law breach of contract | substantial performance doctrine as defense |
ELEMENTS OF CAUSE OF ACTION FOR BREACH OF CONTRACT
To recover for breach of contract, a plaintiff must prove the existence of a valid contract, that the
plaintiff performed, that the defendant breached the contract, and that the defendant's breach
caused plaintiff injury. Winchek, 232 S.W.3d at 202. Recovery of attorney's fees from an adverse
party is allowed when a contract or statute permits the recovery. Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299, 310 (Tex. 2006).
In order to prevail on a breach of contract claim, a plaintiff must establish: "(1) the existence of a valid
contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the
defendant; and (4) damages sustained by the plaintiff as a result of the breach." Valero Mktg. & Supply Co.
v. Kalama Int'l, LLC, 51 S.W.3d 345, 351 (Tex.App.-Houston [1st Dist] 2001, no pet.); see also Bridgmon v.
Array Sys. Corp., 325 F.3d 572, 577 (5th Cir.2003).
The elements of a breach of contract claim are (1) the existence of a valid contract between plaintiff and
defendant, (2) the plaintiff’s performance or tender of performance, (3) the defendant’s breach of the
contract, and (4) the plaintiff’s damage as a result of the breach. Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97
S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). 01-03-00034-CV
ACCRUAL OF ACTION IN INSTALLMENT CONTRACT
A four-year statute of limitations applies to contract actions. Tex. Civ. Prac. & Rem. Code Ann. §
16.004 (Vernon 2002). A cause of action for breach of contract generally accrues at the time of
breach or when the claimant has notice of facts sufficient to place him on notice of the breach. Stine
v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002); Davis Apparel v. Gale-Sobel, a Div. of Angelica Corp.,
117 S.W.3d 15, 18 (Tex. App.-Eastland 2003, no pet.). A party breaches a contract when he or she
fails to perform a duty or violates an obligation required by the contract. Hoover v. Gregory, 835 S.W.
2d 668, 677 (Tex. App.-Dallas 1992, writ denied).
When the breach relates to payment under a contract that calls for fixed, periodic payments, a
separate cause of action accrues for each missed payment. Davis Apparel, 117 S.W.3d at 18;
Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex. App.-Houston [1st Dist.] 1984, writ ref'd n.r.e.)
("[I]f the terms of an agreement call for periodic payments during the course of the contract, a cause
of action for such payments may arise at the end of each period, before the contract is completed").
A claim is time barred if the payment was more than four years overdue when suit is filed. Spin
Doctor Golf, Inc. v. Paymentech, L.P., 296 S.W.3d 354, 362 (Tex. App.-Dallas 2009, pet. denied);
Hollander v. Capon, 853 S.W.2d 723, 726-27 (Tex. App.-Houston [1st Dist.] 1993, writ denied).
MEASURE OF DAMAGES IN BOC CASE
Generally, the measure of damages for breach of contract is that which restores the injured party to the
economic position he would have enjoyed if the contract had been performed. Sava Gumarska v. Advanced
Polymer Sciences, Inc., 128 S.W.3d 304, 317 n.6 (Tex. App.-Dallas 2004, no pet.). This measure may include
reasonably certain lost profits. See Cmty. Dev. Serv., Inc. v. Replacement Parts Mfg., Inc., 679 S.W.2d 721,
725 (Tex. App.-Houston [1st Dist.] 1984, no writ.) Lost profits are damages for the loss of net income to a
business. Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002). 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 or relationships resulting from the breach. See Continental Holdings, Ltd. v. Leahy,
132 S.W.3d 471, 475 (Tex. App.-Eastland 2003, no pet.). But regardless of whether the lost profits are
characterized as direct or consequential damages, the amount of the loss must be shown by competent
evidence with reasonable certainty, be based on objective facts, figures, or data, and be predicated on one
complete calculation. See Holt, 835 S.W.2d at 84. The injured party must do more than show that they
suffered some lost profits. See Szczepanik v. First Southern Trust Co., 883 S.W.2d 648, 649 (Tex. 1994).
Finally, consequential damages may not be recovered unless they are foreseeable and traceable to the
wrongful act and result from it. See Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex. 1998).
08-0303 PAUL MOOD AND K&M DISTRIBUTORS v. KRONOS PRODUCTS, INC.; from Dallas County; 5th
district (05-06-00111-CV, 254 SW3d 8, 11-28-07, pet. denied Jun 2008)(breach and termination of a
distributorship agreement )
ATTORNEYS FEES IN BREACH OF CONTRACT CASE
CHAPTER 38 FEES ONLY AVAILABLE IF CONTRACT DAMAGES ARE RECOVERED
Chapter 38 of the Texas Civil Practice and Remedies Code allows recovery of attorneys’ fees in breach of
contract cases in addition to the amount of a valid claim. TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8)
(West 2008). In order to recover fees, a party must (1) prevail on the breach of contract claim, and (2)
recover damages. MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 666 (Tex. 2009); Mustang
Pipeline Co., 134 S.W.3d at 201; Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997). The requirement
of damages is implied from the statute’s language, “in addition to the amount of a valid claim,” the claimant
must recover some amount on that claim. MBM Fin. Corp., 292 S.W.3d at 666.
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