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LLC v. Point Com, LLC

Court of Appeals of Texas, Seventh District, Amarillo

June 2, 2017

338 INDUSTRIES, LLC, A TEXAS LIMITED LIABILITY COMPANY D/B/A STRATIFIED DATA, APPELLANT
v.
POINT COM, LLC D/B/A WHITE LION INTERNET AGENCY, APPELLEE

         On Appeal from the 200th District Court Travis County, Texas Trial Court No. D-1-GN-11-002012, Honorable Scott H. Jenkins, Presiding

          Before CAMPBELL and HANCOCK and PIRTLE, JJ. [1]

          OPINION

          James T. Campbell Justice

         The trial court signed a judgment in favor of 338 Industries, LLC d/b/a Stratified Data in its suit against Point Com, LLC d/b/a White Lion Internet Agency. The suit arose from a contract under which White Lion undertook to create a website and perform related services for Stratified Data. The jury found White Lion breached the contract, breached express or implied warranties and violated the Deceptive Trade Practices Act.

         Both parties filed notice of appeal. All their issues on appeal address the amounts awarded Stratified Data in the court's judgment. No challenge is raised to the jury's findings related to liability. We will affirm.

         Background

         As Stratified Data's petition described it, White Lion contracted to create a website that would allow political campaigns, as paid subscribers, to access and use Stratified Data's online database of information. The January 2010 contract's statement of work described "deliverables" for several website capabilities, including "core website design, " "user profiles, " an "online data store, " "campaign relationship management" and "Google Maps Block Walk Integration." It estimated cost of the work would be $79, 500, and contained an "estimated timeline" of 16-18 weeks. The statement of work also described services that could be on-going, including website hosting services and maintenance. The contract stated a term of three years, automatically renewing for additional one-year terms unless terminated by either party. An addendum to the contract included a limitation of liability clause and an express warranty under which White Lion agreed to repair, at its expense, any failure in the software that occurred during the first ninety days after Stratified Data's acceptance of the deliverables.

         The addendum also contained a payment schedule by which three-fourths of White Lion's fee was to be paid during the course of the work and the balance "immediately following [Stratified Data's] final acceptance of all Deliverables."

         The contract does not say so expressly, but the parties understood Stratified Data planned to have its website operating in time for use before the November 2010 elections.

         Evidence shows the parties worked in close communication on design, development and testing of the website. Progress was slower than anticipated. By July 2010, White Lion's president apologized to Stratified Data's president for the slow progress. Work continued through the summer and into the fall, with increasing tension between the parties. Disagreements arose over the agreed scope of the work.

         By late September, White Lion was pushing for payment of the last fee installment. In mid-October, Stratified Data asserted that remaining issues with the website's performance were not mere troubleshooting issues but defects that must be corrected before final payment. Final payment was made in November, bringing the total to $85, 069.89, including taxes. After the payment, Stratified Data continued to identify problems with the website's operation, and White Lion continued efforts to remedy them. The website was not available for commercial operation by the November elections.

         Stratified Data terminated the contract in early December. It invoked the contract's termination for cause provision, advising White Lion its termination was due to its "willful malfeasance" or "gross negligence."

         Stratified Data filed suit, and the case was tried in February 2015. Stratified Data produced evidence it had paid a total of $178, 336 to three vendors to repair the website. It paid Noctual LLC $21, 281, Trifecta Interactive Marketing, LLC $75, 701 and Rackspace $81, 354. The jury found White Lion (a) engaged in false, misleading, or deceptive acts or practices, (b) failed to comply with a warranty, and (c) failed to comply with its agreement with Stratified Data. The jury also found Stratified Data gave adequate notice of a breach and a reasonable opportunity to cure the defects, and that White Lion's failure to comply with its agreement was not excused. The jury further found that White Lion's violation of the DTPA was not knowing or intentional.

         Asked to determine the reasonable and necessary cost of repair damages paid to each of the three vendors resulting from White Lion's false, misleading or deceptive act or practice, the jury awarded $7, 218.50 for the work done by Noctual, $5, 062.50 for Trifecta's services, and none for the services performed by Rackspace. Asked to determine the cost of repair damages resulting from White Lion's failure to comply with its warranty, as to each of the three vendors, the jury awarded $20, 812.50 for repairs performed by Trifecta, and none for services of Noctual or Rackspace. The jury was asked a similar question regarding damages resulting from White Lion's breach of the contract, again itemizing the award for repairs performed by each of the three vendors. The jury awarded no damages for that claim.

         The parties agreed the issue of attorney's fees would be tried to the bench. Before that hearing, held in July 2015, the parties submitted briefs to the court on attorney's fees and other issues. Stratified Data argued it was entitled to an award under DTPA section 17.50(b)(3) restoring to it money acquired by White Lion in violation of the DTPA.[2] It contended that unwinding its transaction with White Lion and restoring the parties to their status quo ante required that it be awarded the $85, 069.86 it paid White Lion, in addition to the repair damages found by the jury.

         The court received evidence on Stratified Data's attorney's fees and signed a final judgment the next day, awarding it $20, 812.50 in damages for its DTPA breach of warranty claim and $99, 000 for attorney's fees through trial.[3] White Lion subsequently filed a motion to modify the judgment, asking the trial court to interpret and enforce the contract's limitation of liability clause.[4] The trial court denied ...


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