Justia Contracts Opinion Summaries

A group of workers was injured in a workplace accident at a South Texas refinery when a fire-suppression system, supplied and programmed by Scallon Controls, Inc., unexpectedly discharged after losing power. The workers sued S&B Engineers & Constructors, Ltd. and Sunoco Logistics Partners, the companies responsible for the project. S&B and Sunoco then brought third-party claims against Scallon, alleging breach of contract and seeking indemnification under their agreement, which included a proportional indemnity provision. Following four years of litigation, S&B and Sunoco settled with the injured workers, fully resolving the tort claims. S&B and its insurer, Zurich American Insurance Company, subsequently sought to recover from Scallon a proportional share of the settlement, corresponding to Scallon’s alleged share of fault.The trial court granted summary judgment for Scallon, and the Court of Appeals for the Ninth District of Texas affirmed, relying on prior Supreme Court of Texas decisions, notably Beech Aircraft Corp. v. Jinkins and Ethyl Corp. v. Daniel Construction Co. The appellate court held that S&B and Zurich could not maintain an indemnity claim after settling, and that Zurich’s claim was time-barred.The Supreme Court of Texas reversed, holding that neither Jinkins nor Ethyl precludes enforcement of a freely negotiated, proportional indemnification agreement after settlement. The Court clarified that such contracts are distinct from common law or statutory contribution rights and that parties may contract for comparative indemnity, so long as the contract does not require indemnification for the indemnitee’s own negligence unless stated with specific language. The Court also held that Zurich’s claim was timely, as the limitations period began to run at settlement. The case was remanded to the trial court to determine whether S&B and Zurich can establish Scallon’s proportional liability and the reasonableness of the settlement. View "S&B ENGINEERS & CONSTRUCTORS, LTD. v. SCALLON CONTROLS, INC." on Justia Law

Equinor contracted with Lindale to supply water for hydraulic fracturing operations in North Dakota. The agreement established that Lindale would build a pipeline to deliver water, financed by Equinor’s predecessor, who would then own the pipeline. In exchange, Lindale would serve as the exclusive supplier and pumper of water “on the Pipeline,” at below-market rates. Years later, after Equinor acquired its predecessor, technological advances enabled water delivery via lay-flat hoses, a method cheaper than using the pipeline. Equinor began purchasing water from other suppliers using this new method, rather than from Lindale.Lindale sued Equinor for breach of contract in the District Court, arguing that the exclusivity clause gave Lindale the exclusive right to supply water for all of Equinor’s fracking operations. The district court found the relevant contract provision ambiguous and submitted its interpretation to a jury. The jury found for Lindale and awarded $26 million in damages. The Texas Court of Appeals for the First District affirmed, concluding that Equinor had breached the contract and that the damages award was not excessive.The Supreme Court of Texas reviewed the case and determined that the contract was unambiguous. The court interpreted the exclusivity clause to apply solely to water supplied “on the Pipeline,” as defined by the contract, and not to all water delivered to Equinor’s wells by other means. As a result, Equinor’s purchase of water from other suppliers for wells not “on the Pipeline” did not breach the contract. The court reversed the judgment of the court of appeals and rendered judgment for Equinor, holding that there was no breach as a matter of law. View "EQUINOR ENERGY LP v. LINDALE PIPELINE, LLC" on Justia Law

Following Hurricane Laura, a Texas-based company, Top Notch Movers, provided moving services in Alabama and Louisiana to Shamrock Enterprises, an Alabama-based LLC. Top Notch sent a demand letter to Shamrock seeking payment for over $170,000 in unpaid invoices. Subsequently, Top Notch filed suit in Texas for nonpayment, listing Shamrock’s principal office as a Foley, Alabama address and seeking substituted service via the Texas Secretary of State under section 5.251(1)(A) of the Texas Business Organizations Code. The Secretary of State attempted to forward process to the Foley address, but the mailing was returned as undeliverable. Shamrock did not appear, and Top Notch obtained a default judgment, which was also mailed to the same address and returned.Shamrock later initiated a restricted appeal, arguing that service of process was improper. The Court of Appeals for the Thirteenth District of Texas affirmed the default judgment, finding that Shamrock was amenable to substituted service under the cited statute and that the Secretary of State’s Whitney certificate constituted irrebuttable proof of proper service.The Supreme Court of Texas reviewed the case and determined that even if Shamrock was subject to substituted service under section 5.251(1)(A), the record did not show that process was forwarded to the statutorily required address—Shamrock’s “most recent address . . . on file with the secretary of state.” The court clarified that a Whitney certificate only proves that process was sent to the address provided, not that the statutory requirements were met, and strict compliance is necessary for a valid default judgment. Therefore, the Supreme Court of Texas reversed the judgment of the Court of Appeals, vacated the default judgment, and remanded the case to the trial court for further proceedings. View "SHAMROCK ENTERPRISES, LLC v. TOP NOTCH MOVERS, LLC" on Justia Law

A Maryland real estate investment trust with over 12,000 shareholders entered into an advisory agreement with UMTH General Services, L.P. and its affiliates to manage the trust’s investments and operations. The agreement stated that the advisor was in a fiduciary relationship with the trust and its shareholders, but individual shareholders were not parties to the agreement. After allegations of mismanagement and improper advancement of legal fees surfaced, a shareholder, Nexpoint Diversified Real Estate Trust, sued derivatively in Maryland. The Maryland court dismissed the claims for lack of standing and subject matter jurisdiction. Nexpoint then transferred its shares to a subsidiary, which, along with Nexpoint, sued the advisors directly in Texas, alleging corporate waste and mismanagement, and claimed the advisory agreement created a duty to individual shareholders.In the 191st District Court of Dallas County, the advisors filed a plea to the jurisdiction, a verified plea in abatement, and special exceptions, arguing that the claims were derivative and belonged to the trust, so the shareholders lacked standing and capacity to sue directly. The trial court denied these motions. The advisors sought mandamus relief from the Fifth Court of Appeals, which was denied, and then petitioned the Supreme Court of Texas.The Supreme Court of Texas held that while the shareholders alleged a financial injury sufficient for constitutional standing, they lacked the capacity to sue individually because the advisory agreement did not create a duty to individual shareholders, nor did it confer third-party beneficiary status. The agreement benefited shareholders collectively through the trust, not individually. The court conditionally granted mandamus relief, directing the trial court to vacate its order and dismiss the case with prejudice, holding that shareholders must pursue such claims derivatively and in the proper forum as specified by the trust’s governing documents. View "IN RE UMTH GENERAL SERVICES, L.P." on Justia Law

Southern Methodist University (SMU), a nonprofit corporation, was founded by predecessors to the South Central Jurisdictional Conference of the United Methodist Church (the Conference). Historically, SMU’s articles of incorporation indicated that the university was owned and controlled by the Conference, requiring Conference approval for amendments. In 2019, SMU’s board of directors amended the articles without Conference approval, removing all references to the Conference. The Conference sued, seeking a declaration that the amendments were void and asserting claims for breach of contract and filing a materially false instrument.The trial court dismissed the Conference’s claims for declaratory judgment and breach of contract under Texas Rule of Civil Procedure 91a and granted summary judgment on the false-filing claim. The Court of Appeals for the Fifth District of Texas reversed the trial court’s decision in relevant part, allowing the Conference to pursue its claims.The Supreme Court of Texas held that the Conference has statutory authority to sue SMU to enforce its rights under the articles of incorporation and the Texas Business Organizations Code. The court also held that the Conference could pursue its breach-of-contract claim as a third-party beneficiary of SMU’s articles of incorporation. However, the court agreed with SMU that it was entitled to summary judgment on the false-filing claim, as the certificate of amendment did not constitute a materially false instrument.The Supreme Court of Texas affirmed the Court of Appeals’ judgment in part, allowing the declaratory judgment and breach-of-contract claims to proceed, and reversed it in part, upholding the summary judgment on the false-filing claim. The case was remanded to the trial court for further proceedings. View "SOUTHERN METHODIST UNIVERSITY v. SOUTH CENTRAL JURISDICTIONAL CONFERENCE OF THE UNITED METHODIST CHURCH" on Justia Law

White Knight Development, LLC entered into a contract in 2015 to purchase land from Dick and Julie Simmons for $400,000. The contract included a "buy-back" provision allowing White Knight to require the Simmonses to repurchase the property if certain restrictions were extended. When the restrictions were extended in October 2016, White Knight invoked the buy-back provision, but the Simmonses refused to repurchase the property. White Knight sued for breach of contract and sought specific performance and damages related to the delay in performance.The trial court found that the Simmonses breached the contract and awarded White Knight specific performance, ordering the Simmonses to repurchase the property for $400,000. Additionally, the court awarded White Knight $308,136.14 in damages for various costs incurred due to the delay in performance. These costs included property taxes, loan interest, and other expenses related to the property and White Knight's business operations.The Court of Appeals for the Tenth District of Texas modified the judgment by deleting the $308,136.14 monetary award but otherwise affirmed the trial court's decision. The court acknowledged that monetary compensation could be awarded alongside specific performance in narrow circumstances but found no express statement by the trial court that the monetary award was equitable in nature.The Supreme Court of Texas held that while specific performance usually precludes a monetary award, there are narrow circumstances where both can be awarded. The court concluded that the trial court's findings supported an equitable monetary award to account for the delay in performance. The Supreme Court reversed the Court of Appeals' judgment in part and remanded the case for further review of the monetary award consistent with the principles announced. View "WHITE KNIGHT DEVELOPMENT, LLC v. SIMMONS" on Justia Law

Cheryl Butler was hired as an assistant law professor at Southern Methodist University (SMU) in 2011. After a mandatory third-year performance review, her contract was renewed, and she became eligible for tenure consideration in the fall semester of 2015. Due to illness, Butler requested an extension of the tenure vote, which was denied, but she was later granted leave under the Family Medical Leave Act (FMLA) for the spring semester of 2016. Her tenure committee, chaired by Professor Roy Anderson, concluded that Butler met tenure standards for scholarship and service but not teaching. Consequently, the law faculty voted not to recommend tenure, and Butler's appeals to the SMU Law School Dean and the Provost were unsuccessful. Butler completed the 2016-2017 academic year without teaching any classes.Butler filed a lawsuit against SMU and several of its employees, alleging racially discriminatory tenure standards and processes, and retaliation for her internal complaints about race, disability, and FMLA discrimination. She brought federal statutory claims under 42 U.S.C. § 1981, Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans with Disabilities Act, Title IX, and the FMLA. Additionally, she asserted state-law discrimination and retaliation claims under Texas Labor Code Chapter 21, along with state common law claims for breach of contract and negligent supervision. Against the employee defendants, she claimed defamation, conspiracy to defame, and fraud.The United States District Court for the Northern District of Texas dismissed Butler's defamation and fraud claims against the employee defendants, citing preemption by Chapter 21 of the Texas Labor Code. The court held that the gravamen of these claims was unlawful employment discrimination and retaliation, which Chapter 21 specifically addresses. Butler appealed, and the United States Court of Appeals for the Fifth Circuit certified a question to the Supreme Court of Texas regarding whether Chapter 21 preempts common law defamation and fraud claims against employees based on the same conduct as discrimination claims against the employer.The Supreme Court of Texas held that Chapter 21 does not preempt common law defamation and fraud claims against employees. The court reasoned that Chapter 21 subjects only employers to liability for discriminatory and retaliatory conduct and does not immunize individuals from liability for their own tortious actions. Therefore, Butler's defamation and fraud claims against the employee defendants are not foreclosed by Chapter 21. View "BUTLER v. COLLINS" on Justia Law

This case involves a dispute between American Midstream (Alabama Intrastate), LLC (AMID) and Rainbow Energy Marketing Corporation (Rainbow) over a contract (MAG-0005) for the transportation and balancing of natural gas. Rainbow had contracts to transport gas through two interconnected pipelines, the Transco and the Magnolia, and used the MAG-0005 to leverage AMID’s balancing flexibility. The contract allowed Rainbow to run imbalances, withdrawing gas without simultaneously supplying an equal amount, provided they resupplied by the end of each month. Disputes arose when Transco began limiting imbalances more strictly, leading to AMID curtailing Rainbow’s nominations on several occasions.The trial court found in favor of Rainbow on all its claims, including breach of contract, repudiation, fraud, fraudulent inducement, and negligent misrepresentation, awarding over $6 million in lost profits. The court interpreted Section 9.1 of the MAG-0005 as excusing AMID’s performance only under specific conditions involving scheduled and physical imbalances. The Court of Appeals for the First District of Texas affirmed the trial court’s decision, agreeing with its interpretation of the contract and the award of damages.The Supreme Court of Texas reviewed the case and held that the trial court had erroneously inserted language into Section 9.1 of the MAG-0005. The correct interpretation of Section 9.1 excused AMID from providing balancing services on any day that Transco required AMID or Rainbow to limit imbalances attributable to Rainbow, without distinguishing between types of imbalances. The Supreme Court reversed the lower courts' decisions, rendered judgment for AMID on Rainbow’s contract-repudiation and tort claims, and remanded for a new trial on the breach-of-contract claims to determine if Transco mandates excused AMID’s performance on the days in question. View "AMERICAN MIDSTREAM (ALABAMA INTRASTATE), LLC v. RAINBOW ENERGY MARKETING CORPORATION" on Justia Law

Myers-Woodward, LLC (Myers) owns 160 acres in Matagorda County, Texas. In 1947, Myers’s predecessors retained the surface estate but transferred the mineral estate to the predecessor of Underground Services Markham, LLC and United Brine Pipeline Company, LLC (collectively, USM). The mineral deed granted USM’s predecessor an interest in all oil, gas, and other minerals on the land, along with rights necessary for mining and transporting these minerals. In 2008, USM acquired all of Texas Brine Company’s interest in the salt on the property. Disputes arose over the ownership of caverns created by salt mining and the calculation of royalties owed to Myers.The district court ruled that USM owned the subsurface caverns created by its salt mining activities but denied USM’s request to use the caverns for storing hydrocarbons produced off-site. The court agreed with Myers that USM could only use the land for purposes specified in the 1947 deed. Regarding royalties, the district court ruled that Myers was entitled to a one-eighth royalty based on the market value of the salt at the point of production, which amounted to $258,850.41. Myers appealed, challenging the royalty calculation and the ownership of the caverns. USM cross-appealed, contesting the limitation on its use of the caverns.The Supreme Court of Texas reviewed the case. The court affirmed the lower court’s decision that Myers, as the surface estate owner, retains ownership of the empty spaces within the salt formations. The court held that the mineral estate does not include ownership of the empty spaces created by salt mining. However, the court reversed the lower courts’ calculation of Myers’s royalty payments, ruling that Myers is entitled to an in-kind royalty of one-eighth of the net proceeds from the sale of the salt. The case was remanded to the district court for further proceedings consistent with this opinion. View "MYERS-WOODWARD, LLC v. UNDERGROUND SERVICES MARKHAM, LLC" on Justia Law

Two Texas lawyers, Michael A. Pohl and Robert Ammons, represented out-of-state clients in personal injury cases filed outside Texas. The clients, from Louisiana and Arkansas, alleged that they were solicited by individuals on behalf of the lawyers, which led to the signing of legal-services contracts. The clients later sued the lawyers in Texas, seeking to void the contracts under Texas Government Code Section 82.0651(a), which allows clients to void contracts procured through barratry, and to recover fees and penalties.The trial court dismissed all claims, granting summary judgment in favor of the lawyers. The clients appealed, and the Court of Appeals for the First District of Texas reversed the trial court's decision, concluding that Section 82.0651(a) applied because part of the lawyers' conduct occurred in Texas. The court also rejected the lawyers' arguments regarding limitations and res judicata and allowed Reese's intervention in the case.The Supreme Court of Texas reviewed the case and held that Section 82.0651(a) does not extend to the nonresident clients' claims because the core conduct targeted by the statute—solicitation of a legal-services contract through barratry—occurred outside Texas. The court reversed the Court of Appeals' judgment to the extent it allowed the clients to proceed with their claims under Section 82.0651(a) and rendered judgment that they take nothing on those claims. However, the court affirmed the Court of Appeals' judgment regarding the breach of fiduciary duty claims and remanded those claims to the trial court for further proceedings. View "POHL v. CHEATHAM" on Justia Law