Southwestern Bell Telephone Company v. DeLanney

Supreme Court of Texas · 1991 · Corporations

809 S.W.2d 493 (Tex. 1991)

Updated August 22, 2026

Corporationscontract vs tortnegligenceeconomic lossYellow Pages advertisementduty imposed by lawduty created by contractlost profits

Facts

DeLanney had long advertised his real estate business in Bell's Galveston Yellow Pages and contracted again for a 1980-1981 advertisement. Before publication, his wife asked Bell to cancel one business phone line and add a third number to an existing rotary line; because the advertisement was billed to the canceled single line, Bell's internal procedures automatically deleted the ad. DeLanney sued after the advertisement was not published, and the jury awarded him lost profits based on Bell's negligence. DeLanney did not submit jury questions on breach of contract.

Issue

Whether Bell's negligent failure to publish DeLanney's Yellow Pages advertisement stated a cause of action in tort, or whether the claim sounded only in contract because Bell's duty arose solely from the parties' agreement and DeLanney sought only economic loss.

Rule

If the defendant's conduct would give rise to liability independent of the fact that a contract exists between the parties, the plaintiff's claim may sound in tort. Conversely, if the defendant's conduct would give rise to liability only because it breaches the parties' agreement, and the only injury is economic loss to the subject matter of the contract itself, the action sounds in contract alone.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Dallas, Nora Patel paid Lone Mesa Media, a fictional directory publisher, to place her catering company in its annual local business guide. Because of an internal billing mistake, the listing never appeared, and Nora claims she lost customers and expected profits during the year.

If Nora sues Lone Mesa Media only for negligence, what is the strongest argument against recovery?

Explanation. Under the majority rule, a negligence claim does not lie when the defendant's duty exists only because of the contract and the plaintiff seeks only the economic benefit of the bargain. Here, the omission of the listing would create no liability apart from the agreement, and Nora's lost customers and profits are economic losses tied to the promised performance. The action therefore sounds in contract alone.