441 S.W.3d 474
Tex. App.2014Background
- IHR Security, LLC (IHR) and IBS entered into a Data Duplication Agreement and a Software License Agreement for alarm-monitoring software integration.
- IHR paid IBS $20,000 for installation and data import; IBS allegedly did not import data as promised.
- IBS filed suit for breach seeking $52,437.17 plus attorneys’ fees; IHR responded with a limitation-of-liability defense (cap $5,000).
- Trial court granted IBS summary judgment on the breach claims; IHR’s motion for partial summary judgment on the limitation was denied; final judgment awarded IBS $52,437.17 plus interest and fees.
- Appellate court reversed in part, sustaining some IHR challenges to invoices, remanding for trial on certain invoices and recalculation of interest.
- Data Duplication portion of the judgment (unpaid balances under Data Duplication Agreement) was affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Limitation clause effect on liability | IHR asserts liability capped at $5,000 for the entire contract. | License Agreement contains not-withstanding clause; cap applies to all damages. | Limitation clause does not cap IHR’s payment liability; not ambiguous. |
| Invoicing: D-10 conversion vs software set-up | D-10 charges exceed the $20,700 conversion cap and may be improper. | D-10 reflects software setup, not conversion; some ambiguity. | Fact issue regarding D-10 categorization; sustains Sub-part B. |
| Invoicing: D-7 maintenance fees | Maintenance fees charged despite software never functioning and no benefit to IHR. | Maintenance fees required under License Agreement; evidence insufficient to refute. | Fact issue exists; sustains Sub-part C. |
| IBS’s performance on eleven invoices | Armstrong’s affidavit creates dispute about IBS performance on eleven unpaid invoices. | Affidavit does not raise fact issue about performance on those invoices. | No genuine issue; overruled Sub-part D. |
| Limitation as affirmative defense | Limitation clause forecloses IBS’s damages and ABA defense should prevail. | Limitation defense properly asserted under Rule 94. | Issue Two overruled; court previously held limitation not controlling here. |
Key Cases Cited
- Helmerich & Payne International Drilling Co. v. Swift Energy Co., 180 S.W.3d 635 (Tex.App.—Houston [14th Dist.] 2005) (notwithstanding clause not controlling absent irreconcilable contract conflict)
- Gulf Oil Corp. v. Southland Royalty Co., 496 S.W.2d 547 (Tex. 1973) (priority of contrary provisions in contracts when a 'notwithstanding' clause exists)
- N.M. Uranium, Inc. v. Moser, 587 S.W.2d 809 (Tex.Civ.App.— Corpus Christi 1979) ('anything in this lease to the contrary notwithstanding' language priority)
- Borders v. KRLB, Inc., 727 S.W.2d 357 (Tex.App.—Amarillo 1987) (notwithstanding clause and contract interpretation)
- Regency Advantage Limited Partnership v. Bingo Idea–Watauga, Inc., 928 S.W.2d 56 (Tex.App.—Fort Worth 1995) (contract interpretation; not-withstanding clause considerations)
- Chrysler Insurance Company v. Greenspoint Dodge of Houston, Inc., 297 S.W.3d 248 (Tex. 2009) (contract interpretation and ambiguity standards)
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (contract interpretation; ambiguity rule)
- Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118 (Tex. 1996) (integration of contract terms; harmonization principle)
- Gold’s Gym Franchising LLC v. Brewer, 400 S.W.3d 156 (Tex.App.—Dallas 2013) (summary judgment standards and contract interpretation)
- Diversicare General Partner, Inc. v. Rubio, 185 S.W.3d 842 (Tex. 2005) (evidence evaluation in summary judgment; favorable-to-nonmovant rule)
- City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex. 1979) (summary judgment standards; burden-shifting framework)
- Randall’s Food Markets, Inc. v. Johnson, 891 S.W.2d 640 (Tex. 1995) (affirmative defenses and summary judgment standards)
- Texas Integrated Conveyor Systems, Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348 (Tex.App.—Dallas 2009) (summary judgment; contract construction)