In R.P. Small Corp. v. Land Dep’t, Inc., the plaintiff sued the defendant for breaching fiduciary duties due to a confidential relationship regarding oil and gas development. No. H-20-14902021 U.S. Dist. LEXIS 133695 (S. D. Tex. July 19, 2021). The plaintiff alleged that the defendant took advantage of his relationship, lied about his qualifications and experience, and overbilled and had self-dealing transactions. The defendant filed a motion to dismiss based on the economic loss rule, arguing that the plaintiff’s claims all arose from oral and written contracts. The federal district court denied the motion to dismiss. The court first discussed the economic loss rule:

Under Texas law, the “economic loss rule generally precludes recovery in tort for economic losses resulting from a party’s failure to perform a contract when the harm consists only of the economic loss of a contractual expectancy.” In determining if the economic loss rule applies, Texas courts look to both the “source of the alleged duty and the nature of the claimed injury.” “[A] party may elect a recovery in tort if the duty breached stands independent from the contractual undertaking, and the alleged damages are not solely the result of a bargained-for contractual benefit.” This is because “‘[t]ort obligations are in general obligations that are imposed by law—apart from and independent of promises made and therefore apart from the manifested intention of the parties—to avoid injury to others.’”


Continue Reading Federal Courts Deny Motions To Dismiss Breach Of Fiduciary Duty Claims Due To The Economic Loss Rule

In Shopoff Advisors, LP v. Atrium Circle, GP, the buyer and seller to a real estate transaction sued each other. No. 04-18-00438-CV, 2019 Tex. App. LEXIS 5764 (Tex. App.—San Antonio July 10, 2019, no pet. history). The plaintiff alleged that the defendant conspired with the escrow agent, who owed the plaintiff a fiduciary duty. The defendant filed a SLAPP motion, which the trial court denied. The Texas Citizens Participation Act (“TCPA”) is also known as Texas’s anti-SLAPP statute. Id. (citing Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001-.011). The defendant appealed. The court of appeals affirmed in part on other claims, but reversed as to the conspiracy claim. Regarding conspiracy, the court held:

Continue Reading Court Holds That Economic Loss Rule Bars Conspiracy To Breach Fiduciary Duty Claims