Southwestern Bell Telephone Co. v. DeLanney

• Decision Date: 06 March 1991
• Docket Number: No. C-8282,C-8282
• Citation: 809 S.W.2d 493
• Parties: SOUTHWESTERN BELL TELEPHONE COMPANY, Petitioner, v. Eugene C. DeLANNEY, Respondent
• Court: Texas Supreme Court

Page 493

809 S.W.2d 493

SOUTHWESTERN BELL TELEPHONE COMPANY, Petitioner, v. Eugene C. DeLANNEY, Respondent.

No. C-8282.

March 6, 1991.

Rehearing Overruled June 19, 1991.

Andrew J. Mytelka, John A. Buckley, Jr., Galveston, Richard Billeaud, Houston, for petitioner.

Anthony P. Griffin, Galveston, for respondent.

OPINION

PHILLIPS, Chief Justice.

We consider whether a cause of action for negligence is stated by an allegation that a telephone company negligently failed to perform its contract to publish a Yellow Pages advertisement. The court of appeals held that the company's failure to perform its contract was a basis for recovery in tort as well as contract, and that the clause limiting the telephone company's liability could not apply to limit tort damages. 762 S.W.2d 772. We reverse the judgment of the court of appeals and render judgment in favor of Bell.

Facts

Eugene DeLanney advertised his real estate business in the Galveston Yellow Pages for several years. For the 1980-1981 directory, he again contracted with Bell for a Yellow Pages advertisement. At this time DeLanney had two business phones, a rotary line and a single line. Prior to publication of the 1980-1981 directory, DeLanney's wife asked Bell to cancel the single line and add a third number to their existing rotary line. The Yellow Pages advertisement was billed to DeLanney's single line. When that line was canceled, DeLanney's Yellow Pages advertisement was automatically deleted from the directory due to Bell's internal procedures.

When the advertisement was not published as promised, DeLanney sued Bell, alleging negligence and violation of the Texas Deceptive Practices--Consumer Protection Act ("DTPA"), TEX.BUS. & COM.CODE §§ 17.41-17.63. Bell answered and urged by special exception that DeLanney's petition failed to state a cause of action for negligence. No ruling was made on this special exception, and DeLanney proceeded to trial on both claims.

After DeLanney rested his case in chief, Bell moved for a directed verdict on both theories of liability. The trial court granted Bell's motion as to the DTPA claim, but denied it as to negligence. The remaining issues were submitted to a jury.

The jury found that Bell was negligent in omitting DeLanney's advertisement from the Yellow Pages and that such negligence was a proximate cause of damages to DeLanney. The jury assessed these damages at $109,000 for lost profits in the past and $40,000 for lost profits in the future. After ordering a partial remittitur which reduced future lost profits to $21,480, the trial court rendered judgment for DeLanney. Bell appealed.

Breach of Contract or Negligence

The court of appeals, with one justice concurring and one justice dissenting, affirmed. A majority of the court held that Bell's cancellation of DeLanney's Yellow Pages advertisement was correctly submitted as a negligence claim. The dissenting justice argued that because DeLanney sought damages for breach of a duty created under the contract, rather than a duty imposed by law, the claim sounded only in contract. We agree with the dissent.

The majority below relied on Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 157, 204 S.W.2d 508, 510 (1947), where we quoted from 38 AM.JUR. Negligence § 20 (1941) as follows:

Accompanying every contract is a common-law duty to perform with care, skill, reasonable expedience and faithfulness the thing agreed to be done, and a negligent failure to observe any of these conditions is a tort, as well as a breach of the contract.

In Scharrenbeck, the defendant agreed to repair a water heater in plaintiff's home. A short time after repair, the heater ignited the roof, destroying the house and its contents. Although the contract obligated the defendant to put the water heater back in good working order, the law also implied a duty to the defendant to act with reasonable skill and diligence in making the repairs so as not to injure a person or property by his performance. In failing to repair the water heater properly, the defendant breached its contract. In burning down plaintiff's home, the defendant breached a common-law duty as well, thereby providing a basis for plaintiff's recovery in tort.

The principle recognized in Scharrenbeck has also been recognized by commentators in this area. As one prominent authority has explained: "Tort obligations are in general obligations that are imposed by law--apart from and independent of promises made and therefore apart from the manifested intention of the parties--to avoid injury to others." W. KEETON, D. DOBBS, R. KEETON & D. OWEN, PROSSER AND KEETON ON THE LAW OF TORTS § 92 at 655 (5th Ed.1984) [hereinafter "PROSSER AND KEETON"]. If the defendant's conduct--such as negligently burning down a house--would give rise to liability independent of the fact that a contract exists between the parties, the plaintiff's claim may also sound in tort. Conversely, if the defendant's conduct--such as failing to publish an advertisement--would give rise to liability only because it breaches the parties' agreement, the plaintiff's claim ordinarily sounds only in contract. ¹

In determining whether the plaintiff may recover on a tort theory, it is also instructive to examine the nature of the plaintiff's loss. When the only loss or damage is to the subject matter of the contract, the plaintiff's action is ordinarily on the contract. See PROSSER AND KEETON at 656; 1 J. EDGAR, JR. & J. SALES, TEXAS TORTS AND REMEDIES § 1.03[b] at 1-36 (1990). We applied this analysis in Jim Walter Homes Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.1986), where we wrote:

The acts of a party may breach duties in tort or contract alone or simultaneously in both. 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.

Bell's duty to publish DeLanney's advertisement arose solely from the contract. DeLanney's damages, lost profits, were only for the economic loss caused by Bell's failure to perform. Although DeLanney pleaded his action as one in negligence, he clearly sought to recover the benefit of his bargain with Bell. We hold that Bell's failure to publish the advertisement was not a tort. ² Under our analysis in Reed, DeLanney's claim was solely in contract.

DeLanney, however, did not request jury questions on breach of contract. Because the jury was asked only questions as to liability resulting from Bell's negligence, DeLanney waived any claim for breach of contract. Ramos v. Frito-Lay, Inc., 784 S.W.2d 667, 668 (Tex.1990) (the plaintiff has the "burden to obtain affirmative answers to jury questions as to the necessary elements of his cause of action") (citing TEX.R.CIV.P. 279).

DeLanney did obtain an affirmative answer to the question whether there was a disparity in bargaining power between the parties in negotiating the Yellow Pages agreement. The court of appeals correctly determined that disparity in bargaining power is irrelevant in a negligence suit. Perhaps the issue was submitted because DeLanney pled that Bell's conduct was unconscionable under the DTPA. Because of his failure to comply with the notice requirements of the DTPA, however, DeLanney's entire cause of action under the DTPA, including any claim of unconscionability, was dismissed by a directed verdict. For this reason, and because DeLanney submitted no contract issues, the jury finding concerning disparity of bargaining power is of no effect.

For the foregoing reasons, the judgment of the court of appeals is reversed, and judgment is rendered that DeLanney take nothing.

GONZALEZ and DOGGETT, JJ., concur.

MAUZY, J., dissents.

GONZALEZ, Justice, concurring.

I agree with the court that Bell's failure to publish the advertisement was not a tort and that it sounded solely in contract. I also agree that DeLanney failed to discharge his burden to obtain affirmative findings to jury questions on the contract. However, I do not fault the court of appeals for its confusion. We have muddled the law of "contorts" and an all encompassing bright line demarcation of what constitutes a tort distinct from breach of contract has proven to be elusive. See generally W. PROSSER & W. KEETON, THE LAW OF TORTS § 1 (5th ed. 1984); see also American Nat'l Petro. Co. v. Transcontinental Gas Pipe Line Corp., 798 S.W.2d 274, 280 (1990) (Gonzalez, J., dissenting).

DeLanney and the court of appeals rely heavily on the statement in Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 157, 204 S.W.2d 508, 510 (1947), that:

Accompanying every contract is a common-law duty to perform with care, skill, reasonable expedience and faithfulness the thing agreed to be done, and a negligent failure to observe any of these conditions is a tort, as well as a breach of the contract.

Despite this broad language, not every breach of contract accompanied by negligence creates a cause of action in tort. In International Printing Pressman & Assistants' Union v. Smith, 145 Tex. 399, 198 S.W.2d 729, 735 (1946), we acknowledged that no single concise rule will define the rights of parties in every situation. We nonetheless wrote:

[G]enerally speaking, "actions in contract and in tort are to be distinguished in that an action in contract is for the breach of a duty arising out of a contract either express or implied, while an action in tort is for a breach of duty imposed by law...." "[I]f the action is not maintainable without pleading and proving the contract, where the gist of the action is the breach of the contract, either by malfeasance or nonfeasance, it is, in substance an action on the contract, whatever may be the form of the pleading." (citations omitted).

Id., 198 S.W.2d at 735. I believe that this formulation comes closer than Scharrenbeck to stating a general rule to distinguish contract from tort and that the broad language in Scharrenbeck must be read in light...