With this week’s orders, the Texas Supreme Court issued opinions in two cases (including Justice Devine’s first signed opinion), issued a corrected judgment in a previous case, and chose two new cases for oral argument.

This week’s opinions

Takings applied to a future interest in property

A landowner sold a parcel of land to the City of McKinney, with a condition attached: that if the land were used for anything other than a city park, the seller would have the right to repurchase it.

Ten years later, the city placed a public library on the land. The previous owner sued for inverse condemnation, arguing that the government’s action had deprived it of a compensable property interest, namely, the right to repurchase the land.

The court of appeals held that this condition in a deed was in the nature of a contract and, thus, that the city was immune from suit.

The Texas Supreme Court reversed, with Justice Devine writing for a unanimous court. The Court held that the case concerned a property interest rather than a mere contract right and, thus, no immunity attached.

Along the way, the Court rejected several arguments about why this particular flavor of future property interest — a “right of reentry” — should not be compensable in a taking. The Court noted that the most recent Restatement largely “dispenses with the historical parsing of future interests, recognizing only reversions and remainders. It thus abandons distinctions that previously differentiated a possibility of reverter from a right of entry because, in its view, no legal consequences attach to such distinctions.”

When an express warranty supersedes an implied warranty

In a suit over a defective home-foundation repair, the jury found that the repair company had violated the implied warranty but had not violated the express warranty stated in the sales contract.

The court of appeals reversed, concluding that this claim was barred by limitations. In particular, it held that there was no free-standing claim here for “implied warranty” but that, instead, the theory would have to be raised under the DTPA — and thus subject to a two-year statute of limitations.

The Texas Supreme Court granted review, and now affirms (on different grounds). The Court did not, however, ultimately reach the question of whether Texas has a freestanding claim for “implied warranty” or whether it must be brought under the DTPA — an issue “over which courts have differed.” (Footnote 9 on page 5) Instead, the Court chose to first ask whether the express warranty made here superseded the implied warranty. (( The Court had its choice of which sub-issue to address first. Had it started with the question of whether the DTPA controlled, then it might never have needed to reach this question about when express warranties supersede implied warranties. ))

The Court held that the implied warranty “of good and workmanlike repair” applicable here is just a gap filler. (( The Court also held that a general “no evidence” objection at the charge conference was sufficient to preserve this question of whether an implied warranty existed under Texas law. )) As a gap-filler warranty, it cannot be disclaimed, but it can be superseded — the parties can agree to replace the implied warranty with a custom-tailored express warranty.

Looking at the agreements here, the Court found “language [that] ‘sufficiently describes the manner, performance or quality'” of the work to supersede the implied warranty and replace it with an express warranty. Thus, the judgment could not be supported on the basis of an implied-warranty theory, whether brought as a freestanding claim or as a facet of the DTPA. The statutory question of whether implied warranty claims fall within the DTPA will be left for another day.

The more immediate lesson to counsel with warranty claims may be to handle gingerly any evidence suggesting a warranty obligation — even if not part of a signed contract. The Supreme Court did not analyze the loss of implied-warranty claims as a question of waiver; express warranties can attach — and displace the implied warranty — without the plaintiff signing anything.

Here, the trial court viewed this unsigned document as a problem and decided to admit it for a limited purpose — just to show “what in [the defendant’s] opinion the company was supposed to do.” (Discussion at pages 8.) Yet on appeal, the Supreme Court looked to the terms of this document as part of its analysis of whether the express warranty superseded the implied warranty. The Court explained that, even unsigned, the disputed document “could fairly be characterized as an obligation of [the defendant] to [the plaintiff].” Accordingly, the document’s broad language could weigh in favor of the express warranty superseding the implied warranty.

Correction of a judgment that had reversed some unchallenged parts of a trial court’s decision

In WENDELL REEDER v. WOOD COUNTY ENERGY, LLC; WOOD COUNTY OIL & GAS, LTD.; NELSON OPERATING..., No. 10-0887 , the Court issued a short supplemental opinion explaining that it was modifyings its previous judgment. In August 2012, the Court had reversed and “render[ed] a take-nothing judgment.” As this week’s opinion (PDF) explains, that language was too broad because there were some parts of the trial court’s judgment that had not been challenged in the scope of the appeal. The Supreme Court thus issued a corrected judgment, specifying the issues on which it was reversing the trial court.

Two New Grants