Duff v. Union Texas Petroleum Corp., A14-88-034-CV
| Citation | 770 S.W.2d 615 |
| Decision Date | 27 April 1989 |
| Docket Number | No. A14-88-034-CV,A14-88-034-CV |
| Parties | Barrett S. DUFF, Appellant, v. UNION TEXAS PETROLEUM CORPORATION, Appellee. (14th Dist.) |
| Court | Texas Court of Appeals |
James T. McCartt, Tracey Christopher, Houston, for appellant.
Mark E. Lowes, William K. Wilde, Houston, for appellee.
Before J. CURTISS BROWN, C.J., and JUNELL and DRAUGHN, JJ.
This appeal arises from a judgment in a suit for breach of a joint venture agreement between Union Texas Petroleum (UTP) and Pluspetrol S.A. (an Argentine Company). Pluspetrol assigned their rights under this contract to Barrett S. Duff (Duff).
On November 26, 1980, UTP and Pluspetrol signed an agreement to submit a joint bid for an offshore oil and gas concession at an area known as Block D-1 (an area located offshore the Ivory Coast of Africa). The bid group included UTP, Pluspetrol, Rutherford Oil and Gas Corporation (Rutherford) and Fluor Oil and Gas Corporation (Fluor). 1
In March 1981 a joint bid was filed on behalf of the UTP bid group as stated in the agreement. At the time the UTP bid group filed their bid, Agrip (an African owned oil company) joined the group. In July 1981 the Ivorian Government notified UTP that the oil and gas concession located at Block D-1 would be exclusively divided between UTP, Agrip, Total (a French owned oil company), and Petroci (the Ivory Coast government-owned oil company). The distribution of percentages of this oil and gas concession determined by the Ivory Coast Government:
Agrip (Africa) Ltd. 31.875%
Union Texas Petroleum 31.875%
Total 21.25%
Petroci 15.0% (a carried interest)
The Ivory Coast Minister of Mines, Paul Guidibo, explained the division of percentages because of their wishes not to have consortium partners participating with less than 15% interest. Thus, under the Minister's decision, Pluspetrol/Rutherford/Fluor were denied an interest in the oil and gas concession. Representatives of UTP and Pluspetrol attempted to get the Ivorian Government to approve transfers of interests between UTP and Pluspetrol. The Ivory Coast Government denied the requests.
A production sharing contract was entered into between the UTP, Agrip, Total, Petroci group and the Ivory Coast Government. Exploration commenced on Block D-1 and the two wells drilled were dry holes. Afterwards, the concession terminated and no further production or exploration took place.
Before any of the wells were completed Pluspetrol, Rutherford, and Fluor filed a lawsuit against UTP for breach of the joint bid agreement. Rutherford and Fluor settled with UTP. UTP counterclaimed against Duff for breach of the original agreement and the settlement agreement. After a trial to the bench, the trial court entered a take nothing judgment against both parties. Duff raises four points of error and UTP raises four cross-points of error. We affirm the judgment of the trial court.
After a take nothing judgment against both parties was entered, the trial court made the following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT:
1. Union Texas Petroleum Corporation (UTP) did prevent Pluspetrol from fully participating in the negotiations with the Ivory Coast government for the award of Block D-1 and for the subsequent Production Sharing Contract (PSC), but that conduct did not constitute a material breach of the agreement between UTP and Pluspetrol, and factually caused Pluspetrol no damage or harm of any kind.
2. There was no act of state on the part of the Ivory Coast government that excused UTP's performance under the November 26, 1980, agreement with Pluspetrol.
3. Under the November 26, 1980, agreement with UTP, Pluspetrol was entitled to a 1.59375% interest (out of the total interest awarded in the PSC).
4. UTP failed to convey a 1.59375% interest to Pluspetrol.
5. Neither the Joint Venture Agreement, the PSC, nor the acts of the Ivorian government precluded Pluspetrol's acquisition of that interest from UTP.
6. The Pluspetrol 1.59375% interest was not marketable at all and had no preproduction market value. After the wells were drilled, that interest had no value of any kind.
7. The failure of UTP to convey Pluspetrol a 1.59375% interest caused no damage or harm whatsoever to Pluspetrol or Duff.
8. The acts of the Ivorian government did not preclude Duff's acquisition of an assignment of Pluspetrol's causes of action against UTP.
9. The letter of December 1984 did constitute an enforceable agreement to settle the claims in this lawsuit, but was breached by UTP in insisting that Duff was not entitled to the agreed interest, and was not breached by Duff.
CONCLUSIONS OF LAW:
1. Because the evidence affirmatively shows that Pluspetrol/Duff never suffered any damage or harm as a result of UTP's failure to perform certain obligations under the November 26, 1980, agreement, plaintiff should take nothing in his claims against UTP.
2. Because Duff's causes of action are for breaches that factually caused Duff and/or Pluspetrol no damage or harm, Duff should not recover his attorneys' fees from UTP.
3. Plaintiff should not recover even nominal damages.
4. UTP should take nothing in its counterclaim against Duff.
SIGNED November 17, 1987.
/s/ Ann Tyrrell Cochran
The findings of the trial court are entitled to the same effect on appeal as a verdict by a jury. The fact findings will not be disturbed if there is some evidence of probative force to support them. The evidence must be viewed in the light most favorable to the successful party and every legitimate inference made that is favorable to such party. City of Clute v. City of Lake Jackson, 559 S.W.2d 391, 395 (Tex.Civ.App.--Houston [14th Dist.] 1977, writ ref'd n.r.e.). The trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence to support them. Guajardo v. Neece, 758 S.W.2d 696, 698 (Tex.App.--Fort Worth 1988, no writ); First Nat'l Bank v. Kinabrew, 589 S.W.2d 137, 146 (Tex.Civ.App.--Tyler 1979, writ ref'd n.r.e.). In reviewing an assertion that the evidence is insufficient to support a finding of fact, we are required to consider all of the evidence in the case. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965); Guajardo, 758 S.W.2d at 698.
Appellant's first and second points of error complain that the evidence is legally and factually insufficient to support the findings. Specifically, the first point of error contends that under the parties agreement, Pluspetrol was entitled to a 3.1875% rather than the 1.5937% interest found by the trial court. The second point of error states that the 1.5937% interest that UTP failed to convey had substantial market value whereas the trial court found that the interest had no market value and that Pluspetrol was not damaged by UTP's failure to convey the interest. Appellant's third point of error contends that the trial court erred in concluding that Pluspetrol suffered no damage from UTP's breach of contract. We will address appellant's second and third points of error before considering the first.
The trial court was presented with two different approaches to assess damages caused by UTP's failure to convey the 1.59375% carried interest. First, Duff attempted to link the value of the interest to the risk capital expended by UTP. Duff presented evidence that in December 1980 management authorized UTP to risk 14.875 million dollars for a bonus and initial exploration program. By taking 37.5% of 14.875 million, Duff calculated that his interest should be worth in excess of $396,000.00.
Secondly, Duff presented evidence that before drilling started, Block D-1 was an attractive investment opportunity to Conoco, a large oil company. In 1982 Conoco made an offer to purchase a large percentage (30%) of the oil and gas concession from the UTP/Agrip/Total bid group in excess of $800,000.00 for each 1% interest. No sale to Conoco was consummated.
Duff's own expert conceded that he could not find any comparable sales to evidence market value of Pluspetrol's interest in the concession at the pre-production stage. UTP offered testimony explaining that since Pluspetrol's interest was so small there was no market for an interest of this size. These experts claimed that major oil companies were interested in accumulating interest of at least 25% and smaller companies and individuals are not in a position to risk their capital on this kind of speculative international offshore concession. Furthermore, UTP presented testimony to the effect that Pluspetrol's interest would have had value if offered for sale after production. However, since the breach occurred before production no market value existed.
We find that plaintiff has failed to establish his damages as a matter of law and that a question of fact existed which the court found against him. Exxon Corp. v. Middleton, 613 S.W.2d 240, 246 (Tex.1981). Duff was unable to provide any evidence of comparable sales to determine market value of his interest. The trial court was entitled to reject his evidence and as fact finder to conclude that Duff's interest had no value. See Berry Contr., Inc. v. Coastal States Petrochemical Co., 635 S.W.2d 759, 761-62 (Tex.App.--Corpus Christi 1982, writ ref'd n.r.e.).
Our holdings on points of error two and three are dispositive of point of error number one. We find evidence sufficient to support the finding that Pluspetrol's interest had no value. Therefore, a discussion on the amount of Pluspetrol's interest is not necessary. Appellant's point of error one is overruled.
Appellant's fourth point of error contends that the trial court erred in concluding that he may not recover even nominal damages, and that he may not recover costs and his attorneys' fees from UTP. As previously discussed in points of error two and three, we find evidence supports the trial court's finding Duff's interest had no value and that Duff suffered...
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