Opinion ID: 2833630
Heading Depth: 1
Heading Rank: 2

Heading: Mere Breach of Contract

Text: Gullo Motors argues that Chapa’s only claim is in contract, as the parties’ only dispute is whether she contracted for a base-model Highlander or Highlander Limited. “An allegation of a mere breach of contract, without more, does not constitute a ‘false, misleading or deceptive act’ in violation of the DTPA.” [8] Similarly, “the usual view is that mere breach of contract is not fraud and that it may not be evidence of fraud.” [9] But Chapa alleged more than a mere breach of contract; her complaint was not just that Gullo Motors failed to deliver a Highlander Limited, but that it never intended to do so. A contractual promise made with no intention of performing may give rise to an action for fraudulent inducement. [10] The duty not to fraudulently procure a contract arises from the general obligations of law rather than the contract itself, and may be asserted in tort even if the only damages are economic. [11] Gullo Motors argues that Chapa cannot bring a fraudulent inducement claim because she was not promised a car she did not want, but one that she did. But a party may bring a fraudulent inducement claim even if the terms of the promise are later subsumed into a contract. [12] In all such cases, the liability of the defendant on the contract does not absolve it from liability in tort damages too. [13] Similarly, while the failure to deliver a Highlander Limited would not alone violate the DTPA, [14] Chapa’s claim was that Gullo Motors represented she would get one model when in fact she was going to get another. While failure to comply would violate only the contract, the initial misrepresentation violates the DTPA. [15] Of course, Chapa was required not just to plead but to prove her claims. Proving that a party had no intention of performing at the time a contract was made is not easy, as intent to defraud is not usually susceptible to direct proof. [16] Breach alone is no evidence that breach was intended when the contract was originally made. [17] Similarly, denying that an alleged promise was ever made is not legally sufficient evidence of fraudulent inducement. [18] Usually, successful claims of fraudulent inducement have involved confessions by the defendant or its agents of the requisite intent. [19] But while breach alone is no evidence of fraudulent intent, breach combined with “slight circumstantial evidence” of fraud is enough to support a verdict for fraudulent inducement. [20] We believe Chapa met that standard here. At trial, Chapa testified that she signed a contract listing a Highlander Limited, but that Gullo Motors personnel “snatched” the contract from her after she signed it, and must have destroyed it later. She also testified that the signatures on at least four documents were forged, and that some were forgeries of her deceased husband’s signature rather than her own. In light of the favorable verdict, we must assume the jury credited this testimony. [21] Spoliation of evidence normally supports an inference only that the evidence was unfavorable, [22] not that it was created ab initio with fraudulent intent. But as the evidence here was part of the original contracting process, it provides some circumstantial evidence of fraud in that process. Further, the only contract introduced at trial listed the car sold as a “2002 Toyota”; although Gullo Motors prepared the contract, it offered no explanation why the box for indicating the model was left blank. Although the contract listed a vehicle identification number that matched the base-model Chapa ultimately received, there was evidence that Gullo Motors did not contract for that car until several days after Chapa signed the contract, and thus must have added it later. [23] And when Chapa’s first attorney offered to return the car for a refund, Gullo Motors refused on the ground that it had already been titled, although evidence at trial suggested that did not occur until several days later. We recognize the need to keep tort law from overwhelming contract law, so that private agreements are not subject to readjustment by judges and juries. [24] But we long ago abandoned the position that procuring a contract by fraud was simply another contract dispute. [25] Because Chapa proved more than mere breach of contract here, we hold she was entitled to assert fraud and DTPA claims as well.