Court Opinion

ID: 2776858
Source: CourtListenerOpinion
Date Created: 2015-02-05 13:09:44.42894+00
Date Added: 2024-06-11T10:52:33.454327
License: Public Domain

AFFIRM; and Opinion Filed February 4, 2015.

                                              Court of Appeals
                                                               S      In The

                                       Fifth District of Texas at Dallas
                                                           No. 05-14-00280-CV

                                  JANA CLARK, Appellant
                                          V.
                  PFPP LIMITED PARTNERSHIP D/B/A PLANET DODGE, Appellee

                                   On Appeal from the 134th Judicial District Court
                                                Dallas County, Texas
                                       Trial Court Cause No. DC12-00967-G

                                                                 OPINION
                    Before Chief Justice Wright, Justice Fillmore, and Justice O’Neill, Ret. 2
                                                                1

                                          Opinion by Justice Fillmore
             Janet Clark purchased a pickup truck from Manuel Santoy that she later discovered had

been stolen from PFPP Limited Partnership d/b/a Planet Dodge (Planet Dodge). Clark lost both

the pickup truck and the $22,000 she paid to Santoy. Clark sued Planet Dodge, along with a

number of other defendants. As relevant to this appeal, Clark sought to recover from Planet

Dodge the $22,000 she paid to Santoy, alleging at least one of its employees was involved in the

theft of the pickup truck and she was harmed by Planet Dodge’s negligent hiring, supervision,

and retention of its employees.

     1
         Justice William Whitehill participated in oral argument, but did not participate in this opinion. Chief Justice Wright is a member of the
original panel, but did not participate in oral argument. Chief Justice Wright has reviewed the record and the briefs in this case. See TEX. R. APP.
P. 41.1(a).
     2
         The Hon. Michael J. O’Neill, Justice, Court of Appeals, Fifth District of Texas at Dallas, Retired, sitting by assignment.
        Planet Dodge moved for summary judgment on the ground Clark suffered no physical

injury. The trial court granted the motion and rendered judgment that Clark take nothing on her

claim against Planet Dodge. In this appeal, Clark asserts the trial court erred by granting

summary judgment because she was not required to show she was physically injured in order to

recover on a claim for negligent hiring, supervision, and retention. We affirm the trial court’s

judgment.

                                         Background

        In January 2010, Terry Smith, Clark’s employer, purchased two Dodge pickup trucks

from Santoy at a reduced rate from market price. Smith told Clark about his purchase. Because

Clark was interested in purchasing a new pickup truck to use on her ranch, Smith suggested that

Santoy talk to Clark about the availability of a new truck at a reduced cost. Santoy contacted

Clark and said he had obtained a “great deal” on five extra fleet vehicles from a Houston

dealership. Santoy had a new Dodge pickup truck that he was willing to sell to Clark for

$22,000. Santoy told Clark she would receive title to the vehicle when he went to Austin to

obtain titles for the five trucks.

        On January 28, 2010, Clark and Smith traveled to Houston to Cory Stone’s house to

purchase the truck. Santoy, a man named Steve, and a delivery man arrived at the house with the

truck. Santoy gave Clark his business card which stated he worked for M.S. Enterprise/Luxury

Auto. The truck had temporary paper license plates issued by El Compadre Auto Sales, Inc.

Clark compared the vehicle identification number (VIN) on the plates with the VIN on the dash

board and doors of the truck and confirmed the numbers matched. Clark paid Santoy $22,000

and received a Bill of Sale from Mi Compadre Auto Sales and an application for a Certificate of

Title. Approximately six weeks later, Clark learned the truck had been reported stolen by Planet

Dodge. Clark immediately requested that the Wise County Sheriff take possession of the truck.

                                              –2–
       Clark sued Planet Dodge and a number of other defendants. Clark initially asserted

claims against Planet Dodge based on the Texas Deceptive Trade Practices Act (DTPA), fraud,

negligence per se, respondeat superior, conspiracy, and breach of contract/warranty of title.

Planet Dodge filed a no-evidence motion for summary judgment on all of Clark’s claims. The

trial court granted the motion as to Clark’s claims based on breach of contract, warranty, fraud,

conspiracy, and the DTPA, denied the motion as to Clark’s negligence claim, and ordered Clark

to replead her negligence claim with more particularity.

       Clark amended her petition to assert a negligent hiring, supervision, and retention claim

against Planet Dodge.     Clark specifically alleged that, in contravention of Planet Dodge’s

security measures, one of its employees removed a pickup truck from the dealership

approximately two months before Clark purchased the truck. That pickup truck was returned by

the prospective purchaser due to a problem obtaining financing. Clark alleged that, although

Planet Dodge knew one of its employees removed a vehicle from the dealership, it retained its

employees and did not change its security procedures.       Subsequently, more vehicles were

removed from the dealership, including the trucks purchased by Smith and Clark.

       Clark alleged Planet Dodge owed a duty to its other employees and to the general public

to ascertain the qualifications and competence of the employees it hired and retained. She

alleged Planet Dodge did not exercise reasonable care in hiring its personnel or by assuring its

vehicles and keys were adequately secured. She further alleged that, if Planet Dodge had not

hired, inadequately supervised, and retained its employees, the employees “would not have been

in a position to remove Planet Dodge’s new motor vehicles from its premises” and she would

“not have been harmed, which injury was a foreseeable consequence of Planet Dodge’s hiring,

inadequate supervision, and retention of such employees.”

                                               –3–
       Planet Dodge filed a traditional motion for summary judgment on the ground Clark had

not alleged she suffered physical harm and, therefore, as a matter of law could not recover on a

claim for negligent hiring, supervision, and retention. Planet Dodge attached as Exhibit A to its

summary judgment motion its reply to Clark’s response to the no-evidence motion for summary

judgment to which was attached (1) a constable report indicating Planet Dodge reported the

trucks purchased by Smith as stolen on January 8, 2010 and reported the truck purchased by

Clark as stolen on January 27, 2010; (2) Clark’s statement to the constable about the purchase of

the truck; (3) the Bill of Sale Clark received from “Mi Compadre Auto Sales” and the paper

license plates Clark received from “El Compadre Auto Sales Inc.”; (4) the business card Clark

received from Santoy indicating he worked for M.S. Enterprise/Luxury Auto; and (6) a copy of

an email from Clark’s counsel regarding a response to the motion for summary judgment. Planet

Dodge attached as Exhibit B to its motion for summary judgment Clark’s responses to requests

for disclosure stating, as relevant to this appeal, that Clark was seeking to recover the $22,000

she paid to purchase the truck.

       Clark responded to Planet Dodge’s motion for summary judgment and admitted she had

not suffered physical harm. She asserted, however, that she was required to show only an

actionable tort by an employee of Planet Dodge which caused a legal injury. Clark did not attach

any summary judgment evidence to her response.

       Relying on Blanche v. First Nationwide Mortgage Corp., 74 S.W.3d 444 (Tex. App.—

Dallas 2002, no pet.), a case involving the economic loss rule, the trial court granted Planet

Dodge’s motion for summary judgment and ordered that Clark take nothing on her claim against

Planet Dodge. Clark either took a default judgment against or moved to nonsuit the remaining

defendants. She then filed this appeal.

                                              –4–
                                            Analysis

       We review a trial court's decision to grant summary judgment de novo. Travelers Ins.

Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). Summary judgment is proper when there are

no genuine issues of material fact and the movant is entitled to judgment as a matter of law.

TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985). In

conducting our review of a summary judgment, we consider the evidence in the light most

favorable to the nonmovant. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289

S.W.3d 844, 848 (Tex. 2009). We credit evidence favorable to the nonmovant if reasonable

jurors could, and we disregard evidence contrary to the nonmovant unless reasonable jurors

could not. Id.

       Citing to Gonzales v. Willis, 995 S.W.2d 729, 739–40 (Tex. App.—San Antonio 1999, no

pet.) (op. on reh’g), overruled in part on other grounds by Hoffmann-La Roche Inc. v.

Zeltwanger, 144 S.W.3d 438, 447–48 (Tex. 2004), Clark contends the trial court erred by

granting summary judgment for Planet Dodge because she was required to show only that an

employee of Planet Dodge committed an “actionable tort” that caused her a “legally

compensable injury,” rather than physical harm. Therefore, the issue presented is whether,

absent physical harm, Clark had a “legally compensable injury” that would allow her to recover

from Planet Dodge based on its alleged negligence in hiring, supervising, and retaining its

employees.

       A negligence claim requires proof of a legal duty owed by the defendant to the plaintiff, a

breach of that duty, and damages proximately caused by that breach. Lee Lewis Constr., Inc. v.

Harrison, 70 S.W.3d 778, 782 (Tex. 2001); Lermon v. Minyard Food Stores, Inc., No. 05-13-

00034-CV, 2014 WL 6466840, at *8 (Tex. App.—Dallas Nov. 19, 2014, no pet. h.) (mem. op.).

Negligent hiring, supervision, and retention claims focus on the employer’s own negligence, not

                                              –5–
the negligence of the employee. Lermon, 2014 WL 6466840, at *8 (citing Leake v. Half Price

Books, Records, Magazines, Inc., 918 S.W.2d 559, 563 (Tex. App.—Dallas 1996, no writ)). An

employer can be liable for negligence if its failure to use due care in hiring, supervising, or

retaining an employee creates an unreasonable risk of harm to others. Id.; Martinez v. Hays

Constr., Inc., 355 S.W.3d 170, 180 (Tex. App.—Houston [1st Dist.] 2011, no pet.). Although

the supreme court has yet to rule definitively on the “existence, elements, and scope of [causes of

action for negligent retention and supervision] and related torts such as negligent training and

hiring,” Waffle House, Inc. v. Williams, 313 S.W.3d 796, 804 n.27 (Tex. 2010), it has indicated

that to recover on these theories, a plaintiff must show more than just negligent hiring practices.

Wansey v. Hole, 379 S.W.3d 246, 247 (Tex. 2012) (per curiam). The plaintiff must also show

she “suffer[ed] some damages from the foreseeable misconduct of an employee” who was hired,

supervised or retained pursuant to the defendant’s negligent practices. Id.

           The economic loss rule is a doctrine that limits the recovery of purely economic damages

in an action for negligence. Lan/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234, 235 (Tex.

2014) (“In actions for unintentional torts, the common law has long restricted recovery of purely

economic damages unaccompanied by injury to the plaintiff or his property[.]”); see also

Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 415 (Tex. 2011) (“[P]arties may

be barred from recovering in negligence or strict liability for purely economic losses.”). 3 Texas

courts have generally applied the economic loss rule in cases involving defective products and in

cases involving the failure to perform a contract. Sharyland Water Supply Corp., 354 S.W.3d at

     3
       In the trial court, Planet Dodge argued in its reply to Clark’s response to the motion for summary judgment that “prohibiting [Clark’s]
negligence claim against Planet Dodge, and also consistent with the [sic] Texas law’s ‘physical harm’ and ‘actionable tort’ requirements, is the
economic loss doctrine.” In her sur-reply, Clark objected that Planet Dodge was attempting to expand the grounds on which it sought summary
judgment to include the economic loss doctrine. Although Clark has not pursued this complaint on appeal, we note that Planet Dodge moved for
summary judgment on the ground Clark could not demonstrate physical harm, the essence of the economic loss rule.

                                                                     –6–
418. Planet Dodge asserts that Clark cannot recover on her negligent hiring, supervision, and

retention claim because the damages she seeks relate to the contract between Clark and Santoy.

          Clark did not have a contractual relationship with Planet Dodge. The supreme court

addressed the application of the economic loss rule to contractual strangers in Sharyland Water

Supply Corp., in which a water supply corporation sued a city and the city’s contractors alleging

it was injured when the contractors negligently installed sewer lines above portions of the

corporation’s water system. Id. at 409. As relevant to this appeal, the supreme court considered

whether the corporation’s claims against the contractors based on negligence were barred by the

economic loss rule.               Id. at 415.           The supreme court noted that, although under certain

circumstances the economic loss rule can bar a party from recovering in negligence or strict

liability for purely economic losses, id., it “does not swallow all claims between contractual and

commercial strangers” and does not preclude recovery “completely between contractual

strangers in a case not involving a defective product.” Id. at 418, 419. 4 However, because the

corporation suffered property damage from the negligent acts of the contractors, causing a loss

unrelated to the contract between the corporation and the city, the court was not required to

explore the parameters of the applicability of the economic loss rule to contractual strangers . Id.

at 420.

           In deciding whether the economic loss rule applies in this case, we examine the source of

the defendant’s duty and the nature of the claimed injury. El Paso Marketing , L.P. v. Wolf

Hollow I, L.P., 383 S.W.3d 138, 143 (Tex. 2012); see also Formosa Plastics Corp. USA v.

Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 45 (Tex. 1998); Trebuchet Siege Corp. v.

Pavecon Commercial Concrete Ltd., No. 05-12-00945-CV, 2014 WL 4071804, at *6 (Tex.

     4
        The supreme court specifically noted that courts have allowed recovery of economic damages even absent physical injury or property
damage based on negligent misrepresentation, legal or accounting malpractice, breach of fiduciary duty, fraud, fraudulent inducement, tortious
interference with contract, nuisance, wrongful death claims related to loss of support from the decedent, business disparagement, and some
statutory causes of action. Id. at 418–19 & ns. 14–24.

                                                                    –7–
App.—Dallas Aug. 19, 2014, no pet.) (mem. op.). To determine whether the claim sounds in tort

or contract, the focus is on the substance of the cause of action and not simply the manner in

which it was pleaded. Mickens v. Longhorn DFW Moving, Inc., 264 S.W.3d 875, 879 (Tex.

App.—Dallas 2008, pet. denied) (citing Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 617–

18 (Tex. 1986)). “[A] party states a tort claim when the duty allegedly breached is independent

of the contractual undertaking and the harm suffered is not merely the economic loss of a

contractual benefit.” Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716,

718 (Tex. 2014) (per curiam); see also LAN/STV, 435 S.W.3d at 242–43 (discussing limitations

on recovery of purely economic damages by contractual strangers); Sw. Bell Tel. Co. v.

DeLanney, 809 S.W.2d 493, 494–95 (Tex. 1991) (suggesting source of duty and nature of wrong

should be examined to determine whether underlying claim is in tort or contract). “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.” Jim Walter

Homes, Inc., 711 S.W.2d at 618; see also Wansey, 379 S.W.3d at 248. 5

           Here, the factual basis of Clark’s claims against all the defendants was that, based on

misrepresentations made by Santoy, she agreed to buy the truck and that, by selling her a stolen

truck, Santoy failed to abide by the terms of the contract between them. Clark’s claim against

Planet Dodge was premised on it allegedly negligently hiring, supervising, or retaining an

employee who was allegedly involved in removing the truck from its premises. 6 However, the

     5
       See also Trebuchet; 2014 WL 4071804, at *6 (noting that economic loss rule can apply to bar tort claims between parties who are not in
contractual privility); Coastal Conduit & Ditching, Inc. v. Noram Energy Corp., 29 S.W.3d 282, 287–90 (Tex. App.—Houston [14th Dist.] 2000,
no pet.) (applying economic loss rule where parties were contractual strangers and no accompanying claim for personal injury or property
damages was presented).
     6
       In her brief, Clark argues she pleaded and provided competent summary judgment evidence that one of Planet Dodge’s employees was
engaged in fraud, a cause of action to which the economic loss rule might not apply. See Sharyland Water Supply Corp., 354 S.W.3d at 418–19.
Clark attached no summary judgment evidence to her response to Planet Dodge’s motion for summary judgment. However, taking all of Clark’s
pleaded allegations as true, she alleged only that an employee of Planet Dodge was involved in the theft of the truck. Clark pleaded no
representation or misrepresentation by a Planet Dodge employee to Clark that would support a fraud claim against the employee. See Nat’l Prop.
Holding, L.P. v. Westergren, No. 13-0801, 2015 WL 123099, at *3 (Tex. Jan. 9, 2015) (per curiam) (to prove fraudulent inducement to enter
contract, plaintiff was required to establish: (1) defendant made material representation, (2) representation was false and was either known to be

                                                                      –8–
only injury Clark claimed due to Planet Dodge’s allegedly negligent conduct was the purely

economic harm she suffered when Santoy breached the contract. Under these circumstances, the

economic loss rule bars Clark from recovering this loss from Planet Dodge based on a negligent

hiring, supervision, and retention claim.                          See LAN/STV, 435 S.W.3d at 238; 7 Wansey, 379

S.W.3d at 248; P. McGregor Enters., Inc. v. Hicks Constr. Grp., LLC, 420 S.W.3d 45, 51 (Tex.

App.—Amarillo 2012, no pet.) (economic loss rule barred negligence claim against party not in

contractual privity because cause of action outlined in petition set forth claim for monetary

damages due to breach by party to contract). 8 Accordingly, based on the facts in this case, we

conclude the trial court did not err by granting summary judgment in favor of Planet Dodge on

the ground Clark has not suffered a physical injury from its alleged negligent hiring, supervision,

and retention of its employees. We resolve Clark’s sole issue against her and affirm the trial

court’s judgment.

                                                                            /Robert M. Fillmore/
                                                                            ROBERT M. FILLMORE
                                                                            JUSTICE
140280F.P05

false when made or made without knowledge of its truth, (3) representation was intended to be and was relied upon by injured party, and (4)
injury complained of was caused by reliance).
     7
       In LAN/STV, the supreme court cited to Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927), in which the charters of a steamship
sued a dry dock for damages arising from the loss of use of the ship after the dry dock negligently damaged the ship’s propeller. The charters
were not the owners of the ship. Id. at 307. The Supreme Court concluded:

           [The charters’] loss arose only through their contract with the owners. . . . [No] authority need be cited to show that, as a
           general rule, at least, a tort to the person or property of one man does not make the tort-feasor liable to another merely
           because the injured person was under a contract with that other unknown to the doer of the wrong . . . . The law does not
           spread its protection so far.

Id. at 308, 309.
     8
       See also Martinez, 355 S.W.3d at 180 (“The duty of the employer extends only to prevent the employee or independent contractor from
causing physical harm to a third party.”); Wrenn v. G.A.T.X. Logistics, Inc., 73 S.W.3d 489, 496 (Tex. App.—Fort Worth 2002, no pet.) (same);
Verinakis v. Medical Profiles, Inc., 987 S.W.2d 90, 97–98 (Tex. App.—Houston [14th Dist.] 1998, pet. denied) (same).

                                                                      –9–
                                         S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

JANA CLARK, Appellant                                On Appeal from the 134th Judicial District
                                                     Court, Dallas County, Texas,
No. 05-14-00280-CV         V.                        Trial Court Cause No. DC-12-00967-G.
                                                     Opinion delivered by Justice Fillmore, Chief
PFPP LIMITED PARTNERSHIP D/B/A                       Justice Wright and Justice O’Neill, Ret.
PLANET DODGE, Appellee                               participating.

     In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.

        It is ORDERED that appellee PFPP Limited Partnership d/b/a Planet Dodge recover its
costs of this appeal from appellant Jana Clark.

Judgment entered this 4th day of February, 2015.

                                              –10–