Helms v. Southwestern Bell Telephone Co.

• Decision Date: 14 July 1986
• Docket Number: No. 86-1003,86-1003
• Citation: 794 F.2d 188
• Parties: Tommy HELMS and Ken Helms, Plaintiffs-Appellants, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Defendant-Appellee. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 188

794 F.2d 188

Tommy HELMS and Ken Helms, Plaintiffs-Appellants, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Defendant-Appellee.

No. 86-1003.

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

July 14, 1986.

Lawrence L. Mealer, Thomas J. Lochry, Dallas, Tex., for plaintiffs-appellants.

Barbara McElroy, Dallas, Tex., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before REAVLEY, GARWOOD, and HILL, Circuit Judges.

ROBERT MADDEN HILL, Circuit Judge:

This appeal requires us to determine whether a cause of action exists under either the Texas Deceptive Trade Practices-Consumer Protection Act [DTPA], Tex. Bus. & Com. Code Ann. Secs. 17.41-.63 (Vernon Supp.1986), or the Texas common law of negligence whenever a contract to print telephone directory advertising is breached. We agree with the district court's dismissal of the plaintiffs' DTPA claims, but conclude that the district court erred in dismissing the negligence claim.

I.

According to their assertions, in 1976 Tommy and Ken Helms formed a partnership know as "Chem Strip" in order to engage in the business of removing paint and rust from metal, wood, and other materials with a chemical immersion process. The Helmses worked in the Dallas area and advertised Chem Strip in the Greater Dallas Yellow Pages [Yellow Pages] published by Southwestern Bell Telephone Company [Southwestern Bell]. The Helmses decided to move their business to Mesquite, Texas, a suburb of Dallas. In early 1981 the Helmses contacted Southwestern Bell regarding advertising in the 1981 edition of the Yellow Pages and they were informed that they would have to install telephone service at their Mesquite premises before such advertising could be accepted. They completed their move to the new location and had a telephone installed there.

Ken Helms signed an agreement dated May 4, 1981, providing for the placement of the following advertisement in the 1981 Consumer Edition and the Business-to-Business Edition of the Yellow Pages. ¹

CHEM STRIP

DALLAS' OLDEST AND MOST REPUTABLE CHEMICAL IMMERSION PROCESS FOR PAINT & RUST REMOVAL

820 Scyene Rd----------228-6437

The agreement included the following clause:

The applicant agrees that the Telephone Company shall not be liable for errors in or omissions of the directory advertising beyond the amount paid for the advertising omitted, or in which errors occur, for the issue life of the directory involved.

This ad was printed correctly in the Business-to-Business Edition, but the Consumer Edition erroneously listed the telephone number as "228-6437." Shortly after its publication in October 1981, the Helmses discovered the error and informed Southwestern Bell.

The Helmses requested Southwestern Bell to implement an intercept service to route incoming telephone calls from the incorrect number to the correct one. Southwestern Bell refused, stating that such an intercept was not mechanically feasible because it would require the creation of a "228" prefix, one which did not previously exist in the Dallas area. Southwestern Bell refunded the amount paid for the incorrect advertisement and made no further billing.

The Helmses filed suit in Texas state court against Southwestern Bell, which succeeded in removing the case to federal district court. ² The Helmses alleged that Chem Strip began to suffer a continuing decline in revenues after the publication of the incorrect ad, ultimately leaving them no alternative but to sell their company at a loss in February 1982. The Helmses alleged two causes of action, one under the DTPA and one under the common law of negligence. The district court granted Southwestern Bell's motion for summary judgment, reasoning that a simple breach of contract did not create an action under the DTPA and that the limitation of liability clause was enforceable to preclude any common law claims. The Helmses appeal.

II.

All facts and inferences must be viewed in the light most favorable to the Helmses, the party opposing the summary judgment motion. See United States v. Diebold, 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). For the purposes of the motion, Southwestern Bell did not challenge any of the Helmses' factual assertions. This case was thus an appropriate one for resolution by summary judgment, for there were no genuine issues as to any material facts. See Nicolson v. Life Insurance Co. of the Southwest, 783 F.2d 1316, 1318 (5th Cir.1986). The only issues were ones of law: whether Southwestern Bell's conduct gave rise to an action on behalf of the Helmses under either the DTPA or Texas common law.

A.

The Helmses claim that Southwestern Bell violated the terms of the DTPA both in misprinting their telephone number and in refusing to provide an intercept service. Their complaint alleged that "[i]n the course of the transaction made the basis of this lawsuit," Southwestern Bell violated several provisions of the DTPA: (1) committing a "breach of an express or implied warranty," in violation of Sec. 17.50(a)(2), by failing to print the correct number; (2) engaging in "false, misleading, or deceptive acts or practices," in violation of Sec. 17.46(a), by refusing to institute an intercept service on the grounds of impracticality; (3) violating in an unspecified way Sec. 17.50(a)(3) (which prohibits "any unconscionable action or cause of action"), Sec. 17.46(b)(5) (which prohibits inter alia the representation of goods or services as having "characteristics, ... uses, [or] benefits ... which they do not have"), Sec. 17.46(b)(7) (which prohibits inter alia the representation of goods or services as being of "a particular standard, quality, or grade ... if they are of another"), and Sec. 17.46(b)(12) (which prohibits the representation of an agreement as conferring or involving "rights, remedies, or obligations which it does not have or involve ...").

Texas courts will give the DTPA "its most comprehensive application possible without doing any violence to its terms." Cameron v. Terrell & Garrett, 618 S.W.2d 535, 541 (Tex.1981); see also DTPA Sec. 17.44. Nevertheless, this Court has held that the DTPA, however far-reaching it may be, has not completely supplanted the Texas common law of contracts. "[A] simple breach of contract is not contemplated as a deceptive trade practice under the Texas DTPA...." Dura-Wood Treating Co. v. Century Forest Industries, Inc., 675 F.2d 745, 756 (5th Cir.), cert. denied, 459 U.S. 865, 103 S.Ct. 144, 74 L.Ed.2d 122 (1982). "[A]n allegation of breach of contract--without more--does not constitute a false, misleading, or deceptive action such as would violate section 17.46 of the DTPA." Id. Although the Dura-Wood defendant had "acted unconscionably in breaching the contract," the DTPA did not apply. Id. at 755-56.

The Dura-Wood panel directly based its holdings on two Texas intermediate court opinions. See Coleman v. Hughes Blanton, Inc., 599 S.W.2d 643, 646 (Tex.Civ.App.--Texarkana 1980, no writ); Holloway v. Dannenmaier, 581 S.W.2d 765, 767 (Tex.Civ.App.--Fort Worth 1979, writ ref'd n.r.e.). As the Holloway court observed, "[u]sually mere failure to later perform a promise does not constitute misrepresentation." Id. (citation omitted). The Texas Supreme Court has now adopted the rule of Dura-Wood and the lower Texas courts that "a mere breach of contract, without more, does not constitute a 'false, misleading or deceptive act' in violation of the DTPA." Ashford Development, Inc. v. USLife Real Estate Services Corp., 661 S.W.2d 933, 935 (Tex.1983) (citing Dura-Wood and Coleman). The district court below applied this rule in its determination that the Helmses had no cause of action under the DTPA. We agree. ³

The "more" that is required to change a breach of contract action into a DTPA claim is not settled by Texas case law. In Martin v. Lou Poliquin Enterprises, Inc., 696 S.W.2d 180 (Tex.App.--Houston [14th Dist] 1985, writ ref'd n.r.e.), evidence indicated that a defendant which solicited Yellow Pages advertising contracted with the plaintiff to submit the plaintiff's ad to the telephone company but failed to do so. The defendant then assured the plaintiff that the ad had been submitted, and the plaintiff took no further action until the Yellow Pages were published without the ad. On these facts, the Martin court affirmed the plaintiff's DTPA award. Similarly, in White v. Southwestern Bell Telephone Co., Inc., 651 S.W.2d 260, 262 (Tex.1983), Southwestern Bell misprinted the plaintiff's telephone number and then assured him that an intercept service would be provided. The plaintiff testified that an effective intercept was not provided, and the White court reversed the trial court's grant of an instructed verdict for Southwestern Bell on his DTPA claim. See also Reuben H. Donnelley Corp. v. McKinnon, 688 S.W.2d 612, 614 (Tex.App.--Corpus Christi 1985, writ ref'd n.r.e.) (plaintiff reassured several times that Yellow Pages advertising had been procured, but ad did not appear); Southwestern Bell Telephone Co. v. Nash, 586 S.W.2d 647, 648 (Tex.Civ.App.--Austin 1979, no writ) (Southwestern Bell assured plaintiff that intercept service would be provided). In any event, no such assurances and misrepresentations occurred here. ⁴

The acts of which the Helmses complain amount to no more than a simple breach of contract. Southwestern Bell contracted with the Helmses to print their advertisement as requested but because of some unspecified error failed to do so. The "misrepresentation" alleged by the Helmses was nothing more than Southwestern Bell's failure to perform its promise to correctly print the ad. The Helmses have alleged no other misrepresentations. ⁵ They requested an intercept service and Southwestern Bell simply refused. ⁶ The Helmses have not indicated how such a refusal can be transformed into a DTPA cause of action. ⁷ The facts alleged by the Helmses constitute the "allegation of breach of...