Quantum Meruit When a Contract Exists: Champion Food Service, Inc. v. ProAlamo Foods, L.L.C.

 

We delivered goods to a customer under an agreement, and the customer refused to pay part of the bill. Our contract claim failed at trial, but the jury awarded us the value of the goods anyway. Can we keep that award?

The Supreme Court of Texas took up a version of that question in Champion Food Service, Inc. v. ProAlamo Foods, L.L.C., No. 25-0297 (Tex. June 19, 2026). Two meat suppliers delivered frozen product to a distributor over several months, each shipment accompanied by an invoice reflecting price, quantity, and delivery terms. The distributor left roughly $73,000 in invoices unpaid, asserting the product had spoiled. The suppliers sued for breach of contract and, alternatively, in quantum meruit. The jury found no breach by the distributor, but found for the suppliers on quantum meruit and awarded about $46,000; it also found the suppliers’ reasonable attorney’s fees to be $0. The trial court disregarded the fee finding and awarded $219,674 in fees, and the court of appeals affirmed. The Supreme Court reversed and rendered judgment that the suppliers take nothing.

Quantum meruit is an equitable theory that allows recovery of the reasonable value of goods or services furnished and accepted when no enforceable agreement governs the transaction. Texas courts have long held that the theory is unavailable where a valid express contract covers the same subject matter. Woodward v. Sw. States, Inc., 384 S.W.2d 674, 675 (Tex. 1964); Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988); Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000); Hill v. Shamoun & Norman, LLP, 544 S.W.3d 724, 737 (Tex. 2018). Recognized exceptions exist — for work performed and accepted that falls outside the contract’s scope, and in certain partial-performance situations — but the Court found none of them implicated.

The opinion does not announce a new rule, but it does appear to sharpen how the existing one operates. The Court characterized the question whether a contract covers the goods or services at issue as a legal one, reviewed de novo, rather than a fact question implicitly resolved by a jury’s quantum meruit finding. Because the parties did not dispute that agreements on price, quantity, and delivery existed — agreements that suffice to form a contract under Texas Business and Commerce Code § 2.204 — the Court concluded those agreements covered the deliveries, and the quantum meruit award could not stand. The Court also addressed the suppliers’ argument that handwritten changes the distributor made on the invoices showed the deliveries fell outside any agreement. It reasoned that disputes over credits, price adjustments, or the quality of goods concern breach and damages, not the existence of a contract, offering the example of a customer who crosses out the price on a bakery receipt: the bakery’s remedy lies in contract, not in equity. Finally, the Court observed that “when the existence or scope of a contract is in dispute, the jury should be asked whether a contract exists” — an indication that a plaintiff wishing to preserve quantum meruit as a genuine alternative may need to secure a jury finding on that threshold question rather than rely on the equitable finding alone.

With the quantum meruit recovery gone, the attorney’s fees followed. Recovery under Chapter 38 of the Civil Practice and Remedies Code requires both prevailing on a claim for which fees are authorized and recovering damages. Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 666 (Tex. 2009).

Chief Justice Blacklock, joined by Justice Sullivan, concurred to raise a point the majority left for another day: the trial court’s decision to replace the jury’s $0 fee finding with an award nearly five times the damages, in a case where the plaintiff had lost its principal claim and been found to have breached itself. The concurrence questioned why the law treats a jury’s zero finding on fees with more suspicion than a zero finding on damages, and suggested the issue “should not go unaddressed for much longer.” The majority added a footnote expressing similar reservations. Whether and how the Court takes up that question may be worth watching.

For businesses that sell goods or services on informal terms, the opinion suggests that the presence of an agreement — even an oral one memorialized only by invoices — will likely channel any payment dispute into contract, and that arguing about the bill is not the same as denying the deal. It also suggests that a claim in quantum meruit, though routinely pleaded in the alternative, may not serve as a fallback where the existence of the contract is not itself in question.

See also our earlier posts on quantum meruit and its statute of limitations.

Suspicion, Red Flags, and Justifiable Reliance: Maya Walnut LLC v. Ly

The other party to a business deal made a representation I now know was false. I had some doubts at the time but went ahead anyway. Can I sue for fraud?

The Supreme Court of Texas addressed nearly that situation in Maya Walnut LLC v. Ly, No. 24-0171 (Tex. June 26, 2026). A Dallas grocery tenant negotiating a lease renewal was assured the space remained available; the landlord had in fact already leased it to a competitor. A jury found that the landlord had misrepresented the availability of the premises and awarded the tenant roughly $20.8 million, including exemplary damages. The court of appeals reversed, and the Supreme Court affirmed, holding that the tenant’s reliance on the landlord’s representations was not justifiable as a matter of law.

Justifiable reliance is an element of fraud in Texas, and the Court has held for some time that a sophisticated party dealing at arm’s length must exercise ordinary care for the protection of its own interests. Grant Thornton LLP v. Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010); JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 654 (Tex. 2018); Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 496–97 (Tex. 2019). Under those cases, “red flags” surrounding a representation may negate reliance as a matter of law when the circumstances make actual reliance extremely unlikely, although the question is ordinarily one for the fact-finder.

Maya Walnut appears to develop that doctrine in several respects. First, the Court did not require an accumulation of warning signs; it treated the tenant’s awareness of the competitor’s planned “big surprise” as sufficient on its own to call for inquiry. Second, the Court’s formulation focuses on the plaintiff’s actual state of mind: “When a sophisticated party engaged in arm’s-length negotiations becomes suspicious that a representation may be false, its blind reliance on that representation without further investigation is per se unjustifiable.” Third, the inquiry the Court described was modest — the tenant “easily could have asked Walnut Creek if the property remained available” — and the failure to ask was treated as dispositive. Finally, the tenant was a grocery operator negotiating its own lease rather than an institutional party of the kind involved in the earlier cases, which may suggest a broad reading of who counts as “sophisticated” in commercial dealings.

Chief Justice Blacklock, joined by Justices Lehrmann and Sullivan, concurred in the judgment but not in the red-flag analysis, reasoning instead that the landlord’s statements were non-committal and that no reasonable business would have relied on them to the extent the tenant did. The majority’s formulation therefore carries the Court’s authority, but the separate writing indicates some difference of view about how the doctrine should be framed, and later cases may test its limits — for example, where the suspicious party does ask and receives a further misrepresentation, or where the parties are not on equal footing.

The opinion does not change the elements of fraud, and it does not purport to reach consumers or relationships in which one party owes the other a duty of disclosure. What it does suggest is that, in a commercial negotiation in Texas, the point at which a party becomes uneasy may also be the point at which the law expects that party to ask a direct question and document the answer.

See also our earlier post, “Read Before Signing,” on the related principle that a party generally may not rely on the other side’s description of what a written document says.

Statute of limitations for claims under the Copyright Act

What is the limitations period for claims under the Copyright Act?

Copyright Act claims have a three year limitations period, beginning when an infringing act accrues. However, when a defendant has committed successive violations, the separate-accrual rule accompanying the Copyright Act states that each infringing act starts a new limitation period. Each infringement, however, is actionable only within three years of its occurrence. See Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014).

Limitations periods for trademark infringement

I own a business in Texas, and two years ago I discovered that someone else was using my trademark. Is it too late for me to take legal action in Texas?

Probably not. The Lanham Act (15 U.S.C. §§1125 et seq.) creates a civil claim for trademark infringement. Since the Lanham Act does not contain a specific statute of limitations period, the courts look to state law to determine the appropriate statute of limitations. Federal courts have typically dealt with this issue by applying the state’s limitations period for fraud claims to claims under the Lanham Act. Texas is no different. In Texas, the four year statute of limitations for fraud claims (Tex. Civ. Prac. & Rem. Code §16.004) is applied to claims under the Lanham Act. See Tinker, Inc. v. Poteet, 2017 WL 4351304 at *6 (N.D. Tex. Sept. 30, 2017).  This four year period begins when a plaintiff discovers the fraud or could have discovered the fraud by the exercise of reasonable diligence. See Tinker, Inc. v. Poteet, 2017 WL 4351304 at *6 (N.D. Tex. Sept. 30, 2017) citing S.V. v. R.V., 933 S.W.2d 1, 35 (Tex. 1996). Since you discovered this infringement only two years ago, the statute of limitations for your claims under the Lanham Act may not yet have expired.  You may also have claims under the common law. The statute of limitations will depend on the type of claim you have. For trademark-infringement claims, the statute of limitations is four years while the statute of limitations for unfair-competition claims based on trademark infringement is two years. See  Springboards to Education, Inc. v. Scholastic Book Fairs, Inc., 2018 WL 1806500 at *7 (N.D. Tex. April 17,2018) citing Derrick Mfg. Corp. v. Sw. Wire Cloth, Inc., 934 F. Supp. 796, 804-06 (S.D. Tex. 1996) (citing Tex. Civ. Prac. & Rem. Code § 16.003-.004). Unlike claims under the Lanham Act, in which the statute of limitations period begins when a plaintiff discovers or should have discovered the fraud, the statute of limitations period for common-law trademark claims does not accrue until the allegedly wrongful conduct ends. This is because Texas law treats common law trademark-infringement as a continuing tort. See  Springboards to Education, Inc. v. Scholastic Book Fairs, Inc., 2018 WL 1806500 at *7 (N.D. Tex. April 17,2018) citing Horseshoe Bay Resort Sales Co. v. Lake Lyndon B. Johnson Imp. Corp., 53 S.W.3d 799, 812 (Tex. App. – Austin 2001, pet. denied). However, the affirmative defense of laches may still apply.

Access to opponent's computers

If I were involved in a lawsuit in Texas, could I get access to my opponent’s computer’s hard drive?

Maybe. As a threshold to granting access to electronic devices, you (the requesting party) would have to show that the responding party somehow defaulted on its obligation to search its records and produce the data you requested. See In re Shipman, 540 S.W.3d 562, 568-69 (Tex. 2018) citing In re Weekley Homes, L.P., 295 S.W.3d 309, 317 (Tex.2009)(orig. proceeding). Courts do not rely on skepticism or bare allegation that a responding party failed to comply with its discovery duties to grant access to electronic devices, but rather evidence is needed. See In re Shipman, 540 S.W.3d at  568-69.