Court Opinion

ID: 2833630
Source: CourtListenerOpinion
Date Created: 2015-09-02 17:04:02.402095+00
Date Added: 2024-06-11T11:31:52.521553
License: Public Domain

IN THE SUPREME COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS
 
════════════
No. 04-0961
════════════
 
Tony Gullo Motors I, L.P. and 
Brien Garcia , Petitioners,
 
v.
 
Nury Chapa, 
Respondent
 
════════════════════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Ninth District of 
Texas
════════════════════════════════════════════════════
 
 
Argued October 19, 
2005
 
Justice Brister delivered the opinion 
of the Court, in which Chief Justice 
Jefferson, Justice Hecht, 
Justice Wainwright, Justice Green, and Justice Willett joined.
 
Justice Johnson filed a concurring 
opinion.
 
Justice O’Neill filed a dissenting 
opinion. 
 
Justice Medina did not participate in 
the decision.
 
Nury Chapa 
bought a Toyota Highlander from Tony Gullo Motors for $30,207.38; they disagree 
what model of the car was involved. After a two-day trial, the six jurors 
answered 15 questions concerning breach of contract, fraud, and the DTPA[1] in Chapa’s favor. They also found a 
difference in value of the two models of $7,213, mental anguish damages of 
$21,639, exemplary damages of $250,000, and attorney’s fees of $20,000. 
The trial 
court disregarded the mental anguish and exemplary awards on the ground that 
Chapa’s only claim was for breach of contract, and the fee award because Chapa 
had not segregated fees attributable to that claim alone. In a per curiam 
memorandum opinion, the Ninth Court of Appeals disagreed with both 
conclusions, reinstating all the awards but reducing exemplary damages to 
$125,000.
We agree that 
Chapa could assert her claim in several forms, but disagree that she could 
recover in all of them. Further, the court of appeals’ judgment included 
exemplary damages exceeding the bounds of constitutional law and attorney’s fees 
exceeding the bounds of Texas law. Accordingly, we reverse and remand for 
further proceedings.
I. Election of Remedies
In entering 
judgment for Chapa on all her contract, fraud, and DTPA claims, the court of 
appeals violated the one-satisfaction rule. “There can be but one recovery for 
one injury, and the fact that . . . there may be more than one theory of 
liability[] does not modify this rule.”[2] 
Chapa alleged 
only one injury — delivery of a base-model Highlander rather than a Highlander 
Limited. While she could certainly plead more than one theory of liability, she 
could not recover on more than one.[3] 
For breach of 
contract, Chapa could recover economic damages and attorney’s fees, but not 
mental anguish or exemplary damages.[4] For fraud, she could recover economic 
damages, mental anguish, and exemplary damages, but not attorney’s fees.[5] For a DTPA violation, she could 
recover economic damages, mental anguish, and attorney’s fees, but not 
additional damages beyond $21,639 (three times her economic damages).[6] The court of appeals erred by simply 
awarding them all.
But as Chapa 
was the prevailing party, she is still entitled to judgment on the most 
favorable theory supported by the pleadings, evidence, and verdict.[7] Gullo Motors does not challenge the 
jury’s breach of contract or economic damages findings in this Court. 
Accordingly, the only question before us is whether Chapa is entitled to 
anything more.
II. Mere Breach of Contract
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.
III. Exemplary Damages
The jury 
found Gullo Motors had committed deceptive acts knowingly and found clear and 
convincing evidence that it had committed fraud. Beyond arguing that Chapa can 
only sue in contract, Gullo Motors does not challenge either finding. As we have 
rejected that argument, Chapa is entitled under the verdict to exemplary damages 
for either fraud or violation of the DTPA.[26] 
But both 
parties challenge the court of appeals’ judgment reinstating exemplary damages 
but reducing them to $125,000 — Gullo Motors because the reinstatement went too 
far, and Chapa because it did not go far enough. Although the jury assessed 
exemplary damages for both fraud and deceptive acts at $250,000, the DTPA caps 
those damages at $21,639 (three times Chapa’s economic loss of $7,213),[27] while the fraud award is capped at 
$200,000.[28] Accordingly, the court of appeals’ 
opinion and the parties’ briefs address only whether the exemplary damages were 
properly awarded based on fraud.
A
As an initial 
matter, Chapa asserts that three grounds preclude our constitutional review of 
the exemplary damages award. First, she argues this Court lacks jurisdiction to 
consider whether exemplary damages are constitutionally excessive. While the 
excessiveness of damages as a factual matter is final in the Texas courts of 
appeals,[29] the constitutionality of exemplary 
damages is a legal question for the court.[30] We have conducted such analyses 
before.[31] Moreover, the Supreme Court of the 
United States has found unconstitutional a state constitutional provision 
limiting appellate scrutiny of exemplary damages to no-evidence review.[32] Only by adhering to our practice of 
reviewing exemplary damages for constitutional (rather than factual) 
excessiveness can we avoid a similar constitutional conflict.
Second, Chapa 
claims that by authorizing up to $200,000 in exemplary damages, the Legislature 
necessarily rendered that amount constitutionally permissible. But while “state 
law governs the amount properly awarded as punitive damages,” that amount is 
still “subject to an ultimate federal constitutional check for exorbitancy.”[33] 
Third, Chapa 
argues that she is entitled to the jury’s entire exemplary damage award because 
the trial court complied with the procedural protections required by the Due 
Process Clause. But the constitutional limitations on such awards are 
substantive as well as procedural.[34] Even if the procedural processes were 
perfect, “[t]o the extent an award is grossly excessive, it furthers no 
legitimate purpose and constitutes an arbitrary deprivation of property.”[35]
 
B
We review not 
whether the exemplary damage award is exorbitant (as the dissent says), but 
whether it is constitutional. In reviewing the amount of an exemplary damage 
award for constitutionality, we have been directed to consider three 
“guideposts”: (1) the nature of the defendant’s conduct, (2) the ratio between 
exemplary and compensatory damages, and (3) the size of civil penalties in 
comparable cases.[36]
The 
reprehensibility of Gullo Motors’ conduct (the most important of the 
guideposts)[37] depends in turn on five more factors, 
all but one of which weigh against exemplary damages here.[38] Gullo Motors’ actions did not cause 
physical rather than economic harm, did not threaten the health or safety of 
others, and did not involve repeated acts rather than an isolated incident. 
Chapa claims she was financially vulnerable, but the only harm she alleged (that 
her SUV did not have Michelin tires and lumbar-support seats) did not threaten 
financial ruin.[39] Only the last factor, that the 
conduct at issue was deceitful rather than accidental, points in Chapa’s favor. 
The existence of a single factor “may not be sufficient to sustain a punitive 
damages award.”[40]
Touching the 
second guidepost, the Supreme Court has declined to adopt a bright-line ratio 
between actual and exemplary damages, but has stated that “few awards exceeding 
a single‑digit ratio . . . will satisfy due process.”[41] Further, the Court has pointed to 
early statutes authorizing awards of double, treble, or quadruple damages as 
support for the conclusion that “four times the amount of compensatory damages 
might be close to the line of constitutional impropriety.”[42] Here, the court of appeals’ award 
exceeds four times Chapa’s total compensatory award, and is more than 17 times 
her economic damages. Further, the jury’s award of precisely $21,639 for mental 
anguish — exactly three times her economic damages of $7,213 — supports the 
Supreme Court’s observation that emotional damages themselves often include a 
punitive element.[43] The court of appeals’ judgment at 
least pushes against, if not exceeds, the constitutional limits.
Finally, we 
must compare the exemplary damages awarded here to civil penalties authorized in 
comparable cases. The Texas Occupations Code provides for a maximum civil 
penalty of $10,000 for statutory or regulatory violations by motor vehicle 
dealers.[44] Similarly, the attorney general could 
collect not more than $20,000 as a civil penalty under the DTPA in a case like 
this.[45] These are precisely the kinds of 
penalties for comparable misconduct the Supreme Court has used — and says we 
must use — in our constitutional analysis.[46]
Chapa argues 
we should consider the possibility that Gullo Motors might be found criminally 
liable or lose its license for what happened here. But she provides no proof 
that such a sanction has ever been awarded in a case like this. “[T]he remote 
possibility of a criminal sanction does not automatically sustain a punitive 
damages award.”[47]
The dissent 
reaches a different conclusion only by changing the constitutional standards. 
The Supreme Court says “repeated conduct” refers to recidivism;[48] the dissent says it means reiterating 
a single misrepresentation to a single consumer.[49] The Supreme Court says $1,000,000 in 
emotional anguish does not mean there are “physical injuries”;[50] the dissent says $21,000 in emotional 
anguish is enough to conclude otherwise.[51] The Supreme Court says multiplying 
damages by a factor of 4 is “close to the line of constitutional impropriety”;[52] the dissent says using a factor of 
4.33 is unworthy of our review.[53] The Supreme Court says we must look 
to the civil penalties “imposed in comparable cases”;[54] the dissent says we should look to 
the general $200,000 cap applicable to all exemplary cases regardless of 
their nature.[55] The Supreme Court says exemplary 
damages “pose an acute danger of arbitrary deprivation of property”;[56] the dissent perceives no danger in 
pushing against the constitutional limits in all fraud cases, as the only factor 
present here (deceitful conduct) is present in every one.
While finding 
the jury verdict of $250,000 constitutionally excessive, the court of appeals 
gave no explanation for its award of half that amount. Exemplary damages are not 
susceptible to precise calculation, but this is still five to ten times more 
than comparable civil penalties, or what Chapa could recover under the 
consumer-friendly DTPA.[57] Pushing exemplary damages to the 
absolute constitutional limit in a case like this leaves no room for greater 
punishment in cases involving death, grievous physical injury, financial ruin, 
or actions that endanger a large segment of the public.[58] On this record, Gullo Motors’ conduct 
merited exemplary damages, but the amount assessed by the court of appeals 
exceeds constitutional limits.
C
The Texas 
Rules of Appellate Procedure provide for remittitur orders by the courts of 
appeals,[59] but make no similar provision for 
this Court. While this Court may review the constitutionality of an exemplary 
damages award, the amount of a suggested remittitur is in the first instance a 
matter for the courts of appeals. 
Thus, for 
example, when our constitutional review in Bentley v. Bunton found 
evidentiary support for some amount of mental anguish damages but not for the $7 
million awarded, we remanded to the court of appeals to determine an appropriate 
remittitur.[60] When the case returned to us after 
remittitur but without any reassessment of exemplary damages, we returned it 
again to the court of appeals to conduct a constitutional analysis of those 
damages in the first instance.[61] 
Accordingly, 
having found that the amount awarded by the court of appeals exceeds the 
constitutional limitations on exemplary damages, we remand to that court for 
determining a constitutionally permissible remittitur.
IV. Attorney’s Fees
The jury 
found a reasonable and necessary attorney’s fee “in this case” was $20,000.[62] During and after trial, Gullo Motors 
objected that fees were not recoverable for Chapa’s fraud claim, and thus had to 
be excluded. We agree, and thus reverse and remand the fee issue for a new 
trial.
For more than 
a century, Texas law has not allowed recovery of attorney’s fees unless 
authorized by statute or contract.[63] This rule is so venerable and 
ubiquitous in American courts it is known as “the American Rule.”[64] Absent a contract or statute, trial 
courts do not have inherent authority to require a losing party to pay the 
prevailing party’s fees.[65] As a result, fee claimants have 
always been required to segregate fees between claims for which they are 
recoverable and claims for which they are not.[66] 
We recognized 
an exception to this historical practice in 1991 that has since threatened to 
swallow the rule. In Stewart Title Guaranty Co. v. Sterling, we affirmed 
the general rule: “the plaintiff is required to show that [attorney’s] fees were 
incurred while suing the defendant sought to be charged with the fees on a claim 
which allows recovery of such fees.”[67] But we then added:
 
A 
recognized exception to this duty to segregate arises when the attorney’s fees 
rendered are in connection with claims arising out of the same transaction and 
are so interrelated that their “prosecution or defense entails proof or denial 
of essentially the same facts.” Flint & Assoc. v. Intercontinental Pipe 
& Steel, Inc., 739 S.W.2d 622, 624‑25 (Tex. App.–Dallas 1987, writ 
denied). Therefore, when the causes of action involved in the suit are dependent 
upon the same set of facts or circumstances and thus are “interwined to the 
point of being inseparable,” the party suing for attorney’s fees may recover the 
entire amount covering all claims. Gill Sav. Ass’n v. Chair King, Inc., 
783 S.W.2d 674, 680 (Tex. App.‑Houston [14th Dist.] 1989), modified, 797
S.W.2d 31 (Tex. 1990) (remanded to the trial court for reexamination of 
attorney’s fee award).[68] 
 
 
As the only 
two authorities cited in this passage suggest, this exception had not been 
recognized by this Court before, but only by a few courts of appeals beginning 
about ten years earlier.[69] In fact, we did not even apply the 
exception in Sterling (as the fees there could be segregated),[70] and appear to have applied it only 
once since.[71]
But the 
courts of appeals have been flooded with claims that recoverable and 
unrecoverable fees are inextricably intertwined.[72] As the exception can make all fees 
recoverable (even if Texas law has long said they are not), it is no surprise 
that more and more claimants have sought to invoke it. Moreover, as the details 
of an attorney’s work are shrouded in the attorney-client privilege, it may be 
hard for anyone else to tell whether the work on several claims truly was 
inextricably intertwined.
The exception 
has also been hard to apply consistently. The courts of appeals have disagreed 
about what makes two claims inextricably intertwined — some focusing on the 
underlying facts,[73] others on the elements that must be 
proved,[74] and others on some combination of the 
two.[75] Some do not require testimony that 
claims are intertwined,[76] while others do.[77] When faced with fraud and breach of 
contract claims like those here, some have held the claims inextricably 
intertwined,[78] and others just the opposite.[79]
As 
Sterling suggests the need to segregate fees is a question of law,[80] the courts of appeals have generally 
(though not always) applied a de novo standard of review.[81] That standard, of course, gives no 
deference to the factual determinations of the trial judge or the jury. But the 
fees necessary to prove particular claims often turn on such facts — how hard 
something was to discover and prove, how strongly it supported particular 
inferences or conclusions, how much difference it might make to the verdict, and 
a host of other details that include judgment and credibility questions about 
who had to do what and what it was worth. Given all these details, it may often 
be impossible to state as a matter of law the extent to which certain claims can 
or cannot be segregated; the issue is more a mixed question of law and fact for 
the jury.
This case 
illustrates several of these difficulties. The court of appeals held that Chapa 
was not required to segregate fees (and thus could recover 100 percent of them) 
because she “was required to prove essentially the same facts in pursuing each 
of her three causes of action.” But when Chapa’s attorneys were drafting her 
pleadings or the jury charge relating to fraud, there is no question those fees 
were not recoverable. Nor does Texas law permit them to be compensated for 
preparing and presenting evidence regarding the defendant’s net worth.
Further, the 
effort to recover 100 percent of their fees has required Chapa’s attorneys to 
take a position inconsistent with her underlying claims. As noted above, Chapa 
has insisted (and we have agreed) that her claims were more than a mere breach 
of contract — they could be asserted in fraud. But when it came time to 
segregate fees, her attorneys testified that their work on the fraud claim could 
not possibly be distinguished from that on the contract and DTPA claims. Having 
prevailed in her argument that the claims are distinct, it is hard to see how 
she can also claim they are inextricably intertwined.
It is 
certainly true that Chapa’s fraud, contract, and DTPA claims were all “dependent 
upon the same set of facts or circumstances,”[82] but that does not mean they all 
required the same research, discovery, proof, or legal expertise. Nor are 
unrecoverable fees rendered recoverable merely because they are nominal; there 
is no such exception in any contract, statute, or “the American Rule.” To the 
extent Sterling suggested that a common set of underlying facts 
necessarily made all claims arising therefrom “inseparable” and all legal fees 
recoverable, it went too far. 
But 
Sterling was certainly correct that many if not most legal fees in such 
cases cannot and need not be precisely allocated to one claim or the other. Many 
of the services involved in preparing a contract or DTPA claim for trial must 
still be incurred if tort claims are appended to it; adding the latter claims 
does not render the former services unrecoverable. Requests for standard 
disclosures, proof of background facts, depositions of the primary actors, 
discovery motions and hearings, voir dire of the jury, and a host of 
other services may be necessary whether a claim is filed alone or with others. 
To the extent such services would have been incurred on a recoverable claim 
alone, they are not disallowed simply because they do double service.
Accordingly, 
we reaffirm the rule that if any attorney’s fees relate solely to a claim for 
which such fees are unrecoverable, a claimant must segregate recoverable from 
unrecoverable fees. Intertwined facts do not make tort fees recoverable; it is 
only when discrete legal services advance both a recoverable and unrecoverable 
claim that they are so intertwined that they need not be segregated. We modify 
Sterling to that extent. 
This standard 
does not require more precise proof for attorney’s fees than for any other 
claims or expenses. Here, Chapa’s attorneys did not have to keep separate time 
records when they drafted the fraud, contract, or DTPA paragraphs of her 
petition; an opinion would have sufficed stating that, for example, 95 percent 
of their drafting time would have been necessary even if there had been no fraud 
claim.[83] The court of appeals could then have 
applied standard factual and legal sufficiency review to the jury’s verdict 
based on that evidence. 
There may, of 
course, be some disputes about fees that a trial or appellate court should 
decide as a matter of law. For example, to prevail on a contract claim a party 
must overcome any and all affirmative defenses (such as limitations, res 
judicata, or prior material breach), and the opposing party who raises them 
should not be allowed to suggest to the jury that overcoming those defenses was 
unnecessary. But when, as here, it cannot be denied that at least some of the 
attorney’s fees are attributable only to claims for which fees are not 
recoverable, segregation of fees ought to be required and the jury ought to 
decide the rest.
Chapa’s 
failure to segregate her attorney’s fees does not mean she cannot recover any. 
Unsegregated attorney’s fees for the entire case are some evidence of what the 
segregated amount should be.[84] We have applied this same rule for 
lost profits, medical expenses, and attorney’s fees — an unsegregated damages 
award requires a remand.[85] Accordingly, remand is required.
V. Conclusion
Because the 
jury found in Chapa’s favor on all her claims, she is entitled to recover on the 
most favorable theory the verdict would support. But she is not required to make 
that election until she knows her choices.[86]
Under either 
fraud or the DTPA, Chapa is entitled to $7,213 in economic damages and $21,639, 
in mental anguish. The court of appeals must reassess her exemplary damages, and 
a jury must reassess her attorney’s fees. There is no rule establishing which 
should go first, but for practical reasons we remand first to the court of 
appeals. At the trial level, the most Chapa could recover under the DTPA would 
be additional damages of $21,639 (three times her economic damages) plus 
attorney’s fees of something less than $20,000 (depending on the new verdict). 
If the court of appeals’ reassessment of exemplary damages for fraud exceeds 
this amount, Chapa would obviously be better off electing that recovery; if not, 
then the court of appeals should thereafter remand to the trial court for a new 
trial on attorney’s fees. Accordingly, we remand to the court of appeals for 
further proceedings consistent with this opinion.
 
_____________________________
Scott 
Brister
Justice
 
OPINION 
DELIVERED: December 22, 2006
 

[1] See Texas Deceptive Trade Practices‑Consumer 
Protection Act, Tex. Bus. & Com. 
Code §§ 17.41-.63 (ADTPA”).

[2] Stewart Title Guar. Co. v. Sterling, 822 S.W.2d
1, 8 (Tex. 1991).

[3] See Boyce Iron Works, Inc. v. Sw. Bell Tel. Co., 
747 S.W.2d 785, 787 (Tex. 1988) (AWhen a party tries a case on alternative theories of 
recovery and a jury returns favorable findings on two or more theories, the 
party has a right to a judgment on the theory entitling him to the greatest or 
most favorable relief.”); see also Tex. Bus. & Com. Code § 17.43 
(providing that Ano recovery shall be permitted under both this 
subchapter and another law of both damages and penalties for the same act or 
practice”); Gunn Infiniti, Inc. v. O’Byrne, 996 S.W.2d 854, 862 (Tex. 
1999) (holding plaintiff must elect recovery under either DTPA or fraud after 
remand).

[4] See Stewart Title Guar. Co. v. Aiello, 941
S.W.2d 68, 72 (Tex. 1997) (holding mental anguish and exemplary damages 
unavailable for breach of contract).

[5] See New Amsterdam Cas. Co. v. Texas Indus., 414
S.W.2d 914, 915 (Tex. 1967) (stating that Aattorney’s fees are not recoverable either in an action 
in tort or a suit upon a contract unless provided by statute or by contract 
between the parties”); see also Neeley v. Bankers Trust Co. of Texas, 757
F.2d 621, 633 (5th Cir. 1985).

[6] See Tex. 
Bus. & Com. Code § 17.50(b)(1). For acts committed intentionally, a 
consumer may recover additional damages up to three times the amount of economic 
and mental anguish damages combined, see id.; with regard to the DTPA, 
Chapa only requested and obtained a jury finding that Gullo Motor’s violations 
were committed knowingly.

[7] See Gulf States Utils. Co. v. Low, 79 S.W.3d
561, 566 (Tex. 2002); Boyce Iron Works, 747 S.W.2d at 787 (Tex. 
1988).

[8] Ashford Dev., Inc. v. USLife Real Estate Serv. 
Corp., 661 S.W.2d 933, 935 (Tex. 1983) (citations omitted).

[9] Thigpen v. Locke, 363 S.W.2d 247, 252 (Tex. 
1962). 

[10] See Formosa Plastics Corp. USA v. Presidio Eng’rs 
and Contractors, Inc., 960 S.W.2d 41, 46 (Tex. 1998) (quoting Crim Truck 
& Tractor Co. v. Navistar Int’l Transp. Corp., 823 S.W.2d 591, 597 (Tex. 
1992)).

[11] See id. at 46-47.

[12] See id. at 47 (citing Graham v. Roder, 5
Tex. 141, 149 (1849)).

[13] See id.; Spoljaric v. Percival Tours, 
Inc., 708 S.W.2d 432, 436 (Tex. 1986). 

[14] See Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 
14 (Tex. 1996).

[15] See Tex. 
Bus. & Com. Code §§ 17.46(b)(7) (defining deceptive acts to include 
Arepresenting that . . . goods are of a particular style 
or model, if they are of another”), 17.46(b)(24) (defining deceptive acts to 
include Afailing to disclose information concerning goods or 
services which was known at the time of the transaction if such failure to 
disclose such information was intended to induce the consumer into a transaction 
into which the consumer would not have entered had the information been 
disclosed”).

[16] See Spoljaric, 708 S.W.2d at 435. 

[17] See id. (AFailure to perform, standing alone, is no evidence of 
the promisor’s intent not to perform when the promise was made.”); Formosa 
Plastics, 960 S.W.2d at 48; Schindler v. Austwell Farmers Co‑op., 841
S.W.2d 853, 854 (Tex. 1992) (per curiam) (finding failure to pay amount due was 
not fraud); Crim Truck, 823 S.W.2d at 597.

[18] See Miga v. Jensen, 96 S.W.3d 207, 210-11 (Tex. 
2002); T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 
222 (Tex. 1992) (stating that denial of making promise was Aa factor” but Adoes not constitute evidence that the Bank never 
intended to perform its promise”); Spoljaric, 708 S.W.2d at 435 
(AFailure to perform . . . is a circumstance to be 
considered with other facts to establish intent.”). But see Thigpen v. 
Locke, 363 S.W.2d 247, 252 (Tex. 1962) (A[S]ubsequent breach is not evidence that may be 
considered in determining whether or not there was fraud in the original 
transaction.”).

[19] See, e.g., Formosa Plastics, 960 S.W.2d at 48 
(noting that defendant’s civil department director admitted that defendant had 
acted deceptively and had no intention of performing a key contractual promise 
at the time it was made); Spoljaric, 708 S.W.2d at 434-35 (noting that 
defendant denied he ever approved a bonus contract, but corporate secretary 
testified that he did).

[20] Spoljaric, 708 S.W.2d at 435. 

[21] See City of Keller v. Wilson, 168 S.W.3d 802, 
819-20 (Tex. 2005).

[22] See Trevino v. Ortega, 969 S.W.2d 950, 953 (Tex. 
1998) (holding spoliation best addressed not by independent cause of action but 
by inference that evidence was unfavorable).

[23] Chapa also argues that Gullo Motors’ agreement after 
the dispute arose to install certain features of a Highlander Limited in her 
base-model is some evidence of its earlier fraudulent intent. We disagree; if 
efforts to satisfy a consumer after a dispute arises are some evidence of fraud, 
sellers will be loathe to make any. Cf. PPG Indus., Inc. v. JMB/Houston Ctrs. 
Partners Ltd. P’ship, 146 S.W.3d 79, 95 (Tex. 2004) (AWe should encourage sellers to attempt repairs; tolling 
limitations every time they do might discourage them from doing so at all.”). 

[24] See, e.g., William Powers, Jr., The 
Availability of Tort Remedies for Breach of Contract: Border Wars, 72 Tex. L. Rev. 1209 
(1994).

[25] See Formosa Plastics, 960 S.W.2d at 
46-47.

[26] See Tex. 
Civ. Prac. & Rem. Code § 41.003(a) (providing for recovery of 
exemplary damages if claimant proves by clear and convincing evidence that harm 
resulted from fraud); Tex. Bus. & 
Com. Code § 17.50(b)(1) (providing for recovery of up to three times 
economic damages if conduct violating DTPA was committed 
knowingly).

[27] Tex. Bus. & 
Com. Code § 17.50(b)(1). The same statutory provision limits additional 
damages to three times economic and mental anguish damages if conduct is 
committed intentionally, id., but Chapa only requested a jury 
finding whether Gullo Motors’ committed deceptive acts 
knowingly.

[28] Tex. Civ. Prac. 
& Rem. Code § 41.008(b) (capping exemplary damages at the greater of 
(1) noneconomic damages plus two times economic damages, or (2) 
$200,000).

[29] See Alamo Nat’l. Bank v. Kraus, 616 S.W.2d 908, 
910 (Tex. 1981).

[30] See Owens‑Corning Fiberglas Corp. v. Malone, 972
S.W.2d 35, 43, 45 (Tex. 1998); see also Cooper Indus., Inc. v. Leatherman 
Tool Group, Inc., 532 U.S. 424, 436-37 (2001) (requiring de novo appellate 
review of exemplary damages because Athe level of punitive damages is not really a ‘fact’ 
‘tried’ by the jury”) (citation omitted).

[31] See Bentley v. Bunton, 94 S.W.3d 561, 607 (Tex. 
2002) (finding exemplary damages were not constitutionally excessive, but 
remanding for reassessment in light of reduced mental anguish award); 
Malone, 972 S.W.2d at 45-48 (finding exemplary damages were not 
constitutionally excessive).

[32] Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415, 
418, 426-27 (1994) (AAn amendment to the Oregon Constitution prohibits 
judicial review of the amount of punitive damages awarded by a jury ‘unless the 
court can affirmatively say there is no evidence to support the verdict.’ The 
question presented is whether that prohibition is consistent with the Due 
Process Clause of the Fourteenth Amendment. We hold that it is 
not.”).

[33] Gasperini v. Ctr. for Humanities, Inc., 518 U.S.
415, 431 n.12 (1996); Malone, 972 S.W.2d at 45 (A[E]ven if an assessment of punitive damages is not 
deemed excessive under governing state law, it may violate a party’s substantive 
due process right to protection from ‘grossly excessive’ punitive damages 
awards.”).

[34] State Farm Mut. Auto. Ins. Co. v. Campbell, 538
U.S. 408, 418 (2003); Cooper Indus., 532 U.S. at 433; Oberg, 512 
U.S. at 420 (AOur recent cases have recognized that the Constitution 
imposes a substantive limit on the size of punitive damages awards.”); TXO 
Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 453-54 (1993). 

[35] Campbell, 538 U.S. at 417.

[36] Id. at 418 (citing BMW of N. Am. v. Gore, 
517 U.S. 559, 575 (1996)).

[37] Id. at 419 (quoting Gore, 517 U.S. at 
575).

[38] See id. 

[39] Cf. Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 
24 (Tex. 1994) (A[A]n insurance carrier’s refusal to pay a claim cannot 
justify punishment unless the insurer was actually aware that its action would 
probably result in extraordinary harm not ordinarily associated with breach of 
contract or bad faith denial of a claimBsuch as death, grievous physical injury, or financial 
ruin.”).

[40] Campbell, 538 U.S. at 419.

[41] Id. at 425; Gore, 517 U.S. at 
581-82.

[42] Campbell, 538 U.S. at 425.

[43] See id. at 426; see also Restatement (Second) of Torts § 908, 
cmt. c, at 466 (1977) (AIn many cases in which compensatory damages include an 
amount for emotional distress, such as humiliation or indignation aroused by the 
defendant’s act, there is no clear line of demarcation between punishment and 
compensation and a verdict for a specified amount frequently includes elements 
of both.”).

[44] Tex. Occ. Code 
§ 2301.801.

[45] See Tex. 
Bus. & Com. Code § 17.47(c).

[46] See Campbell, 538 U.S. at 428 (comparing award 
in bad-faith insurance case to civil penalty of $10,000 available under Utah 
law); Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 
442-43 (2001) (comparing award in misappropriation case to civil penalty of 
$25,000 available under Oregon’s Unlawful Trade Practices Act).

[47] Campbell, 538 U.S. at 428 (AGreat care must be taken to avoid use of the civil 
process to assess criminal penalties that can be imposed only after the 
heightened protections of a criminal trial have been observed, including, of 
course, its higher standards of proof. Punitive damages are not a substitute for 
the criminal process. . .”).

[48] See, e.g., BMW of N. Am. v. Gore, 517 U.S. 559, 
577 (1996) (AOur holdings that a recidivist may be punished more 
severely than a first offender recognize that repeated misconduct is more 
reprehensible than an individual instance of malfeasance.”).

[49] See ___ S.W.3d at ___.

[50] Campbell, 538 U.S. at 426. 

[51] See ___ S.W.3d at ___.

[52] Campbell, 538 U.S. at 425.

[53] ___ S.W.3d at ___.

[54] Gore, 517 U.S. at 575 (emphasis added); 
Campbell, 538 U.S. at 428; Cooper Indus., Inc. v. Leatherman Tool Group, 
Inc., 532 U.S. 424, 442-43 (2001).

[55] See ___ S.W.3d at ___. The case cited by 
the dissent does not support its analysis. See Gore, 517 U.S. at 583-84 
(comparing award in fraud case to maximum civil penalty of $2,000 available 
under Alabama’s Deceptive Trade Practices Act).

[56] Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415, 
432 (1994).

[57] Cf. PPG Indus., Inc. v. JMB/Houston Ctrs. Partners 
Ltd. P’ship, 146 S.W.3d 79, 89 (Tex. 2004) (AFrequently, the DTPA is pleaded not because it is the 
only remedy, but because it is the most favorable remedy.”) 
(italics in original).

[58] See Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 
24 (Tex. 1994).

[59] Tex. R. App. 
P. 46.

[60] 94 S.W.3d 561, 605-08 (Tex. 2002).

[61] See Bunton v. Bentley, 153 S.W.3d 50, 53-54 
(Tex. 2004) (per curiam).

[62] The figure represented fees only through the trial 
level; Chapa tendered no evidence or jury question on appellate 
fees.

[63] See, e.g., Gulf States Utils. Co. v. Low, 79
S.W.3d 561, 567 (Tex. 2002); Dallas Cent. Appraisal Dist. v. Seven Inv. 
Co., 835 S.W.2d 75, 77 (Tex. 1992); New Amsterdam Cas. Co. v. Texas 
Indus., Inc., 414 S.W.2d 914, 915 (Tex. 1967); Mundy v. Knutson Constr. 
Co., 294 S.W.2d 371, 373 (Tex. 1956).

[64] See, e.g., Buckhannon Bd. and Care Home, Inc. v. 
West Virginia Dept. of Health and Human Res., 532 U.S. 598, 602 (2001) 
(AIn the United States, parties are ordinarily required to 
bear their own attorney’s fees‑the prevailing party is not entitled to collect 
from the loser. Under this ‘American Rule,’“ we follow Aa general practice of not awarding fees to a prevailing 
party absent explicit statutory authority.”) (internal citations 
omitted).

[65] Travelers Indem. Co. of Connecticut v. Mayfield, 
923 S.W.2d 590, 594 (Tex. 1996).

[66] See Stewart Title Guar. Co. v. Aiello, 941
S.W.2d 68, 73 (Tex. 1997); Stewart Title Guar. Co. v. Sterling, 822
S.W.2d 1, 10 (Tex. 1991); Matthews v. Candlewood Builders, Inc., 685
S.W.2d 649, 650 (Tex. 1985); Int’l Sec. Life Ins. Co. v. Finck, 496
S.W.2d 544, 547 (Tex. 1973). 

[67] 822 S.W.2d at 10. 

[68] Id. at 11-12.

[69] See, e.g., Village Mobile Homes, Inc. v. Porter, 
716 S.W.2d 543, 552 (Tex. App.‑Austin 1986, writ ref’d n.r.e.); De La Fuente 
v. Home Sav. Ass’n, 669 S.W.2d 137, 146 (Tex. App.BCorpus Christi 1984, no writ); First Wichita Nat’l 
Bank v. Wood, 632 S.W.2d 210, 215(Tex. App.-Fort Worth 1982, no writ); 
Wilkins v. Bain, 615 S.W.2d 314, 316 (Tex. Civ. App.‑Dallas 1981, no 
writ). 

[70] See Sterling, 822 S.W.2d at 12.

[71] See Aiello, 941 S.W.2d at 73. In Am. Nat’l 
Petroleum Co. v. Transcon. Gas Pipe Line Corp., this Court held that the 
court of appeals erred in requiring segregation of fees between a valid contract 
and an invalid tortious interference claim, holding instead that both claims 
were valid. 798 S.W.2d 274, 280 (Tex. 1990). We did not address the alternative 
basis for the court of appeals’ ruling — that attorney’s fees are not 
recoverable in a tort action. See 763 S.W.2d 809, 823 (Tex. 
App.BTexarkana 1988).

[72] A Westlaw search shows more than one hundred published 
and unpublished opinions addressing the Sterling exception since 1991. 
See, e.g., Ski River Dev., Inc. v. McCalla, 167 S.W.3d 121, 143 (Tex. 
App.BWaco 2005, pet. denied); Marrs and Smith P’ship v. 
D.K. Boyd Oil and Gas Co., 2005 WL 3073794, *15 (Tex. App.BEl Paso 2005, pet. denied); Shadow Dance Ranch 
P’ship, Ltd. v. Weiner, 2005 WL 3295664, *9 (Tex. App.BSan Antonio 2005, no pet. h.); Royal Maccabees Life 
Ins. Co. v. James,146 S.W.3d 340, 353 (Tex. App.BDallas 2004, pet. denied); Aetna Cas. & Sur. v. 
Wild, 944 S.W.2d 37, 40 (Tex. App.BAmarillo 1997, writ denied); Panizo v. Young Men’s 
Christian Ass’n 938 S.W.2d 163, 170 (Tex. App.BHouston [1st Dist.] 1996, no writ); Kenneth H. Hughes 
Interests, Inc. v. Westrup, 879 S.W.2d 229, 233 (Tex. App.BHouston [1st Dist.] 1994, writ denied). 

[73] See, e.g., Rio Grande Valley Gas Co. v. City of 
Edinburg, 59 S.W.3d 199, 224 (Tex. App.‑Corpus Christi 2000) aff’d in 
part, rev’d in part sub nom. Southern Union Co. v. City of Edinburg, 
129 S.W.3d 74 (Tex. 2003); Great Am. Ins. Co. v. N. Austin Mun. Util. 
Dist. No. 1, 902 S.W.2d 488, 505 (Tex. App.BAustin 1993) aff’d in part, rev’d in part, 908
S.W.2d 415 (Tex. 1995). 

[74] See, e.g., Z.A.O., Inc. v. Yarbrough Drive Ctr. 
Joint Venture, 50 S.W.3d 531, 550‑51 (Tex. App.BEl Paso 2001, no pet.); AU Pharm., Inc. v. 
Boston, 986 S.W.2d 331, 337 (Tex. App.BTexarkana 1999, no pet.). 

[75] See, e.g., Air Routing Int’l. Corp. (Canada) v. 
Britannia Airways, Ltd., 150 S.W.3d 682, 693 (Tex. App.BHouston [14th Dist.] 2004, no pet.).

[76] See id.

[77] See Royal Maccabees,146 S.W.3d at 
353.

[78] See, e.g., Nat’l Gas Clearinghouse v. Midgard Energy 
Co., 113 S.W.3d 400, 417 (Tex. App.‑Amarillo 2003, pet. denied); W. Beach 
Marina, Ltd. v. Erdeljac, 94 S.W.3d 248, 268 (Tex. App.‑Austin 2002, no 
pet.); Pegasus Energy Group, Inc. v. Cheyenne Petroleum Co., 3 S.W.3d
112, 131 (Tex. App.‑Corpus Christi 1999, pet. denied).

[79] See, e.g., Young v. Neatherlin, 102 S.W.3d 415, 
421 (Tex. App.-Houston [14th Dist.] 2003, no pet.); Panizo v. Young Men’s 
Christian Ass’n, 938 S.W.2d 163, 171 (Tex. App.‑Houston [1st Dist.] 1996, no 
writ); S. Concrete Co. v. Metrotec Fin., 775 S.W.2d 446, 450‑51 
(Tex.App.BDallas 1989, no writ).

[80] See Stewart Title Guar. Co. v. Sterling, 822
S.W.2d 1, 12 (Tex. 1991) (AFollowing a review of the record, we conclude that the 
attorney’s fees are capable of segregation.”).

[81] See, e.g., Air Routing Int’l. Corp., 150 S.W.3d 
at 688; Flagship Hotel, Ltd. v. City of Galveston, 117 S.W.3d 552, 565 
(Tex. App.BTexarkana 2003, pet. denied); Pacesetter Pools, Inc. 
v. Pierce Homes, Inc., 86 S.W.3d 827, 833 (Tex. App.BAustin 2002, no pet.); Aetna Cas. & Sur. v. 
Wild, 944 S.W.2d 37, 41 (Tex. App.BAmarillo 1997, writ denied). But see AU Pharm., Inc. 
v. Boston, 986 S.W.2d 331, 337 (Tex. App.BTexarkana 1999, no pet.) (applying abuse of discretion 
review).

[82] Sterling, 822 S.W.2d at 11.

[83] See, e.g., Stewart Title Guar. Co. v. 
Aiello, 941 S.W.2d 68, 73 (Tex. 1997) (noting that claimant’s attorney 
Atestified that approximately twenty‑percent of his time 
and fifteen‑percent of his paralegal’s time concerned issues predating the 
agreed judgment”); Med. Specialist Group, P.A. v. Radiology Assocs., 
L.L.P., 171 S.W.3d 727, 738 (Tex. App.‑Corpus Christi 2005, pet. denied) 
(AIn his affidavit, Radiology Associates’ counsel. . . 
testified that his fees for the defense of the case totaled $460,087.00, and 
approximately forty percent of these fees were directly related to Saratoga’s 
antitrust claims.”); Flagship Hotel, 117 S.W.3d at 566 n.7 (AFlagship argues that the segregation standard is 
difficult to meet. We disagree and note that segregated attorney’s fees can be 
established with evidence of unsegregated attorney’s fees and a rough percent of 
the amount attributable to the breach of contract claim. Schenck v. Ebby 
Halliday Real Estate, Inc., 803 S.W.2d 361, 369 (Tex. App.BFort Worth 1990, no writ); accord, Bradbury v. 
Scott, 788 S.W.2d 31, 40 (Tex. App.‑Houston [1st Dist.] 1989, writ 
denied).”).

[84] See Sterling, 822 S.W.2d at 12.

[85] See Minnesota Mining and Mfg. Co. v. Nishika 
Ltd., 953 S.W.2d 733, 739 (Tex. 1997) (lost profits); Texarkana Mem’l 
Hosp., Inc. v. Murdock, 946 S.W.2d 836, 840-41 (Tex. 1997) (medical 
expenses); Sterling, 822 S.W.2d at 11-12 (attorney’s 
fees).

[86] The dissent suggests Chapa must elect between her 
fraud, contract, and DTPA claims before knowing what amount of attorney’s 
fees she might recover. This would defeat the principle that she is entitled to 
recover on the most favorable theory the verdict supports. See n.7, 
supra.