No Good Faith Required Between University and Students in TX

By Jonathan R. Tung, Esq. on April 26, 2016 | Last updated on March 21, 2019

A Texas case coming out of the Fifth Circuit should remind practitioners to watch your step in Texas with regards to breach of good-faith suits. A student who sued Southern Methodist University for breach of good and fair dealing, but discovered that his relationship with his school fell decidedly outside of Texas' handful of recognized and protected relationships.

When you go to the Lone Star State, take note of the relationships in which you enter formal agreements. You might not be getting what you thought you bargained for.

And It All Comes Tumbling Down

Daniel Hux, a former student and student advisor of Texas' Southern Methodist University, sued his school after they summarily let him go from his position as a student advisor at the college. It all began in 2011 when Stephanie Howeth, a fellow student advisor to Hux, met with the plaintiff and complained to him that she was uncomfortable with his "romantic overtures" to her. Hux allegedly made it perfectly clear to her that he was not interested in her romantically. Unfortunately, she had already reported the meeting with her superiors. Hux's relationship with the school deteriorated from that point on -- rapidly.

The school fired Hux from his position soon afterward, citing "inappropriate behavior and comments." The incident with Howeth was included in the justifications.

Suit for Litany of Causes of Action

Hux sued the school for every cause of action he or his lawyer could think of -- 19 in total. The lower court dismissed them all. The lower court found that there was no triable issue as to whether or not the the school had breached a duty of good faith and fair dealing.

Good Faith Is the Exception

The circuit not only affirmed the lower court, it went into great detail to explain that Texas, as an independent jurisdiction, generally has taken the view that the good faith relationship is actually the exception rather than the norm. In fact, in Texas, the court explained such duties generally arise only in two contexts: when there is a formal fiduciary relationship (such as a trustee-beneficiary) or when are in a "special confidential relationship."

In Texas law, the circuit said, that special relationship seems to only have been applied to the insurer-insured relationship. In fact, courts had previously denied the special relationship status for purposes of good faith and fair dealing in a fair number of ways. Read the following excerpt from the circuit's opinion:

"Indeed, those courts recognize only one special relationship--that between an insurer and an insured. Texas courts have refused to impose a tort duty of good faith and fair dealing on any of the following relationships: employer-employee, lender-borrower, medical provider-patient, mortgagor-mortgagee, supplier-distributor, franchisor-franchisee, creditor-guarantor, issuer and beneficiary of a letter of credit, or insurance company-third-party claimant."

So what does this mean? Be careful of what you think you can expect in Texas as far as relationships go. You could be getting something else.

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