Chapman Custom Homes, Inc., and Michael B. Duncan, Trustee of the M.B. Duncan Separate Property Trust v. Dallas Plumbing Company
445 S.W.3d 716
| Tex. | 2014Background
- Chapman Custom Homes contracted to build a house for the M.B. Duncan Trust; Dallas Plumbing was subcontracted to install the plumbing.
- After completion, plumbing leaks allegedly caused extensive water damage to the newly constructed house.
- Plaintiffs (the builder and the trust) sued Dallas Plumbing for breach of contract, breach of express warranty, and negligence.
- Dallas Plumbing moved for summary judgment; the trial court granted it and the court of appeals affirmed, holding no viable negligence claim and that contract recovery was unavailable to the trust as a nonparty.
- The court of appeals relied on the economic loss rule and on DeLanney to treat the claims as purely contractual.
- The Texas Supreme Court granted review, held that negligent performance of a contract that proximately injures a noncontracting party’s property states a negligence claim, reversed, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a homeowner/noncontracting property owner can sue in negligence for physical damage caused by a subcontractor’s negligent work | Negligent performance of the subcontractor’s work caused physical damage to the trust’s property, giving rise to a tort duty and negligence claim | The dispute is contractual: duties arise from the subcontract; economic loss rule bars tort recovery by contractual strangers | Held: Yes. Subcontractor assumed an implied common-law duty not to damage the house; negligence claim cognizable when physical property damage occurs |
| Whether the economic loss rule bars tort recovery where harm arises from contract work | Economic loss rule does not apply to negligence claims based on duty independent of the contract that caused physical harm | Economic loss rule precludes tort recovery for losses that are only disappointed contractual expectations | Held: Economic loss rule does not bar tort claims where the duty is independent of contractual obligations and damages are physical, not merely economic |
| Whether plaintiffs’ pleadings alleged only contractual breaches (defeating negligence) | Pleadings allege negligent installation (improper joining) that foreseeably caused flooding and structural damage — a tort theory | Pleadings assert breach of contractual duties only; no independent tort duty alleged | Held: Pleadings adequately pleaded negligence independent of contract; summary judgment on negligence was error |
Key Cases Cited
- Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493 (Tex. 1991) (discusses limits on tort recovery where duties arise from contract)
- Montgomery Ward & Co. v. Scharrenbeck, 204 S.W.2d 508 (Tex. 1947) (contractor’s negligent performance causing house destruction imposed an implied duty and supported tort recovery)
- Coulson v. Lake L.B.J. Mun. Util. Dist., 734 S.W.2d 649 (Tex. 1987) (reaffirmed that an implied duty of care attends contractual undertakings)
- Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986) (articulated the economic loss rule in the construction context)
- Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011) (cautions that contracting parties cannot avoid tort liability to the world simply by contracting)