Medical Imaging Solutions Group, Inc. of Texas v. Westlake Medical of Austin, Ltd. D/B/A the Hospital at Westlake Medical Center, WLMA, LC, Westlake Surgical, LP D/B/A/ the Hospital at Westlake and WS GP, LLC
04-17-00285-CV
| Tex. App. | Sep 25, 2017Background
- MIS (Medical Imaging Solutions) and Westlake executed an Asset Management Agreement in 2011 making MIS the exclusive servicer for certain imaging equipment and requiring monthly payments due the 1st of each month.
- MIS repeatedly accepted late payments and, in late 2013–early 2014, communicated that 60-day payment terms (and a weekly payment plan) were acceptable. Westlake made payments under that plan.
- In January 2014 MIS installed an anode power module (APM) on Westlake’s CT; the CT recurred problems and Philips (OEM) diagnosed MIS’s APM as defective and replaced it, a repair covered by the Agreement. MIS refused to replace its defective APM unless Westlake agreed to an unnecessary x‑ray tube replacement and thereafter ceased servicing the equipment.
- Westlake paid third parties (including Philips) to perform covered repairs after MIS’s refusal, incurring roughly $368,050.94 in costs. MIS then sent default notices and sued; Westlake counterclaimed for breach and related defenses (repudiation, modification, waiver, fraud).
- Jury found both parties breached but also found Westlake’s breach was excused (Question No. 3). Trial court entered a take‑nothing judgment; MIS appealed arguing Question No. 3 improperly permitted repudiation, modification (no consideration), and waiver theories and that the broad‑form submission created reversible Casteel error.
Issues
| Issue | Plaintiff's Argument (MIS) | Defendant's Argument (Westlake) | Held |
|---|---|---|---|
| Whether repudiation (MIS’s refusal to perform) was properly submitted | Repudiation was not pleaded/supported; trial by consent doctrine doesn’t apply | Repudiation was pleaded, litigated, and supported by testimony showing MIS refused to perform covered OEM repairs and ceased servicing | Submission of repudiation was proper; evidence supported jury finding of MIS’s repudiation |
| Whether the contract modification (60‑day/payment plan) lacked consideration | Modification lacked separate consideration and therefore was invalid | MIS offered extended terms and a weekly payment plan; Westlake accepted and performed — benefit/detriment constituted consideration | Jury could reasonably find a valid modification supported by consideration and performance |
| Whether waiver of payment‑term provisions was properly submitted | Waiver instruction invalid because Agreement required written signed modification/waiver | Waiver may be unilateral and can be implied by acceptance of late payments and explicit communications by MIS accepting 60‑day terms | Evidence supported waiver (express and implied); submission to jury was proper |
| Whether broad‑form Question No. 3 created Casteel reversible error | Broad question combined multiple defenses so jury may have relied on an invalid theory | Each theory (repudiation, modification, waiver) was legally viable, supported by pleadings and evidence; no preserved Casteel challenge at trial | No presumptive Casteel error; traditional harmless‑error review shows verdict supported by evidence — judgment affirmed |
Key Cases Cited
- Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000) (rule on reversible error when jury may have relied on invalid theory in single question)
- Harris County v. Smith, 96 S.W.3d 230 (Tex. 2002) (trial court duty to submit questions raised by pleadings and evidence; discussion of broad‑form submission)
- T.O. Stanley Boot Co., Inc. v. El Paso, 847 S.W.2d 218 (Tex. 1992) (standard for reviewing jury‑supported findings and no‑evidence points)
- Bed, Bath & Beyond, Inc. v. Urista, 211 S.W.3d 753 (Tex. 2006) (harmless‑error analysis where jury may have considered multiple theories)
- Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183 (Tex. 1977) (pleadings sufficient if they give fair and adequate notice; liberal construction of pleadings)