Court Opinion

ID: 6342887
Source: CourtListenerOpinion
Date Created: 2022-05-23 07:12:17.179156+00
Date Added: 2024-06-11T12:44:42.045066
License: Public Domain

Supreme Court of Texas
                           ══════════
                            No. 20-0079
                           ══════════

      James Construction Group, LLC and Primoris Services
                         Corporation,
                             Petitioners,

                                   v.

                  Westlake Chemical Corporation,
                             Respondent

   ═══════════════════════════════════════
               On Petition for Review from the
     Court of Appeals for the Fourteenth District of Texas
   ═══════════════════════════════════════

      JUSTICE BOYD, joined by Justice Blacklock and Justice Huddle,
dissenting in part.

      I agree with the Court that substantial compliance can satisfy a
written-notice requirement but oral notice cannot constitute substantial
compliance. I also agree that Westlake cannot recover the costs it
incurred when it replaced James because its oral notice failed to
substantially comply with the contract’s written-notice requirement and
the contract did not otherwise entitle Westlake to recover those costs.
But I conclude that the parties’ agreement that “no claim shall be made”
for consequential damages constitutes a covenant not to sue for such
damages. Because I would reverse the court of appeals’ holding as to the
consequential-damages provision, I respectfully dissent in part.
      The contract plainly stated that neither party “shall be liable to
the other for any consequential . . . damages . . . and no claim shall be
made by either [party] for such damages.” [Emphasis added.] The Court
gives undue weight to the contractual language explicitly forbidding
claims for consequential damages being “an independent clause.” Ante
at ___. This grammatically inconsequential detail pales in comparison
to the binding power of the conjunctive “and,” which links the waiver of
consequential damages to the covenant not to sue for such damages,
ensuring both are valid, independently enforceable provisions.
      The Court’s rationales for its interpretation are unpersuasive. Its
premier argument relies on the title of the contract section at issue
(“Waiver of Consequential Damages”), ante at ___, and disregards the
fact that the substantive text of the section clearly records the parties’
more expansive intent. See Enter. Leasing Co. of Hous. v. Barrios, 156
S.W.3d 547, 549 (Tex. 2004) (“Although we recognize that in certain
cases, courts may consider the title of a contract provision or section to
interpret a contract, ‘the greater weight must be given to the operative
contractual clauses of the agreement.’” (quoting Neece v. A.A.A. Realty
Co., 322 S.W.2d 597, 600 (Tex. 1959))). The contract spells out the
parties’ agreement to both waive consequential damages and covenant
not to sue for such damages. And if the section’s title does not fully
capture this manifestation of intent, the contract’s text must
nevertheless control. The difference between these provisions is
paramount because the mutual waiver of consequential damages simply

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bars recovery, while the promise not to sue constitutes a covenant that,
if breached, enables the other party to recoup its costs incurred in
defending that suit. These provisions are not duplicative, as the Court’s
reading would ensure; rather, they accomplish different goals and avoid
surplusage and superfluity.
      The Court attempts to rely on the distinction between a “claim”
and a “suit,” asserting that relinquishing “a claim to any consequential
damages to which [the parties] may be entitled in the event of a lawsuit”
is not the same as relinquishing “the right to bring a suit in the first
place.” Ante at ___. But the contract bars both collecting consequential
damages and making a claim for such damages. Westlake breached the
contract when it asserted a claim against James for consequential
damages.
      Finally, the Court errs by depending on the somewhat
unpredictable line between direct and consequential damages, arguing
that because a court might ultimately categorize damages as
consequential when a party believed them to be direct, the contract here
could not have barred suit for consequential damages. Ante at ___. But
Westlake’s subjective belief that the damages it sought were direct,
rather than consequential, was subject to judicial review and
interpretation. To whatever extent judicial characterization of damages
as direct or consequential impeded Westlake’s ability to safely predict
whether it was violating a covenant when it sued James, that does not
alter the contract’s plain language. Whether it knew or not, Westlake
was   suing    for   consequential   damages,     which    its   contract
straightforwardly forbids.

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      Because Westlake breached the contract’s covenant not to sue for
consequential damages, I would reverse the court of appeals’ contrary
holding and reinstate the jury’s award of the attorney’s fees James
incurred in defending against Westlake’s claims for consequential
damages. Because the Court does not, I respectfully dissent.

                                      Jeffrey S. Boyd
                                      Justice

OPINION DELIVERED: May 20, 2022

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