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Formosa Plastics Corp. United States v. Presidio Eng'Rs & Contrs.

Supreme Court of Texas

October 1, 1996, Argued ; January 16, 1998, Opinion Delivered

No. 95-1291

Opinion

 [*43]  We overrule Respondent's motion for rehearing and motion for voluntary remittitur. We withdraw our opinion of July 9, 1997, and substitute the following in its place.

In Southwestern Bell Telephone Co. v. DeLanney, 809 S.W.2d 493, 494-95 (Tex. 1991), this Court held that a cause of action for negligence could not be based on an allegation that a party had negligently failed to perform a contract because such a claim sounded in contract, not in tort. Today we are requested to apply a similar analysis to preclude a recovery in tort for a fraudulent inducement of contract claim. We decline to do so, holding instead that our DeLanney analysis is not applicable to such a claim. However, because there is no probative evidence to support the entire amount of damages awarded by the trial court, we reverse the judgment of [**2]  the court of appeals and remand the case to the trial court for a new trial.

In 1989, Formosa Plastics Corporation began a large construction "expansion project" at its facility in Point Comfort, Texas. Presidio Engineers and Contractors, Inc. received an "Invitation to Bid" from Formosa on that part of the project requiring the construction of 300 concrete foundations. The invitation was accompanied by a bid package containing technical drawings, specifications, general information, and a sample contract. The bid package also contained certain representations about the foundation job. These representations included that (1) Presidio would arrange and be responsible for the scheduling, ordering, and delivery of all materials, including those paid for by Formosa; (2) work was to progress continually from commencement to completion; and (3) the job was scheduled to commence on July 16, 1990, and be completed 90 days later, on October 15, 1990.

Presidio's president, Bob Burnette, testified that he relied on these representations in preparing Presidio's bid. Because the bid package provided that the contractor would be responsible for all weather and other unknown delays, he added [**3]  another 30 days to his estimate of the job's scheduled completion date. He submitted a bid on behalf of Presidio in the amount of $ 600,000. Because Presidio submitted the lowest bid, Formosa awarded Presidio the contract.

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960 S.W.2d 41 *; 1998 Tex. LEXIS 33 **; 41 Tex. Sup. J. 289

FORMOSA PLASTICS CORPORATION USA AND FORMOSA PLASTIC CORPORATION, TEXAS, PETITIONERS v. PRESIDIO ENGINEERS AND CONTRACTORS, INC., RESPONDENT

Prior History:  [**1]  ON APPLICATION FOR WRIT OF ERROR TO THE COURT OF APPEALS FOR THE THIRTEENTH DISTRICT OF TEXAS.

Disposition: Judgment affirmed allowing respondent to bring a fraudulent procurement of contract suit against petitioners even though only economic losses related to the contract were claimed, as independent legal duty supporting tort suit arose when contract fraudulently procured, but damage award reversed and new trial ordered because evidence did not support entire award, and "fair dealing" suit dismissed, as no such duty existed in commercial dealings.

CORE TERMS

damages, bid, remittitur, award damages, legally sufficient, writ denied, fraudulent inducement, representations, out-of-pocket, calculation, contractors, delivery, economic loss, bargain, court of appeals, benefit-of-the-bargain, fraudulent, promise, tort damages, package, induce, misrepresentation, profits, breach of contract, lost profits, fraud claim, recoverable, speculative, scheduled, concrete

Contracts Law, Affirmative Defenses, Fraud & Misrepresentation, General Overview, Torts, Business Torts, Types of Damages, Compensatory Damages, Material Misrepresentations, Civil Procedure, Appeals, Standards of Review, Clearly Erroneous Review, Remedies, Damages, Relief From Judgments, Additur & Remittitur, Remittiturs, Contract Interpretation, Good Faith & Fair Dealing