COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-04-065-CV
TARRANT
COUNTY HOSPITAL DISTRICT APPELLANT
d/b/a
JOHN PETER SMITH HOSPITAL
V.
GE
AUTOMATION SERVICES, INC., f/k/a APPELLEES
GE
INDUSTRIAL SYSTEMS SOLUTIONS,
INC.,
SUPPLY OPERATIONS, INC., f/k/a
GE
SUPPLY OPERATIONS, INC., AND
GENERAL
ELECTRIC COMPANY
------------
FROM
THE 153RD DISTRICT COURT OF TARRANT COUNTY
OPINION
Appellant
Tarrant County Hospital District d/b/a John Peter Smith Hospital appeals from a
summary judgment granted to Appellees1 in a suit
brought by Appellant against Appellees alleging various causes of action arising
out of a transaction between the parties in 1996. We affirm.
BACKGROUND
Appellant
is a unit of local government that provides health care services to individuals
and families in Fort Worth, Tarrant County, Texas. See Tex. Health & Safety Code Ann. §§
281.001-.002 (Vernon 2001 & Supp. 2004-05). In 1995-96, Appellant
contracted with Appellees to design, supply, and install a power supply system
for John Peter Smith Hospital (“the Hospital”). This work was
completed by December 31, 1996.
On
April 1, 2002, Appellant filed the underlying lawsuit against Appellees,
alleging various causes of action as a result of the alleged failure of
Appellees’ materials, which were used to construct in the Hospital an
electrical system called a bus duct system.2
Appellant contended that Appellees designed defective joint covers for the bus
duct system; bus duct joints connect bus duct segments, and the joint covers
protect the bus duct joints from the elements, including moisture
infiltration. Appellant alleged that the defective joint covers were not
weatherproof and allowed water to infiltrate the bus duct system, causing
electrical shorts and damage to the bus duct system.3
Appellant sought damages for breach of contract, breach of express and implied
warranties, products liability, negligence, and gross negligence.4
Appellees
answered asserting, among other things, that Appellant’s contract and warranty
causes of action are barred by the affirmative defense of limitations (without
citing a specific limitations provision) and that Appellant’s tort causes of
action are barred under the “economic loss rule”5
because Appellant is seeking to recover losses resulting from an alleged breach
of the parties' contract.
Appellant
filed a motion for partial summary judgment claiming Appellees’ statute of
limitations affirmative defense is not applicable to Appellant, a governmental
entity. Appellant’s motion specifically discussed the limitations
provision of section 16.061 of the Texas Civil Practice and Remedies Code.6
Appellees
then filed a traditional motion for summary judgment claiming Appellant’s
non-tort claims are barred by the four-year limitations provision of section
2.725 of the Texas Business and Commerce Code. See Tex. Bus. & Com. Code Ann. § 2.725
(Vernon 1994). Appellees’ motion also contended that Appellant’s tort causes
of action are barred by the economic loss rule. Appellees’ motion further
alleged as a ground for summary judgment that even if some sort of immunity from
limitations applied to Appellant, Zurich is not immune to the statute of
limitations. Appellees Automation and Supply additionally filed a no-evidence
motion for summary judgment asserting that Appellant had no evidence to support
any element of any of its causes of action.
Appellant
responded to Appellees’ traditional motion for summary judgment by stating
that the governing statute of limitations is section 16.061 of the Texas Civil
Practice and Remedies Code, rather than section 2.725 of the Texas Business and
Commerce Code; therefore, Appellant contended that it, and Zurich, were immune
from any statute of limitations defense. Appellant further claimed that
Appellees had failed to meet their burden of proof regarding the economic loss
rule, which Appellant labeled an affirmative defense. Lastly, Appellant
filed objections to the no-evidence motion for summary judgment filed by
Appellees Automation and Supply, contending the use of such a motion to
challenge each element of each cause of action asserted by Appellant was
prohibited and the no-evidence motion was untimely.
On
February 6, 2004, the trial court signed a judgment granting Appellees’ motion
for summary judgment,7 ordering that Appellant take
nothing by its action against Appellees, and denying Appellant’s motion for
partial summary judgment and Appellant’s objections.
APPELLANT’S
ISSUES ON APPEAL
Appellant
brings four issues on appeal. In its first issue, Appellant contends the trial
court erred in ruling that Appellant, a Texas governmental entity, is not immune
from the applicable contract and warranty statutes of limitations.
Appellant’s second issue asserts the trial court erred in holding that Zurich
does not have the same rights as the Tarrant County Hospital District with
respect to governmental immunity from the statute of limitations.
Appellant’s third issue alleges the trial court erred in ruling that the
economic loss rule bars Appellant’s tort claims. In its fourth issue,
Appellant claims the trial court erred in ruling there is not more than a
scintilla of evidence to support each element of Appellant’s causes of action
against Automation and Supply and by ruling that their no-evidence motion did
not violate the procedure set forth in civil procedure rule 166a(i).8
THE PARTIES’
STIPULATIONS
Appellant
filed the current suit on April 1, 2002. The parties subsequently agreed
upon four written stipulations of fact:
1. All products or goods complained of by Plaintiff in the above-styled lawsuit
were sold to the Hospital no later than December 31, 1996.
2.
Tender of delivery to the Hospital of the products or goods complained of by
Plaintiff in the above-styled lawsuit occurred no later than December 31, 1996.
3.
Installation of the “products, which comprise the Spectra Series TM Busway (“Busway System”)” complained of
by Plaintiff in the above-styled lawsuit was completed by December 31, 1996.
4.
All breaches of contract alleged by Plaintiff in the above-styled lawsuit
occurred no later than December 31, 1996.
STANDARD OF
REVIEW
A. Traditional Motion
When
a trial court's order granting summary judgment does not specify the ground or
grounds relied on for its ruling, summary judgment will be affirmed on appeal if
any of the theories presented to the trial court and preserved for appellate
review are meritorious. Provident Life & Accident Ins. Co. v. Knott,
128 S.W.3d 211, 216 (Tex. 2003); Star-Telegram, Inc. v. Doe, 915 S.W.2d
471, 473 (Tex. 1995); Harwell v. State Farm Mut. Auto. Ins. Co., 896
S.W.2d 170, 173 (Tex. 1995).
In
reviewing a traditional summary judgment, we determine whether the movant met
its summary judgment burden by establishing that no genuine issue of material
fact exists and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); S.W. Elec.
Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); City of Houston v.
Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). The burden
of proof is on the movant, and all doubts about the existence of a genuine issue
of material fact are resolved against the movant. S.W. Elec. Power Co.,
73 S.W.3d at 215; Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911
(Tex. 1997); Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co.,
391 S.W.2d 41, 47 (Tex. 1965). Therefore, we must view the evidence and
its reasonable inferences in the light most favorable to the nonmovant. Great
Am., 391 S.W.2d at 47.
A
defendant is entitled to summary judgment if the summary judgment evidence
establishes, as a matter of law, that at least one element of a plaintiff’s
cause of action cannot be established. Elliott-Williams Co. v. Diaz,
9 S.W.3d 801, 803 (Tex. 1999). The defendant as movant must present
summary judgment evidence that negates an element of the plaintiff’s
claim. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.
1995). Once the defendant produces sufficient evidence to establish the
right to summary judgment, the burden shifts to the plaintiff to come forward
with competent controverting evidence raising a genuine issue of material fact
with regard to the element challenged by the defendant. Id.
A
defendant is entitled to summary judgment on an affirmative defense if the
defendant conclusively proves all the elements of the affirmative defense.
Rhone-Poulenc, Inc. v. Ramirez, 997 S.W.2d 217, 223 (Tex. 1999). To
accomplish this, the defendant-movant must present summary judgment evidence
that establishes each element of the affirmative defense as a matter of
law. Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 121 (Tex. 1996).
The
summary judgment will be affirmed only if the record establishes that the movant
has conclusively proved all essential elements of the movant's cause of action
or defense as a matter of law. Clear Creek Basin, 589 S.W.2d at
678.
B. No-Evidence Motion
After
an adequate time for discovery, the party without the burden of proof may,
without presenting evidence, move for summary judgment on the ground that there
is no evidence to support an essential element of the nonmovant's claim or
defense. Tex. R. Civ. P.
166a(i). The motion must specifically state the elements for which there is no
evidence. Id.; Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d
193, 207 (Tex. 2002). The trial court must grant the motion unless the
nonmovant produces summary judgment evidence that raises a genuine issue of
material fact. See Tex. R.
Civ. P. 166a(i) & cmt.; S.W. Elec. Power Co., 73 S.W.3d at
215.
We
review the evidence in the light most favorable to the party against whom the
no-evidence summary judgment was rendered. King Ranch, Inc. v. Chapman,
118 S.W.3d 742, 751 (Tex. 2003), cert. denied, 124 S. Ct. 2097 (2004); Johnson,
73 S.W.3d at 197; Morgan v. Anthony, 27 S.W.3d 928, 929 (Tex.
2000). If the nonmovant brings forward more than a scintilla of probative
evidence that raises a genuine issue of material fact, then a no-evidence
summary judgment is not proper. Moore v. K Mart Corp., 981 S.W.2d
266, 269 (Tex. App.—San Antonio 1998, pet. denied).
TRADITIONAL
MOTION FOR SUMMARY JUDGMENT
Immunity From
Statute of Limitations
Appellant
argued in its motion for partial summary judgment and in its opening brief on
appeal that it is immune from a statute of limitations defense under Texas
common law and section 16.061 of the Texas Civil Practice and Remedies
Code. Appellees, on the other hand, asserted in their motion for summary
judgment and in their brief on appeal that section 16.061 is not applicable and
that limitations is a viable defense pursuant to section 2.725 of the Texas
Business and Commerce Code (Texas’s version of the Uniform Commercial Code).
In
its first issue on appeal, Appellant contends the trial court erred in holding
that Appellant “is not immune from the applicable contract and warranty
statutes of limitations.” Inexplicably, Appellant’s brief does not
mention or challenge the granting of summary judgment on the basis of section
2.725. When the trial court's judgment rests upon more than one
independent ground or defense, the aggrieved party must assign error to each
ground, or the judgment will be affirmed on the ground to which no complaint is
made. Davis v. Conveyor-Matic, Inc., 139 S.W.3d 423, 428 (Tex.
App.—Fort Worth 2004, no pet.). Because the phrasing of Appellant’s
first issue is broad enough to encompass a challenge to the application of
section 2.725 to the facts of the case, and because Appellant’s reply brief
does specifically address this issue, we conclude Appellant has properly
challenged this ground upon which the trial court could have granted summary
judgment.
Section 16.061 of the Texas Civil Practice and
Remedies Code
Appellant
relies upon the current version of article 16.061. See Tex. Civ. Prac. & Rem. Code Ann. §
16.061 (Vernon Supp. 2004-05). However, because the parties stipulated
that any breach occurred by December 31, 1996, the version of the statute that
applies to the instant case is the version in effect at that time, which
provided as follows:
§
16.061. Rights Not Barred
(a)
A right of action of this state, a county, an incorporated city or town,
a navigation district, a port authority, an entity acting under Chapter 341,
Acts of the 57th Legislature, Regular Session, 1961 (Article 1187f, Vernon’s
Texas Civil Statutes), or a school district is not barred by any of the
following sections: 16.001-16.004, 16.006, 16.007, 16.021-.028,
16.0300-.032, 16.035-16.037, 16.051, 16.062, 16.063, 16.065-16.067, 16.070,
16.071, 31.006, or 71.021.[9]
The
Tarrant County Hospital District was created under the authority of the Texas
Constitution and chapter 281 of the Texas Health and Safety Code. See
Tex. Const. art. IX, § 4; Tex. Health & Safety Code Ann. ch.
281 (Vernon 2001 & Supp. 2004-05). As such, it is a branch of the
State. See Tarrant County Hosp. Dist. v. Henry, 52 S.W.3d 434,
445-46 (Tex. App.—Fort Worth 2001, no pet.) (op. on reh’g) (holding Tarrant
County Hospital District is a branch of the State, having been created by
authority of the Texas Legislature and the Texas Constitution); Armendarez v.
Tarrant County Hosp. Dist., 781 S.W.2d 301, 307 (Tex. App.—Fort Worth
1989, writ denied) (holding Tarrant County Hospital District is a political
subdivision of the State of Texas).
Therefore,
if section 16.061 applies to Appellant’s causes of action for breach of
contract and warranty, then these causes of action are not barred by
limitations.
Section 2.725 of the Uniform Commercial Code
Appellees
contend that the contract between the parties involves a transaction in goods,
and as such section 2.725 governs Appellant’s causes of action for breach of
contract and warranty. This section of the U.C.C. provides as follows:
§
2.725. Statute of Limitation in Contracts for Sale
(a)
An action for breach of any contract for sale must be commenced within four
years after the cause of action has accrued. By the original agreement the
parties may reduce the period of limitation to not less than one year but may
not extend it.
(b)
A cause of action accrues when the breach occurs, regardless of the aggrieved
party’s lack of knowledge of the breach. A breach of warranty occurs
when tender of delivery is made, except that where a warranty explicitly extends
to future performance of the goods and discovery of the breach must await the
time of such performance the cause of action accrues when the breach is or
should have been discovered.
Tex. Bus. & Com. Code Ann. § 2.725 (emphasis added).
Appellees
claim this statute applies to Appellant because an “aggrieved party” means
“a party entitled to pursue a remedy,” a “party” means “a person that
has engaged in a transaction or made an agreement subject to this title,” and
a “person” includes “government, governmental subdivision, agency or
instrumentality.” Id. § 1.201(b)(2), (26), (27) (Vernon Supp.
2004-05).
It
is undisputed that Appellant filed this lawsuit more than five years after
Appellees’ alleged breach of contract and warranty. If section 2.725,
rather than section 16.061, applies to the transaction between the parties,
Appellant’s contract and warranty claims are barred by limitations.
Rules of Statutory Construction
In
our construction of the interaction of these two code sections, we are “not to
second-guess the policy choices that inform our statutes or to weigh the
effectiveness of their results; rather, our task is to interpret those statutes
in a manner that effectuates the Legislature’s intent.” McIntyre v.
Ramirez, 109 S.W.3d 741, 748 (Tex. 2003); see Phillips v. Beaber, 995
S.W.2d 655, 658 (Tex. 1999). In determining the Legislature’s intent, we
first look to the statutes’ plain and common meanings. Tex. Gov’t Code Ann. § 311.011(a)
(Vernon 1998) (“Words and phrases shall be read in context and construed
according to the rules of grammar and common usage.”). We presume the
Legislature intended the entire statute to be effective, and every word in a
statute is presumed to have been used for a purpose; a cardinal rule of
statutory construction is that each sentence, clause, and word is to be given
effect if reasonable and possible. Tex. Workers’ Comp. Ins. Fund v.
Del Indus., Inc., 35 S.W.3d 591, 593 (Tex. 2000). Where language in a
statute is unambiguous, we must seek the intent of the Legislature as found in
the plain and common meaning of the words and terms used. Monsanto Co.
v. Cornerstones Mun. Util. Dist., 865 S.W.2d 937, 939 (Tex. 1993).
Words in statutes have their ordinary meanings unless the statute defines them
or they are connected with and used with reference to a particular trade or
subject matter or are a term of art. Tex. Gov’t Code Ann. § 312.002
(Vernon 1998); Dallas Morning News Co. v. Bd. of Trustees, 861 S.W.2d
532, 535-36 (Tex. App.—Dallas 1993, writ denied).
Discussion
The
code sections referenced in section 16.061 deal with statutes of limitations for
at least twenty-eight separate and distinct causes of action, none of which is
applicable to any of the causes of action alleged in Appellant’s suit against
Appellees. Additionally, section 16.061 recites that the State is not
barred by section 16.051, which is entitled “Residual Limitation Period” and
states, “Every action for which there is no express limitations period, except
an action for the recovery of real property, must be brought not later than four
years after the day the cause of action accrues.” Tex. Civ. Prac. & Rem. Code Ann. §
16.051 (Vernon 1997). Appellees assert that the residual limitation period
of section 16.051 is not applicable because section 2.725 contains an express
limitations period that bars Appellant from pursuing its contract and warranty
causes of action.
Section
2.102 of the Uniform Commercial Code recites that chapter 2 applies to
transactions in goods. Tex. Bus. &
Com. Code Ann. § 2.102 (Vernon 1994). “Goods” means “all
things (including specially manufactured goods) which are movable at the time of
identification to the contract for sale.” Id. § 2.105(a).
When a contract contains a mix of sales and services, the U.C.C. applies if the
sale of goods is the “dominant factor” or “essence” of the
transaction. Cont’l Casing Corp. v. Siderca Corp., 38 S.W.3d 782,
787 (Tex. App.—Houston [14th Dist.] 2001, no pet.); Westech Eng’g, Inc.
v. Clearwater Constructors, Inc., 835 S.W.2d 190, 197 (Tex. App.—Austin
1992, no writ).
The
contract documents between the parties state that the bid package is a
“product purchase” for electrical distribution. Accordingly, the U.C.C.
applies because the sale of goods was the dominant factor or essence of the
transaction between the parties.
The
four-year limitations period of section 2.725 applies to an action for the
breach of contract for the sale of goods. Big D Serv. Co. v. Climatrol
Indus., Inc., 523 S.W.2d 236, 236 (Tex. 1975). Additionally, section
2.725 applies to an action for breach of warranty for the sale of goods. Safeway
Stores, Inc. v. Certainteed Corp., 710 S.W.2d 544, 545-46 (Tex. 1986).
Therefore, unless Appellant enjoys immunity from the limitations provision of
section 2.725, its contract and warranty causes of action are barred.
In
support of its contention that it is not subject to the limitations provision of
section 2.725, Appellant relies upon the immunity provision of section
16.061. Appellees assert that the immunity from limitations provided by
section 16.061 is applicable only to actions specifically referenced within the
statute itself. Appellees conclude that because section 2.725 is not
mentioned or referenced in any way in section 16.061, the limitations provision
of section 2.725 is applicable to Appellant’s contract and warranty causes of
action.
Appellant
acknowledges that section 16.061 does not specifically list section 2.725 as a
limitations statute from which governmental entities are immune. However,
Appellant argues there is no indication in any statute or case law that the
Legislature ever intended to abrogate the rule of governmental immunity with
respect to transactions involving the sale of goods. Appellant contends
that it is indisputable that suits on other contract actions are subject to
governmental immunity from limitations, citing section 16.004, which is
specifically included in section 16.061. None of the provisions of section
16.004 are applicable to the sale of goods alleged in the instant case.10
As
further supporting authority, Appellant relies upon a case that holds that the
predecessor to section 16.061, former article 5517,11
included immunity from the limitations provisions regarding personal actions and
actions to recover land. See El Paso v. Del Norte Golf & Country
Club, Inc., 614 S.W.2d 168, 169-70 (Tex. Civ. App.—El Paso 1980, writ
ref’d n.r.e.). Del Norte was decided under former article 5517,
which provided that “[t]he right of the State, all counties, incorporated
cities and all school districts shall not be barred by any of the provisions of
this Title.” Del Norte concluded that the cause of action pled,
rent allegedly owed the governmental entity under a lease, was a cause of action
under “this Title,” which included the various statutes of limitations of
personal actions and limitations of actions to recover land. Id.
Accordingly, the governmental entity was immune from limitations by virtue of
article 5517. Id. Because the particular cause of action in Del
Norte was specifically covered by the statute granting governmental immunity
from limitations, we do not find it supportive of Appellant’s argument in the
instant case that a non-covered
cause of action should be included under section 16.061.
The
supreme court has discussed the interplay between section 16.008, a statute of
repose regarding claims against architects, engineers, interior designers, and
landscape architects, and section 16.061. See Johnson v. City of Fort
Worth, 774 S.W.2d 653, 653-55 (Tex. 1989).12
Like section 2.725, section 16.008 was not mentioned in section 16.061.
The supreme court found nothing in the language or history of the enactment of
section 16.008 to suggest that the predecessor to that section was to have been
encompassed within the provisions of former article 5517, now section
16.061. Id. at 655. Accordingly, the court held that the
governmental entity could not claim immunity under section 16.061 from the
statute of repose listed in section 16.008. Id.
Likewise,
we find nothing in the language or history or enactment of section 2.725 to
indicate that the Legislature intended to include this section within the
immunity section of section 16.061 or former article 5517. Looking at the
plain meaning of section 16.061, we find its meaning is unambiguous. If
the Legislature had intended to exempt a governmental entity from any and all
statutes of limitations or repose, it could have done so. Instead, when
the Legislature enacted section 16.061, it expressly provided that a
governmental entity is not barred by any of the thirty separate statutes that
are specifically enumerated in section 16.061; section 2.725 is not mentioned or
referenced in section 16.061.
Indeed,
section 2.725 is not alone in its omission from immunity under section
16.061. There exist numerous other statutes of limitations or repose for
which the Legislature did not specifically provide governmental immunity under
section 16.061. See, e.g., Tex.
Civ. Prac. & Rem. Code Ann. §§ 16.009 (suit against persons
furnishing construction or repair of improvements), 16.010 (misappropriation of
trade secrets), 16.011 (surveyors), 16.029 (evidence of title to land by
limitations) (Vernon 2002), 16.012 (products liability claims against a
manufacturer or seller) (Vernon Supp. 2004-05).
We
hold the trial court did not err in granting summary judgment on the ground that
Appellant is not immune from the limitations provision of section 2.725.
Accordingly, we overrule Appellant’s first issue on appeal.
Does Zurich
Have The Same Rights As The Hospital?
In
Appellant’s second issue, it contends the trial court erred in granting
summary judgment on the ground that Zurich does not have the same rights as the
Hospital. This issue is premised upon our sustaining Appellant’s first
issue, which we have overruled. Accordingly, we need not address
Appellant’s second issue, which is overruled.
Economic Loss
Rule
In
their motion for summary judgment, Appellees contended that Appellant’s causes
of action for products liability, negligence, and gross negligence are barred by
the “economic loss rule.” The economic loss rule precludes recovery of
economic losses in tort cases when the loss is the subject matter of a contract
between the parties. See S.W. Bell, 809 S.W.2d at 494; Jim
Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 617-18 (Tex. 1986). When a
plaintiff asserts a tort claim arising from a contract, we must look to the
substance of the cause of action, not the manner in which it was plead, to
determine the type of action that is brought. See Jim Walter Homes,
711 S.W.2d at 617-18. When the injury is only the economic loss to the
subject of a contract itself, the action sounds in contract alone. S.W.
Bell, 809 S.W.2d at 494.
Is the “Economic Loss Rule” an Affirmative
Defense?
Appellant
and Appellees disagree on whether the economic loss rule is an affirmative
defense on which Appellees had the burden of proof, or whether it is merely a
court-adopted rule that provides a bar to recovery in tort for certain types of
damages claimed by a plaintiff. Neither party has cited us to any case
dealing with this precise issue, and we have found none.
An
affirmative defense establishes an independent reason why the plaintiff should
not recover on its asserted cause of action. Tex. Beef Cattle Co. v.
Green, 921 S.W.2d 203, 212 (Tex. 1996); Rodgers v. Comm’n For Lawyer
Discipline, No. 02-03-072-CV, 2004 WL 2108883, at *10 (Tex. App.—Fort
Worth Sept. 23, 2004, no pet. h.); see Tex. R. Civ. P. 94 (entitled
“Affirmative Defenses” and providing that a party’s pleading “shall set
forth affirmatively [specific enumerated defenses] and any other matter
constituting an avoidance or affirmative defense”).13
But the economic loss rule is not an independent reason for denying recovery;
instead, it applies to the contract that forms the basis of the existing dispute
and precludes recovery when a plaintiff’s injury is only the economic loss to
the subject of a contract itself, as determined from reviewing the substance of
plaintiff’s cause of action. See Jim Walter Homes, 711 S.W.2d at
617-18.
We
conclude that the economic loss rule is a not an affirmative defense within the
meaning of rule 94 but is a court-adopted rule for interpreting whether a party
is barred from seeking damages in an action alleging tort injuries resulting
from a contract between the parties.
Appellant’s
final amended petition states that Appellant brings these claims against
Appellees because they “failed to provide the Hospital with properly designed
products to construct a safe and reliable power supply system.” Under
the “Facts” section of the petition, Appellant recites that in 1995 it
decided to upgrade its electrical system and entered into a contact with another
vendor to construct a bus duct system. Appellant generated a bid package
for materials and equipment that would be used to construct the bus duct
system. Appellees submitted a bid to provide these products and to inspect
the bus duct system upon its completion to make certain it was installed and
operating in compliance with the manufacturer’s specifications.
Appellees’ bid was accepted, and they provided the materials and constructed
the bus duct system. However, Appellant alleged that the bus duct system failed
to operate correctly because Appellees defectively designed the bus duct joint
covers that they sold Appellant under the contract, and because Appellees failed
to properly inspect the bus duct system.
Appellant
claimed “significant damage to the other products which comprised the Busway
System” and to “other products which were used to construct the Busway
System.” By this pleading, Appellant alleged property damage to the
electrical busway system, which is the very product purchased from Appellees
that is the subject of Appellant’s contract and warranty claims.
Appellant’s pleadings do not specify damage separate or independent of the
busway, the product it contracted to purchase from Appellees.
We
conclude that the injuries allegedly resulting from Appellant’s causes of
action for products liability, negligence, and gross negligence are damages from
the economic loss to the subject of the contract between the parties, and these
actions sound in contract or breach of warranty, not in tort. See S.W.
Bell, 809 S.W.2d at 495 (holding economic loss resulting from alleged
negligence in failing to comply with contract to publish advertisement sounds
solely in contract and was barred by economic loss rule); Mid Continent
Aircraft Corp. v. Curry County Spraying Serv., Inc., 572 S.W.2d 308, 311
(Tex. 1978) (holding economic loss resulting from product with defective
workmanship and materials is not recoverable in strict liability because loss is
merely loss of value resulting from a failure of the product to perform
according to contractual bargain). Accordingly, we hold the trial court
did not err in granting summary judgment on this ground. We overrule
Appellant’s third issue.
NO-EVIDENCE
MOTION FOR SUMMARY JUDGMENT
We
have held that the trial court properly granted summary judgment to all
Appellees based upon grounds alleged in their traditional motion for summary
judgment. Therefore, we need not address Appellant’s fourth issue on
appeal, which challenges the no-evidence motion for summary judgment filed by
Appellees Automation and Supply. Accordingly, we overrule Appellant’s
fourth issue.
CONCLUSION
We
conclude the trial court properly granted summary judgment in favor of
Appellees, and we affirm the judgment of the trial court.
DIXON
W. HOLMAN
JUSTICE
PANEL
B: HOLMAN, WALKER, and MCCOY, JJ.
DELIVERED:
JANUARY 27, 2005
NOTES
1.
When appropriate, we will refer to Appellees collectively as “Appellees” or
will use the names of the individual entities: GE Automation Services, Inc.,
f/k/a GE Industrial Systems Solutions, Inc. (“Automation”); Supply
Operations, Inc., f/k/a GE Supply Operations, Inc. (“Supply”); and General
Electric Company (“General Electric”).
2.
The bus duct system consisted, in part, of various sizes of bus duct, which are
conduits for electricity.
3.
Although the suit was filed in Appellant’s name, the entity pursuing the suit
as plaintiff is American Guarantee and Liability Company (“Zurich”), which
insured Appellant and paid Appellant for the damages incurred as a result of the
defective bus duct system. Accordingly, Zurich asserts it is subrogated to
the rights of Appellant in this matter.
4.
Appellant initially also alleged a violation of the Texas Deceptive Trade
Practices Act; this cause of action was subsequently abandoned by Appellant.
5.
The economic loss rule precludes recovery of economic losses in negligence cases
when the loss is the subject matter of a contract between the parties. See
S.W. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494-95 (Tex. 1991).
6.
See note 9, infra.
7.
The trial court did not specify the grounds upon which the motion was granted
and did not specify whether it was granting the traditional motion, the
no-evidence motion, or both.
8.
See Tex. R. Civ. P.
166a(I).
9.
Act of May 29, 1993, 73d Leg., R.S., ch. 782, § 1, sec. 16.061, 1993 Tex. Gen.
Laws 3059, 3059 (amended 1997 & 2001) (current version at Tex. Civ. Prac. & Rem. Code Ann. §
16.061 (Vernon Supp. 2004-05))(emphasis added). Even if the current
version applied to the instant case, the changed language does not affect the
issue before this court.
10.
Section 16.004 provides that suit on the following actions must be brought not
later than four years after the day the cause of action accrues: specific
performance of a contract for the conveyance of real property; penalty or
damages on the penal clause of a bond to convey real property; debt; fraud;
breach of fiduciary duty; suit on the bond of an executor, administrator, or
guardian; suit against a partner for settlement of partnership accounts; an
action on an open or stated account; or an action on a mutual and current
account concerning the trade of merchandise between merchants and their agents
or factors. Tex. Civ. Prac. &
Rem. Code Ann. § 16.004 (Vernon 2002).
11.
See Act of May 19, 1953, 53d Leg., R.S., ch. 348, § 1, 1953 Tex. Gen.
Laws 857, 857, repealed by Act of May 17, 1985, 69th Leg., R.S., ch. 959,
§ 9, 1985 Tex. Gen. Laws 3242, 3322 (current version at Tex. Civ. Prac. & Rem. Code Ann. §
16.061 (Vernon Supp. 2004-05)).
12.
“A statute of repose in a general sense is a legislative enactment which sets
a period of time within which an action may be brought. A statute of
limitation is a category of repose statute.” Id. at 654 n.1.
13.
The specific affirmative defenses listed in rule 94 are accord and satisfaction,
arbitration and award, assumption of risk, contributory negligence, discharge in
bankruptcy, duress, estoppel, failure of consideration, fraud, illegality,
injury by fellow servant, laches, license, payment, release, res judicata,
statute of frauds, statute of limitations, and waiver. Tex. R. Civ. P. 94.