Supreme Court of Texas

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No. 20-0980

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Wal-Mart Stores, Inc.; Wal-Mart Stores East, LP; Wal-Mart 

Louisiana, LLC; Sam’s East, Inc.; and Sam’s West, Inc.,

Petitioners,

v.

Xerox State & Local Solutions, Inc. a/k/a, f/k/a ACS State & Local 

Solutions, Inc., 

Respondent

═══════════════════════════════════════

On Petition for Review from the

Court of Appeals for the Fifth District of Texas

═══════════════════════════════════════

Argued September 21, 2022

JUSTICE DEVINE delivered the opinion of the Court.

Justice Lehrmann did not participate in the decision.

In this tort and breach-of-contract suit, several affiliated retailers 

seek to recoup millions of dollars in disallowed reimbursements for 

purchases their customers made under the federally funded 

Supplemental Nutrition Assistance Program (SNAP). The retailers’ 

losses arose in connection with a lengthy outage in a third-party 

contractor’s Electronic Benefit Transfer (EBT) system. As authorized 
2

by federal regulations, the retailers permitted their SNAP customers to 

make purchases during the system outage but held the EBT 

transactions in abeyance for later submission and reimbursement. 

When the EBT contractor subsequently declined reimbursement for 

nearly 90,000 transactions, the retailers sued for damages under 

negligence and negligent-misrepresentation theories and as third-party 

beneficiaries under the EBT contractor’s agreements with state 

agencies. The trial court rendered a take-nothing summary judgment 

on the retailers’ claims, and the court of appeals affirmed.

A central issue on appeal is whether the EBT contractor is 

insulated from liability under a federal regulation authorizing retailers 

to store and forward EBT transactions “at the retailer’s own choice and 

liability.” We hold that this regulation does not insulate third-party 

EBT contractors from liability to retailers. The court of appeals’ 

contrary conclusion led to the erroneous affirmance of summary 

judgment on some of the retailers’ losses and rendered the court’s 

analysis faulty as to the retailers’ tort claims. Accordingly, we 

(1) reverse summary judgment as to the tort claims and remand those 

claims to the court of appeals to consider the EBT contractor’s 

alternative grounds for affirmance but (2) affirm summary judgment on 

the breach-of-contract claims because the retailers have failed to 

produce evidence of their status as third-party beneficiaries.

I. Background

A. SNAP

Congress authorized SNAP “to safeguard the health and 

well-being of the Nation’s population by raising levels of nutrition 
3

among low-income households.”1 Subject to regulations promulgated by 

the U.S. Department of Agriculture (USDA),2 state agencies administer 

the federally funded SNAP by distributing monthly benefits through an 

EBT system that allows SNAP beneficiaries to purchase food at 

authorized retailers with debit-like EBT cards.3 State agencies may 

contract with EBT contractors to perform services, including managing 

the EBT cardholder authorization system to redeem SNAP benefits.4 

Retailers may similarly contract with third-party processors to operate 

the processing system for routing EBT transactions to the appropriate 

state authorization system.5 Wal-Mart Stores, Inc.; Wal-Mart Stores 

East, LP; Wal-Mart Louisiana, LLC; Sam’s East, Inc.; and Sam’s West, 

Inc. (collectively, Wal-Mart) are authorized SNAP retailers who retained 

First Data Corporation as their third-party processor. Xerox State & 

Local Solutions, Inc. is the EBT contractor for sixteen states under 

written contracts with state agencies in each of those states.6 Xerox also 

1 7 U.S.C. § 2011. 

2 Id. § 2013(c). 

3 7 C.F.R. §§ 274.1(a), (b), .2(a). Although Part 274 has been amended 

since the events giving rise to this litigation, the changes are not material to 

the issues on appeal; accordingly, we cite to the current version of the 

regulations for convenience. 

4 Id. § 271.2.

5 Id. § 274.8(b)(10)(iv); see id. § 274.3(d) (distinguishing third-party 

processors from the state agencies’ EBT contractors).

6 Those states are Alabama, California, Georgia, Illinois, Iowa, 

Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, New 

Jersey, Ohio, Oklahoma, Pennsylvania, and Virginia.
4

operates under a written contract with First Data but has no direct 

contractual relationship with Wal-Mart.

In a typical SNAP transaction, the customer uses a state-issued 

EBT card at a retailer’s point-of-sale (POS) device and enters a personal 

identification number (PIN). The POS device creates and transmits 

transaction information to the retailer’s third-party processor. The 

third-party processor follows the EBT contractor’s specifications to 

develop the transaction message and sends it to the EBT contractor’s 

mini-switch. The mini-switch receives the message and provides 

intra- and interstate routing to state-agency databases within the EBT 

contractor’s host system for processing. The databases hold the relevant 

SNAP account information to process and authorize the EBT 

transactions for approval or denial. The EBT system’s host computer 

returns an electronic response through “the switch, to the third party 

processors, to a store’s host computer or POS device.”7

B. The Outage

On a Saturday in October 2013, during peak retail-transaction 

times, Xerox’s EBT system went offline for more than 10 hours when 

Xerox suffered a power failure while performing unannounced, but 

planned, maintenance at its Dallas data center. SNAP regulations 

provide that when EBT systems are inaccessible, state agencies must 

“ensure that a manual purchase system is available for use.”8 This 

process uses manual vouchers and permits re-presentation of SNAP 

7 Id. § 274.2(g)(2).

8 Id. § 274.8(d). 
5

transactions during subsequent months.9 State agencies also “may opt 

to allow retailers, at the retailer’s own choice and liability, to perform” 

what the regulations call “store-and-forward transactions,” which allow 

retailers the opportunity to electronically store EBT transactions and 

then forward the transactions to the EBT contractor “one time within 

24 hours of when the system again becomes available.”10 Wal-Mart had 

a system in place to use the latter option to “store and forward” 

transactions when Xerox’s EBT system was inaccessible.

Throughout the outage, Wal-Mart communicated with Xerox and 

First Data. Early in the outage, some of Xerox’s systems came back 

online, and Xerox considered “failing over” to its backup data center in 

Pittsburgh but chose to stay with Dallas. At the height of the outage, 

Xerox’s “state servers, which house the EBT programs, were not 

operational, but the mini-switches, communicating between servers and 

the third party processors, were operational.” During this brief opening 

in the system, Wal-Mart forwarded stored EBT transactions, but Xerox’s 

EBT system returned a “Code 19” response. The response description 

for “Code 19” is “Re-enter Transaction,” which “requires the card holder 

to re-enter his or her PIN number.” 

According to Xerox, Wal-Mart’s automated store-and-forward 

system was designed such that First Data would “remap” a Code 19 

response to a Code 05 “general denial” response before returning a 

9 Id.

10 Id. § 274.8(e)(1) (emphasis added). 
6

response code to Wal-Mart.11 On receiving the “general denial” 

response, Wal-Mart’s automated system removed the stored transaction 

from the store-and-forward queue, meaning the Code 19 transactions 

could no longer be re-presented to Xerox when its EBT system was back 

up and running. After realizing what was occurring—and within 

15 minutes of the mini-switches coming online—First Data worked with 

Xerox to “cut [its] links” to the mini-switches to prevent further Code 19 

responses to Wal-Mart’s store-and-forward transactions.

Toward the end of the outage, Xerox worked with First Data and 

Wal-Mart to restore the EBT processing on a state-by-state basis. 

During this operation, Wal-Mart’s automatic store-and-forward system 

again submitted more transactions that were returned as Code 19 

responses and remapped to “general denial” responses. Only later that 

evening was Xerox’s EBT system fully restored. 

All told, Wal-Mart stored 420,000 transactions for 

re-presentment following the outage. Of them, Xerox declined around 

86,000 transactions, resulting in two categories of losses for Wal-Mart: 

(1) 32,000 reimbursement claims that were denied because the 

customers lacked sufficient benefits or used an improper PIN to 

complete the transaction (NSF transactions or losses); and (2) 54,000 

reimbursement claims that received Code 19 responses and were 

refused even though the customers had sufficient SNAP benefits to cover 

11 Some Code 19 responses were also remapped to Code 94, which 

means “try again.”
7

the purchases (Code 19 transactions or losses).12 Wal-Mart does not 

dispute that federal regulations preclude it from recouping these losses, 

worth around $4 million, from its customers, the states, or the federal 

government, but it contends Xerox is responsible for the outage and may 

be held liable for the ensuing losses. 

C. Procedural History

Seeking to recover those losses, Wal-Mart sued Xerox for 

negligence, negligent misrepresentation, and breach of contract.13 

Xerox twice moved for summary judgment. First, Xerox moved for 

traditional summary judgment on all claims, arguing that, as a matter 

of law, “Wal-Mart bears any and all loss it may have incurred” because 

federal regulations provide that store-and-forward transactions are 

undertaken “at the retailer’s own choice and liability.”14 The trial court 

granted that motion in part, rendering a take-nothing summary 

judgment on the 32,000 NSF losses but leaving Wal-Mart’s claims for 

the 54,000 Code 19 losses pending. 

Second, in a motion for traditional and no-evidence summary 

judgment on the remaining claims, Xerox raised no-evidence challenges 

to most elements of Wal-Mart’s claims and raised traditional grounds 

that it was entitled to judgment as a matter of law because (1) Xerox 

12 In addition, Wal-Mart alleged damages resulting from “losses 

associated with the carts of abandoned groceries and other items as a result of 

the Outage.”

13 Wal-Mart also asserted claims based on promissory estoppel and 

breach of an implied-in-fact contract but has not challenged the court of 

appeals’ affirmance of summary judgment on those claims.

14 Id.
8

had no duty to Wal-Mart; (2) Xerox made no false representations; 

(3) Wal-Mart is not an intended third-party beneficiary of Xerox’s 

contracts with the state agencies; and (4) select provisions in some of 

Xerox’s contracts expressly disclaim third-party beneficiaries. Xerox 

also raised a global traditional ground for summary judgment on the 

basis that Wal-Mart is the “producing cause” of all damages through its 

“remapping” of the Code 19 responses. 

In response, Wal-Mart argued that (1) Xerox owed it a 

common-law duty because the damage resulting from the outage was 

foreseeable and Xerox voluntarily undertook responsibility for

processing EBT transactions; (2) Xerox misrepresented that its system 

was ready to receive transactions when it was not; and (3) Wal-Mart is 

an intended beneficiary of certain indemnity provisions in Xerox’s 

contracts with the state agencies. As to causation, Wal-Mart urged that 

Xerox’s Code 19 responses were improper because (1) that code applies

only to face-to-face, not store-and-forward, EBT transactions; (2) PIN 

security rules required Wal-Mart to remove the store-and-forward 

transactions from the queue after receiving a Code 19 response; and 

(3) even if Wal-Mart’s remapping contributed to causing the damages, 

proportionate responsibility is a question for the jury. 

The trial court granted Xerox’s motion and rendered a final 

take-nothing judgment against Wal-Mart. The court of appeals 

affirmed. 

The appeals court agreed with Xerox’s interpretation of the 

federal regulation, finding it “clear in imposing liability on Wal-Mart for 

the risks associated with its ‘store and forward’ transactions,” and 
9

affirmed summary judgment on the losses from the 32,000 NSF 

transactions.15 Relying on this holding, the court also affirmed 

summary judgment on the negligence and negligent-misrepresentation 

claims.16 Finally, the appeals court affirmed summary judgment on 

Wal-Mart’s breach-of-contract claims.17 Although Wal-Mart had argued 

that Xerox’s traditional summary judgment on the contract claims could 

not be based on only contract excerpts, the court concluded that (1) the 

relevant provisions disclaiming third-party beneficiaries were sufficient 

to shift Xerox’s burden as a traditional summary-judgment movant; 

(2) Wal-Mart did not identify any missing contract provisions that might 

be relevant in response; and (3) Wal-Mart failed to raise a fact issue on 

its third-party-beneficiary status because the contracts contained 

specific provisions assigning liability for store-and-forward transactions 

to the retailer and those provisions “prevail[ed] over the more general 

indemnity provision.”18 

Wal-Mart’s petition for review contends Xerox is not entitled to 

summary judgment because (1) the federal SNAP regulation insulates

only the federal government, state agencies, and SNAP beneficiaries 

from liability for losses on store-and-forward transactions; (2) excerpted 

contract provisions disclaiming third-party beneficiaries are insufficient 

on their own to shift a traditional summary-judgment movant’s burden; 

and (3) Wal-Mart’s evidence was sufficient to raise fact issues defeating 

15 646 S.W.3d 546, 554-55 (Tex. App.—Dallas 2020).

16 Id. at 555-57.

17 Id. at 557-61.

18 Id. at 558-61.
10

summary judgment on its negligence, negligent-misrepresentation, and 

breach-of-contract claims. Xerox’s response asserts, as cross-points, 

that the second summary judgment should be affirmed on the 

independent ground that Wal-Mart’s “remapping” of the Code 19 

responses was a “new and independent, or superseding, cause” of its 

damages and that Wal-Mart waived any challenge to this alternative 

ground for affirmance by failing to mention it in its merits brief. 

II. Discussion

We review summary judgments de novo.19 A party moving for 

traditional summary judgment must prove that no genuine issue of 

material fact exists and it is entitled to judgment as a matter of law.20 

In comparison, a properly filed no-evidence motion shifts the burden to 

the nonmovant to present evidence raising a genuine issue of material 

fact supporting each element contested in the motion.21 If the 

nonmovant brings forth more than a scintilla of probative evidence to 

raise a genuine issue of material fact, summary judgment is improper.22 

In determining whether a fact issue precludes summary judgment, “we 

take as true all evidence favorable to the nonmovant, and we indulge 

every reasonable inference and resolve any doubts in the nonmovant’s 

favor.”23 

19 Zive v. Sandberg, 644 S.W.3d 169, 173 (Tex. 2022).

20 TEX. R. CIV. P. 166a(c).

21 JLB Builders, L.L.C. v. Hernandez, 622 S.W.3d 860, 864 (Tex. 2021)

(citing TEX. R. CIV. P. 166a(i)).

22 Id.

23 Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
11

A. The Federal SNAP Regulation

The primary dispute on appeal concerns the meaning and 

applicability of Section 274.8(e)(1) of the SNAP regulations, which 

served as the sole basis for the first summary judgment on Wal-Mart’s 

NSF losses and undergirded the court of appeals’ disposition of 

Wal-Mart’s negligence and negligent-misrepresentation claims. 

Section 274.8(e)(1) provides:

(e) Store-and-forward. As an alternative to manual 

transactions: 

(1) State agencies may opt to allow retailers, at the 

retailer’s own choice and liability, to perform 

store-and-forward transactions when the EBT system 

cannot be accessed for any reason. The retailer may 

forward the transaction to the host one time within 

24 hours of when the system again becomes available. 

Should the 24-hour window cross into the beginning of a 

new benefit issuance period, retailers may draw against all 

available benefits in the account.24

The crux of the dispute between Wal-Mart and Xerox is whether 

the regulation insulates an EBT contractor from liability to a retailer 

under state common-law theories. Xerox argues that “at the retailer’s 

own choice and liability” means Wal-Mart “bears any and all loss it may 

have incurred on any ‘store-and-forward’ transaction as a matter of law” 

and “assumes all liability for those transactions—no matter what.” 

Wal-Mart contends that Section 274.8(e)(1) does not provide Xerox with 

“blanket immunity . . . no matter what it did” and instead contemplates 

the retailer assuming liability for losses only as against the 

24 7 C.F.R. § 274.8(e)(1) (emphasis added).
12

governmental entities and program beneficiaries. In Wal-Mart’s view, 

Xerox’s interpretation would result in federal preemption of state-law 

claims without any apparent congressional intent to bar such claims.

The parties have not identified, nor have we found, any authority 

construing Section 274.8(e)(1) as it pertains to relieving EBT contractors 

from liability for state-law claims. When presented with a federal 

question of first impression, we look to “how the U.S. Supreme Court 

would decide the issue,” “often draw[ing] on the precedents of other 

federal courts, or state courts, to determine the appropriate answer.”25 

In interpreting regulations, the U.S. Supreme Court uses the 

“traditional tools” of construction and carefully considers “the text, 

structure, history, and purpose of a regulation,” which “will resolve 

many seeming ambiguities out of the box.”26 Applying this approach, 

we conclude that Section 274.8(e)(1) is not “genuinely ambiguous”27 and 

does not insulate an EBT contractor from state common-law liability. 

25 In re Morgan Stanley & Co., 293 S.W.3d 182, 189 (Tex. 2009).

26 Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019). As we do, federal courts 

interpret regulations by applying similar construction principles used to 

interpret statutes. See Mitchell v. C.I.R., 775 F.3d 1243, 1249 (10th Cir. 2015)

(“In interpreting the relevant regulations, we apply the same rules we use to 

interpret statutes.”); Patients Med. Ctr. v. Facility Ins. Corp., 623 S.W.3d 336, 

341 (Tex. 2021) (“We interpret administrative rules using the same principles 

we apply when construing statutes.”); see also In re Facebook, Inc., 625 S.W.3d 

80, 87 (Tex. 2021) (noting that the U.S. Supreme Court has “stated principles 

of statutory interpretation with which we agree”); In re Acad., Ltd., 625 S.W.3d 

19, 25 (Tex. 2021) (“In analyzing federal statutes, we apply principles 

substantially similar to those that govern our interpretation of Texas law.”).

27 See Kisor, 139 S. Ct. at 2415.
13

Interpretation of the regulation begins with its text, which grants 

permissive authority subject to two conditions precedent: a retailer may 

perform store-and-forward transactions if (1) the state agency opts to 

allow it and (2) the EBT system cannot be accessed for any reason.28 

The parties agree that both conditions precedent were satisfied here. 

Accordingly, the regulations authorized Wal-Mart to exercise the option 

to store and forward transactions at its own “liability.” 

The parties’ interpretive disagreement rests on the breadth of the 

word “liability,” which generally refers to “[t]he quality, state, or 

condition of being legally obligated or accountable; legal responsibility 

to another or to society, enforceable by civil remedy or criminal 

punishment.”29 The parties agree that the scope of the retailer’s 

“liability” for store-and-forward transactions applies such that the 

retailer bears the risk in relation to the USDA, state agencies, and 

SNAP beneficiaries. But the term “liability” on its own does not 

delineate whether the scope is limited to allocating the risk to the 

retailer only as to those relationships or also extends beyond those 

relationships to relieve third parties from liability to the retailer under 

state law.30 

28 7 C.F.R. § 274.8(e)(1). 

29 Liability, BLACK’S LAW DICTIONARY (11th ed. 2019) (emphasis added).

30 See, e.g., Antonin Scalia & Bryan A. Garner, READING LAW: THE 

INTERPRETATION OF LEGAL TEXTS 105-06 (2012) (noting that sometimes the 

scope of a general term is unclear).
14

“Context is a primary determinant of meaning.”31 In considering 

the context, there is a presumption of consistent usage: “A word or 

phrase is presumed to bear the same meaning throughout a text.”32 

Being “mindful” of that presumption,33 we note that in another section 

of the SNAP regulations, “liability” in the context of lost or stolen EBT 

cards is allocated as follows: “Once a household reports that their EBT 

card has been lost or stolen, the State agency shall assume liability for 

benefits subsequently drawn from the account and replace any lost or 

stolen benefits to the household.”34 If the word “liability” bore the

breadth Xerox suggests, a state agency would be precluded from suing 

to recover SNAP benefits from thieves and embezzlers, but such a 

construction would be contrary to a fair reading of that provision. The 

presumption of consistent usage indicates that “liability,” when used in 

the SNAP regulations, does not necessarily preclude a party with 

assigned “liability” from seeking recovery from at least some other 

persons or entities under state common-law theories. 

The structure of the SNAP regulations also supports this reading, 

especially considering how Subsections (d) and (e) of Section 274.8 

relate to each other. Subsection (e) describes store-and-forward 

transactions “[a]s an alternative to manual transactions,”35 which are 

31 Id. at 167.

32 Id. at 170. 

33 See S.C. v. M.B., 650 S.W.3d 428, 445 (Tex. 2022).

34 7 C.F.R. § 274.6(b)(2).

35 Id. § 274.8(e).
15

discussed in the immediately preceding Subsection (d).36 But unlike the 

regulation for store-and-forward transactions, the regulation governing 

manual vouchers provides that the state agency “may accept liability for 

manual purchases within a specified dollar limit” and “shall be strictly 

liable for manual transactions that result in excess deductions from a 

household’s account.”37 “The Department,” on the other hand, “shall not 

accept liability under any circumstances for the overissuance of benefits 

due to the utilization of manual vouchers.”38 Moreover, the opportunity 

to re-present the manual vouchers and the amount to be debited is 

limited and requires notice to the SNAP beneficiaries.39 Reading these 

subsections together and in context, as the “traditional tools” of 

construction require,40 the regulations allocate liability among the 

USDA, state agencies, and retailers to protect the SNAP beneficiaries 

when using back-up procedures—manual vouchers and store and 

forward—during a system outage. But the regulations related to 

back-up procedures do not contemplate the liability of other parties, for 

example, as between an EBT contractor and a retailer.

36 Id. § 274.8(d).

37 Id. § 274.8(d)(4), (5).

38 Id. § 274.8(d)(4).

39 Id. § 274.8(d)(1)–(3).

40 See Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019); see also Food & Drug 

Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000) (“The 

meaning—or ambiguity—of certain words or phrases may only become evident 

when placed in context.”); Cadena Comercial USA Corp. v. Tex. Alcoholic 

Beverage Comm’n, 518 S.W.3d 318, 326 (Tex. 2017) (noting that we consider 

provisions within the context of the entire framework and construe text “as a 

whole” not in “isolation”). 
16

Finally, reading “liability” as limited to describing the allocation 

of risk among the federal government, state agencies, SNAP 

beneficiaries, and the entity being assigned “liability”—here, the 

retailer—is consistent with the history and purpose of the regulation. 

In 1992, the USDA recognized in the preamble to its regulations that 

“there must be a back-up system available for use whenever any 

component of the EBT system malfunctions” because “[i]t is essential 

that households have a means to purchase food when any part of the 

system is unavailable.”41 The USDA noted that the “greatest concern” 

of commenters was “the liability associated with back-up transactions 

and when re-presentation against a household’s future benefits may 

take place.”42 At that time, the USDA continued with “requir[ing] that 

liability for overdraws resulting from manual transactions rest[s] with 

the State agency.”43 But the USDA provided that the agency “can pass 

this liability on to other parties through negotiations as appropriate for 

its circumstances.”44 

41 Standards for Approval and Operation of Food Stamp Electronic 

Benefit Transfer Systems, 57 Fed. Reg. 11213, 11247 (Apr. 1, 1992); see 

Antonin Scalia & Bryan A. Garner, READING LAW: THE INTERPRETATION OF 

LEGAL TEXTS 218 (2012) (noting that although prefatory materials like a 

preamble “cannot give words and phrases of the dispositive text itself a 

meaning that they cannot bear,” they are “appropriate guide[s] to meaning” 

and “ought to be considered along with all other factors in determining whether

the instrument is clear”).

42 Standards for Approval and Operation of Food Stamp Electronic 

Benefit Transfer Systems, 57 Fed. Reg. at 11247.

43 Id.

44 Id.
17

In 2001, the USDA presented store and forward as an alternative 

“preferable to manual vouchers for some retailers who do not wish to 

spend time obtaining telephone authorization for the transaction when 

the system is down.”45 In the proposed rule, the USDA would allow 

retailers to use store and forward for those “who elect to assume liability 

for these transactions,” with one opportunity to forward the transaction 

within 24 hours “to protect against applying the transaction to future 

months’ benefits.”46 In 2005, the USDA authorized store and forward in 

an interim rule, noting and addressing commenters’ concerns that 

store-and-forward procedures provide a “potential for fraud” and 

overdrafts.47 

The regulatory history and concerns raised during the adoption 

process evince overarching objectives of the store-and-forward process: 

(1) to ensure SNAP beneficiaries can purchase food with their SNAP 

benefits during outages, (2) to provide a more efficient method for 

retailers when manual vouchers might not be feasible so they are 

encouraged to participate in SNAP during outages, and (3) to protect the 

public fisc and SNAP beneficiaries from increased potential liability or 

unexpected or fraudulent withdrawals from SNAP accounts. Neither 

the promulgation process nor the regulation’s text indicates regulatory 

45 Food Stamp Program, Regulatory Review: Standards for Approval 

and Operation of Food Stamp Electronic Benefit Transfer (EBT) Systems, 66 

Fed. Reg. 36495, 36500 (proposed July 12, 2001).

46 Id. at 36500-01.

47 Food Stamp Program, Regulatory Review: Standards for Approval 

and Operation of Food Stamp Electronic Benefit Transfer (EBT) Systems, 70 

Fed. Reg. 18263, 18268-69 (Apr. 11, 2005). 
18

concern about allocating liability between retailers and EBT 

contractors.

Separately and collectively, the federal regulation’s text, 

structure, history, and purpose point in the same direction: 

Section 274.8(e)(1) does not insulate EBT contractors from liability to 

retailers under state common-law claims. Xerox’s contrary reasoning, 

on the other hand, would allow an EBT contractor to escape 

independently negotiated contractual obligations with a retailer and 

avoid liability not only for its negligent conduct but also for intentional 

torts related to store-and-forward losses. If EBT contractors are not 

incentivized to minimize the risks of outages, retailers might be more 

likely to turn away SNAP customers during outages, limiting their 

options to purchase food. Such a construction runs counter to regulatory 

objectives.48

48 Xerox nevertheless argues that a 2015 USDA letter to Wal-Mart

supports its construction of the regulation. In 2015, nearly two years after the 

outage at issue here, Wal-Mart experienced losses in connection with a similar 

EBT system outage and asked the USDA to provide an adjustment for denied 

store-and-forward transactions. The USDA denied the request, noting that 

when SNAP recipients have insufficient funds or use invalid PINs, “the retailer 

must be willing [to] accept the loss of funds.” Xerox asserts that this letter 

reflects the agency’s construction of Section 274.8(e)(1) as insulating EBT 

contractors from liability to retailers and that the agency’s construction is 

entitled to deference. We cannot agree with Xerox’s characterization of the 

letter, which only involves Wal-Mart’s attempt to recover from the USDA. The 

letter does not—in any way, shape, or form—address an EBT contractor’s 

liability under Section 274.8(e)(1). Even if it could be so construed, “a court 

should not afford Auer deference [to an agency’s interpretation of its 

regulations] unless the regulation is genuinely ambiguous,” Kisor v. Wilkie, 

139 S. Ct. 2400, 2415 (2019), and this regulation is not.
19

Moreover, by concluding that Section 274.8(e)(1) barred 

Wal-Mart’s contract and tort claims for the NSF losses, the court of 

appeals effectively held that the federal regulation preempted those 

common-law claims.49 But there is a “presumption against preemption” 

because “respect for the States as ‘independent sovereigns in our federal 

system’ leads us to assume that ‘Congress does not cavalierly pre-empt 

state-law causes of action.’”50 The presumption “does not rely on the 

absence of federal regulation” and instructs that federal law should not 

be read to preempt state law “‘unless that was the clear and manifest 

purpose of Congress.’”51 The parties have not identified, nor have we 

found, a clear and manifest purpose of Congress intending to preempt 

such state common-law claims. Thus, even if Xerox had provided a 

plausible alternative construction given the regulation’s text, structure, 

history, and purpose and even if the regulation were ambiguous, we 

49 See 646 S.W.3d 546, 554-55 (Tex. App.—Dallas 2020).

50 Wyeth v. Levine, 555 U.S. 555, 565 n.3 (2009) (quoting Medtronic, Inc. 

v. Lohr, 518 U.S. 470, 485 (1996)).

51 Id. at 565 & n.3 (quoting Medtronic, 518 U.S. at 485). We have noted 

that a “doctrinal dispute” exists as to whether the presumption applies when 

a statute contains an express preemption clause. See In re Facebook, Inc., 625 

S.W.3d 80, 88 n.5 (Tex. 2021) (collecting cases). As in In re Facebook, we need 

not resolve this doctrinal dispute. See id. We have found no SNAP Act 

provision expressly preempting these types of state common-law claims, 

although at least one court has concluded that provisions of the SNAP Act 

unrelated to this case expressly preempt other types of state law. See Barry v. 

Corrigan, 79 F. Supp. 3d 712, 750 (E.D. Mich. 2015) (“Sections 2014(b) and 

2020(e)(5) of the SNAP Act expressly preempt state eligibility requirements 

that exceed the federal eligibility requirements.”), aff’d sub nom. Barry v. Lyon, 

834 F.3d 706, 718 n.5 (6th Cir. 2016) (noting that the “district court also found 

that preemption principles provided a second, independent basis for finding 

Michigan’s law and policy invalid” without addressing this alternative ground).
20

would construe the regulation consistent with the presumption against 

preemption.

We therefore conclude that the court of appeals erred in 

construing Section 274.8(e)(1) to insulate Xerox from liability for the 

32,000 NSF losses. We reverse the court of appeals’ judgment on those 

losses. 

B. Negligence and Negligent Misrepresentation

Relying on its construction of Section 274.8(e)(1), the court of 

appeals also affirmed summary judgment on Wal-Mart’s negligence and 

negligent-misrepresentation claims. But the court’s erroneous 

construction of Section 274.8(e)(1) rendered its analysis faulty as to 

these tort claims. 

To support its negligence claim, Wal-Mart asserts that a duty 

exists under common-law theories, either by applying what we have 

called the “Phillips factors” or based on Xerox’s voluntary undertaking 

of services.52 The court of appeals concluded that Xerox had no duty 

because Section 274.8(e)(1) places “the risk of using ‘store and forward’ 

transactions . . . on Wal-Mart.”53 Although a background regulatory 

framework may be considered in a Phillips-factor analysis,54 the court 

52 Elephant Ins. Co. v. Kenyon, 644 S.W.3d 137, 149-52 (Tex. 2022)

(describing the Phillips-factor inquiry and discussing the requirements for a 

voluntary-undertaking theory).

53 See 646 S.W.3d 546, 557 (Tex. App.—Dallas 2020). In the court of 

appeals, Wal-Mart also relied on contractual and regulatory sources for the 

existence of a duty, which the court rejected. Id. at 556-57. Because Wal-Mart 

does not rely on those theories here, we do not opine on their respective merits.

54 See, e.g., Mission Petroleum Carriers, Inc. v. Solomon, 106 S.W.3d 

705, 714-15 (Tex. 2003) (declining to impose a duty after “[a]pplying the 
21

erred by relying on an improper interpretation of Section 274.8(e)(1) 

without weighing the Phillips factors or considering Wal-Mart’s 

voluntary-undertaking theory. 

Wal-Mart’s negligent-misrepresentation claim primarily rests on 

alleged representations that Xerox’s EBT system was ready to receive 

transactions when it was not. Wal-Mart argues that, based on these 

representations, it submitted the transactions before the EBT system 

could process them, which resulted in Xerox returning a Code 19 

response and prevented Wal-Mart from re-presenting those transactions 

when the system was eventually operational. The court of appeals 

noted, however, that “[a]ll of Xerox’s alleged ‘misrepresentations’ 

occurred as part of attempts to restore the system” and “Wal-Mart seeks 

to isolate very specific steps in the day-long process of restoring the 

system and label these as ‘misrepresentations.’”55 Relying on its 

interpretation of Section 274.8(e)(1) that “the risk of using ‘store and 

Phillips risk/utility factors” because, in part, the “comprehensive statutory and 

regulatory scheme” reduces the risk of harm). 

55 646 S.W.3d at 556. The negligent-misrepresentation elements are:

(1) the defendant made a representation in the course of its business or in a 

transaction in which it has a pecuniary interest; (2) the representation 

conveyed “false information” for the guidance of others in their business;

(3) the defendant did not exercise reasonable care or competence in obtaining 

or communicating the information; and (4) the plaintiff suffers pecuniary loss 

by justifiably relying on the representation. JPMorgan Chase Bank, N.A. v. 

Orca Assets G.P., 546 S.W.3d 648, 653-54 (Tex. 2018). Xerox raised a 

no-evidence challenge to each element except the first and also a traditional 

summary-judgment ground that Xerox did not make any false representations

as a matter of law, relying on testimony from a Wal-Mart employee who was 

on the phone with First Data and Xerox throughout the outage. Wal-Mart’s 

employee testified he did not recall anyone saying, “Okay. Submit them all. 

Now’s the time to send over all the transactions.” 
22

forward’ transactions was on the retailer, Wal-Mart,” the court of 

appeals then held that “the ‘misrepresentations’ identified by Wal-Mart 

were not negligent misrepresentations that would subject Xerox to 

liability.”56

Because the court relied on an erroneous construction of 

Section 274.8(e)(1) in affirming summary judgment on Wal-Mart’s 

negligence and negligent-misrepresentation claims, we reverse that 

portion of the court’s judgment and remand those claims to the court of 

appeals for reconsideration in light of this opinion.

C. Superseding Cause and Waiver

Among the alternative grounds for affirmance, Xerox argues in 

its merits brief that (1) the second summary judgment may be affirmed 

on the global “superseding” cause ground57 that Wal-Mart’s vendor, 

First Data, had remapped the Code 19 responses to general-denial codes 

and (2) Wal-Mart waived its right to seek reversal of the judgment 

because it did not address causation in its merits brief in this Court. 

Because this causation ground was briefed in but not considered by the 

court of appeals, Wal-Mart could raise the issue in a reply brief “[t]o 

obtain a remand to the court of appeals” or “to request that the Supreme 

56 646 S.W.3d at 556. The precise basis for the court of appeals’ holding 

is unclear as the court did not identify the element of Wal-Mart’s 

negligent-misrepresentation claim on which it affirmed the trial court’s 

no-evidence summary judgment. However, the court’s erroneous interpretation 

of Section 274.8(e)(1) prominently supported its conclusion that the identified 

misrepresentations “were not negligent misrepresentations that would subject 

Xerox to liability.” Id.

57 In its motion for traditional and no-evidence summary judgment, 

Xerox referred to this ground as a “producing cause” but in its merits briefing 

now refers to it as a “new and independent, or superseding, cause.”
23

Court consider such issues or points.”58 While we have discretion to take 

up the causation issue, we adhere to our usual practice of remanding to 

the appeals court to consider the unaddressed issues.59 

We now turn to the breach-of-contract claim, which the court of 

appeals disposed of without relying on its construction of 

Section 274.8(e)(1). 

D. Breach of Contract: Third-Party Beneficiary

Generally, the contractual benefits and burdens belong solely to 

the contracting parties, but a qualifying third-party beneficiary may sue 

for damages caused by the breach of the contract.60 To establish its 

third-party-beneficiary status, the plaintiff must demonstrate that the 

contracting parties intended to secure a benefit to it and contracted 

58 See TEX. R. APP. P. 53.4 (authorizing this Court to either remand or 

consider issues briefed in “but not decided by” the court of appeals). After 

describing Xerox’s causation argument but did not address it other than to note 

in a cursory sentence that Wal-Mart had “ignore[d]” it. 646 S.W.3d 546, 

553-54, 56 (Tex. App.—Dallas 2020).

59 See Tex. Comm’n on Env’t Quality v. Maverick County, 642 S.W.3d 

537, 550-51 (Tex. 2022) (“[O]rdinarily a case will be remanded to the court of 

appeals for further proceedings when we reverse the judgment of the appeals 

court and the reversal necessitates consideration of issues raised in but not 

addressed by that court.” (quoting State v. Ninety Thousand Two Hundred 

Thirty-Five Dollars & No Cents in U.S. Currency ($90,235), 390 S.W.3d 289, 

294 (Tex. 2013))).

60 First Bank v. Brumitt, 519 S.W.3d 95, 102 (Tex. 2017). Although none 

of the contracts at issue involved the state of Texas, we apply Texas law 

because Wal-Mart agrees it “is appropriate [to do so] when there is no 

difference between Texas law and competing jurisdictions on the basic points 

of law necessary for this appeal.” See El Paso Mktg., L.P. v. Wolf Hollow I, 

L.P., 383 S.W.3d 138, 144 n.26 (Tex. 2012) (presuming the laws of other states 

are the same as Texas law when the parties have not pointed to any material 

difference).
24

directly for its benefit; in other words, the contracting parties “must 

have intended to grant the third party the right to be a ‘claimant’ in the 

event of a breach.”61 The controlling factor is whether sufficiently clear 

and unequivocal language demonstrates such intent.62 

As a threshold matter, the parties disagree about Xerox’s 

obligation to submit the subject contracts in their entirety to satisfy its 

burden on traditional summary judgment to establish that Wal-Mart is 

not a third-party beneficiary. We hold that submitting the entire 

contract was not necessary to shift the burden to Wal-Mart to identify 

other contract language, if any, that is necessary to explain, complete, 

or contextualize the passages Xerox relied on to support its motion. 

Wal-Mart also argues that, even if the burden shifted, excerpts of 

contractual indemnity provisions that it produced in the trial court raise 

a genuine fact issue on its third-party-beneficiary status. We disagree 

on this count as well.

1. Traditional Summary-Judgment Burden

When a defendant moves for traditional summary judgment on a 

plaintiff’s claim—as Xerox did here—it must demonstrate that “there is 

no genuine issue as to any material fact” and that it is “entitled to 

judgment as a matter of law.”63 If the movant meets that burden, the 

burden shifts to the nonmovant to present evidence raising a fact issue, 

but the burden does not shift if the movant does not satisfy its initial 

61 First Bank, 519 S.W.3d at 102.

62 Id. at 103.

63 TEX. R. CIV. P. 166a(c); Amedisys, Inc. v. Kingwood Home Health 

Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014).
25

burden.64 Summary-judgment motions must stand or fall on their own 

merits, and the nonmovant has no burden unless the movant 

conclusively establishes its cause of action or defense.65 

As the traditional summary-judgment movant seeking to 

conclusively negate Wal-Mart’s status as a third-party beneficiary, 

Xerox bore the burden of establishing that the contracting parties either 

did not “intend[] to secure a benefit” to Wal-Mart or did not “enter[] into 

the contract directly” for Wal-Mart’s benefit.66 Xerox provided excerpts 

from its contracts with state agencies in six states67 that expressly 

disclaimed third-party beneficiaries with language such as “[t]here are 

no third party beneficiaries to this Contract” or “[n]othing contained in 

this Contract shall give to or allow any claim or right of action 

whatsoever by any other third person.”68 

In reviewing third-party-beneficiary disclaimers, we have given 

great weight to the expression of the contracting parties’ intent not to 

create third-party beneficiaries.69 But we also have considered other 

provisions within the contract to determine whether they could be 

64 Amedisys, 437 S.W.3d at 511.

65 Id. at 511-12.

66 First Bank, 519 S.W.3d at 103 (quoting Stine v. Stewart, 80 S.W.3d 

586, 589 (Tex. 2002)). 

67 Those states are California, Georgia, Iowa, Louisiana, 

Massachusetts, and Mississippi.

68 On appeal, Wal-Mart neither discusses any variation in the language 

of the six contracts nor contests that the excerpts expressly disclaim 

third-party beneficiaries.

69 See MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 

651-52 (Tex. 1999).
26

harmonized with or were rendered “wholly meaningless” by the 

disclaimer.70 And we have often stated that contract provisions must be 

interpreted in the context of the entire contract.71 In those cases, 

however, the parties had provided the entire contracts, and we 

interpreted the contracts in light of the entire evidentiary record. But 

we have never held that excerpted contract provisions disclaiming 

third-party beneficiaries lack meaning or are ambiguous for want of the 

entire contract. Indeed, an express disavowal of third-party 

beneficiaries is often clear on its own, even without the remainder of the 

contract.72

70 See id. at 652. We have not decided whether express disclaimers are 

dispositive and irrebuttable proof regardless of other provisions, but we note 

that at least one prominent contract treatise appears to have taken that view. 

See 9 John E. Murray, CORBIN ON CONTRACTS § 44.4 (rev. ed. 2007) (“Where 

parties expressly deny any intention of conferring rights upon a third party . . . 

the critical question of whether they intended to benefit the third party is 

resolved.”).

71 See, e.g., First Bank, 519 S.W.3d at 102 (“To determine whether the 

contracting parties intended to directly benefit a third party and entered into 

the contract for that purpose, courts must look solely to the contract’s 

language, construed as a whole.”); Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 

2011) (“When discerning the contracting parties’ intent [to directly benefit a 

third party], courts must examine the entire agreement and give effect to each 

provision so that none is rendered meaningless.”); Stine, 80 S.W.3d at 589 (“To 

determine the parties’ intent, courts must examine the entire agreement when 

interpreting a contract and give effect to all the contract’s provisions so that 

none are rendered meaningless.”); MCI Telecomms., 995 S.W.2d at 652 (“When

interpreting a contract, we examine the entire agreement in an effort to 

harmonize and give effect to all provisions of the contract so that none will be 

meaningless.”).

72 See First Bank, 519 S.W.3d at 103 (noting that “a contract may 

expressly provide that the parties do not intend to create a third-party 

beneficiary” and that we have concluded that a contract did not create 
27

Creating a bright-line rule that summary judgment on a contract 

claim may be avoided unless the movant attaches the entire contract to 

the motion has superficial appeal but would give rise to needless 

impracticalities and difficulties. For example, determining what the 

“entire” agreement is becomes complicated when other documents are 

incorporated by reference. It is also not uncommon for contracts to 

contain potentially sensitive, yet irrelevant, information. To require the 

movant to always attach an entire contract despite an express 

disclaimer like the ones here would unduly burden the movant and, 

more importantly, the trial court with unnecessary disputes about 

“completeness” and the need for confidentiality orders. Any benefits 

inuring from a bright-line rule are grossly outweighed by the burdens 

that it would impose. Accordingly, we decline to adopt such a rule. 

We instead hold that an express disclaimer provision, even if 

presented only in excerpted form, is sufficient, if not rebutted, to 

establish the movant’s entitlement to summary judgment. That is, such 

evidence, when attached to a summary-judgment motion, shifts the 

burden to the nonmovant to produce evidence raising a genuine fact 

issue as to third-party-beneficiary status in light of the express 

third-party beneficiaries when it “expressly disclaimed any intent to create 

third-party beneficiaries” notwithstanding that “the contract prohibited one 

party from interfering with third parties’ ‘existing prior rights’”); MCI 

Telecomms., 995 S.W.2d at 651 (noting that “the unambiguous language” of a 

particular contract provision “indicates that [the contracting parties] 

specifically intended not to secure a direct benefit to . . . any other 

nonsignatory”).
28

disclaimer.73 We acknowledge that, in the context of an alleged 

third-party-beneficiary relationship, the movant is often the party with 

better access to the original contract.74 But the nonmovant is not bereft 

of tools to protect itself from summary judgment. Our rules provide that 

the nonmovant may seek a continuance to obtain discovery, should it be 

needed, to respond to a summary-judgment motion.75 As a result, the 

nonmovant can supplement the record with other provisions or the 

entire contract as necessary to provide a more complete picture. As the 

nonmovant, Wal-Mart had this opportunity and took advantage of it by 

submitting other provisions providing for indemnification.

2. Third-Party-Beneficiary Status

Having concluded that Xerox satisfied its traditional 

summary-judgment burden on the six contracts with express 

disclaimers of third-party beneficiaries, we now consider whether 

Wal-Mart’s evidence of other contract provisions providing for 

indemnification raised a genuine issue of material fact when the burden 

shifted.76 Wal-Mart relied on the same type of evidence to defeat Xerox’s 

73 Cf. Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 

507, 517 (Tex. 2014) (describing how “prima facie evidence” could shift 

summary-judgment burden); Kerlin v. Arias, 274 S.W.3d 666, 668 (Tex. 2008)

(holding that the summary-judgment movant presented “prima facie evidence” 

to support judgment as a matter of law and that certain additional details need 

not be proved until nonmovants raised a fact question).

74 Cf. Paragon Sales Co. v. N.H. Ins. Co., 774 S.W.2d 659, 661 (Tex. 

1989) (“In a situation such as the case at bar, a third party beneficiary is even 

less likely than the insured to have access to the original documents.”).

75 See TEX. R. CIV. P. 166a(g); Tenneco Inc. v. Enter. Prods. Co., 925 

S.W.2d 640, 647 (Tex. 1996).

76 See TEX. R. CIV. P. 166a(c). 
29

no-evidence challenge for the other ten state contracts that did not have 

express disclaimers.77 We conclude that the indemnity provisions 

Wal-Mart relied on are no evidence that the contracting parties intended 

to benefit a retailer using store and forward under federal regulations.78

Although a contract need not “expressly” name an intended 

third-party beneficiary,79 a contract that fails to identify any “specific, 

limited group of individuals” to which the consenting parties owed an 

obligation does not create any third-party beneficiaries.80 Xerox’s 

contracts with the state agencies do not specifically name Wal-Mart (or 

any other authorized SNAP retailer) as an intended beneficiary. 

77 In its traditional summary-judgment motion, Xerox provided

affidavit testimony from Joseph Froderman, its vice president of payment 

services and product delivery, regarding the contracting parties’ intent with 

respect to all sixteen contracts: 

My understanding of the contracts between the States and 

[Xerox] is that they are not entered with the intent that any of 

the 200,000 retailers throughout the United States would be 

able to enforce them. I do not believe that either the States or 

[Xerox] would enter a contract subjecting the parties to 

contractual liability of such magnitude. 

Wal-Mart argues that this extrinsic evidence is irrelevant because it does not 

reference the contents of the contracts and because extrinsic evidence is only 

admissible where a contract is ambiguous or unavailable. Because we conclude 

that Wal-Mart did not produce any evidence of its third-party-beneficiary 

status, we need not consider whether the affidavit testimony was sufficient to 

satisfy Xerox’s traditional summary-judgment burden as to the contracts 

without express disclaimers.

78 See 7 C.F.R. § 274.8(e).

79 See Energy Serv. Co. of Bowie, Inc. v. Superior Snubbing Servs., Inc., 

236 S.W.3d 190, 195 (Tex. 2007).

80 First Bank v. Brumitt, 519 S.W.3d 95, 103 (Tex. 2017).
30

Instead, the contractual provisions before us generally refer to (1) a 

merchant “participant,” as defined by the National Automated Clearing 

House Association’s (NACHA’s) Quest Rules, which are standards for 

the distribution of SNAP benefits under the Quest service mark 

governing electronic benefits, or (2) a retailer performing certain 

functions. Wal-Mart identifies two categories of evidence addressing 

these general references that purportedly raise a fact issue on its 

third-party-beneficiary status.81 

First, Xerox’s contracts with state agencies in thirteen of the 

sixteen states incorporate the Quest Rules,82 which were included in the 

summary-judgment record. Wal-Mart points to a general indemnity 

provision at the end of the Quest Rules in Section 10.3: 

Each Processor . . . shall indemnify and hold harmless each 

other Participant against any and all claims, losses, costs, 

damages, liabilities or expenses (including reasonable 

attorneys’ fees) that are incurred as a result of a 

Transaction or attempted Transaction and that arise out 

of: 

a. The Authorization or denial of Authorization of a 

Transaction by such Processor . . . ;

81 These contracts are not typical private contracts but are, instead, 

contracts with state agencies implementing a federal program. See Astra USA, 

Inc. v. Santa Clara County, 563 U.S. 110, 118 (2011) (noting that “[t]he 

distinction between an intention to benefit a third party and an intention that 

the third party should have the right to enforce that intention is emphasized 

where the promisee is a governmental entity” (quoting 9 John E. Murray,

CORBIN ON CONTRACTS § 45.6 (rev. ed. 2007))). Given our disposition and the 

arguments presented, however, we do not address this potential distinction.

82 Those states are Alabama, California, Georgia, Iowa, Maine, 

Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio, 

Pennsylvania, and Virginia.
31

b. Malfunction of or failure to operate the . . . system for 

processing and routing Transactions (unless such 

malfunction was caused by the party claiming 

indemnification); 

c. Unauthorized access being obtained to the systems 

utilized to process, route and authorize Transactions from 

any point in such system that is under the ownership or 

control of such Processor;

d. The failure of the Processor to comply, as to any 

Transaction, with any Applicable Law;

e. The negligence or fraudulent conduct of the Processor;

f. The failure of the Processor to comply with these Rules; 

and

g. The Completion by the Processor of any Transaction 

denied by, or on behalf of, an Issuer. 

The Quest Rules define “Participant” to include a “Merchant” “that has 

entered into an agreement to participate in the routing and processing 

of Transactions and servicing of Cardholders or NACHA.” On appeal, 

the parties do not contest Xerox’s status as a “Processor” or Wal-Mart’s 

status as a “Merchant” “Participant” for the contracts that incorporated 

the Quest Rules. 

Wal-Mart claims that this general indemnity provision—

specifically Subsections (b) and (e) regarding malfunction and 

negligence—is at least some evidence of its third-party-beneficiary 

status.83 Xerox responds that a more specific provision in the Quest 

83 As support, Wal-Mart cites Paragon Sales Co. v. New Hampshire

Insurance Co., 774 S.W.2d 659, 661 (Tex. 1989) (holding that evidence of an 

indemnity agreement is some evidence to confer standing as a third-party 

beneficiary). We assume without deciding that the general indemnity 
32

Rules governs over the general indemnity provision and demonstrates 

that a retailer using store and forward is not an intended third-party 

beneficiary to the contract. To that end, Section 3 of the Quest Rules 

provides: “Each Acquirer and its respective Merchants shall bear the 

risk of denial, for any reason, of a Store and Forward Food Stamp 

Transaction or Manual Food Stamp Transaction for which Telephone 

Authorization was not received.”

In construing contracts, we look to the plain language as the 

written expression of the parties’ intent.84 Consistent with our 

long-established precedent that provisions should be considered 

together and harmonized, when possible, so that none will be rendered 

meaningless, “a specific contract provision controls over a general 

one.”85

Wal-Mart argues there is no tension between the two provisions 

if Section 3 is construed to bear the same meaning as the federal 

regulation Section 274.8(e)(1), which does not allocate the risk between 

a retailer and an EBT contractor. But Section 3’s language is markedly 

different. Unlike the federal regulation’s “at the retailer’s own choice 

and liability” language, Section 3 modifies “denial” with “for any reason” 

provision in Section 10.3 would, on its own, be some evidence of 

third-party-beneficiary status for a nonsignatory “Participant.”

84 Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 

888 (Tex. 2019).

85 Id. at 889. 
33

without qualification.86 The plain meaning of “for any reason” would 

include an EBT contractor’s negligence or the malfunction of its system. 

Despite any tension between Sections 3 and 10.3, we may still 

give the provisions “their plain meaning and enforce them without 

rendering either provision entirely superfluous.”87 For example:

Note that the general/specific canon does not mean that the 

existence of a contradictory specific provision voids the 

general provision. Only its application to cases covered by 

the specific provision is suspended; it continues to govern 

all other cases. So if a lease provides in one clause that 

water is provided, and in another it provides that the 

tenant is responsible for all utilities, the tenant will still be 

liable to pay for all utilities other than water.88

Construing Sections 3 and 10.3 together to enforce them without 

rendering either provision entirely superfluous, we interpret Section 3 

as carving out retailers utilizing store-and-forward transactions as an 

exception from the general indemnity contained in Section 10.3 for the 

86 The federal regulation also includes the phrase “for any reason.” In 

contrast to Section 3, however, the regulatory phrase “for any reason” modifies 

“when the EBT system cannot be accessed” as a condition precedent for 

retailers “to perform store-and-forward transactions.” 7 C.F.R. § 274.8(e)(1) 

(“State agencies may opt to allow retailers, at the retailer’s own choice and 

liability, to perform store-and-forward transactions when the EBT system 

cannot be accessed for any reason.”).

87 G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 531 

(Tex. 2015).

88 Antonin Scalia & Bryan A. Garner, READING LAW: THE 

INTERPRETATION OF LEGAL TEXTS 184 (2012); see El Paso Field Servs., L.P. v. 

MasTec N. Am., Inc., 389 S.W.3d 802, 814 (Tex. 2012) (Guzman, J., dissenting)

(collecting authorities and noting that “[t]o harmonize conflicting [contract] 

provisions, we treat narrow provisions as exceptions to general provisions”).
34

denial of those transactions.89 So when read together with Section 3, 

Section 10.3 is no evidence that the contracting parties intended to grant 

a retailer using store-and-forward transactions the right to be a 

claimant.90

Second, Wal-Mart argues that Xerox’s contracts with the state 

agencies required Xerox to indemnify retailers for a state-specific 

amount during “[s]tand-in processing” and that this indemnification is 

evidence that Xerox and the states intended to benefit retailers like 

Wal-Mart. In its response to Xerox’s second motion for summary 

judgment, Wal-Mart described “stand-in processing” as when the EBT 

contractor guarantees that, during unplanned system unavailability, 

retailers may authorize EBT transactions up to an amount specified by 

the state by using emergency manual vouchers without requiring 

advance authorization.91 

As evidence of this contractual indemnification obligation for 

retailers during stand-in processing, Wal-Mart provided excerpts from 

various states’ requests for proposals (RFPs) to provide EBT services 

89 This interpretation is also supported by the canon: “In harmonizing 

[contract] provisions, terms stated earlier in an agreement must be favored 

over subsequent terms.” Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).

90 See First Bank v. Brumitt, 519 S.W.3d 95, 102 (Tex. 2017).

91 In another motion during the trial court proceedings, Wal-Mart noted 

that “[e]mergency vouchers, also known as stand-in processing,” involve a 

process where the transactions are “recorded at the point of sale on paper 

vouchers.” SNAP regulations provide for stand-in processing by authorizing

that “the State agency, in consultation with authorized retailers and with the 

mutual agreement of the State agency’s vendor, if any, may accept liability for 

manual purchases within a specified dollar limit.” 7 C.F.R. § 274.8(d)(4).
35

and Xerox’s responses to those RFPs.92 For example, Xerox’s response 

to Louisiana’s RFP states that when Xerox “authorizes a transaction 

while in stand-in processing mode and there are insufficient funds 

available to cover the purchase,” Xerox “compensates the retailer for the 

amount of the deficiency up to the $50.00 threshold,” which provides 

“the retailer with protection from loss” and acts as an “incentive for their 

participation in the EBT program.” Wal-Mart also references an 

internal email that Xerox’s vice president of card-products management 

sent during the outage. With a subject line of “Xerox stand-in vouchers,” 

the email states: “Many of our EBT states have a contractual 

requirement for us to stand-in for $25-$40/transaction during system 

outages that are our fault. This would qualify. We have not been 

broadcasting it at all but if retailers are using [stand-in vouchers], then 

we will have some liability.” 

This evidence, however, concerns a retailer using emergency 

manual vouchers during stand-in processing, and it is undisputed that 

Wal-Mart used only store-and-forward transactions during the outage, 

not manual vouchers. In fact, Wal-Mart’s corporate representative 

testified that manual vouchers are a “process which we no longer do,” 

and Wal-Mart’s expert explained that “[i]t is not practical to support 

manual vouchers in a high volume, multi-lane supermarket 

92 Wal-Mart included in the summary-judgment record an EBT RFP 

Guidance handbook from the USDA that states, “The contract usually consists 

of the RFP, the winning proposal, final negotiations that modify either the RFP 

or the proposal, and other documents.” 
36

environment where speed of checkout is critical.”93 Once again, 

Wal-Mart’s evidence does not raise a fact issue on whether the 

contracting parties intended to grant a retailer using only 

store-and-forward transactions the right to be a claimant. 

We therefore conclude that the court of appeals did not err in 

affirming summary judgment on Wal-Mart’s breach-of-contract claim 

because (1) Xerox established as to six contracts that Wal-Mart was not 

a third-party beneficiary; (2) Wal-Mart did not produce evidence raising 

a genuine issue of material fact when the burden shifted; and (3) as to 

the other ten contracts, Wal-Mart failed to produce evidence raising a 

fact issue in response to Xerox’s no-evidence challenge.

III. Conclusion 

For the reasons stated, we affirm the court of appeals’ judgment 

on Wal-Mart’s breach-of-contract claim, reverse the judgment on the 

losses from the NSF transactions and on Wal-Mart’s tort claims, and 

remand the case to the court of appeals for further proceedings.

 

 John P. Devine

 Justice

OPINION DELIVERED: March 17, 2023

93 Xerox asserted in its briefing that because of Wal-Mart’s expert 

testimony, manual vouchers are “a moot topic for this case.” At oral argument 

Xerox’s counsel stated, “The other indemnity provisions . . . are from provisions 

in bid documents . . . relating to manual transactions, which of course are not 

part of this case. Wal-Mart was never going to do that[.]” Wal-Mart did not 

contest or respond to these statements.