of an untried enterprise, even when that hope is realistic, is not enough for recovery of lost profits.” Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279-80 (Tex.1994). However, the fact that a business is new does not absolutely preclude recovery of lost profits. See id. at 280. Recovery will depend upon the experience of the people involved in the business, the nature of the business, and the relevant market. See Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 280 (Tex.1994).
Thursday, February 4, 2016
Contract Damages: Lost Profits
If someone breached our contract, can I seek recovery of lost profits?
Generally, Texas law does allow a party injured by another party’s breach of their contract to sue for lost profits. “Generally, the measure of damages for breach of a contract is that which restores the injured party to the economic position he would have enjoyed if the contract had been performed. This measure may include reasonably certain lost profits. Lost profits may be in the form of direct damages – that is, profits lost on the contract itself – or in the form of consequential damages – such as profits lost on other contracts resulting from the breach. To be recoverable, consequential damages must be foreseeable and directly traceable to the wrongful act and result from it. Thus, consequential damages are generally not recoverable unless the parties contemplated at the time they made the contract that such damages would be a probable result of the breach.” See AZZ Inc. v. Morgan, 462 S.W.3d 284, 289 (Tex. App. – Fort Worth 2015, no pet.) (citations omitted).
Generally, Texas law does allow a party injured by another party’s breach of their contract to sue for lost profits. “Generally, the measure of damages for breach of a contract is that which restores the injured party to the economic position he would have enjoyed if the contract had been performed. This measure may include reasonably certain lost profits. Lost profits may be in the form of direct damages – that is, profits lost on the contract itself – or in the form of consequential damages – such as profits lost on other contracts resulting from the breach. To be recoverable, consequential damages must be foreseeable and directly traceable to the wrongful act and result from it. Thus, consequential damages are generally not recoverable unless the parties contemplated at the time they made the contract that such damages would be a probable result of the breach.” See AZZ Inc. v. Morgan, 462 S.W.3d 284, 289 (Tex. App. – Fort Worth 2015, no pet.) (citations omitted).
Sunday, August 16, 2015
The Economic Loss Rule
What is the Economic Loss Rule?
“[T]here is not one economic loss rule broadly applicable throughout the field of torts, but rather several more limited rules that govern recovery of economic losses in selected areas of the law.” Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 415 (Tex. 2011)(citations omitted). Generally, “the prevailing rule in America [is that] a plaintiff may not recover for his economic loss resulting from bodily harm to another or from physical damage to property in which he has no proprietary interest.” See, e.g., Fleming James, Jr., Limitations on Liability for Economic Loss Caused by Negligence: A Pragmatic Appraisal, 25 Vand. L. Rev. 43, 43 (1972) “In actions for unintentional torts, the common law has long restricted recovery of purely economic damages unaccompanied by injury to the plaintiff or his property - a doctrine we have referred to as the economic loss rule. The rule serves to provide a more definite limitation on liability than foreseeability can and reflects a preference for allocating some economic risks by contract rather than by law. But the rule is not generally applicable in every situation; it allows recovery of economic damages in tort, or not, according to its underlying principles.” Lan/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234, 235 (Tex. 2014)(footnotes omitted). One of "[t]he underlying purpose[s] of the economic loss rule is to preserve the distinction between contract and tort theories in circumstances where both theories could apply." Lan/STV, 435 S.W.3d at 240 (citing Vincent R. Johnson, The Boundary-Line Function of the Economic Loss Rule, 66 ash. & Lee L. Rev. 523, 546 (2009)(footnotes omitted) (quoting Stewart I. Edelstein, Beware the Economic Loss Rule, Trial, June 2006, at 42, 43 (2006))). “The economic loss rule is a doctrine that limits the recovery of purely economic damages in an action for negligence. Lan/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234, 235 (Tex. 2014) ("In actions for unintentional torts, the common law has long restricted recovery of purely economic damages unaccompanied by injury to the plaintiff or his property[.]"); see also Sharyland Water Supply Corp. v. City f Alton, 354 S.W.3d 407, 415 (Tex. 2011)("[P]arties may be barred from recovering in negligence or strict liability for purely economic losses."). Texas courts have generally applied the economic loss rule in cases involving defective products and in cases involving the failure to perform a contract.” Clark v. PFPP, Ltd. Partnership, 455 S.W.3d 283, 288 (Tex. App. – Dallas 2014, no pet.).
“[T]here is not one economic loss rule broadly applicable throughout the field of torts, but rather several more limited rules that govern recovery of economic losses in selected areas of the law.” Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 415 (Tex. 2011)(citations omitted). Generally, “the prevailing rule in America [is that] a plaintiff may not recover for his economic loss resulting from bodily harm to another or from physical damage to property in which he has no proprietary interest.” See, e.g., Fleming James, Jr., Limitations on Liability for Economic Loss Caused by Negligence: A Pragmatic Appraisal, 25 Vand. L. Rev. 43, 43 (1972) “In actions for unintentional torts, the common law has long restricted recovery of purely economic damages unaccompanied by injury to the plaintiff or his property - a doctrine we have referred to as the economic loss rule. The rule serves to provide a more definite limitation on liability than foreseeability can and reflects a preference for allocating some economic risks by contract rather than by law. But the rule is not generally applicable in every situation; it allows recovery of economic damages in tort, or not, according to its underlying principles.” Lan/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234, 235 (Tex. 2014)(footnotes omitted). One of "[t]he underlying purpose[s] of the economic loss rule is to preserve the distinction between contract and tort theories in circumstances where both theories could apply." Lan/STV, 435 S.W.3d at 240 (citing Vincent R. Johnson, The Boundary-Line Function of the Economic Loss Rule, 66 ash. & Lee L. Rev. 523, 546 (2009)(footnotes omitted) (quoting Stewart I. Edelstein, Beware the Economic Loss Rule, Trial, June 2006, at 42, 43 (2006))). “The economic loss rule is a doctrine that limits the recovery of purely economic damages in an action for negligence. Lan/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234, 235 (Tex. 2014) ("In actions for unintentional torts, the common law has long restricted recovery of purely economic damages unaccompanied by injury to the plaintiff or his property[.]"); see also Sharyland Water Supply Corp. v. City f Alton, 354 S.W.3d 407, 415 (Tex. 2011)("[P]arties may be barred from recovering in negligence or strict liability for purely economic losses."). Texas courts have generally applied the economic loss rule in cases involving defective products and in cases involving the failure to perform a contract.” Clark v. PFPP, Ltd. Partnership, 455 S.W.3d 283, 288 (Tex. App. – Dallas 2014, no pet.).
Thursday, February 28, 2013
Attorneys' fees in Tortious Interference Suits
Can attorneys’ fees be recovered on a claim for tortious interference?
Generally in current litigation, attorneys’ fees are not recoverable on tort claims and are typically only recoverable if provided for by statute or in a contract. Also generally, unless provided for by statute or by contract of the parties, attorneys’ fees incurred by a party in older litigation are not recoverable against the present adversary in new, current litigation. However, at least one Texas appellate court has recognized an equitable exception to this general rule for lawsuits based on tortious interference. See Texas Beef Cattle Co. v. Green, 883 S.W.2d 415, 430 (Tex. App. – Beaumont 1994) rev'd on other grounds, 921 S.W.2d 203 (Tex. 1996). In this case, the Beaumont court of appeals held that necessary and reasonable attorneys' fees and costs even though expended and incurred in previous litigation can be recovered as proper damages in a later suit based on tortious interference of contract if the natural and proximate results and consequences of prior wrongful acts had been to involve the plaintiff in litigation with and against third parties and other parties.
Generally in current litigation, attorneys’ fees are not recoverable on tort claims and are typically only recoverable if provided for by statute or in a contract. Also generally, unless provided for by statute or by contract of the parties, attorneys’ fees incurred by a party in older litigation are not recoverable against the present adversary in new, current litigation. However, at least one Texas appellate court has recognized an equitable exception to this general rule for lawsuits based on tortious interference. See Texas Beef Cattle Co. v. Green, 883 S.W.2d 415, 430 (Tex. App. – Beaumont 1994) rev'd on other grounds, 921 S.W.2d 203 (Tex. 1996). In this case, the Beaumont court of appeals held that necessary and reasonable attorneys' fees and costs even though expended and incurred in previous litigation can be recovered as proper damages in a later suit based on tortious interference of contract if the natural and proximate results and consequences of prior wrongful acts had been to involve the plaintiff in litigation with and against third parties and other parties.
Tuesday, February 26, 2013
Duty of Discharged Employee to Mitigate Damages
Discharged employee’s duty to mitigate damages.
The general rule as to mitigation of damages in breach of employment suits is that the discharged employee must use reasonable diligence to mitigate damages by seeking other employment. The correct measure of damages for wrongful discharge of an employee is the present cash value of the contract if it had not been breached, less any amounts that the employee should in the exercise of reasonable diligence be able to earn through other employment. See Gulf Consol. Int'l, Inc. v. Murphy, 658 S.W.2d 565, 565-66 (Tex. 1983).
The general rule as to mitigation of damages in breach of employment suits is that the discharged employee must use reasonable diligence to mitigate damages by seeking other employment. The correct measure of damages for wrongful discharge of an employee is the present cash value of the contract if it had not been breached, less any amounts that the employee should in the exercise of reasonable diligence be able to earn through other employment. See Gulf Consol. Int'l, Inc. v. Murphy, 658 S.W.2d 565, 565-66 (Tex. 1983).
Monday, February 25, 2013
Generally, No Recovery of Mental Anguish on a Tortious Interference with Contract Claim
Can mental anguish damages be recovered on a claim for tortious interference with a contract?
Generally, mental anguish damages are not recoverable on a claim for tortious interference with a contract. This is because the measure of actual damages for tortious interference with a contract is the same as the measure of damages for breach of the interfered-with contract, and mental anguish damages generally are not available for breach of a contract. Mental anguish damages are available in "a very limited number of contracts dealing with intensely emotional noncommercial subjects such as preparing a corpse for burial or delivering news of a family emergency." See City of Tyler v. Likes, 962 S.W.2d 489, 496 (Tex. 1997).
Generally, mental anguish damages are not recoverable on a claim for tortious interference with a contract. This is because the measure of actual damages for tortious interference with a contract is the same as the measure of damages for breach of the interfered-with contract, and mental anguish damages generally are not available for breach of a contract. Mental anguish damages are available in "a very limited number of contracts dealing with intensely emotional noncommercial subjects such as preparing a corpse for burial or delivering news of a family emergency." See City of Tyler v. Likes, 962 S.W.2d 489, 496 (Tex. 1997).
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