Anderson Greenwood & Co. v Martin

CourtCourt of Appeals of Texas
Citation44 S.W.3d 200
Docket NumberNo. 14-98-01274-CV,14-98-01274-CV
Decision Date29 March 2001

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Panel consists of Justices Sears, Draughn, and Lee.*


Ross A. Sears, Justice(Assigned)

Anderson, Greenwood & Co. (AGCO) appeals from a take-nothing judgment in their contract suit against appellees (collectively referred to as "Nibsco"). In four issues, AGCO asserts: (1) the trial court erred in disregarding the jury's findings that Nibsco's breach of contract caused AGCO damages of $120,000.00 plus $750,000.00 attorney's fees; (2) the evidence is legally and factually insufficient to support the jury's findings of AGCO's tortious interference with Nibsco's contract with Praxair; (3) the trial court erred in not awarding AGCO ownership of the F80 valve patent and machine drawings notwithstanding the jury's findings; and (4) the evidence is legally and factually insufficient to support the jury's findings that AGCO incurred no appellate attorney's fees. We affirm.


AGCO is a large manufacturer of safety relief valves, and sells its valves through independent representatives such as Nibsco. Nibsco, and the other corporate appellees, are owned by appellee Buck Martin and his family, and they operate their business primarily in New York State and Ohio.

In the early part of 1993, the parties entered into a written agreement whereby Nibsco would sell AGCO's products. The contract provided that it could be terminated at any time, without cause, by either party giving the other party sixty days prior written notice. This lawsuit primarily concerns clauses providing the duties and obligations of the representative (Nibsco) as follows, in pertinent part:

1.4. Direct Sales by Manufacturer or Other Sales. . . . Manufacturer may, from time to time retain for itself or for other designated sales representatives(s) certain "National Accounts" for the sale of Products. Any such National Account will be automatically withdrawn from coverage hereunder and Representative will not thereafter be entitled to any commission or compensation whatsoever from Manufacturer on sales made by anyone to such National Account . . . .

4.3. Market Information; Sales Report. Representative [Nibsco] agrees to provide to Manufacturer [AGCO] from time-to-time in the future, on a nonconfidential basis, forecasts, market studies and such other reports pertaining to customers, markets, and Products covered by this Agreement as Manufacturer may reasonably request.

4.4 Competitive Products; Remanufactured Goods; Other Accounts. During the term of this Agreement, neither Representative nor any Affiliate (as defined below) shall in any manner manufacture, stock, sell, lease, promote or advertise any goods (including parts therefor) or services which are directly or indirectly competitive with (whether in purpose, function or otherwise, including, but no limited to, used, reconditioned or remanufactured goods) or in any way similar to the Products (including parts therefor).

6.1. Use of Manufacturer's Name; Intellectual Property Rights. All intellectual property rights relating to the Products and/or to this Agreement, including, but not limited to, all trademarks, copyrights, patents, trade names, trade secrets, logotypes, advertising and other commercial symbols, service marks, and goodwill (herein collectively referred to as "Intellectual Property"), are and shall remain the sale property of Manufacturer.


Representative agrees that any Intellectual Property that may be developed in the course of Representative's performance of this Agreement or which relates in any manner to the Products shall be the sole property of Manufacturer.

7.4. Disposition of Stock on Termination. . . . In the event Manufacturer terminates this Agreement, Manufacturer shall repurchase . . . any or all of the Products listed herein which Representative purchased from Manufacturer.

Nibsco proposed a modification of some of the terms of the agreement in a "side letter" agreement from Nibsco to Ed Ross, Vice President of AGCO's Sales and Marketing, dated January 26, 1993. Mr. Ross signed the letter agreement accepting and agreeing to its terms on July 13, 1993. The "side letter" modified the reporting requirements of section 4.3 by agreeing that Niabco-Ohio will mail AGCO written quotes involving AGCO products sent out by any of the companies to their customers for the previous month. Section 4.3 was further limited in that all other information "will not be required until AGCO is fully capable of handling it at its factory. . . ." Also agreed was the "customer swap" program whereby Nibsco would furnish its customers reconditioned AGCO valves. AGCO also agreed to allow Nibsco to continue to assemble and purchase parts to valve assemblies, which may include the purchase of valves from other manufacturers. AGCO also agreed that Nibsco could sell its F70 unloader valve, Ful-Flo oil valves, Asco solenoid valves, ball valves, butterfly valves and other unloading valves. AGCO agreed that it "does not have any present intention to classify any of Nibsco's . . . existing customers as a 'national account'" under section 1.4 of the agreement.

Kevin Martin (Buck Martin's son), president of Nibsco, testified that Nibsco "reverse engineered" AGCO valve components by making duplicate parts from AGCO valve components. He stated that Nibsco used Tony Staub's machine shop to make these parts. He testified that Nibsco worked on and developed the F80 valve during the tenure of the agreement, but made no attempt to sell it to any of their customers. Upon termination by AGCO, Nibsco made a written request to AGCO to repurchase Nibsco's remaining inventory of valves, and Nibsco then shipped the inventory to AGCO. Mr. Martin testified that all valves were purchased from AGCO, and that they owed AGCO nothing on their purchases. Mr. Martin stated that AGCO never paid them anything under section 7.4 of the agreement, nor did they ever return any of the inventory. AGCO contended that some of the parts were obsolete and some were "counterfeit." Mr. Martin said Nibsco pulled out all parts that were not AGCO's at an inventory with AGCO's representative.

In 1990, Warner G. "Buck" Martin engaged Walter Powell, a design engineer, to develop the F80 valve which was similar to AGCO's 80 series valves. Mr. Martin testified that there had been no changes in AGCO's 80 series valves since 1968, and he had experienced leaking problems with some of AGCO's valves. In 1990, AGCO terminated Niabco-Florida, and Mr. Martin began to develop other plans in case AGCO terminated Nibsco. Mr. Martin stated that they had sold AGCO products since 1966. He was reluctant to sign the 1992 agreements because he was worried about AGCO cancelling Nibsco. He stated that AGCO told him to "put Florida out of [his] mind," that there would be "no change" at Linde-Praxair, and that they would have a long-lasting relationship. Flow Safe was incorporated in 1991, before the agreements with AGCO. Flow Safe was set up to do research and development on the F80 valve. Nibsco did not sell these F80 valves until after AGCO terminated their contract in 1995.

Gregory Hyland, president of AGCO, testified that he terminated Nibsco's agreement because: (1) Nibsco was selling a competitive valve, known as the F70RR, as a substitute for certain AGCO valves; (2) Nibsco was selling AGCO valves outside of its territory; (3) Nibsco was making duplicate valve parts; and (4) Nibsco became the master distributor for SabreValves, one of AGCO's competitors.

Mr. Hyland testified that he talked to Buck and Kevin Martin about a blanket contract with Praxair whereby AGCO would sell valves to Praxair direct and pay Nibsco a commission. Mr. Hyland testified that AGCO had been talking to Praxair since 1991 about a discounted direct-sales contract.

Praxair was Nibsco's biggest customer and provided a large part of Nibsco's income. Nibsco contended AGCO committed fraud in the inducement of the contract, and wanted Nibsco to enter the contract so AGCO could get confidential information concerning Praxair. Nibsco alleged that once AGCO acquired all the information it needed concerning Praxair, it would terminate Nibsco's contract without cause, then sell directly to Praxair with no commissions to Nibsco. After AGCO terminated the contract with Nibsco in 1995, AGCO entered into a direct sale contract with Praxair in March 1996.


In its first issue, appellant contends the trial court erred in disregarding the jury findings awarding AGCO damages for Nibsco's unexcused breach of contract and for AGCO's attorney's fees. In response to Question No. 1, the jury found Nibsco failed to comply with their agreements with AGCO. In Question No. 2, the jury found that Nibsco's breach was not excused because of a false representation or concealed material fact by AGCO. In Question No. 3, the jury found that AGCO was damaged by Nibsco's breach of contract in the sum of $120,000.00. In Question No. 25, the jury found AGCO incurred reasonable attorney's fees for preparation and trial in the sum of $750,000.00. In Question No. 28, the jury found that AGCO committed fraud against Nibsco, but found in Question No. 29 that Nibsco suffered no lost profits as damages. Based on this jury finding of fraud by AGCO, the trial court entered its order disregarding the...

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