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Jim Walter Homes Inc. v. Reed

Supreme Court of Texas
Jul 16, 1986
711 S.W.2d 617 (Tex. 1986)

Summary

holding that contract breach cannot support exemplary damages award even if conduct involves gross negligence

Summary of this case from Country Title, L.L.C. v. Jaiyeoba

Opinion

No. C-4691.

May 14, 1986. Rehearing Denied July 16, 1986.

Appeal from the District Court No. 214, Nueces County, Margarito C. Garza, J.

Mike Mills, Atlas Hall, McAllen, for petitioner.

F.I. Gandy, Jr., Corpus Christi, for respondents.


This case involves whether there is an independent tort to support an award of exemplary damages.

Ray Reed and his wife sued Jim Walter Homes, Inc., seeking damages arising out of the sale and construction of a house. The jury found that Jim Walter Homes, Inc. breached the warranty of good workmanship in the contract and that it was grossly negligent in the supervision of the construction of the house. Our concern is with the award of punitive or exemplary damages.

The jury found actual damages, additional damages as provided under the Deceptive Trade Practices Act, Tex.Bus. Com. Code § 17.46 (Vernon Supp. 1985), exemplary damages and attorney's fees. The trial court awarded actual damages and attorney's fees, disallowed the additional DTPA damages, and remitted a portion of the exemplary damages. The court of appeals modified the judgment of the trial court by awarding DTPA damages only and attorney's fees. In addition the court ordered a remittitur reducing the exemplary damages. 703 S.W.2d 701 at 708.

Although the principles of contract and tort causes of action are well settled, often it is difficult in practice to determine the type of action that is brought. We must look to the substance of the cause of action and not necessarily the manner in which it was pleaded. International Printing Pressmen and Ass't Union v. Smith, 145 Tex. 399, 198 S.W.2d 729 (1946).

The contractual relationship of the parties may create duties under both contract and tort law. Montgomery Ward Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508 (1947). The acts of a party may breach duties in tort or contract alone or simultaneously in both. The nature of the injury most often determines which duty or duties are breached. When the injury is only the economic loss to the subject of a contract itself, the action sounds in contract alone. Mid-Continent Aircraft Corp. v. Curry County Spraying Service, 572 S.W.2d 308, 312 (Tex. 1978); Nobility Homes of Texas, Inc. v. Shivers, 557 S.W.2d 77 (Tex. 1977). The Reeds' injury was that the house they were promised and paid for was not the house they received. This can only be characterized as a breach of contract, and breach of contract cannot support recovery of exemplary damages. Bellefonte Underwriters Insurance Co. v. Brown, 704 S.W.2d 742 (1986); Amoco Production Co. v. Alexander, 622 S.W.2d 563 (Tex. 1981).

The jury found Jim Walter Homes, Inc. to have been grossly negligent in its supervision of construction. Gross negligence is a mental state lower in culpability than intentional or willful acts. Luna v. North Star Dodge Sales, Inc., 667 S.W.2d 115 (Tex. 1984). Gross negligence in the breach of contract will not entitle an injured party to exemplary damages because even an intentional breach will not. Amoco Production Co. v. Alexander, 622 S.W.2d 563, 571 (Tex. 1981); City Products Corp. v. Berman, 610 S.W.2d 446, 450 (Tex. 1980).

To support an award of exemplary damages in this case, the plaintiff must prove a distinct tortious injury with actual damages. Bellefonte Underwriters Insurance Co. v. Brown, supra; Luna v. North Star Dodge Sales, Inc., supra; City Products Corp. v. Berman, supra. The only issue on actual damages inquired as to the cost of repairing the home to the condition it was represented to be in at the time of sale. Although the Reeds sought recovery for mental anguish in their petition, no issue was submitted on those damages. There were no other injuries found by the jury other than loss of the benefit of the bargain. Therefore, we reverse the court of appeals award of exemplary damages and affirm the remainder of the judgment.


Summaries of

Jim Walter Homes Inc. v. Reed

Supreme Court of Texas
Jul 16, 1986
711 S.W.2d 617 (Tex. 1986)

holding that contract breach cannot support exemplary damages award even if conduct involves gross negligence

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holding economic loss rule applied where plaintiff attempted to cast breach of contract claim as tort claim

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holding that because the homeowners' “injury was that the house they were promised and paid for was not the house they received,” they did not have a viable negligence cause of action—i.e., the construction of the home itself was the subject matter of the contract

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concluding whether cause of action is based in contract or tort is based on substance of cause of action

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In Jim Walter Homes, the court held that a homeowner could not recover punitive damages against a builder because the substance of the homeowner's claim was a breach of contract causing purely economic loss.

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In Jim Walter Homes v. Reed the court rejected the Reeds' attempt to recover for defects in their home under a negligence theory.

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In Jim Walter Homes, the Texas Supreme Court noted that the "contractual relationship of the parties may create duties under both contract and tort law."

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), a negligent supervision case, the Texas Supreme Court explained: "The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), a negligent supervision case, the Texas Supreme Court explained: "The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, the Texas Supreme Court reversed a jury verdict awarding exemplary damages for a homebuilder's grossly negligent supervision of the construction of a house.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), a negligent supervision case, the Texas Supreme Court explained: "The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), the Court held that a claim that plaintiffs' "house they were promised and paid for was not the house they received" could "only be characterized as a breach of contract."

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), a negligent supervision case, the Texas Supreme Court explained: "The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), the Texas Supreme Court explained: "The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), a negligent supervision case, the Texas Supreme Court explained: "The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex.1986), a negligent supervision case, the Texas Supreme Court explained: “The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex.1986), a negligent supervision case, the Texas Supreme Court explained: “The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), the Texas Supreme Court explained: "The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex.1986), a negligent supervision case, the Texas Supreme Court explained: “The nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), we recognized that, while the contractual relationship of the parties could create duties under both contract law and tort law, the "nature of the injury most often determines which duty or duties are breached.

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In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986), we recognized that, while the contractual relationship of the parties could create duties under both contract law and tort law, the "nature of the injury most often determines which duty or duties are breached.

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explaining that "[t]he acts of a party may breach duties in tort or contract alone or simultaneously in both" and courts look to the "nature of the injury" in determining "which duty or duties are breached" and whether the cause of action "sounds in contract alone"

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Case details for

Jim Walter Homes Inc. v. Reed

Case Details

Full title:JIM WALTER HOMES, INC., Petitioner, v. Ray REED et ux., Respondents

Court:Supreme Court of Texas

Date published: Jul 16, 1986

Citations

711 S.W.2d 617 (Tex. 1986)

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