Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432

Background

Bartush contracted Cimco to install a new refrigeration system; Bartush selected the most expensive of three quoted options and paid $306,758, leaving $113,400 unpaid.
After installation, Bartush ran the system at 35°F; ice formed on fan motors because the defrost unit was not designed for that temperature, causing motor failures and temperature spikes.
Bartush withheld the remaining payment, engaged an independent engineer, and paid $168,079 to Jax Refrigeration to install a warm-glycol defrost unit that solved the problem.
Cimco sued to recover the $113,400 balance; Bartush counterclaimed for breach and damages (including the $168,079 replacement cost) and argued its nonpayment was excused by Cimco’s prior breach.
The jury found both parties breached, found Cimco breached first, found Bartush’s breach was not excused, awarded Bartush $168,079 plus attorney’s fees and awarded Cimco $113,400; the trial court entered judgment solely for Bartush, the court of appeals reversed for Cimco, and the Supreme Court granted review.

Issues

Issue	Plaintiff's Argument (Bartush)	Defendant's Argument (Cimco)	Held
Whether Cimco’s prior breach excused Bartush’s subsequent nonpayment (materiality question)	Cimco’s failure to provide equipment capable of maintaining 35°F was a material breach as a matter of law, so Bartush was excused from further performance	Cimco denied guaranteeing a specific temp and argued its breach was not material; if nonmaterial, Bartush remains liable for nonpayment	Jury’s implied finding that Cimco’s breach was nonmaterial stands; materiality is generally for the factfinder and reasonable jurors could differ, so not decided as matter of law
Whether a party’s later breach (nonpayment) precludes recovery for earlier breach-caused damages	Bartush: its later nonpayment was excused; alternatively, both damages awards should be offset to yield Bartush net recovery	Cimco: Bartush’s material nonpayment bars Bartush’s recovery; also argued no evidence Cimco breached	The court rejected the court of appeals’ rule that Bartush’s later breach retroactively bars recovery for Cimco’s prior breach; material breach excuses future, not past, performance; Bartush may recover for preexisting breach even if liable for later breach
Whether the trial court and court of appeals properly entered judgment consistent with the jury verdict	Bartush urged reinstatement of trial court judgment in its favor	Cimco urged reversal in its favor	Both lower courts misapplied the jury findings: trial court ignored jury’s finding that Bartush’s breach was not excused; court of appeals ignored jury’s finding Cimco breached first; Supreme Court reversed court of appeals and remanded for unaddressed issues
Whether Cimco preserved error about the jury’s failure to award its attorney’s fees	N/A	Cimco argues its objection to an allegedly invalid Question 3 preserved error on the conditioned attorney-fee question	Court declined to decide preservation because it remanded; left attorney-fee preservation and whether evidence supports Cimco’s breach to the court of appeals on remand

Key Cases Cited

Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004) (enumerates Restatement factors for material breach)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for sufficiency of evidence and when facts permit decision as matter of law)
Hudson v. Wakefield, 645 S.W.2d 427 (Tex. 1983) (materiality is ordinarily a fact question)
Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691 (Tex. 1994) (material breach discharges other party’s duty)
Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480 (Tex. 1984) (contractor substantially completing performance can recover unpaid balance while owner may claim damages)
Levine v. Steve Scharn Custom Homes, Inc., 448 S.W.3d 637 (Tex. App.—Houston [1st Dist.] 2014) (distinguishing effect of material vs. nonmaterial breach)