Face Challenges Confidently

004 Melody Home Manufacturing Co. v. Barnes

Friday, September 4th, 2015

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
Melody Home Manufacturing Company v. Barnes, S.W.2d 31 Tex. Sup. Ct. J. 45 (November 7, 1987) withdrawing opinion of 30 Tex. Sup. Ct. J. 489 (June 20, 1987). This case involved a claim for recovery under the Texas Deceptive Trade Practices Act (TDPA) for defective repairs to a mobile home. The case is important to the oil and gas industry because many industry transactions involve the buying or selling of goods (things and real property) or services. “Services” is defined by statute as work, labor or service purchased or leased including services in connection with the sale or repair of goods. This case imposes a new theory of liability on repair service providers and increases the potential liability of repair service providers. Under the DTPA, treble damages and attorney’s fees can now be recovered without proving negligence, fraud or breach of contract.
The court in Melody Home abandons the “Buyer Beware” rule. The Court applies the theory of implied warranty to the delivery of repair services and holds that all repair service providers impliedly warrant that repair services of existing tangible goods or property will be performed in a good and workmanlike manner. “Good and workmanlike manner” means “that quality of work performed by one who has the knowledge, training, or experience necessary for the successful practice of a trade or occupation and performed in a manner generally considered proficient by those capable of judging such work.” The case is significant because for the first time the provider of repair services is subjected to the statutory liability of the DTPA merely by the act of providing services. The statutory liability is significant because not only are attorney’s fees recoverable, but a “knowing” breach of the implied warranty justifies an award of discretionary or exemplary (treble) damages or rescission. To fall within the Act the plaintiff must only be a “consumer,” who sought the services by purchase or lease, and the services must form the basis of the complaint. A “consumer” is almost any entity except a business consumer having assets of at least $25,000,000.
Claims under the DTPA have become almost a fixture in all consumer litigation, and judgments in these cases can frequently be windfalls unrelated to actual damages. The DTPA does not create any warranties, but simply leaves it to the court to define the warranties that fall under the Act. The legislation directs the courts to liberally construe the Act to protect consumers. This decision is consistent with the increasingly liberal trend of the Court in the last two years. The Court first released a decision in this case in June, and has just recently withdrawn that opinion and released a new decision. In Decision #1 the Court expressly made the implied warranty applicable to all service providers, including “professional” service providers (engineers, geologists, landmen, lawyers, accountants, consultants, etc.). A vigorous dissent by Justice Gonzalez apparently caused the Court to reconsider, and Decision #2 is limited to repair service providers. However, the Court’s majority (in a 5-4 opinion in Decision #2) makes it clear that the majority believes the DTPA applies to all service providers. The first case raising the issue as to “professional” service providers before this Court is likely to revive the result reached in Decision #1. If so, the effect on the industry will be dramatic. For example, traditional limitations on liability, such as the customary limitations on the operator’s liability under an operating agreement, may be unenforceable. Virtually every action taken by professionals and well operators may be subjected to the new implied warranty. As originally issued in Decision #1 Melody Home reversed a Supreme Court decision limiting “professional” liability that is less than two years old. The dissent of Justice Gonzalez inquired as to what could have changed in only two years to require the Court to reverse itself. Justice Oscar Mauzy replied for the majority that “the makeup of this Court has changed,” and the people, speaking through the elective process, have constituted a new majority of this Court . . .” Elections to the Supreme Court have not traditionally evoked much interest. In recent years an increasingly political court has provoked a storm of controversy and some radical departures from existing case law. Melody Home is destined to become a landmark decision and may provide the primary theory of liability in thousands of cases.
UPDATE: The Texas Supreme Court has agreed to hear Amarillo Oi l Com pa ny v. Ene rgy- Agri Products, Inc. reported in the July 1987 issue of the News Bulletin. The case holds that the Court does not have jurisdiction to hear a “White Oil” case because the classification of the well and the right to produce is a matter within the primary jurisdiction of the Railroad Commission.