With today’s orders list, the Texas Supreme Court issued one opinion, granted two petitions for argument this fall, and granted one motion for rehearing of a previously denied petition.

The lines between contract and tort claims and between direct and consequential damages

El Paso Marketing, L.P. and Enterprise Texas Pipeline, LLC v. Wolf Hollow I, L.P., No. 11-0059 (Hecht, J.)

This case may not break new ground, but it is a useful example of the categorization problems that sometimes afflict complex commercial cases. This dispute was between a reseller of natural gas (El Paso) and a customer for that gas (Wolf Hollow) that, in turn, sold electric power to downstream customers. When insufficient gas was supplied, Wolf Hollow sued. The Texas Supreme Court had to decide if a particular claim was really for negligence or instead sounded in contract. It also had to decide whether Wolf Hollow’s damages theory was “consequential damages” barred by the contract or was instead “cover damages” that might have been permissible.

It ultimately concluded:

  • The duties here flowed from the contract, not from a background common-law rule against behaving negligently. So damages were negligence would be barred by the economic-loss rule.

  • The damages that Wolf Hollow suffered in losses for sales to its customers are classic consequential damages — they grow out of other contracts, not anything directly from the contract at issue in this suit. Thus, they might normally be barred by a contractual provision that waived consequential damages.

  • But the contract also had a special provision about “cover damages,” under which Wolf Hollow might be able to recover its added costs for the fuel it purchased to continue providing electricity to its customers.

The Court reversed in part but, because Wolf Hollow still had a valid theory of damages for cover damages, it remanded to the court of appeals to consider the remaining issues in the case.

Two cases granted for argument this fall

Defamation for repeating a false statement attributed to another

Byron D. Neely, Individually and Byron D. Neely, M.D., P.A. V. Nanci Wilson, CBS Stations Group of Texas, L.P., D/B/a KEYE-Tv and Viacom, Inc., No. 11-0228.

Is a newspaper absolutely shielded from liability for having republished a defamatory statement that the article attributes to a third party?

Environmental regulations and preemption

Southern Crushed Concrete, LLC V. City of Houston, No. 11-0270

Is a set of environmental regulations imposed by the City of Houston preempted by state law or the issuance of a state permit?

Rehearing granted

The Court granted rehearing of the petition in Homer Merriman v. XTO Energy, Inc., No. 11-0494, an oil-and-gas case. The motion for rehearing takes a narrower approach than the original petition, arguing that even if oral argument were not granted, the case might be appropriate for a per curiam.