Martin K. Eby Construction Co. v. LAN/STV
350 S.W.3d 675
Tex. App.2011Background
- Eby Construction sued LAN/STV for delays and increased costs allegedly caused by LAN/STV's negligent misrepresentations in bid documents for the NW-1A light-rail project.
- DART settled with Eby for $4.7 million in a related breach-of-contract/misrepresentation action; settlement evidence was admitted at trial.
- Jury found LAN/STV negligent in misrepresentation and allocated 45% responsibility to LAN/STV, 40% to DART, and 15% to Eby; damages awarded were $5,000,000.
- Trial court awarded Eby 45% of the jury damages ($2,250,000); Eby and LAN/STV cross-appealed challenging fault allocations and damages procedures.
- LAN/STV argued derivative immunity, error in damages evidence, improper application of the economic loss rule, failure to credit settlements, and insufficient evidence of negligent misrepresentation.
- The Dallas Court of Appeals affirmed, holding the trial court did not disregard the joint-fault findings, and addressing the cross-appeals on immunity, damages, and settlement credits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court should disregard Eby's and DART's fault findings | Eby contends findings of Eby's 15% and DART's 40% are immaterial. | LAN/STV argues faults should be disregarded to prevent double counting and immaterial findings. | Findings not immaterial; proportional fault remains. |
| Whether LAN/STV's and DART's fault should be disregarded to limit liability | Eby asserts DART's and LAN/STV's fault findings should not shift liability away from LAN/STV. | LAN/STV asserts faults (including DART's) should be disregarded as immaterial or duplicative. | Findings of DART and LAN/STV faults upheld; no disregard. |
| Whether LAN/STV had derivative immunity to liability | N/A | LAN/STV seeks derivative immunity from DART's immunity. | Derivative immunity rejected for LAN/STV; Eby I remains distinguishable and control lies with Texas law. |
| Whether there is legally sufficient evidence of damages and whether the economic loss rule bars recovery | Eby presented out-of-pocket damages; damages supported; economic loss rule does not bar recovery. | LAN/STV argues damages are purely economic, barred by the economic loss rule and lack independent injury. | Damages supported; economic loss rule does not bar recovery for negligent misrepresentation here. |
| Whether settlement credit should reduce LAN/STV's liability | N/A | LAN/STV argues a settlement credit should reduce damages per §33.012; Eby induced the settlement. | Court correctly declined to apply additional settlement credit beyond the DART settlement already reflected; methodology sanctioned. |
Key Cases Cited
- Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154 (Tex. 1994) (disregarding immaterial jury findings when allowed by law)
- Se. Pipe Line Co. v. Tichacek, 997 S.W.2d 166 (Tex. 1999) (mandatory nature of jury questions under statute)
- F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680 (Tex. 2007) (section 33.003(a)(1) obligation to allocate responsibility)
- Roberts v. Williamson, 111 S.W.3d 113 (Tex. 2003) (settlement credit allocation under 33.012/33.013; separation of damages found vs. recoverable amount)
- Esty v. Beal Bank S.S.B., 298 S.W.3d 280 (Tex. App.—Dallas 2009) (out-of-pocket damages standard for negligent misrepresentation)
- DSA, Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662 (Tex. 1998) (out-of-pocket damages vs. benefit-of-bargain distinction)
- King Ranch, Inc. v. Chapman, 118 S.W.3d 742 (Tex. 2003) (evidence sufficiency and reasonable juror standard)
- Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493 (Tex. 1991) (economic loss rule in contract-based injuries)
- Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986) (economic loss rule in residential construction context)
- Bernard Johnson, Inc. v. Continental Constructors, Inc., 630 S.W.2d 365 (Tex.App.—Austin 1982) (distinction on duty to contractor/privity context)