City of Austin v. Houston Lighting & Power Co.

• Decision Date: 07 October 1992
• Docket Number: No. 05-89-01354-CV,05-89-01354-CV
• Citation: 844 S.W.2d 773
• Parties: CITY OF AUSTIN, Appellant, v. HOUSTON LIGHTING & POWER COMPANY and Houston Industries, Inc., Appellees.
• Court: Texas Court of Appeals

Page 773

844 S.W.2d 773

CITY OF AUSTIN, Appellant, v. HOUSTON LIGHTING & POWER COMPANY and Houston Industries Inc., Appellees.

No. 05-89-01354-CV.

Court of Appeals of Texas Dallas.

Oct. 7, 1992.

Rehearing Denied Nov. 18, 1992.

Fulbright & Jaworski, Roger Townsend, Ronald J. Palmer, Ben Taylor, Jeff Dykes, Jeffrey S. Wolff, Houston, Carrington, Coleman, Sloman & Blumenthal, James E. Coleman, Marvin S. Sloman, Dallas, Liddell, Sapp, Zivley, Hill & Laboon, John L. Hill, Jr., Roy Atwood, Houston, City of Austin, Iris J. Jones, Acting City Atty., John T. Gooding II, Mark G. Yudof, Austin, for appellant.

Graves, Dougherty, Hearon & Moody, Robert J. Hearon, Jr., Thomas B. Hudson, Jr., Matthew G. Dore, Michael Diehl, Selden W. Bobbitt, Austin, Baker & Botts, Finis E. Cowan, J. Gregory Copeland, Houston, Baker & Botts, Joe R. Greenhill, Minton, Burton, Foster & Collins, Roy Q. Minton, Martha S. Dickie, Austin, for appellees.

Before THOMAS, KINKEADE and OVARD, JJ.

OPINION

KINKEADE, Justice.

City of Austin (Austin) appeals a take-nothing judgment rendered in favor of Houston Lighting & Power Company and its parent company, Houston Industries, Inc. (collectively HL & P), in this action for breach of a contract to build a nuclear power plant, fraud, and violation of the Deceptive Trade Practices Act (DTPA). In six points of error, Austin argues that the trial court erred by (1) sustaining HL & P's special exceptions to Austin's cause of action for breach of the implied duty to perform the contract with skill and care, (2) overruling Austin's hearsay objections to the admission of several newspaper articles, (3) refusing Austin's requested jury questions and instructions, (4) overruling Austin's objections to jury question two, and (5) overruling Austin's motion for new trial. HL & P raises what it characterizes as two conditional cross-points, but what this Court would term counterpoints. See Jackson v. Ewton, 411 S.W.2d 715, 717 (Tex.1967); Ragsdale v. Progressive Voters League, 743 S.W.2d 338, 342 (Tex.App.--Dallas 1987), rev'd on other grounds,790 S.W.2d 77 (Tex.1990). HL & P argues that we should affirm the trial court's judgment because there is no evidence that any failure by HL & P to provide information caused any cost increase and because Austin is not a "consumer" as to HL & P as defined by the DTPA. Because the trial court did not err by (1) granting HL & P's special exceptions, (2) admitting the newspaper articles, (3) refusing to submit Austin's requested jury questions and instructions, (4) overruling Austin's objections to jury question two, and (5) denying Austin's motion for new trial, we overrule all of Austin's points of error and need not address HL & P's cross-points in which HL & P asks only for affirmance. We affirm the trial court's judgment.

FACTUAL HISTORY

The Lower Colorado River Authority (LCRA), Central Power & Light (CP & L), the City of San Antonio (San Antonio), Austin, and HL & P all belong to the South Texas Interconnected Systems. Formed in the 1940's, this interconnected group provides for the sharing of electricity in emergencies and the staggered building of additional units to the individual systems to take advantage of each other's generation powers. On July 14, 1971, the group met and discussed for the first time the possibility of building a jointly owned nuclear power plant.

On December 14, 1971, all of the participants in this interconnected entered into a preliminary agreement to share the costs of studies to determine the feasibility of licensing, constructing, and operating a jointly owned two-unit nuclear powered electric generating plant. The group formed a study committee, which employed the Nuclear Utilities Systems Corporation to conduct feasibility studies. Upon completion of these feasibility studies, each participant would decide whether to agree to participate and build the South Texas Project (the project).

In its report presented to the study committee on January 13, 1972, Nuclear Utilities Systems estimated that it would take twenty-two staff members of HL & P to handle the project and estimated the cost of the project at $902 million for both units. The report also projected October 1, 1980, as the completion date for unit one and March 1, 1982, for unit two. Having tentatively decided, after receiving this report, to build a jointly owned nuclear power plant and wanting to avoid delays in proceeding with preliminary work pending completion and execution of a participation agreement, all of the participants entered into an interim agreement on June 15, 1972. In this agreement, the participants chose HL & P as the project manager. HL & P agreed to serve as the project manager without compensation, except for the reimbursement of project-related expenses, including overhead. In the construction of a nuclear power plant, regulations require the project manager to act as licensee and to represent the project before the Nuclear Regulatory Commission (NRC).

In September 1972, LCRA and Austin decided not to participate in the project. On September 6, 1972, LCRA authorities passed a resolution not to participate in the project because they felt that nuclear power plants were still in the experimental stage and that the economics of such plants were questionable. Austin chose not to participate because its voters did not approve the bonds for the project.

On July 1, 1973, San Antonio, CP & L, and HL & P executed the participation agreement, which provided for the joint licensing, construction, operation, and maintenance of the project. Each participant owned an undivided interest as follows: San Antonio, thirty percent (30%); CP & L, thirty percent (30%); and HL & P, forty percent (40%). Under the participation agreement, the owners agreed to share all costs proportionately. The agreement provided for a management committee, composed of an officer or general manager from each participant, and a project manager. The agreement also provided that the project manager could be removed by a simple majority vote.

As project manager, HL & P's responsibility included hiring an Architect/Engineer(A/E)-constructor to design and build the plant. In June 1972, after an allegedly intensive investigation, HL & P tentatively recommended Brown & Root to the study committee for the position of A/E-constructor on the project. Before making a final commitment to hire Brown & Root, however, HL & P wanted to further test Brown & Root's capabilities by having it do additional site-study work for the project and assist in developing the specifications for the project's nuclear steam supply system. The steam supply system takes the steam produced by the heat from the nuclear reactor and transfers it to the turbine generator, which in turn rotates and produces electricity.

On June 11, 1974, after Brown & Root completed these tasks to all of the participants' satisfaction, HL & P and Brown & Root signed a contract in which Brown & Root agreed to act as the A/E-constructor for the project. Brown & Root contracted for a fixed profit, or "cost plus" basis, and the contract required it to complete ninety percent of the total engineering work before starting construction. All of the participants previously had employed Brown & Root to perform various construction projects and were satisfied with its work. They also knew that Brown & Root had no previous nuclear experience and that this was the first nuclear power plant Brown & Root had contracted to design and build.

Brown & Root's responsibilities as A/E-constructor included aiding HL & P in evaluating and selecting the steam supply system unit for the project. At the July 13, 1973 management committee meeting, HL & P discussed in detail its and Brown & Root's bid analyses and recommended the selection of the Westinghouse 3800 unit based on Westinghouse's final contract. The participants accepted HL & P's recommendation and signed a contract with Westinghouse in 1974.

Austin's Entry into the Project

In late 1972 and early 1973, Austin began experiencing problems with fuel availability. Austin relied entirely on natural gas for its electricity generation. On May 24, 1973, the Austin City Council received a report from the mayor's Energy Study Commission, which recommended that Austin participate in a joint venture for the development of coal or lignite power or a joint venture for a nuclear power plant. It did not specifically recommend that Austin participate in the project.

In a November 1973 bond election, Austin voters approved $161 million for Austin to participate in the project. On December 14, 1973, Austin's representative, R.L. Hancock, began attending the management committee meetings. At that meeting, he received all the back copies of the management committee's meeting minutes. Austin never asked about the contents of the previous meeting minutes or for any other documents before signing the participation agreement. On December 21, 1973, Austin joined the other participants in the project by executing the first amendment to the participation agreement. With the execution of the amendment, Austin became a sixteen percent undivided interest owner with the three other cotenants. The entry of Austin into the project reapportioned the other participants' undivided interests as follows: San Antonio, 28%; CP & L, 25.2%; and HL & P, 30.8%.

At the time Austin entered the project, it knew that (1) the participants had chosen HL & P to act as project manager and that HL & P's only involvement with nuclear power plants was its recent experience with its Allens Creek project, (2) Brown & Root had signed a letter of intent to act as the A/E-constructor on a "cost plus" basis, and (3) the size of the steam supply system had been increased from 1150 megawatts to 1250 megawatts. Before entering the participation agreement, Austin made no inquiry into the selection process used in choosing the steam supply system, the budget, or...