James J. Flanagan Shipping Corporation v. Del Monte Fresh Produce N.A., Inc.
2013 Tex. App. LEXIS 2412
| Tex. App. | 2013Background
- Flanagan operates a Galveston stevedoring facility; Del Monte imports produce with year-round Galveston shipments.
- From 1997–2007 Flanagan provided stevedoring; Flanagan repeatedly bid and was selected for the contract.
- In 2007–2008 Del Monte considered replacing Flanagan; Lutty ultimately decided to award to Flanagan, not authorized by Wiley/Albano.
- Bradford provided Del Monte with Flanagan’s confidential information to help Gulf Stevedoring Services (Pacific) imitate Flanagan’s bid.
- Del Monte terminated Flanagan in 2008 and replaced it with Gulf; after settlements with others, Flanagan sued Del Monte and others for fiduciary duty, conspiracy, unfair competition, and related claims.
- Trial court found claim merits but applied settlement credit and economic loss rule against Flanagan’s recovery, resulting in a take-nothing judgment; the court awarded exemplary damages of $635,928 and lost profits of $1,348,910, offset by $1.5 million settlements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Economic loss rule applicability | Flanagan argues rule does not bar recovery for fiduciary duty harm. | Del Monte asserts damages are purely economic from contract breach. | Rule does not apply; fiduciary-duty torts recoverable. |
| Settlement credit against exemplary damages | Settlement credit should not reduce exemplary damages. | Settlement credit cannot offset exemplary damages. | |
| Causation of Flanagan’s losses | Bradford/Del Monte misconduct caused termination and losses. | Evidence shows December 2007 decision, not after misconduct. | Rational fact-finder could find causation despite timing. |
| Malice supporting exemplary damages | Del Monte knowingly participated in Bradford’s breach. | No direct malice; witnesses deny intent. | Evidence supports malice; exemplary damages affirmed. |
Key Cases Cited
- Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986) (economic loss rule context; contract-based damages contrasted with tort claims)
- Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011) (economic loss rule narrowed; tort damages allowed for fiduciary duty and certain claims)
- Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41 (Tex. 1998) (tort damages independent of contract for some claims)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for legal sufficiency and review of evidence)
- Frommer v. Frommer, 981 S.W.2d 811 (Tex. App.—Hou. [1st Dist.] 1998) (findings in judgment not automatically fatal to appeal when no conflicting findings)