Contract limiting remedies to replace or replacement by the vendor preclude damages for repair or replacement by a third party for failed product.   

Special contributing author Laura Mueller, City Attorney for Dripping Springs

New Braunfels I.S.D. v. FieldTurf USA Inc., No. 07-20-00308-CV (Tex. App.—Amarillo Nov. 12, 2021) (mem. op.).

In this appeal from a trial court’s judgment in favor of the school district on its breach of contract claim but against the district on its fraud and attorney’s fees claims.   The defendant cross-appealed on the breach of contract damages award arguing that the contract did not allow for damages, but only for repair and replacement.  The Seventh Court of Appeals reversed the trial court’s judgment on the breach of contract claim and held in favor of the defendant based on the plain language of the contract.

The school district and the defendant entered into a contract for turf for its sports field.  The contract included a provision that the school district’s only remedy for the turf wearing out early is repair or replacement.  The turf did wear out early and the school district informed the vendor defendant. The vendor defendant inspected the field but did not repair or replace the field.  The school district paid a third party to replace the field and then sued the vendor defendant for the amount paid for the replacement based on breach of contract and fraud.  The jury held in favor of the school district for damages for breach of contract but not for the fraud claim.  The trial court entered judgment on the jury’s award but struck the prejudgment interest from the judgment.

Appellate review of a trial court’s entry of judgment on a jury verdict is a pure question of law. Arbor Windsor Court, Ltd. v. Weekley Homes, LP, 463 S.W.3d 131, 136 (Tex. App.—Houston [14th Dist.] 2015, pet. denied).  The issue of interpretation of a contractual provision that is unambiguous is a question of law and the court reads the plain langue of the contract.   URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 763-64 (Tex. 2018).  The Texas UCC Section 2.719 provides that a remedy may be substituted in the contract for those in the UCC, but if the remedy fails its essential purpose, a remedy in the UCC may be used.  The court of appeals held that the remedy did not fail its essential purpose and the language in this agreement adequately provided an exclusive remedy:

[t]his warranty is limited to the remedies of repair or replacement, which shall constitute the exclusive remedies available under this warranty, and all other remedies or recourses which might otherwise be available are hereby waived by the Buyer.

See Equistar Chems., L.P. v. ClydeUnion DB, Ltd., 579 S.W.3d 505, 522 (Tex. App.—Houston [14th Dist.] 2019, pet. denied) (citing PPG Indus., Inc. v. JMB/Houston Ctrs. Ltd. P’ship, 146 S.W.3d 79, 98, 101 (Tex. 2004).  Because the exclusive remedy was repair or replacement, the school district’s remedy was limited to repair or replacement and it could not be awarded damages. Without prevailing on its claim for damages, the school district was also not able to recover attorney’s fees.

The court of appeals reversed the trial court’s judgment and dismissed the claim for damages because the exclusive remedy was repair or replacement of the turf.

If you would like to read this opinion click here.   Panel consists of Chief Justice Quinn and  Justices Pirtle and Doss.  Opinion by Justice Pirtle.