Superior Laminate & Supply, Inc. v. Formica Corporation and Patrick Weaver

Citation: Not availableDocket: 14-00-00081-CV

Court: Court of Appeals of Texas; October 10, 2002; Texas; State Appellate Court

Original Court Document: View Document

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Affirmed opinions were filed on October 10, 2002, in The Fourteenth Court of Appeals case NO. 14-00-00081-CV, involving Superior Laminate Supply, Inc. (Appellant) and Formica Corporation (Appellee), stemming from the 113th District Court of Harris County, Texas (Trial Court Cause No. 96-44611). Superior Laminate sued Formica for breach of contract, fraud, and promissory estoppel after Formica terminated their distributor agreement. The trial court disregarded some jury findings and entered a take-nothing judgment against Superior, which was upheld on appeal.

Superior Laminate was established in June 1989 as an exclusive distributor for Formica in Houston, based on assurances from Formica's management that their partnership would remain as long as Superior sold Formica products. Following several agreements, the last of which expired in 1994, Formica terminated their relationship on July 25, 1996, effective September 30, 1996. Superior claimed that Formica had promised not to terminate their relationship without cause.

A four-day trial resulted in a jury charge with nineteen questions. The jury determined that while there was an agreement for exclusivity, Formica did not breach the contract. However, the jury also found that Superior relied on Formica’s promise and that Formica committed fraud. Despite these findings, the jury concluded that Superior should have discovered the fraud by August 17, 1990, over four years prior to filing suit. The trial court disregarded the jury's conclusions on promissory estoppel and fraud, resulting in a judgment favoring Formica. Superior contested this judgment, arguing that it should have prevailed on the fraud claim.

Question 6A in the case determined that Superior should have discovered Formica’s alleged fraud by August 17, 1990, the date the Distributor Agreement was delivered. Formica requested the trial court to disregard the jury's response, arguing that Superior's fraud claim was barred by the statute of limitations, which requires claims to be filed within four years of accrual. The court granted this request. A fraud claim accrues when a plaintiff knows or should have known of the wrongful act and injury, as established in Texas case law. Superior contends that it did not realize it had suffered an injury until 1996, when Formica terminated the distributorship. However, the court found that Superior's petition indicated it suffered injury upon making investments based on Formica’s misrepresentations, specifically the false promise regarding termination. Consequently, once Superior became aware that Formica could terminate the agreement on short notice, it should have recognized the fraud, thus accruing the claim by August 17, 1990. Superior's suit, filed on August 30, 1996, was therefore barred by limitations.

In a separate issue, Superior challenged the trial court’s inclusion of a novation instruction during the jury's consideration of its breach-of-contract claim. The jury concluded that Formica could only terminate the agreement if Superior stopped promoting its products, but the trial court's instruction indicated that a new agreement could excuse noncompliance with the prior one. Superior argued this instruction was improper as it was not pleaded by Formica and caused surprise. However, improper jury instructions warrant reversal only if they likely led to an incorrect judgment, with the court stating that the entire record must be examined to assess this impact.

Novation, the substitution of a new agreement for an existing one between the same parties, serves as an affirmative defense against breach of contract claims. Although Formica did not plead novation, it argued that Superior's claims are barred by the doctrine of merger, which occurs when the same parties enter into a written integrated agreement covering the same subject matter. The determination of merger depends on the parties' intent. Formica asserted that the jury instruction concerning the merger defense was appropriate. Superior acknowledged that the merger doctrine yields the same outcome as the novation doctrine, and thus, it did not prove that the trial court’s instruction likely led to an improper judgment. Superior also admitted that it understood Formica intended to argue the new contract replaced the oral contract. The trial court's instruction, even if incorrect, did not warrant reversing the judgment.

Regarding promissory estoppel, Superior claimed the trial court erred by not entering judgment on this basis. The jury found that Superior relied to its detriment on Formica's promise of continued exclusivity as a distributor, resulting in damages. However, the trial court disregarded these findings, agreeing with Formica that a valid agreement existed, which invalidates a promissory estoppel claim. The doctrine is defensive and cannot supplant an enforceable contract. Superior contended that Formica waived its argument by not objecting to the submission of the promissory-estoppel question, but Formica's post-trial motions focused on the existence of a valid agreement rather than the charge's form. A party does not need to object to raise concerns about immaterial findings. Consequently, the trial court properly disregarded the jury's findings on the promissory-estoppel claim. Superior's additional claim regarding limitations on this claim was deemed unnecessary to address due to the resolution of the third issue, and the trial court’s judgment was affirmed.

Judgment rendered on October 10, 2002, by Justices Yates, Edelman, and Wittig, included a dissenting opinion from Justice Edelman. Edelman concurred with the majority's decision but disagreed regarding the overruling of Superior's first issue, which challenged the sufficiency of evidence supporting the jury's finding that Superior should have discovered Formica's fraud by August 17, 1990. Edelman contested the majority's assertion that Superior suffered an injury based on reliance on Formica's false promise regarding the distributorship's termination. He argued that the injury should not be deemed suffered until there was an actual failure to perform, as the parties maintained a productive contractual relationship from 1990 to 1994 without any breach. Edelman emphasized that, during this period, Superior was not economically worse off than if the alleged fraud had not occurred, and that the contractual arrangement could have continued indefinitely without a breach. He raised concerns about the implications of requiring a lawsuit while the contract was being performed satisfactorily, the challenge of calculating damages when the plaintiff received all agreed benefits, and the potential for two lawsuits arising from similar facts if a later breach occurred. Consequently, Edelman would sustain Superior's first issue and reverse the corresponding part of the trial court's judgment.