46 F.4th 344
5th Cir.2022Background
- Allison King paid full Spring 2020 tuition, fees, and meal-plan charges and clicked to accept Baylor’s Financial Responsibility Agreement (FRA), which obligated her to pay for Baylor’s provision of “educational services.”
- Mid-semester Baylor moved in‑person instruction and many campus activities online and limited on‑campus services because of COVID‑19; Baylor issued no tuition/fee refunds (it prorated and credited meal-plan balances).
- King sued Baylor (class action) for breach of contract and unjust enrichment, seeking prorated refunds for tuition, fees, and meal plans; Baylor moved to dismiss.
- The district court granted dismissal, holding the FRA was an integrated, enforceable contract that did not promise in‑person instruction and foreclosed implied‑contract and unjust‑enrichment recovery.
- The Fifth Circuit affirmed that the FRA is a valid, enforceable contract but reversed in part and remanded because the court did not analyze whether the term ‘educational services’ is (or is susceptible to) latent ambiguity and failed to consider surrounding circumstances/extrinsic evidence relevant to that term; it rejected implied‑contract and unjust‑enrichment claims as barred where an express contract covers the subject.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability of FRA | FRA lacks consideration and essential terms; not a complete agreement | FRA is a valid, integrated contract; key terms (time, price, services) are ascertainable | FRA is valid and enforceable under Texas law; plaintiff did not show lack of consideration or indefiniteness |
| Meaning of 'educational services' (ambiguity & parol evidence) | Term is ambiguous/ incomplete; extrinsic evidence (catalog, recruitment materials, registration process) may show she paid for on‑campus experience | Term is broad and includes online delivery; FRA and invoices suffice to define services | Court remanded: district court must decide whether the term is ambiguous (latent ambiguity) and, in either event, construe it in light of surrounding circumstances/extrinsic evidence |
| Implied contract for in‑person instruction | Even if FRA exists, an implied contract/promise to provide in‑person instruction arose from Baylor’s materials and practices | The express FRA covers educational services, so no recovery on an implied contract for the same subject | No separate implied contract for services covered by the FRA; express contract predominates |
| Unjust enrichment / equitable relief | Alternatively pled; seeks restitution/disgorgement if contract remedies inadequate | Unjust enrichment is not available where an express contract governs the dispute | Unjust‑enrichment pleaded as alternative is recognized in Texas but is unavailable here because a valid express contract (the FRA) governs the subject matter |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard under Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must contain factual content permitting reasonable inference of liability)
- Fischer v. CTMI, L.L.C., 479 S.W.3d 231 (Tex. 2016) (essential terms must be reasonably certain)
- Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587 (Tex. 1996) (contract ambiguity analysis: ambiguous only if subject to two or more reasonable interpretations)
- URI, Inc. v. Kleberg Cty., 543 S.W.3d 755 (Tex. 2018) (latent ambiguity permits extrinsic evidence of parties’ intent)
- Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671 (Tex. 2000) (unjust enrichment inapplicable when express contract covers the subject)
- RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113 (Tex. 2015) (ambiguity exists if both parties’ constructions are reasonable)