Medical City Dallas, Ltd. v. Carlisle Corp.
51 Tex. Sup. Ct. J. 753, 65 U.C.C. Rep. Serv. 2d (West) 1047, 251 S.W.3d 55 (2008)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A claim for a breach of an express warranty is considered a claim founded on an oral or written contract for the purposes of recovering attorney's fees under Texas Civil Practice and Remedies Code § 38.001(8).
Facts:
- In 1991, Medical City Dallas contracted with Charley Company of Texas to re-roof one of its buildings using materials manufactured by Carlisle Corp.
- Carlisle issued express warranties directly to Medical City, including a Twenty Year Membrane Material Warranty promising the roof membrane would not deteriorate prematurely.
- Within months of installation, the roof began leaking, and by 1999, the leaks were continuous.
- In 2000, an expert consultant hired by Medical City evaluated the roof and found material defects and premature aging of the roof membrane.
- After failed attempts to resolve the dispute, Medical City incurred the cost of replacing the entire roof in October 2002.
Procedural Posture:
- Medical City sued Carlisle in trial court for, among other things, breach of express warranty.
- The trial court granted Carlisle summary judgment on a separate negligence claim.
- A jury returned a verdict for Medical City on the breach of express warranty claim, awarding damages and attorney's fees.
- The trial court denied Carlisle's motion for judgment notwithstanding the verdict and entered a final judgment for Medical City.
- Carlisle, as appellant, appealed to the intermediate court of appeals.
- The court of appeals affirmed the damages award but reversed the award of attorney's fees, rendering a take-nothing judgment for Carlisle on that issue.
- Medical City, as petitioner, sought review from the Supreme Court of Texas on the sole issue of its entitlement to attorney's fees.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a claim for breach of an express warranty constitute a claim based on an 'oral or written contract' under Texas Civil Practice and Remedies Code § 38.001(8), thereby entitling the prevailing party to recover attorney's fees?
Opinions:
Majority - Chief Justice Jefferson
Yes. A claim for a breach of express warranty is founded on a contract for purposes of awarding attorney's fees under section 38.001(8). The court reasoned that while breach of warranty and breach of contract are distinct causes of action under the Uniform Commercial Code (UCC), an express warranty is fundamentally contractual in nature because it is part of the 'basis of the bargain' between the parties. The court noted that contract interpretation rules are used to construe warranties and that a warranty claim, like a contract claim, seeks damages for an opponent's failure to uphold their end of the bargain. Furthermore, the economic loss rule supports this conclusion; because Medical City's injury was only the economic loss to the subject of the contract (the roof), the action sounds in contract. The court disapproved of prior lower court decisions that held otherwise, finding their reasoning unpersuasive.
Analysis:
This decision clarifies Texas law by holding that express warranty claims are contract-based for the purpose of recovering attorney's fees, resolving a split among lower appellate courts. It strengthens the position of prevailing plaintiffs in warranty disputes by allowing them to recover litigation costs, which can be substantial. The ruling solidifies the link between warranty law and contract principles, particularly where damages are limited to economic loss, and will likely encourage parties to pursue valid express warranty claims that might have previously been economically unfeasible due to the cost of litigation.
Unlock the full brief for Medical City Dallas, Ltd. v. Carlisle Corp.