Intentional Infliction of Emotional Distress IIED: Texas Courts Part 1

Today’s blog will concern the tort of Intentional Infliction of Emotional Distress (IIED) in Texas Courts civil proceedings and focusing especially on this tort as it relates to the Dallas Texas collection attorney. Defamation and wrongful discharge, have a different set of standards and are not addressed herein.

How do Texas Courts define Intention Infliction of Emotional Distress?

The Dallas Court of Appeals held in 2013, that actions for IIED are available when a person intentionally inflicts severe emotional distress in a manner so unusual that the victim has no other recognized theory of redress, also holding that such cases are rare. Hairston v. SMU 441 SW3d 327 (Tex. Civ. App- Dallas 2013, pet. denied). Also, see Hoffmann-La Roche v. Zeltwanger 144 SW3d 438 (Tex. 2004).

What are the legal ‘elements’ of IIED?

The elements of a cause of action for IIED proceedings are as follows:

  1. The Plaintiff is a ‘person’;
  2. The Defendant acted intentionally or recklessly;
  3. The emotional distress suffered by the Plaintiff was severe;
  4. Defendant’s conduct was extreme and outrageous;
  5. Defendant’s conduct proximately caused Plaintiff’s emotional distress;
  6. No alternative cause of action would provide a remedy for the severe emotional distress caused by the Defendant’s conduct.

The above elements were recited by the Texas Supreme Court in Kroger Tex. v. Subera 216 SW3d 788. There is no cause of action in Texas for ‘mere’ negligent IIED. The ‘Intentional’ element means that the Defendant either desires to cause t4he consequences or believes that they are substantially certain to result from its act. Toles v. Toles 45 SW3d 252 (Tex. App. – Dallas 2001, pet. denied).

Intent can be inferred from circumstances or the Defendant’s conduct, not only from their overt expressions because a Defendant will rarely admit that they knew the distress would result from his/her conduct. Morgan v. Anthony 27 SW3d 925 (Tex. 2000).

In Texas courts collection actions also regarding Intentional Infliction of Emotional Distress (IIED) Plaintiff may establish ‘reckless conduct’ should Defendant know or have reason to know of facts that create a high degree of risk of harm to another, and then deliberately acts in conscious disregard or with total indifference to that risk. Twyman v. Twyman 855 SW2d 619 (Tex. 1993). ‘Severe Emotional Distress’ includes painful emotional and mental reactions, such as embarrassment, fright, horror, grief, shame, humiliation or worry. Blanche v. First Nationwide 74 SW3d 444 ( Dallas – 2002).

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Unconscionability, Waiver, Limitation Of Liability: Part III

Q—What is the ‘discharge’ defense?

Another sticky area of contract defenses is the area of discharge, on account of plaintiff’s repudiation of the contract or plaintiff’s own material breach of the contract.  If plaintiff repudiates a dependent promise or materially breaches the contract itself, then the defendant will allege that it has been discharged from performing the contract, due to plaintiff’s repudiation of the contract.  Long Trusts v. Griffen 222 SW3d 412 (Tex. 2006).

Stated another way, a party that does not perform its own obligations cannot enforce the remaining terms of the contract against the defendant.  Interestingly, of course, from defendant’s point of view, if the plaintiff repudiates the contract, or if plaintiff materially breaches the contract, this will also support defendants own breach of contract claim against the plaintiff, through a counter-claim by the defendant against the plaintiff.

Q—What about the ‘venue’ for breach of contract lawsuits?


Although venue, in Texas collection actions, is a long and involved area of the law, for this discussion, it also can be a defense for a defendant.  If a breach of contract lawsuit is brought in the wrong county, a defendant may defend such contract obligation and seek a transfer, if the contract provides specifically that the obligation was to be performed in a certain county or a definite place Tx. Civ.  Prac. & Rem. Code sec 15.035(a)

For instance, in Justice of the Peace cases, a lawsuit based upon an oral contract for labor actually performed may only be brought in the county and precinct, where the labor was performed. KW Construction v. Stephens 165 SW3d 874 (Texarkana 2005).  In suits brought against a defendant based upon a written contract involving a consumer transaction for goods, services, loans, or extensions of credit, which is intended for personal, family or household or agricultural use, such collection suit must be filed either in the county where the defendant signed the contract or the county where the defendant resided when the suit was commenced. 

Trying to restrict or change venue, and enforce against the defendant, can backfire because there are several Texas Supreme Court cases that say that generally any agreement in a contract in which the parties try to restrict mandatory venue, is void as being against public policy.  This is not true in large transactions, however, and choice of venue provisions are completely enforceable in what is called “major transaction”, which is defined as a commercial transaction involving at least $1,000,000.00 in controversy.

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Unconscionability, Waiver, Limitation Of Liability: Part II

Q– What can be done if my contract is unconscionable?

If a portion of the contract, or the entire contract, is found to be unconscionable, the court has several choices:

  1. Refuse to enforce the entire contract
  2. Sever out the unconscionable portion from the contract
  3. Limit the application of the unconscionable provision

Q—Is a Waiver a defense available to the Defendant? What is it?

Another contract defense often seen by Texas Collection attorneys is the contractual defense of waiver.  Waiver is usually defined as an intentional relinquishment of a known right and is either made expressly or indicated by conduct, that is inconsistent with an intent to claim such right.  Ulico Cas v. Allied Pilots 262 SW3d 773 (Tex. 2008). For instance, conduct such as prolonged silence or inaction may amount to a waiver. 

Waiver may be implied only to prevent fraud or inequitable consequences as plaintiff’s intent is the primary factor in determining waiver, in the absence of some clear intent, whether expressed by conduct, words or acts.  Should a defendant breach the contract, the plaintiff may later affirm such contract action and thus waive its waivered defense, by plaintiff either showing a conscious intent to do so or by acting to induce detrimental reliance on the part of the defendant. Consolidated v. Southern Steel 699 SW2d 188 (Tex. 1985).

Certain Texas collection cases have indicated that there are certain acts that do not necessarily constitute waiver, as follows:

  1. Plaintiff’s acceptance of defendants late performance, for instance, the defendant’s late payments may constitute waiver
  2. If a plaintiff continues his performance after defendant’s breach, that may be a waiver.
  3. If a plaintiff shows honest efforts to induce the defendant to perform the contract, then that will not necessarily constitute a waiver.

Q– What is a limitation-of-liability provision in a written contract?

Another contract defense is the limitation-of-liability provision.  Here, defendant asserts that his liability is limited by the contract itself.  These provisions are only enforceable if the agreements do not “violate public policy”.  Whether public policy has been violated in this context, a court may look at if there is any disparity in bargaining power between the parties. Allright v. Elledge 515 SW2d 266 (Tex. 1974).


Unconscionability, Waiver, Limitation Of Liability: Part I

Q–‘Unconscionability’ sounds like fraud; what is it?

Texas Collection attorneys will sometimes see the defense called ‘unconscionability’. Generally either in collection or factoring litigation, a contract can be deemed unconscionable if it is unfair because of the overall or gross one-sidedness of the contract terms. 

There are two main issues associated with unconscionability, being first, how the parties arrived at the contract terms, and whether there is some legitimate commercial reason justifying the terms of the contract.  The discussion about how the parties arrived at the contract terms addresses the “procedural aspect” of unconscionability, whereas the discussion about the “legitimate commercial reasons”, is a substantive aspect. 

A defendant will bear the burden of proving either a procedural aspect or substantive aspect of unconscionability, and of course this defense  must be pleaded under Rule 194.

Q—where does ‘fairness’ come into play?

Regarding whether there is a legitimate commercial reason justifying the contract terms, this focuses mainly on the fairness of the contract.  If it is utterly lopsided or there is no reasonable parity between the values exchanged, it will appear to be substantively unconscionable. 

As to procedural unconscionability, the court is looking at the parties assent and all the facts surrounding the bargaining process.  If the court senses oppression or unfairness, this taints the negotiation process in the contract negotiation. 

There are other factors which court will look at in Dallas factoring contract decisions, such as the presence of deception, or some unethical business practice.  Also, if one party appears to have absolutely no bargaining power, or ability to change the contract, and this would be a factor present in ‘adhesion contracts’, which is actually a standard contract usually used for consumer transactions and looks like a ‘take it or leave it’ sort of contract, in which the consumer has no real bargaining rights and is obtaining goods or services only by acquiescing to the contract terms.   

Accord Satisfaction and Novation


Q- I was sued, but I settled the matter, now the creditor is coming back, wanting more. What can I do?

Today’s subject as used by Texas collection attorneys is the defense of accord and satisfaction. Accord and satisfaction is an affirmative defense and rests on a new contract which is a new written express contract or an implied contract, in which the parties agree to discharge the existing obligation. In this sense, the term “accord” is a new contract which discharges the existing old obligation.

Also, the “satisfaction” means the performance of that new contract to which the parties agree to. Importantly, because an accord is essentially a new separate agreement or contract, all of the elements which are necessary to establish the formation of a contract, such as offer, acceptance, and consideration, must also exist and be proven. For example, if a check is tendered, in an effort to discharge a disputed obligation, the acceptance of the check constitutes an accord and satisfaction. Harris v. Rowe 593 SW3d 303 (Tex. 1979); also see TransAmerican v. Finkelstein 933 SW2d 591 (San Antonio 1996).

Here are the elements that a defendant must establish to prove accord and satisfaction:

  1. The parties have a legitimate dispute about the underlying obligation.
  2. The parties intentionally and specifically agree to discharge such obligation.
  3. Debtor’s payment to the creditor was intended to be full satisfaction of the entire claim
  4. The parties had a “meeting of the minds”.
  5. There exists an unmistakable communication to the creditor, that the tender of the sum which is less than the contract price, was made on the condition that creditor’s acceptance of such sum constitutes full satisfaction of the underlying obligation.
  6. The condition made, was plain, definite, and certain.
  7. The statement accompanying the tender of the lesser sum was so clear, full, and explicit, that it is not susceptible to any other interpretation.
  8. The offer was accompanied by declarations that the creditor was certain to understand.

Honeycutt v. Billingsley 992 SW2d 570 (Houston 1st, 1999).

In the situation in Texas factoring or debt collection matters, when a debtor pays a creditor with a check or draft, or which purports to satisfy the creditor’s entire claim, then the creditor must return the tendered check or draft to the debtor in order to repudiate the transaction. It is not permissible for the creditor, in that situation, to simply strike out or cross out the debtor’s conditions on the face of the check or draft and then insert the creditors own provisions, for instance, that the check is only in partial payment, or “under protest”.

Checks often have a restrictive endorsement, and if creditor cashes the check, which is for less than full payment, but strikes the check maker’s restrictive endorsement, and inserts some different notation, then the courts will hold that the full accord and satisfaction has occurred. Metromarketing v. HTT Headwear 15 SW3d 190 (Houston 14th 2000).

Another available defense in factoring in collection matters is where a Defendant asserts the defense of novation. Essentially, a novation is a substitution that either replaces an existing obligation with a new obligation or replaces one of the original parties with a new party. To establish a novation, the Defendant will show the earlier valid contract, and a mutual agreement to a new contract, together with the express extinguishment of the earlier contract, plus a new, valid contract.

Obviously, if a novation is shown, it discharges the original contractual obligation, and only the new obligation will be enforceable. Novation is also an affirmative defense, and it must be pleaded by the Defendant or it is waived. Fulcrum v. AutoTester 102 SW3d 274 (Dallas 2003).

Another defense available to the Defendant in addition to accord and satisfaction, or novation, is the defense of modification. In this case, Defendant alleges that the original contract between the parties was modified and that the Defendant has complied with the terms of the modified contract. Modification in this sense means the introduction of a new or different element into the contract, that the general purpose and effect of the original contract is unchanged. Obviously, whether the contract has been modified is a question of fact that depends on the parties intentions.

The elements of “modification” are as follows:

  1. Mutual assent-there must be a meeting of the minds between all parties, on the new terms of the modification.
  2. Consideration-a modification to the contract must be supported by new consideration.
  3. Oral modifications-a written contract can be modified, by subsequent oral agreement. The contract as modified, however, must also comply with the statute of frauds. This defense was discussed in our earlier blog. If the terms of said oral modification “materially change” the original contract, so that it becomes subject to the statute of frauds, such modification must be in writing to be enforceable. On the other hand, if such modification is not subject to the statute of frauds, and does not change contract terms material to the original contract, in that case, the oral modification is enforceable.

Arthur J. Gallagher v. Dieterich 270 SW3d 695 (Dallas 2008).

In addition to the above defenses, Defendants may want to allege that they are entitled to an offset, or that a contractual damage provision is actually an unenforceable penalty. If a contract has a liquidated damages provision, if it is a penalty, it is, therefore, an unenforceable penalty whether such provision is unenforceable is a question of law, not fact.   The defense of “penalty” must be pleaded or else it is waived.



Types of Damages in Texas

What damages can I recover in my collection lawsuit?

Actual damages, the Texas collection lawyer seeks damages called “compensatory damages”, awarded to compensate for an injury or to repair a wrong. Actual damages may be either economic or non-economic and do not include exemplary damages. Economic damages compensate for actual economic or pecuniary loss, and non-economic damages are awarded to compensate for physical pain and suffering, mental and emotional pain or anguish, disfigurement, physical impairment, loss of companionship in society, inconvenience, loss of enjoyment of life, injury to reputation, and all other non-pecuniary losses, other than exemplary damages.

How do I allege damages in my lawsuit?

In pleading damages, Plaintiff should plead sufficient facts, in order to give Defendant fair and adequate notice of the damages sought and enough information for Defendant to prepare a defense. Horizon v. Auld 34 SW3d 887 (Tex. 2000). For pleading purposes, actual damages are classified as either direct or consequential. Direct damages are also sometimes called “general damages”, and consequential damages called “special damages”. General damages are further defined as: those that are the necessary and usual result of the Defendant’s wrongful acts. Plaintiff need not plead general damages. Special damages are those that result naturally but not necessarily from Defendant’s wrongful acts. Special damages must be foreseeable, not too remote or uncertain, and must be plead. Although general damages do not need to be specifically plead, if Plaintiff pleads special damages, but not general damages, then Plaintiff’s right to recover general damages may be waived. Weingartens, 461 SW2d 260 (Houston 1970). Also see Texas Rule 56 which requires special damages to be plead.

How do I come up with the “amount” of damages?

Although under Texas Rules, a Plaintiff is not required to plead the measure of damages, and need only allege sufficient facts to stated cause of action from which the court and determine the proper measure of damages, the new Texas Rules of Civil Procedure requires certain pleading requirements or the court may kick back the petition. Under Rule 47, if Plaintiff is pleading unliquidated damages, Plaintiff must only plead that they are within the jurisdictional limits of the court. Nominal and exemplary damages are considered special damages, and must be specifically pleaded. (read the new Rule 47, or your pleading will be kicked back by the Court Clerk to be refiled).

What if I think of more damages after the trial is over?

Under the One Satisfaction Rule, even though a party is entitled to sue and seek damages on alternative theories of liability, Rule 48, the One Satisfaction Rule prevents a Plaintiff from receiving a double recovery under a multiple theories of liability, regardless of the number of theories of liability pleaded Galle, Inc. v. Pool 262 SW3d 564 (Austin 2008). Therefore, a judgment which awards damages on more than one theory may stand only if the theories arise from separate and distinct injuries, and such damage findings are entered on each theory. Under the One Satisfaction Rule, several recent cases have addressed the number of theories of liability pleaded: Lundy v. Masson, 260 S.W.3d 482 (Houston 2008); Birchfield v. Texarkana Memorial, 747 S.W.2d 361 (Tex. 1987). In the Lundy case, the Plaintiff received what amounted to a double recovery, because the attorney did not distinguish between damages which were cause by fraud, and damages which were caused by Defendant’s breach of fiduciary duty. Again, the court’s focus is the judgment awarding damages on more than one theory. The court looks at if the theories arise from separate and distinct injuries, have separate and distinct damages been testified about, and if so, the appellate court will not overrule a judgment which lists and itemizes the separate damages for the separate theories of liability.

Under the Collateral-Source Rule, payments made to, or benefits conferred upon, a Plaintiff from sources other than the Defendant, are not credited against the Defendant’s liability, even if they cover all or some of the damages for which Defendant is liable. This rule, therefore, is an exception to the One Satisfaction Rule. Taylor v. American 132 SW3d 613 (Houston 14th 2004) The policy of this rule is to make the Defendant completely responsible for its wrongful actions, even if it may sometimes result in a windfall for the Plaintiff. The courts consider it more appropriate that the Plaintiff benefit from a windfall than the Defendant. This rule applies to both contract and tort actions. The Texas legislature tried to repeal certain aspects of the Collateral-Source rule in 2003, but none of the proposed amendments passed. The Collateral-Source rule is actually a rule of evidence. Therefore, it prevents a Defendant from introducing evidence of benefits which were received by the Plaintiff from outside sources. One exception to the evidence rule would be if evidence of Collateral-Source benefits are offered for impeachment purposes, in response to Plaintiff’s testimony, that is inconsistent with the receipt of benefits. Examples of this rule include evidence of receipt of insurance benefits, governmental assistance, tax deductions, or gratuitous services.

Aren’t we talking mostly about damages under a contract?

Another rule for measuring damages for contractual injuries is called Expectancy Damages, also known as Benefit of the Bargain. Generally, Plaintiff can recover damages for its expectation interest in the contract. These damages give Plaintiff the benefit of its bargain on the theory that it puts Plaintiff in the same economic position it would have occupied had the contract been performed. Sharifi v. Steen 370 SW3d 126 (Dallas 2012). The loss in value of the Defendant’s performance is sometimes characterized as Plaintiff’s anticipated receipts under the contract. Because the difference between what Plaintiff expected, and what Plaintiff actually received can be demonstrated in several different ways, no single formula can be written to cover every type of breached contract. To prove Expectancy Damages, Plaintiff can offer its own testimony, or the testimony of an expert witness, about the loss in value or consequential losses.

What about my lost profits?

Lost profits are a category of damages that a Plaintiff can recover if it can show damages that were lost as the natural and probable consequence of the breach. These anticipated profits cannot be recovered if they depend on uncertain and changing conditions such as market fluctuations or business risks, or if there is no evidence introduced from which profits can be estimated. Hernandez v. Sovereign 343 SW3d 162 (Dallas 20111) Plaintiff’s evidence should also allow for any expenditure it would have had to make in completing the contract. Lost profits must be specifically pleaded. Lost profit evidence must show the amount of the loss by competent evidence and with reasonable certainty. ERI Consulting v. Swinnea 318 SW3d 867 (Tex. 2010).


Defenses- Part 1


Feb. 4, 2018


Today’s blog will center on some of the defenses available in a breach of contract action, concerning Texas collections cases. The first area we will address often seen by Texas collection attorneys is the defense of ‘waiver’. A Waiver is defined as an intentional relinquishment of a known right and is either made expressly or indicated by conduct, that is inconsistent with an intent to claim the right. Several recent Texas Supreme Court cases construing “waiver” are as follows:

  1. Ulico Cas. Vs. Allied Pilots, 262 S.W.3d 773 (Tex. 2008);
  2. Jernigan v. Langley, 111 S.W.3d 153 (Tex. 2003)
  3. Perry Holmes v. Cull, 258 S.W.3d 580 (Tex. 2008)

Of course, the defense of waiver is fact-specific, with the court looking, not usually for an express statement by a Plaintiff that he has waived a claim, but really, conduct indicating that Plaintiff has waived his rights. One way to indicate an intent to claim a right, thereby waiving the right, would be the Plaintiff’s prolonged silence or inaction, in asserting a known right. Martin v. Birenbaum, 193 S.W.3d 677 (Tex. App. – Dallas 2006, pet. denied).

The Plaintiff’s intent is the primary factor in determining waiver, and in the absence of a clear intent expressed in words, acts, or conduct, waiver will be implied only to prevent fraud or inequitable consequences. Stowers v. Harper, 376 S.W.2d 34 (Tex. App. – Tyler 1964, writ ref’d n.r.e.).

Also, a Plaintiff may affirm a contract which has been breached, thereby waiving Plaintiff’s claim for breach of the contract, in one of two ways, such as:

  1. Showing a conscious intent to waive its claim, or
  2. Plaintiff acting to induce the Defendant’s detrimental reliance, thereby creating an estoppel situation.

There are several different fact scenarios which do not necessarily constitute waiver in Texas. The first would be Plaintiff accepting Defendant’s late performance. Another case out of the Tyler Court of Appeals held that when Plaintiff accepted late payments from Defendant, this did not clearly and unequivocally show that Plaintiff intended to relinquish its rights on prompt payment. Also in breach of contract situations, if a Plaintiff continues to perform after Defendant breaches, that is not necessarily a waiver situation. Also, where Plaintiff honestly tries to induce the Defendant to continue to perform Defendant’s obligation on the contract, this will not necessarily show a clear intent by Plaintiff to waive its rights.

We have much more to cover next week so please stay tuned for Part 2 on Defenses.

Contact Us

If you have any questions about this topic or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us:

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion



Estoppel Defenses: Part 2

This week we’re finishing up a subject relating to different ‘defenses’ available to Defendants in Texas collection cases, and specifically, doctrines known as “estoppel by misrepresentation”, also known as equitable estoppel, and on the other hand, the claim of quasi-estoppel, also known as “estoppel by conduct”.

Another equitable theory not often used, but which will accomplish justice in many cases, are cases in which a third -party beneficiary breach of contract action is brought, for a party’s refusal to pay under a contract.  The issue is whether the third-party is an intended third party beneficiary under the agreement.  The leading case is Stine v. Stewart  80 S.W.3d  586 (2002 Tex).  Stine is a Texas Supreme Court case in which the Trial Court originally concluded that Stine was an intended third party beneficiary under a contract.  The Court of Appeals differed, however, ruling that Stine was only an incidental beneficiary, but the Supreme Court reversed the Court of Appeals, holding that Stine was an intended third party beneficiary of the agreement.  The case involved a divorce in the early 90’s, in which the Stewarts executed an agreement incident to divorce, disposing of marital property, and agreed that if a certain house was sold, certain monies owing to Stine were to be paid upon the sale.  Stine did not sign the agreement.  When one of the Stewarts sold property, leaving net proceeds, Steward did not pay Stine so Stine sued Stewart for breaching the agreement.

The Trial Court heard the evidence and concluded that Stine was an intended third-party beneficiary of the agreement.  When the Court of Appeals reversed, holding that the agreement does not clearly and unequivocally acknowledge the debt owed to Stine, the Supreme Court stated the applicable law.  The Supremes ruled that the third-party may recover on a contract, made between other parties, only if the parties intended to secure a benefit for that third-party, and only if the contracting parties entered into the contract directly for the third-party’s benefit.  The Court further said that to determine the party’s intent, courts must examine the entire agreement when interpreting a contact, and give effect to all of the contract’s provisions so that none are rendered meaningless.  Further, if the agreement states that the third-party beneficiary is a “creditor beneficiary” under the agreement, performance will come to him in satisfaction of a legal duty owed to him by the Promisee.  Such a duty may be indebtedness.  

Obviously, the Stewarts responded that Stine did not have standing to sue under the agreement because she was only an incidental beneficiary.  Stine, on the other hand, contended that the marital agreement acknowledges a $50,000 debt owed to her and recognizes that a note existed, and requires the Stewarts to pay amounts due under said note.  The Supremes concluded that Stine was a third-party creditor beneficiary.  The agreement expressly provided that the Stewarts intended to satisfy an obligation to repay to Stine the $50,000 that the Stewarts owed her.  Thus, the agreement’s terms expressly required the Stewarts to satisfy an existing obligation to pay Stine.  

Importantly, in the Stine case, and contrary to the Stewarts’ argument, a third-party beneficiary does not have to show that the agreement signatories executed the contract solely to benefit her as a non-contracting party.  Rather, the focus is on whether the contracting parties intended to at least in part, discharge an obligation owed to a third-party.  Here, the marital agreement was obviously not for Stine’s sole benefit; however, certain contractual provisions expressly stated the Stewarts intention to pay Stine the money due to her.  Also, under the Tex. Civ. Prac. & Rem Code, Sec.16.065, the Court held that the marital agreement acknowledged a debt owed under a note and created a new obligation.  Additionally, the amount of the obligation, must be susceptible of ready ascertainment.  The Court held that the agreement’s language clearly shows that the Stewarts intended to secure a benefit to Stine, as a third party creditor beneficiary.  The agreement also acknowledged the existence of a legal obligation owed to Stine, and consequently, when Stewart breached the agreement, by refusing to pay Stine the money owed as the contract required, Stine was entitled to sue under the agreement.  The Supremes reversed the Court of Appeals judgment and remanded the case to the Trial Court to render judgment consistent with such opinion.

Contact Us

If you have any questions about this topic, or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us:

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

Estoppel Defenses: Part 1

Today’s subject relates to different ‘defenses’ available to Defendants in Texas collection cases, and specifically, doctrines known as “estoppel by misrepresentation”, also known as equitable estoppel, and on the other hand, the claim of quasi-estoppel, also known as “estoppel by conduct”. First, equitable estoppel, contains the following elements:

  1. Defendant made a false representation to, or concealed material facts from Defendant; intending that the representation or concealment be acted on;
  2. Plaintiff actually knew the real facts but Defendant did not know or have any way of knowing the real facts;
  3. Defendant relied on the representation or concealment, to its damage and detriment.

Maguire Oil v. City of Houston 69 SW3d 350 (Texarkana 2002). Equitable estoppel is usually raised as a defense, but also, may be raised by Plaintiff, to nullify one of Defendant’s defenses. Cook v. Smith 673 SW2d 232 (Dallas 1984). The theories of ‘fraud’, and equitable estoppel, are different: the foundation of fraud rest upon the misrepresentation itself, whereas equitable estoppel looks at the ‘changed position’, which resulted from the misrepresentation.

The defense of equitable estoppel, therefore, seeks to establish that Plaintiff either made a false representation to, or concealed a material fact from, the Defendant. Equitable estoppel, however, cannot be used or based upon a promise to do something in the future. If Plaintiff’s statement involves Plaintiff’s future promise to do something, a Defendant should instead allege promissory estoppel. Regarding Plaintiff’s “false representation” Defendant must establish that Plaintiff either made a false statement of material fact or that Plaintiff concealed a material fact, by remaining silent while under a duty to speak. The one element, that Defendant must establish Plaintiff made such representation with the intention to be acted upon is, in essence, a representation or concealment, made in bad faith.

In proving equitable estoppel, where Defendant’s evidence establishes that it substantially, reasonably, and detrimentally relied upon Plaintiff’s false representation, the Defendant is showing that “but for”, the representation, it would not have acted. Also, Defendant’s reliance must be reasonable. Johnson & Higgins v. Kenneco (Tex. Sup. Ct. 1998). To have detrimentally relied upon Plaintiff’s representation, the Defendant must have “shifted” from a better position to a worse position, based upon Plaintiff’s representation. Equitable estoppel is an affirmative defense and must be pleaded, or it is waived.

The Texas collections attorney needs to be aware that Quasi-estoppel, or estoppel by conduct, is slightly different, however. Quasi-estoppel is an equitable doctrine, which prevents a party from asserting a right inconsistent with that party’s previous position, to another party’s disadvantage. The brief

elements are as follows:

  1. Plaintiff acquiesced, or accepted a benefit under transaction;
  2. Plaintiff’s position now is inconsistent with its earlier position when it accepted the benefit of the transaction;
  3. It would be unconscionable to allow the party to maintain its present position, to the other party’s disadvantage.

Lopez v. Munoz 22 SW 857 (Tex. 2000). The Lopez case also stated that Defendant needs to establish that it would be unconscionable to allow Plaintiff to maintain its current position, to another’s (Defendant’s) disadvantage.

Contact Us

If you have any questions about this topic, or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us:

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

QUANTUM MERUIT – I didn’t get a contract signed; can I still sue for the services I provided?

Today’s Blog addresses the Texas debt collections issue of QUANTUM MERUIT—an equitable theory of recovery, intended to prevent unjust enrichment, when there is AN IMPLIED AGREEMENT TO PAY FOR SERVICES RECEIVED. In re Kellogg Brown 166 SW3d 732 (Tex. 2005), also Barnett v. Coppell 123 SW3d 804 (Dallas, 2003). If an express written agreement covers the transaction in dispute, quantum meruit cannot be brought or used by the Texas collections attorney, because QM is an independent theory that does not arise from a contract.

The elements of QM are as follows: 1- Plaintiff provided valuable services or materials; 2- the services or materials were provided for Defendant; 3- Defendant accepted the services or materials; 4- Defendant had reasonable notice that Plaintiff expected compensation for the services or materials furnished Excess Underwriters v. Frank’s casing Crew 246 SW3d 42 (Tex. 2008). Upon a jury trial concerning QM, the Texas Pattern Jury Charge can be found at PJC 101.42.

Q- what are some Texas cases denying quantum meruit damages?

A few cases have addressed situations where QM was not available. The first was LTS Group v. Woodcrest 222 SW3d 918 (Dallas 2007, no pet.) where the Dallas Court correctly ruled that “the expectation of a future business advantage or business opportunity, cannot form the basis of a cause under QM”. However, LTS was decided because of the inadequate proof provided by the furnisher of the services. The furnisher, LTS, only testified, when asked about the basis for its opinion as to the value of the services provided, that ‘most brokers get about 4%.’ The Court said that testimony constituted “no evidence” of the value of the services provided nor was it any evidence of the reasonable value of the work provided, and also quoted the M.J. Sheridan case 731/620 (Houston 1st 1987).

Word to the wise in Dallas commercial collections actions would be, make sure you prove up your QM damages, thoroughly. The LTS cases, above, was later cited by the Houston 1st Dist. case of Green Garden v. Schoenmann 2010 Tex App. LEXIS 8887 (Nov. 2010). In Green it was argued that a QM recovery is not available when a party provides services “merely in hopes of obtaining a future business relationship”. The Houston Court however, stated the Tx. Supreme Court view that “in certain circumstances, a party who provides services with an expectation of entering into a future business agreement may seek recovery of the value of said services” under QM if there is sufficient evidence of the remainder of the QM elements. Vortt Exploration v. Chevron 787 SW2d 942, (Tex. 1990). InVortt, the Tx. Sup. Ct. also noted that the parties had been negotiating for 4 years to reach a joint operating agreement, and services were provided only in the expectation that such agreement would be reached. Under those circumstances a QM claim was allowed.

Also, if the service provider provides the services, for the provider’s own benefit, no QM claim will be allowed. Again, the services, and evidence about them, must be provided to the Defendant.

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*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate