File: 041056HF - From documents transmitted: 11/29/2006
AFFIRMED AS REFORMED IN PART, REVERSED AND RENDERED IN
PART, AND REVERSED AND REMANDED IN PART; Opinion Filed November
29, 2006
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-04-01056-CV
............................
CESSNA AIRCRAFT COMPANY and
ASSOCIATED AVIATION UNDERWRITERS, INC., Appellants
V.
AIRCRAFT NETWORK, L.L.C., Appellee
.............................................................
On Appeal from the 160th Judicial District Court
Dallas County, Texas
Trial Court Cause No. 01-3267
.............................................................
OPINION ON MOTION FOR REHEARING
Before Justices Morris, Wright, and Richter
Opinion By Justice Wright
We deny Aircraft Network, L.L.C.'s motion for rehearing en banc. On the
Court's own motion, we withdraw our opinion and vacate our judgment of March 16, 2006.
This is now the opinion of the Court.
Cessna Aircraft Company and Associated Aviation Underwriters, Inc. (AAU)
appeal a trial court's judgment following a jury trial. AAU contends that Aircraft Network lacks
standing to sue AAU. Alternatively, AAU asserts the evidence is legally and factually insufficient
to support the jury findings for breach of contract, fraud, negligent misrepresentation, and
exemplary damages. Cessna asserts: (1) the evidence is legally and factually insufficient to
support jury findings for breach of contract, negligent misrepresentation, and breach of the
implied warranty for good and workmanlike manner; (2) the trial court improperly submitted
certain questions to the jury; (3) the trial court erred in awarding attorney's fees. In a
cross-point, Aircraft Network contends the award for promissory estoppel should be reinstated
should this Court reverse the award for breach of reimbursement contract. In a single point of
error on cross-appeal, Aircraft Network contends the trial court erred in failing to offset the
awards in favor of Cessna.
For the reasons that follow, we affirm in part, reform in part, reverse and
render in part, and reverse and remand in part. We sustain AAU's first point of error, reverse
the trial court's judgment with respect to AAU, and render judgment that Aircraft Network take
nothing on its claims against AAU. We sustain Cessna's first point of error to the extent it
complains about the submission of the damages question and reform the judgment to delete a
portion of the damages awarded for breach of bailment contract. We sustain Cessna's second,
third, and fourth points of error, reverse the trial court's judgment on the claims for breach of
reimbursement contract, negligent misrepresentation, and breach of implied warranty, and render
judgment that Aircraft Network take nothing on those claims. We sustain Aircraft Network's
cross-point and reinstate the jury award for promissory estoppel. We reverse the awards of
attorney's fees and costs and remand those issues to the trial court for proceedings consistent
with this opinion. In all other respects, the trial court's judgment is affirmed.
Background
Aircraft Network owned a Cessna Citation III jet aircraft. In June of 2000,
while on a trip to California, the aircraft developed problems. On June 13, 2000, Chuck Weese,
pilot of the aircraft, took it to the Cessna service center in Long Beach, California for minor
repairs. While repairing the aircraft, a Cessna employee accidentally damaged the tail section of
the aircraft when he jacked up the nose of the aircraft while the tail stand was still in place.
Cessna readily accepted responsibility for the damage to the aircraft caused by
its employee. The damage to the aircraft rendered it unairworthy. John Sloan, the maintenance
manager at the Long Beach service center, informed Weese that Cessna would replace the
entire skin panel. However, it would take about six weeks to obtain the necessary parts. In the
meantime, Sloan advised Weese that Cessna had an interim repair that it could make so that they
could fly the aircraft while waiting for the parts.
Stevan Hammond, president of Aircraft Network, had planned a business trip
to Europe in July. Hammond decided that he would not be comfortable taking the aircraft with
an interim repair to Europe. Accordingly, Aircraft Network declined the interim repair and
opted to wait on the permanent repair. Weese then flew the aircraft on a special flight permit
back to Dallas where it was scheduled to have avionics work. The permanent repair would then
be made at the Cessna service center in Wichita, Kansas.
Preparing
for its trip to Europe, Aircraft Network located a Gulfstream II that
it could lease for the trip. Paul Martin, claims attorney for AAU, informed Aircraft Network that it
would pay the costs of substitute transportation on a “differential of operating costs” basis. On
July 12, 2000, Martin sent a letter to Aircraft Network stating that AAU would support the
European trip “provided that the operating costs you would have incurred, but for the damage
to your aircraft, are deducted from the costs of the G-II.” Aircraft Network took the European
trip in the G-II.
Aircraft Network also chartered other flights for business purposes. Aircraft
Network tendered invoices for its
chartered flights without any deduction for normal operating costs. A
dispute arose as to costs covered for the chartered flights. Aircraft
Network refused any payment offered by Cessna in return for a partial
release of its claims.
Aircraft Network filed
this lawsuit alleging claims against Cessna for negligence, breach of
bailment contract, breach of contract for reimbursement, promissory
estoppel, fraud, negligent misrepresentation, and breach of implied
warranties. Aircraft Network asserted claims against AAU for breach of
reimbursement contract, promissory estoppel, fraud, negligent
misrepresentation, and Insurance Code violations. Cessna filed a
counterclaim against Aircraft Network for breach of contract for
failure to pay for past services.
At
the conclusion of the trial, the jury found in favor of Aircraft
Network on its claims against Cessna for negligence, See Footnote 1 breach of bailment contract,
breach of reimbursement contract, negligent misrepresentation, and breach of implied warranty.
The jury also found in favor of Aircraft Network on its claim against AAU for breach of
reimbursement contract, fraud, and negligent misrepresentation. Cessna recovered on its
counterclaim. The trial court rendered a judgment on the jury verdict awarding damages,
exemplary damages, and attorney's fees to Aircraft Network and damages to Cessna on its
counterclaim. This appeal timely followed.
Standing to Sue AAU
Initially, we address AAU's assertion that Aircraft Network lacks standing to
sue AAU because a third-party claimant cannot sue an insurer.
Potential
conflicts arise with respect to an insurer's duty to its insured when a
third-party sues the insurer directly. The supreme court has addressed these concerns when
considering whether a third-party claimant has standing to sue an insurer. See Transport Ins.
Co. v. Faircloth, 898 S.W.2d 269 (Tex. 1995); Allstate Ins. Co. v. Watson, 876 S.W.2d
145 (Tex. 1994). In Faircloth, a woman was killed in a car accident involving Allied Van Lines.
Allied's insurer, Transport Insurance Company, entered into a $250,000 settlement agreement
with Paula Faircloth, a minor thought to be the daughter of the deceased. Upon reaching the age
of majority, Faircloth sued Transport for unfair settlement practices. The supreme court held that
third-party claimants lack standing to sue an insurer for a claim for breach of the duty of good
faith and fair dealing. Id. at 279. The supreme court noted that the insured's interests are
adverse to those of a third-party claimant. If an insurer owes duties to a third-party, the insurer's
duties to its insured would necessarily be compromised. Id.
Watson also involved a car accident. Watson sued Allstate, the other driver's
insurer, alleging claims for unfair settlement practices under the insurance code. Watson, 876
S.W.2d at 146. The supreme court held that a third-party claimant cannot sue an insurer for unfair
settlement practices under the insurance code. Id. at 149. In so holding, the supreme court
explained that allowing a third-party claimant to sue insurers would undermine the duties that
insurers owe to their insureds. “An insurance company owes to its insured a duty to defend
against the claims asserted by a third party.” Id. at 150 (emphasis in original).
Aircraft Network relies primarily on one case to support its contention that it
does have standing to sue AAU. See Webb v. International Trucking Co., Inc., 909 S.W.2d
220 (Tex. App.-San Antonio 1995, no writ). Webb involved an accident between two truck
drivers. One truck was owned by International Trucking (Trucking). The other truck involved in
the accident was owned by Williams Drilling Company (Williams). Prior to liability being
determined, the adjuster for Williams's insurer told Trucking that the insurer would pay for the
damages to its truck and instructed Trucking to have it repaired at a certain service facility. Id. at
223. Relying on the insurer's statement, Trucking had its truck repaired. Subsequently, the
insurer determined that its driver was not at fault and, therefore, refused to pay Trucking's repair
bill. Trucking sued the insurer for DTPA and insurance code violations. Summary judgment was
granted on the insurance code violations and the jury found in favor of Trucking on the DTPA
claims. Id. at 224.
On appeal, the insurer asserted that Trucking, a third-party claimant, lacked
standing to sue it. The court of appeals distinguished Watson and Faircloth on the ground that
the claims in both of those cases were based on unfair claim settlement practices. Id. at 224-25.
Significantly, the facts giving rise to the claims in Webb occurred prior to liability being either
determined or reasonably clear and, therefore, outside the context of settlement negotiations. An
insurer does not settle a claim for which its insured is not liable. An insurer engages in settlement
practices at the point that liability is determined or becomes reasonably clear.
In our case, liability was determined at the point of the accident. Cessna
admitted its fault and never wavered from that position. Responsibility for the accident was never
an issue. From the beginning, AAU was trying to settle a claim for which Cessna, its insured,
was liable. In an effort to fit this case into the Webb analysis, Aircraft Network couches its
claims as a separate agreement between itself and AAU outside the context of any settlement
negotiations. The facts, however, are against such assertion. Aircraft Network's claims arose
from AAU's attempts to settle those claims on behalf of Cessna, AAU's insured. Loss of use was
one of the claims AAU was attempting to settle. Aircraft Network and AAU did not reach an
agreement on the loss of use claim during the negotiation process. See Footnote 2
We hold that, under these circumstances, Aircraft Network lacked standing to
sue AAU. Accordingly, we sustain AAU's first point of error. We reverse the trial court's
judgment with respect to AAU and render judgment that Aircraft Network take nothing on its
claims against AAU.
Claims Against Cessna
A. Standard of Review
In reviewing a legal sufficiency point of error, the reviewing court must
consider only the evidence and inferences tending to support the challenged findings and
disregard all evidence and inferences to the contrary. If there is more than a scintilla of evidence
to support the challenged findings, the no evidence challenge fails. Leitch v. Hornsby, 935
S.W.2d 114, 118 (Tex.1996). We may sustain a no evidence point only when the record
discloses one of the following: (1) there is a complete absence of evidence of a vital fact; (2) the
court is barred by rules of law or evidence from giving weight to the only evidence offered to
prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla of
evidence; or (4) the evidence establishes conclusively the opposite of a vital fact. See Merrell
Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997).
When conducting a factual sufficiency review, we must consider all of the
evidence, including any evidence contrary to the verdict. Plas-Tex., Inc. v. U.S. Steel Corp.,
772 S.W.2d 442, 445 (Tex.1989). Furthermore, we must reverse on the basis of factual
insufficiency if the court's finding is so against the great weight and preponderance as to be
manifestly unjust. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986).
B. Breach of Bailment Contract
1. Existence of Breach of Bailment Claim
In its first point of error, Cessna raises two arguments with respect to the
breach of bailment claim. First, Cessna contends a breach of bailment claim is inapplicable to the
facts of this case. Second, Cessna contends the trial court erred in submitting the breach of
bailment claim.
Cessna contends Aircraft Network's claim is for breach of warranty. Because
Aircraft Network has a breach of warranty claim, Cessna argues, a breach of bailment claim is
not available. We disagree.
Cessna relies on Southwestern Bell Tel. Co. v. FDP Corp., 811 S.W.2d 572
(Tex. 1991) and Ellis v. Precision Engine Rebuilders, Inc., 68 S.W.3d 894 (Tex.
App.-Houston [1st Dist.] 2002, no pet.) to support its claim. Cessna's reliance is misplaced.
Both FDP Corp. and Ellis concern remedies available to buyers under the UCC. FDP sued
Southwestern Bell Telephone for breach of an express warranty when the yellow pages
advertisement it purchased failed to include a display as agreed to. FDP Corp., 811 S.W.2d at
575. The supreme court held that if a seller fails to deliver goods, a buyer has a claim for breach
of contract. Id. at 576. If, however, the seller delivers nonconforming goods, the buyer has a
claim for breach of warranty. Id.
FDP does not hold, as Cessna contends, that a party with a breach of
warranty claim may not also assert a breach of bailment contract claim. The supreme court
stated: “Our first inquiry is whether FDP's allegations state a claim for breach of warranty,
which is actionable under the DTPA, or merely a claim for breach of contract.” FDP, 811
S.W.2d at 574. (emphasis added). “[W]e reject Bell's argument that its failure to publish the
double quarter column display was exclusively a breach of contract.” Id. at 576. (emphasis
added).
In Ellis, a buyer purchased a rebuilt engine. The engine did not work properly
and the buyer returned it several times for repairs. Id. at 895. The buyer sued alleging causes of
action for breach of contract and breach of warranty. The seller obtained summary judgment.
The court of appeals held that Ellis did not have a breach of contract claim because under the
UCC the seller performed by delivering the engine to the buyer. Id. at 897. The holding in Ellis
was based on the provisions of the UCC. In contrast to the parties in FDP and Ellis, Aircraft
Network and Cessna were not in a buyer/seller relationship governed by the UCC. We find no
support for Cessna's contention that Aircraft Network is limited to a breach of warranty claim.
Cessna also contends that it did not have a bailor/bailee relationship with
Aircraft Network. Cessna argues that no bailment exists because the aircraft was damaged
while repair services were being performed. The existence of a bailor/bailee relationship,
however, is not determined by the circumstances that bring about the damage or loss. Rather,
we consider the following elements: (1) the delivery of personal property from one person to
another for a specific purpose; (2) acceptance by the transferee of such delivery; (3) an
agreement that the purpose will be fulfilled; and (4) an understanding that property will be
returned to the transferor. See Prime Products, Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631,
635 (Tex. App.-Houston [1st Dist.] 2002, pet. denied); Sears, Roebuck & Co. v. Wilson, 963
S.W.2d 166, 168-69 (Tex.App.-Fort Worth 1998, no pet.). A bailor/bailee relationship is not
limited to circumstances where damage or loss to the bailed property comes about through no
fault of the bailee.
This Court has found a bailor/bailee relationship where a car was damaged as it
was being serviced. See Lockey v. Packard-Dallas, Inc., 119 S.W.2d 150 (Tex. Civ.
App.-Dallas 1938, writ dism'd). Mr. Lockey took the car to the dealership to have it serviced.
He told the service manager that the car was sluggish. Id. at 151. In an effort to pinpoint the
problem, an employee of the service center drove the car. While driving the car, the employee
wrecked it. Id. This Court reversed a directed verdict for the dealership, holding that the facts
raised an issue of bailment. Id. at 152.
The Austin court of appeals found a bailor/bailee relationship existed between
an owner of an aircraft and a potential buyer. The potential buyer wrecked the aircraft as he was
taxiing down the runway after landing. Hastings v. Thweatt, 425 S.W.2d 661, 662 (Tex. Civ.
App.-Austin 1968, no writ). The court of appeals affirmed a judgment for the bailor holding the
bailee liable for the damage to the airplane he had borrowed from plaintiff for the purpose of
trying it out to determine whether he wanted to buy it. Id; see also Wilson v. Chazanow, 105
S.W.3d 21, 23-24 (Tex. App.-Corpus Christi 2002, no pet.) (bailor/bailee relationship where a
jeweler sent a sapphire ring to another jeweler for resizing and sapphire was cracked while being
resized).
Thus, we conclude there was a bailor/bailee relationship between Cessna and
Aircraft Network. See Lockey, 119 S.W.2d at 152; Hastings, 425 S.W.2d at 662.
2. Jury Submission of Bailment Claim
a. Submission of Liability Issue
In
its first issue, Cessna also contends the trial court erred in its
submission of the bailment claim to the jury. We review claims of charge error for an abuse of discretion. Tex.
Dep't of Human Servs. v. E.B., 802 S.W.2d 647, 649 (Tex.1990). In question four, the jury
was asked whether Cessna failed to comply with the bailment contract. The instructions for that
question included the following statement: “Cessna's failure to return the Aircraft or returned
[sic] it in damaged condition creates a rebuttable presumption that Cessna breached the
bailment contract.” See Footnote 3 Cessna contends this statement in the instructions
was improper because whether the aircraft was returned in a damaged condition was a question
of fact. We disagree.
Cessna contends the evidence is undisputed that the aircraft was not returned
in a damaged condition because it was “ultimately” returned in the same condition following
the permanent repair. Cessna asserts that its offer to immediately do the interim repair somehow
vitiates the fact that the aircraft was damaged while in its possession. Cessna does not cite any
authority to support its position. Cessna's focus on the condition of the aircraft when it was
ultimately returned is misplaced. Aircraft Network took the aircraft to the Long Beach service
center for a minor repair. Cessna admittedly damaged the aircraft, and it is undisputed that the
aircraft was initially returned in a damaged condition. Aircraft Network had to obtain a ferry
permit to fly the plane back to Dallas because the plane was rendered unairworthy by the
damage caused by Cessna. An offer to repair or subsequent repair of the damage does not
change that fact.
We conclude the trial court did not abuse its discretion in submitting question
four to the jury.
b. Submission of Damages Issue
Cessna also contends the trial court erred in submitting the damages question
for breach of the bailment contract to the jury. See Footnote 4 Cessna contends that
Aircraft Network cannot recover damages for both the amount it actually expended in securing
substitute transportation and also the cost it would have incurred in the alternative in securing a
replacement aircraft on a monthly basis as “loss of use” damages. Aircraft Network counters
that the damages are not duplicitous because damages for the value of the aircraft to Aircraft
Network differs from the replacement value.
Damage awards are duplicitous if they compensate a party for the same injury.
See Waite Hill Services, Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182, 184
(Tex.1998); City of San Antonio v. Guidry, 801 S.W.2d 142, 150 (Tex.App.--San Antonio
1990, no writ) For example, the recovery of both lost profits and damage to business reputation
could easily be duplicitous. See Nelson v. Data Terminal Systems, Inc., 762 S.W.2d 744,
748 (Tex.App-San Antonio 1988, writ denied). However, a plaintiff may recover for both lost
profits and injury to business reputation if the damages cover different time periods or apply to
different markets. See Guidry, 801 S.W.2d at 150. Thus, recovery for both lost profits and
injury to business reputation are not necessarily duplicitous, but may be so depending on the
evidence.
Just as damages for loss of business reputation and lost profits may be
duplicitous, so too can damages for loss of value and loss of use. The usual measure of damages
for loss of use of injured property is the reasonable cost of renting a replacement. Luna v.
North Star Dodge Sales, Inc. 667 S.W.2d 115, 119 (Tex. 1984). Where property is not
rentable, the plaintiff may resort to proving the actual worth of use. See Goose Creek Consol.
Ind. Sch. Dist. of Chambers and Harris Counties, Texas v. Jarrar's Plumbing, Inc., 74
S.W.3d 486, 497 (Tex. App.-Texarkana 2002, pet. denied). It is error to admit evidence of
both rental costs and replacement costs for loss of use of damages. Hyder-Ingram Chevrolet,
Inc. v. Kutach, 612 S.W.2d 687, 689 (Tex. App.-Houston [14th Dist.] 1981, no writ).
An award for the loss of having an aircraft available twenty-four hours a day,
seven days a week necessarily includes damages for substitute transportation. The damages
sought by Aircraft Network for the costs of substitute transportation and loss of the value of the
aircraft cover the same time period. Under these circumstances, we conclude the trial court
erred in its submission of question five. Further, we conclude Aircraft Network cannot recover
damages on its breach of bailment contract claim for both the costs of obtaining substitute
transportation and for the value of the aircraft during the same time period. Accordingly, we
sustain Cessna's first point of error to the extent that we reform the award for breach of
bailment contract to delete the damages in the amount of $166,000. In all other respects,
Cessna's first point of error is overruled.
C. Reimbursement Contract
In its second point of error, Cessna contends the evidence is legally and
factually insufficient to support the jury's finding of breach of reimbursement contract.
Specifically, Cessna contends the evidence is insufficient to establish the elements of a contract.
The elements of a valid contract include: (1) an offer; (2) acceptance; (3)
meeting of the minds; (4) each party's consent to the terms; and (5) execution and delivery of the
contract with the intent that it be mutual and binding. Prime Products, Inc., 97 S.W.3d at 636.
In determining the existence of an oral contract, the court looks to the communications between
the parties and to the acts and circumstances surrounding the communications. Id.
Cessna asserts the evidence is insufficient to establish a contract because any
offer lacked consideration, there was no acceptance of any offer, and there was no meeting of
the minds. We focus our attention on the element of acceptance. An acceptance must be
identical to the offer, or there is no binding contract. See Long Trusts v. Griffin, 144 S.W.3d
99, 111-12 (Tex. App.-Texarkana 2004, pet. filed).
In its brief, Aircraft Network argues that “the correspondence, conversations,
and testimony of [Richard] Burton [in-house counsel for Aircraft Network] showed that Cessna
accepted Aircraft Network's terms for reimbursement.” Aircraft Network does not provide
record citations to support this statement. And our review of the record shows that the parties
did not come to a meeting of the minds with respect to the costs to be reimbursed and that
Aircraft Network did not accept any offer by Cessna.
In his July 12, 2000 letter, Martin confirmed that Cessna would reimburse
Aircraft Network for its trip to Europe on a differential of costs basis. Aircraft Network
persisted in its request to have an airplane available twenty-four hours a day, seven days a
week. On September 8, 2000, Lonnie Joe, supervisor of accounting at Cessna, had a phone
conversation with Hammond and Weese. Joe informed them that Cessna would not agree to
pay to have an airplane available to Aircraft Network twenty-four hours, seven days a week.
Joe did state that Cessna would pay one-hundred percent of costs of substitute transportation
from September 8, 2000 until repair of the aircraft was completed.
Burton testified that he submitted the invoice for the European trip after
September 8, 2000. The invoice included all costs of the trip with no deductions for costs that
Aircraft Network would have incurred had it taken its own aircraft. Burton testified that he felt
Cessna's September 8th commitment to pay one-hundred percent of costs included all chartered
trips, not just those trips occurring after September 8th. He stated: “My point was, and still is,
that's an arbitrary period of time. September 8th through September 25th was just picked out of
the hat, there is no rhyme or reason to it. If it's reasonable for that period of time, it's reasonable
for the entire period of time our plane is down. By Paul Martin basically stating to me that the
reason why they chose that concept was to try to compensate us for this loss of 24-7, to me, of
course we thought it was reasonable, and in my opinion AAU had determined it was reasonable
by saying for a certain period of time they're going to do it. I just thought it should be pulled not
just from that arbitrary period of time, but it should cover the entire three months our plane was
down.”
Aircraft Network contends Martin's July 12, 2000 letter constituted a
reimbursement contract. Martin stated in the letter that Cessna would reimburse Aircraft
Network for its charter flight to Europe on a differential of cost basis. An essential term to the
alleged contract was reimbursement of costs on a differential of cost basis. Aircraft Network
took the trip to Europe and in September submitted its invoice for one-hundred percent of costs.
Burton testified that after the July 12th letter, he continued to negotiate with Martin regarding the
extent of reimbursement. Because of these negotiations, Burton believed that Joe's promise on
September 8th to cover one- hundred percent of costs for chartered flights included the
chartered flights for the months of July and August as well. We conclude the evidence is factually
insufficient to show: (1) that Aircraft Network accepted the offer made by Martin on July 12th;
or (2) that the parties had a meeting of the minds as to an essential term of the alleged
reimbursement contract - the costs that would be reimbursed.
We sustain Cessna's second point of error. We reverse the trial court's award
of damages for the breach of reimbursement contract claim and render judgment that Aircraft
Network take nothing on that claim.
D. Negligent Misrepresentation
In
its third point of error, Cessna contends the evidence is legally and
factually insufficient to support a cause of action for negligent misrepresentation. Specifically, Cessna
contends the evidence is insufficient because a negligent misrepresentation claim cannot be based
on a promise of future performance and such claim must be supported by an independent injury.
In
its fourth amended petition, Aircraft Network asserted its claim for
negligent misrepresentation in the alternative to its claims for breach of reimbursement contract, promissory
estoppel - reimbursement, and fraud - reimbursement. A party may plead alternative theories of
recovery, present the facts as it understands them to be, and recover under any one of their
theories. Bantuelle v. Williams, 667 S.W.2d 810, 819 (Tex. App.-Dallas 1983, writ ref'd
n.r.e.).
To recover on a claim for negligent misrepresentation, there must be an injury
independent of damages for the breach of contract claim. See D.S.A., Inc. v. Hillsboro Indep.
Sch. Dist., 973 S.W.2d 662, 663-64 (Tex.1998); Blue Star Operating Co. v. Tetra
Technologies, Inc., 119 S.W.3d 916, 922 (Tex. App.-Dallas 2003, pet. denied). The facts in
Blue Star are analogous to the facts in this case. Blue Star alleged a claim of negligent
misrepresentation against Tetra for failing to disclose the possibility of significant filtration losses.
Blue Star asserted that it relied on the misrepresentation in entering the contract. Blue Star, 119
S.W.3d at 922. However, this Court upheld the directed verdict in favor of Tetra on this claim
because Blue Star did not cite to any evidence regarding any injury it suffered or damages it
sought as a result of Tetra's alleged failure to disclose that was independent from its breach of
contract claim. Id.
Aircraft Network's claim for negligent misrepresentation does not involve an
injury independent from the injury alleged for its claim for breach of reimbursement contract.
Both claims are based on the same factual scenario that Cessna promised to reimburse Aircraft
Network for substitute transportation, Aircraft Network incurred costs in reliance on that
promise, and Aircraft Network sustained damages when Cessna breached its promise.
Consequently, we conclude there is no evidence to support the submission of
the negligent misrepresentation claim to the jury. We sustain Cessna's third point of error,
reverse the trial court's judgment with respect to the negligent misrepresentation claim, and
render judgment that Aircraft Network take nothing on its negligent misrepresentation claim.
E. Implied Warranty of Good and Workmanlike Manner
In
its fourth point of error, Cessna contends the evidence is legally and
factually insufficient to support the award for breach of implied warranty.
The jury found that Cessna breached the implied warranty of performing
services in a good and workmanlike manner and assessed $142,000 in damages for that breach.
Cessna contends that the award for breach of the implied warranty amounts to a double recovery
because the damages are subsumed in damages awarded for breach of bailment contract.
Cessna further argues that Aircraft Network's recovery, if any, should be limited to the smaller
award for breach of implied warranty. Although we agree that the two awards are duplicitous,
we hold that the trial court erred in awarding damages for breach of implied warranty.
An implied warranty arises by operation of law as a matter of public policy.
Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 353 (Tex. 1987). There must be a
compelling need to justify an implied warranty for service transactions. Rocky Mountain
Helicopters, Inc. v. Lubbock Cty. Hosp. Dist., 987 S.W.2d 50, 53 (Tex. 1998). A
compelling need for an implied warranty does not exist where other adequate remedies are
available. Id. Where a party has negligence and/or breach of contract claims available to it, an
implied warranty does not arise. Id; see also Anthony Equip. Corp. v. Irwin Steel Erectors,
Inc., 115 S.W.3d 191, 209 (Tex. App.-Dallas 2003, writ dism'd).
Aircraft Network asserted claims for negligence and breach of bailment
contract. The jury found in favor of it and awarded damages on both of those claims. Under
these circumstances, we hold that Aircraft Network does not also have a claim for breach of an
implied warranty of good and workmanlike manner.
We sustain Cessna's fourth point of error. We reverse the award of damages
for breach of the implied warranty of good and workmanlike manner and render judgment that
Aircraft Network take nothing on that claim.
F. Attorney Fees
In
its fifth point of error, Cessna contends the trial court's award of
attorney's fees was erroneous. Specifically, Cessna contends Aircraft Network failed to properly segregate
their fees among the different claims and the different defendants. We have reversed the trial
court's judgment with respect to AAU and rendered judgment that Aircraft Network take
nothing on its claims against AAU, reversed the award for breach of reimbursement contract and
rendered judgment that Aircraft Network take nothing on that claim against Cessna. Thus, our
holdings impact the amount of attorney's fees recoverable. Accordingly, we sustain Cessna's fifth
point of error. We reverse the attorney's fee award and remand that issue to the trial court for
proceedings consistent with this opinion.
G. Costs
In
its final point of error, Cessna asserts the trial court erred in
awarding costs to Aircraft Network. The trial court awarded costs against Cessna and AAU jointly and
severally. In light of this Court's holding that Aircraft Network take nothing on its claims against
AAU, we remand the issue of costs to the trial court for proceedings consistent with this opinion.
We sustain Cessna's sixth point of error.
Aircraft Network's Cross-Point
In a single cross-point, Aircraft Network asserts that if this Court sustains
Cessna's point of error as to the breach of the reimbursement contract, then this Court should
reinstate the jury award on its promissory estoppel claim. In response, Cessna contends that
because there is no contract for reimbursement, there can be no claim for promissory estoppel.
We disagree. A claim for promissory estoppel can only exist if there is no contract. See Doctors
Hospital 1997, L.P. v. Sambuca Houston, L.P., 154 S.W.3d 634, 636 (Tex. App.-Houston
[14th Dist.] 2004, pet. filed).
We
have held that the evidence is insufficient to support the jury's
finding of a reimbursement contract. Thus, no reimbursement contract exists, and the jury found for Aircraft
Network on its promissory estoppel claim. Cessna does not contend that the evidence is
insufficient to support the jury's finding. Accordingly, we sustain Aircraft Network's cross-point
and reinstate the award of damages for the promissory estoppel claim.
Aircraft Network's Cross-Appeal
In a single point of error, Aircraft Network contends the trial court erred in
failing to offset the judgment awarded to Cessna on its counterclaim. Offset is required only
where a defendant is awarded a judgment on its counterclaim that exceeds that established by
the plaintiff. Tex. R. Civ. P. 302. Aircraft Network's recovery, at trial and following appeal,
exceeds the recovery awarded to Cessna on its counterclaim. Accordingly, offset is not required
and the trial court did not abuse its discretion in failing to offset the judgments. We overrule
Aircraft Network's point of error on cross-appeal.
Conclusion
We sustain AAU's first point of error and hold that Aircraft Network lacked
standing to sue AAU. We reverse the judgment with respect to AAU and render judgment that
Aircraft Network recover nothing on its claims against AAU. We sustain Cessna's first point of
error to the extent it asserts error in the submission of the damages question on the breach of
bailment contract claim. We reform the trial court's judgment to delete the $166,000 award for
breach of bailment contract. We sustain Cessna's second, third, and fourth points of error and
render judgment that Aircraft Network recover nothing on its claims against Cessna for breach
of a reimbursement contract, negligent misrepresentation, and breach of the implied warranty of
a good and workmanlike manner. We sustain Aircraft Network's cross-point and reinstate the
jury's award of $210,517.66 for promissory estoppel. Finally, we remand to the trial court the
issues of attorney's fees and costs of proceedings consistent with this opinion. In all other
respects, we affirm the trial court's judgment.
CAROLYN WRIGHT
JUSTICE
041056HF.P05
Footnote 1 The trial court required Aircraft Network to make an election of remedies
between the negligence and breach of bailment contract causes of action. Aircraft Network
elected the breach of bailment contract award.
Footnote 2 The Court discusses in detail the lack of any such agreement under
“Reimbursement Contract” on page 13.
Footnote 3 QUESTION NO. 4:
Did Cessna fail to comply with the bailment contract it entered with Aircraft
Network?
Answer (“YES” or “NO”): Yes
INSTRUCTIONS FOR QUESTION NO. 4
If Cessna and Aircraft Network entered a bailment contract concerning the Aircraft, and
both were to benefit from the contract, Cessna owed a duty to exercise ordinary care for
the Aircraft.
“Ordinary Care” means that degree of care that would be used by a person of ordinary
prudence under the same or similar circumstances.
Cessna's failure to return the Aircraft or returned [sic] it in damaged condition creates a
rebuttable presumption that Cessna breached the bailment contract.
Footnote 4 QUESTION NO. 5:
What sum of money, if any, if paid now in cash, would fairly and reasonably
compensate Aircraft Network for its damages, if any, that resulted from such failure to comply?
Consider the following when calculating these damages. Do not include
damages for one element in any other element. Do not include interest on any amount of
damages you find. Do not include in your answer any amount that you find Aircraft Network
could have avoided by the exercise of reasonable care.
a.
Damages arising from loss of the use of the Aircraft, including, but not limited to the
following:
(1) the costs associated with utilizing substitute aircraft
Answer
in dollars and cents, if any.
Answer:
210,517.66
(2) loss of use of the Aircraft
Answer
in dollars and cents, if any.
Answer:
166,000.00
(3) lost charter revenue
Answer
in dollars and cents, if any.
Answer:
-0-
b.
Decrease in the Aircraft's market value as a result of damage thereto
Answer
in dollars and cents, if any.
Answer:
180,000
INSTRUCTIONS FOR QUESTION NO. 5
“Market value” means the amount that would be paid in cash by a willing
buyer who desires to buy, but is not required to buy, to a willing seller who desires to sell, but is
under no necessity of selling.
For “Loss of use” consider the reasonable value of the use of an airplane in
the same class as the Aircraft for the period of time required to repair the damage, if any, caused
by the occurrence in question.
File Date[11/29/2006]
File Name[041056HF]
File Locator[11/29/2006-041056HF]