Texas Courts are Serious about the Opportunity to Cure

Texas Courts are Serious about the Opportunity to Cure Thumb

               We recently had a case in which the plaintiff sued our client for allegedly defective products and demanded that we pay for the cost of remediation necessitated by the defect.  The total claimed for remediation was close to $300,000, plus attorneys’ fees for breach of contract.  We counter-sued for the unpaid invoices for the product, and we demanded attorneys’ fees for breach of a sworn account.

               Looking at the plaintiff’s case, it was to be a timely and expensive investigation into whether, in fact, the products had been defective.  Experts would weigh in, samples would be analyzed, and depositions of site owners, workers, and representatives of the companies would be taken.  And even worse, trial was just around the corner.  Would it make sense to simply pay for the remediation and avoid all these litigation costs?

               The answer was unequivocally no!  As it turns out, whether our products were defective, in this case, would never be reached.  The plaintiff never gave our client the opportunity to cure.  The plaintiff undertook the remediation before meeting with our client to discuss the defects.  While we maintained our products were exactly what the plaintiff ordered—none of that mattered.  We filed a traditional summary judgment motion, and we argued that because the plaintiff did not give us the opportunity to cure, the plaintiff was not entitled to a recovery. 

The court agreed and granted summary judgment.  In the end, rather than paying the plaintiff $300,000 plus attorneys’ fees, we received payment for the unpaid invoices plus our client’s attorneys’ fees.  What’s the lesson here?  Before delving into whether a product is defective—did the customer give your client a chance to cure the claimed defect?

               Under section 2.607(c)(1) of the Texas U.C.C., a buyer is required to notify a seller that a breach of warranty has occurred in order to allow the [6]  seller an opportunity to cure the defect, if any. Miller v. Spencer, 732 S.W.2d 758, 761 (Tex. App.--Dallas 1987). The notice requirement under Tex. Bus. & Com. Code Ann., § 2.607(c)(1) is liberally construed. Vintage Homes, Inc. v. Coldiron, 585 S.W.2d 886 (Tex. App.--El Paso 1979, no writ); Reynolds Metals Co. v. Westinghouse Electric Corp., 758 F.2d 1073, 1078(5th Cir. Tex. 1985).

               Too often, we focus on the notice period or the products themselves in products cases.  These are both fact-based inquiries that likely preclude summary judgment.  However, Texas mandates the notice period so that a seller can cure!  Under the Uniform Commercial Code, a buyer is required to notify the seller that a breach of warranty has occurred before bringing a cause of action against the seller to give the seller an opportunity to cure the defect. Brewer v. General Motors Corp., 926 S.W.2d 774, 781 (Tex. App.--Texarkana 1996 (emphasis added). Failure to notify the seller of breach of warranty and to allow the seller some opportunity to cure bars recovery on the basis of breach of warranty. Lochinvar Corp. v. Meyers, 930 S.W.2d 182 (Tex. App.--Dallas 1992, no writ).

               Giving the seller the opportunity to cure makes sense.  With no opportunity to cure, the seller is cut out of the loop.  Maybe the seller would have provided new products? Maybe the seller would have determined the products were not defective?  Maybe the seller would have chosen someone else to do the remediation?  Failing to give the opportunity to cure leaves the seller with no input or control.  Texas courts agree—that just ain’t right.

Feb 02, 2015