staton-holdings-inc-dba-staton-wholesale-dba-staton-corporate ( 2014 )

AFFIRM; Opinion Filed June 10, 2014.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-12-01408-CV
STATON HOLDINGS, INC. D/B/A STATON WHOLESALE D/B/A
STATON CORPORATE & CASUAL, Appellant
V.
TATUM, L.L.C. FORMERLY KNOWN AS TATUM CONTROLLER
GROUP SOLUTIONS, L.L.C., Appellee
On Appeal from the County Court at Law No. 2
Dallas County, Texas
Trial Court Cause No. CC-09-01049-B
MEMORANDUM OPINION
Before Justices Moseley, FitzGerald, and Evans
Opinion by Justice Moseley
Staton Holdings, Inc. d/b/a Staton Wholesale d/b/a Staton Corporate & Casual appeals
from a summary judgment in favor of Tatum, L.L.C., formerly known as Tatum Controller
Group Solutions, L.L.C. Staton alleged that during a dispute with the candidate it hired through
Tatum’s executive search services, Staton learned that one of the candidate’s prior employers
had fired him and would not have recommended him for hiring. Staton sued Tatum for several
claims including breach of contract and breach of warranty for Tatum’s failure to contact that
employer and disclose the facts to Staton.
In a prior appeal, we reversed the trial court’s summary judgment for Tatum on Staton’s
breach of warranty claims. See Staton Holdings, Inc. v. Tatum, L.L.C., 345 S.W.3d 729 (Tex.
App.—Dallas 2011, pet. denied). We held a contract provision prospectively releasing future
claims did not release Staton’s breach-of-warranty claims against Tatum because the release did
not satisfy the express-intent (also known as the express-negligence) doctrine. Id. at 735. 1
Accordingly, we reversed the summary judgment as to the breach of warranty claims and
remanded for further proceedings.
On remand, Tatum filed a traditional motion for summary judgment and sought to
disprove one or more essential elements of Staton’s causes of action as a matter of law.
Specifically, Tatum argued the letter agreement created no express warranty as alleged by Staton
and thus Staton could prove a breach of an express warranty. 2 The trial court granted Tatum’s
motion for summary judgment and rendered judgment that Staton take nothing on its breach of
warranty claims. On appeal, Staton argues the trial court erred because the statements in the
letter agreement amount to a warranty and representation by Tatum about the characteristics of
its services.
The background of the case and the evidence adduced at trial are well known to the
parties; thus, we do not recite them here in detail. Because all dispositive issues are settled in
law, we issue this memorandum opinion. TEX. R. APP. P. 47.2(a), 47.4. We affirm the trial
court’s judgment.
We review the trial court’s summary judgment de novo. Provident Life & Accident Ins.
Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). The standards for reviewing summary
judgments are well established and we follow them in reviewing this appeal. See TEX. R. CIV. P.
166a(c); Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985) (traditional
summary judgment standards of review).
Staton and Tatum entered into a letter agreement where Tatum agreed to provide
1
We also held the terms of the release provision barred Staton’s breach of contract claim. Id. at 736.
2
Staton does not challenge in this appeal the trial court’s summary judgment on its breach of implied
warranty claim.
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executive search services to Staton. In relevant part, the letter agreement states:
The scope of our Executive Search Services will include:
• Identification of Qualified Candidates
• A briefing on each Qualified Candidate
• Candidate and Client Preparation and Debriefing for Interviews
• Degree Verification, Certification Verification, Background Checks and
References on Chosen Candidate
• Offer Presentation to the Chosen Candidate
• Offer Negotiation with the Chosen Candidate
• Resignation and Counter Offer Consulting Services
Staton contends the fourth bullet point regarding background checks and references
creates an express warranty that those services will be performed in a good and workmanlike
manner. Tatum contends the bullet points merely identify the services it agreed to provide and
do not warrant the quality of those services. We agree with Tatum that the letter agreement does
not create an express warranty as alleged.
Under the UCC, breach of contract and breach of warranty are not the same cause of
action and have different remedies. See Sw. Bell Tel. Co. v. FDP Corp., 811 S.W.2d 572, 575–
76 (Tex. 1991). This rule also applies to service contracts. Id. (no sound reason exists to apply
different standard when contract is for services instead of goods). The elements of a claim for
breach of warranty for services are (1) the defendant sold services to the plaintiff; (2) the
defendant made a representation to the plaintiff about the characteristics of the services by
affirmation of fact, by promise, or by description; (3) the representation became part of the basis
of the bargain; (4) the defendant breached the warranty; (5) the plaintiff notified the defendant of
the breach; and (6) the plaintiff suffered injury. Paragon Gen. Contractors, Inc. v. Larco Const.,
Inc., 227 S.W.3d 876, 886 (Tex. App.—Dallas 2007, no pet.).
Generally, a warranty describes the character, quality, or title of the thing being sold. See
Chilton Ins. Co. v. Pate & Pate Enterprises, Inc., 930 S.W.2d 877, 890–91 (Tex. App.—San
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Antonio 1996, writ denied). An express warranty is a definitive affirmation of fact or a promise
which becomes part of the basis of the bargain and upon which the parties rely. Id. at 891.
Express warranties arise out of the terms of the agreement between the parties. An express
warranty is the result of a negotiated exchange and is a “creature of contract.” Med. City Dallas,
Ltd. v. Carlisle Corp., 251 S.W.3d 55, 60 (Tex. 2008) (citations omitted). “Additionally,
although breach of warranty and breach of contract are distinct causes of action with separate
remedies, an express warranty is part of the basis of the bargain and contractual in nature.
Consequently, when ascertaining the parties’ intentions in a warranty, we look to well-
established rules for interpretation and construction of contracts.” Methodist Hosp. v. Zurich
Am. Ins. Co., 329 S.W.3d 510, 528 (Tex. App.—Houston [14th Dist.] 2009, pet. denied)
(citations omitted). An express warranty has been defined as “any representation of fact or
promise as to the title, quality, or condition of existing or future goods or services.” Enterprise–
Laredo Assoc. v. Hachar’s Inc., 839 S.W.2d 822, 830 (Tex. App.—San Antonio), writ denied,
843 S.W.2d 476 (Tex. 1992) (per curiam).
Therefore, to determine whether an express warranty has been created, we must examine
the agreement between the parties. While words like “warrant” or “guarantee” are not required
to create an express warranty, there must be a representation or affirmation as to the character,
quality, or title of the goods or services. See Chilton, 930 S.W.2d at 891 (“A contract term
identifies what is being sold; warranties describe the attributes, suitability for a particular
purpose, and ownership of what is sold.”); see also Humble Nat’l Bank v. DCV, Inc., 933 S.W.2d
224, 233 (Tex. App.—Houston [14th Dist.] 1996, writ denied) (express warranty created when
seller makes affirmation of fact or promise to purchaser that relates to sale and warrants
conformity to the affirmation as promised).
Staton argues it discovered, after hiring the candidate, that the background checks and
references were not properly performed, and it is now complaining about the quality of the
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services it received from Tatum. However, this argument does not answer the question of
whether Tatum expressly warranted the quality of those services in the contract. The letter
agreement between Staton and Tatum merely lists the executive search services Tatum agreed to
perform. Those services included, “Degree Verification, Certification Verification, Background
Checks and References on Chosen Candidate.” The agreement nowhere states that these services
will be performed to a certain standard or will have a particular character or quality.
The mere identification of what services are to be performed is not, without more, an
express warranty that those services are to be performed to any particular standard or quality.
The parties certainly could have included such a promise as to the quality of the services and if it
formed part of the basis of the bargain it would establish an express warranty. But here there is
no promise as to the quality of the services Tatum agreed to provide. We will not rewrite the
bargain the parties made simply because one party is now dissatisfied with the agreement or
wishes it included other words. See Hidalgo v. Hidalgo, No. 05-06-00966-CV, 2011 WL
1797621, at *3 (Tex. App.—Dallas May 10, 2011, no pet.) (mem. op.) (“Courts are not
authorized to rewrite agreements by inserting additional terms, definitions, or provisions that the
parties could have included themselves but did not, or by implying terms for which the parties
have not bargained.”); see also HECI Exploration Co. v. Neel, 982 S.W.2d 881, 888 (Tex. 1998);
Tenneco, Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 646 (Tex. 1996).
Mere breach of a contractual promise is not a breach of warranty unless the promise
amounts to an express warranty. See Humble Nat. Bank, 933 S.W.2d at 234 (alleged breach of
agreement to honor customer’s resolution regarding authorized signatories on bank account “was
simply another condition or covenant of the contractual agreement and was not an express
warranty”). Otherwise, there would be no distinction between breach of contract and breach of
warranty.
In order to preserve the distinction between contract and express warranty, breach of
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warranty claims must involve something more than a mere promise to perform under the
contract. Here, that something more is missing and we conclude Tatum’s promise to provide
background checks and references on the chosen candidate is not an express warranty. Thus, we
conclude the agreement did not create an express warranty as alleged by Staton. 3 Therefore,
Staton cannot recover on its breach of express warranty cause of action.
The agreement between the parties does not create an express warranty. Therefore, the
trial court did not err by rendering summary judgment denying Staton’s breach of express
warranty claim. We overrule Staton’s sole issue and affirm the trial court’s judgment.
/Jim Moseley/
JIM MOSELEY
JUSTICE
121408F.P05
3
Even if, as Staton argues, the statement “background checks and references on chosen candidate” is a
representation of the quality of the executive search services, then Tatum established it did not breach that
representation. It is undisputed that Tatum provided background checks and references on the chosen candidate.
Thus, the executive search services had the quality represented in the letter agreement: background checks and
references on the chosen candidate.
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
STATON HOLDINGS, INC. D/B/A On Appeal from the County Court at Law
STATON WHOLESALE D/B/A STATON No. 2, Dallas County, Texas
CORPORATE & CASUAL, Appellant Trial Court Cause No. CC-09-01049-B.
Opinion delivered by Justice Moseley.
No. 05-12-01408-CV V. Justices FitzGerald and Evans participating.
TATUM, L.L.C. FORMERLY KNOWN AS
TATUM CONTROLLER GROUP
SOLUTIONS, L.L.C., Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
It is ORDERED that appellee TATUM, L.L.C. FORMERLY KNOWN AS TATUM
CONTROLLER GROUP SOLUTIONS, L.L.C. recover its costs of this appeal from appellant
STATON HOLDINGS, INC. D/B/A STATON WHOLESALE D/B/A STATON CORPORATE
& CASUAL.
Judgment entered this 10th day of June, 2014.
/Jim Moseley/
JIM MOSELEY
JUSTICE
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