D.S.A., Inc. v. Hillsboro Independent School Dist.
| Decision Date | 25 August 1998 |
| Docket Number | No. 97-0631,97-0631 |
| Citation | 973 S.W.2d 662 |
| Parties | 128 Ed. Law Rep. 927, 41 Tex. Sup. Ct. J. 1360 D.S.A., INC., Petitioner, v. HILLSBORO INDEPENDENT SCHOOL DISTRICT, Respondent. |
| Court | Texas Supreme Court |
Sidney H. Davis, Jr., Gregory R. Ave, Dallas, for Petitioner.
Patricia Hair, Kathleen Hopkins Alsina, Houston, for Respondent.
Our Per Curiam opinion of May 8, 1998 is withdrawn, and the following is substituted in its place.
The principal issue in this case is whether a party may recover benefit-of-the-bargain and punitive damages for negligent and grossly negligent misrepresentations made by the other party in pre-contractual negotiations. We conclude that such damages may not be recovered under either theory, and we reverse the judgment of the court of appeals.
This suit arises out of an elementary school construction project overseen by D.S.A., Inc. ("DSA"), a construction management firm, for the Hillsboro Independent School District ("HISD"). The school building, completed and occupied in the fall of 1987, suffered several severe defects. The roof was unable to withstand winds common to Hill County and was plagued with numerous leaks. Poor water drainage of the ground beneath and around the school caused the soil in the crawlspace to expand and buckle the sewage lines suspended beneath the floor joists. After HISD spent an additional $220,244.33 to repair these defects, it sued DSA for breach of contract, negligent and gross negligent misrepresentation, and DTPA violations in connection with DSA's contract to manage the construction of an elementary school.
The jury returned findings against DSA on three theories of recovery--breach of contract, negligent misrepresentation, and DTPA--and awarded HISD $220,661 in actual and $170,000 in exemplary damages plus attorneys' fees. The trial court rendered judgment on HISD's DTPA cause of action.
The court of appeals disposed of HISD's DTPA claims as barred by the statute of limitations. It held that DSA breached its supervisory duties under the contract, fulfillment of which might have protected HISD from defects and deficiencies in the roof and crawlspace of the building. It also held that during pre-contractual negotiations, DSA negligently misrepresented the functions it would perform and that it was grossly negligent in doing so. The court of appeals reduced actual damages by $416.67 but otherwise affirmed, based on HISD's grossly negligent misrepresentation claim.
On appeal, DSA argues that HISD's negligent misrepresentation claim sounds only in contract. The damages the jury awarded for negligent misrepresentation were identical to the damages it awarded for breach of contract, and HISD did not offer proof of any economic injury independent of contract damages. In response, HISD urges that being induced into the contract was itself an independent injury. Citing our opinion in Formosa Plastics Corp. v. Presidio Engineers, 960 S.W.2d 41, 46-47 (Tex.1998), HISD further argues that it could recover in tort for losses related to the subject matter of the contract because DSA had a legal duty, independent from its contractual duties, not to make misrepresentations to induce HISD into the contract.
Without deciding whether HISD breached a legal duty independent of its contractual duties, we conclude that HISD's negligent misrepresentation claim must fail for lack of any independent injury. The Formosa opinion's rejection of the independent injury requirement in fraudulent inducement claims does not extend to claims for negligent misrepresentation or negligent inducement. Unlike fraudulent inducement, the benefit of the bargain measure of damages is not available for a claim of negligent misrepresentation. In Federal Land Bank Ass'n v. Sloane, 825 S.W.2d 439, 442-43 (Tex.1991), we adopted the independent injury requirement of section 552B of the Restatement (Second) of Torts:
(1) The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss to him of which the misrepresentation is legal cause, including:
(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and (b) pecuniary loss suffered otherwise as a consequence of the plaintiff's reliance upon the misrepresentation.
(2) the damages...
To continue reading
Request your trial
-
Grozdanich v. Leisure Hills Health Center, Inc.
...claim, as phrased in the Second Restatement, has been recognized by several other jurisdictions. See, e.g., D.S.A., Inc. v. Hillsboro Ind. Sch. Dist., 973 S.W.2d 662, 664 (Tex.1998); Brogan v. Mitchell Int'l, Inc., 181 Ill.2d 178, 229 Ill.Dec. 503, 692 N.E.2d 276, 278 (Ill.1998); Bailey v. ......
-
Friedman v. Merck & Co.
...887-892; Brogan v. Mitchell Intern., Inc. (1998) 181 Ill.2d 178, 229 Ill.Dec. 503, 692 N.E.2d 276, 278-279; see also D.S.A., Inc. v. HISD (Tex.1998) 973 S.W.2d 662, 664 ["A party may recover for negligent misrepresentations involving a risk of physical harm only if actual physical harm resu......
-
In Re: Soporex Inc. Et Al.
...recoverable on a breach of contract claim. Id. Texas has adopted section 552B of the Torts Restatement. D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662 (Tex. 1998). That section, entitled "Damages for Negligent Misrepresentation," provides: (1) The damages recoverable for a negl......
-
Trevino v. HSBC Mortg. Servs., Inc. (In re Trevino)
...contract,” rather than tort, then the economic loss rule will apply and bar recovery of economic damages. D.S.A., Inc. v. Hillsboro Indep. School Dist., 973 S.W.2d 662, 663 (Tex.1998). “In determining whether a tort claim is merely a repackaged breach of contract claim, a court must conside......
-
Table of Cases
...Med. Ctr., Inc. v. Pan-American Life Ins. Co., 110 F.3d 280 (5th Cir. 1997), §11.06.3 — D — D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W. 2d 662 (Tex. 1998), §10.05 D/FW Commercial Roofing Co., Inc. v. Mehra , 854 S.W.2d 182 (Tex. App.—Dallas 1993, no writ), §1.02.4.2 Dailey v. Whea......
-
Trial: Part Two Court's Charge to Judgment
...submitted to the jury. See Federal Land Bank Ass’n v. Sloane, 825 S.W.2d 439 (Tex. 1991); D.S.A., Inc. v. HILLSBORO INDEP. SCH. DIST., 973 S.W. 2d 662 (Tex. 1998) (benefit of the bargain damages not available); see generally §10.11 infra. §10.05 Negligent Misrepresentation Negligent misrepr......
-
Chapter 1-7 Negligent Misrepresentation
...Statutory Fraud, Common Law Fraud, Fraud by Non-Disclosure, DTPA, Negligence MUST READ CASES D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662 (Tex. 1998) McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787 (Tex. 1999) Grant Thornton LLP v. Prospect High I......
-
Chapter 9-8 Grossly Negligent Inducement of Contract
...Fraud by Non-disclosure, Negligent Misrepresentation, Fraudulent Inducement MUST READ CASES D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662 (Tex. 1998) Yzaguirre v. KCS Res., Inc., 47 S.W.3d 532 (Tex. App.—Dallas 2000), aff'd, 53 S.W.3d 368 (Tex. 2001) 9-8:2 Expressly Rejected i......