## Facts

- A nonprofit animal-welfare organization contracted with a seller/manufacturer to provide a steel-frame building for storage of animal food and equipment.
- During negotiations, the buyer communicated requirements including enclosed sides, doors on both ends, rodent resistance, compatibility with existing shelving, and specific colors.
- The parties executed a written purchase agreement describing the building and listing certain specifications.
- The purchase agreement included a merger clause and a conspicuous disclaimer stating no warranties and limiting responsibility for damages arising from performance.
- A second signed writing also described an almond-colored building with a slightly different size but similar basic features.
- After construction, the buyer complained the building did not match expectations and/or specifications, including incorrect color, roof defects (rust and holes), dimensional/structural features interfering with shelving, and gaps affecting rodent resistance.
- The seller attempted repairs, but the buyer sued for breach of contract, breach of warranty, fraud, and DTPA violations, seeking damages and attorney’s fees.

## Issues

1. Whether legally sufficient evidence supported liability for breach of the written contract.
2. Whether, given the merger clause and parol evidence rule, pre-contract oral statements could supply or alter contractual obligations.
3. Whether the evidence supported DTPA and common-law fraud claims independent of a failure to perform the contract.
4. Whether any express or implied warranty claims survived the contract’s conspicuous disclaimers.
5. Whether damages were proved with reasonable certainty under a proper contract measure and whether attorney’s fees were recoverable without segregation by claim.

## Decision

- The appellate court held the evidence supported a finding that the seller breached the written contract by failing to provide a building conforming to written specifications.
- The court rejected the buyer’s DTPA, fraud, and warranty theories, concluding the proof and the contract’s disclaimers did not support recovery on those claims.
- The court held the evidence was legally insufficient to support the amount of damages awarded for breach of contract.
- The court reversed the attorney’s fee award because recoverable fees were not segregated from fees attributable to unsuccessful or non-recoverable claims.
- The judgment was reversed and the case remanded for a new trial limited to the contract claim (including proper damages and any recoverable, segregated fees).

## Legal Principles

- A merger/integration clause is probative but not conclusive on whether a writing is fully integrated; courts examine the writing and circumstances to determine integration and whether extrinsic terms are consistent with the written agreement.
- Under the parol evidence rule, extrinsic terms cannot be enforced to the extent they contradict an integrated written agreement’s material provisions.
- DTPA and fraud claims require proof of actionable misrepresentation or conduct beyond a mere failure to perform contractual promises; relabeling a contract dispute as tort/statutory deception is insufficient without independent proof.
- Conspicuous contractual warranty disclaimers may negate implied warranties and limit asserted warranty-based and related statutory theories, subject to applicable statutory requirements.
- Contract damages must be supported by legally sufficient evidence and proved with reasonable certainty under a recognized measure (e.g., repair cost, replacement cost, or value differential).
- Attorney’s fees must be segregated between recoverable and non-recoverable (or unsuccessful) claims unless the services are so intertwined that segregation is not feasible.

## Conclusion

The appellate court confined the dispute to contract remedies, affirming breach liability but reversing the damages and attorney’s fee awards for insufficient proof and lack of segregation, and rejecting DTPA, fraud, and warranty recoveries; it remanded for a new trial on the contract claim to determine proper damages and any recoverable, segregated fees.


Morgan Bldgs. & Spas, Inc. v. Humane Soc’y of Se. Tex., 249 S.W.3d 480 (Tex. App.—Beaumont 2008, pet. denied)