Eagle Railcar Servs. v. Matheson Tri-Gas, Inc.
| Docket Number | 12-22-00103-CV |
| Decision Date | 21 July 2023 |
| Parties | EAGLE RAILCAR SERVICES, L.P., EAGLE RAILCAR SERVICES -ROSCOE, INC., EAGLE RAILCAR SERVICES - CAIRO, OHIO, LLC AND EAGLE RAILCAR SERVICES -WICHITA FALLS, TEXAS, LLC, APPELLANTS/CROSS-APPELLEES, v. MATHESON TRI-GAS, INC., APPELLEE/CROSS-APPELLANT |
| Court | Court of Appeals of Texas |
Appeal from the 3rd District Court of Anderson County, Texas (Tr. Ct. No. DCCV19-0805-3)
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
Appellants Eagle Railcar Services, L.P. (Eagle Elkhart), Eagle Railcar Services - Roscoe, Inc. (Eagle Roscoe), Eagle Railcar Services - Cairo, Ohio, LLC (Eagle Cairo), and Eagle Railcar Services - Wichita Falls, Texas, LLC (Eagle Wichita Falls)[1] challenge the trial court's judgment in favor of Appellee, Matheson Tri-Gas, Inc. (Matheson) following a bench trial. In five issues, Eagle contends the trial court erred by (1) finding in favor of Matheson on its breach of contract counterclaim, (2) denying Eagle's breach of contract claim, (3) entering judgment in favor of Matheson on its declaratory judgment counterclaim, (4) denying Eagle's motion for a trial amendment, and (5) awarding Matheson "excessive and non-segregated attorney's fees[.]" Matheson filed a cross-appeal in which it challenges (1) the trial court's failure to award Matheson damages as a lost volume seller and (2) the trial court's award of a lower amount of attorney's fees than Matheson requested. We affirm in part and reverse and remand in part.
Eagle entered into seven product supply agreements with Matheson pursuant to which Eagle agreed to purchase all of its "present and future requirements" of certain industrial gas products, as identified in Exhibit A to each agreement. Specifically, the contracts were for the following products and facilities: (1) packaged gases for Eagle Elkhart, including liquid argon, liquid CO2, liquid oxygen liquid nitrogen, oxygen, propylene, nitrogen, argon "argon/CO2[,]" and "TriMix HEL, ARG, CO2[,]" (2) bulk liquid nitrogen for Eagle Elkhart, (3) bulk liquid oxygen for Eagle Elkhart, (4) bulk nitrogen for Eagle Cairo, (5) bulk liquid oxygen for Eagle Roscoe, (6) bulk nitrogen for Eagle Wichita Falls, and (7) bulk oxygen for Eagle Wichita Falls. The contracts stated that Eagle agrees to purchase all the identified products "at the prices, charges and fees (aggregately, 'Prices'), set forth in Exhibit A."
Each agreement provided for an initial term of five years and would renew for successive terms unless either party received written notice of termination not less than twelve months before the term expired. Paragraph 5(a) of each agreement provided that Matheson had the right to increase its prices "[f]rom time to time" by giving Eagle written notice of the increase, and if Eagle did not provide Matheson with a competing bid, the price increase "shall become effective fifteen (15) days after the date of said notice" and the agreement "shall otherwise remain in full force and effect." Paragraph 5(a) also provided that notices "shall be sent by certified mail, return receipt requested." The contracts stated that if Matheson received a competing bid, Matheson had the option to either meet the lower price or rollback its price to the price that was in effect before the increase. Paragraph 5(c) provided that from time to time, Matheson "may need to recover for unusual or unexpected cost increases including, but not limited to, the costs of complying with [f]ederal, state and local regulations involving the storage, transportation, handling and/or disposal of hazardous materials, energy and/or fuel price changes, loss of local production facilities, raw material or commodity supply dislocations, and other similar events ("Surcharges")." However, Eagle Elkhart's contracts for bulk nitrogen and bulk oxygen, Eagle Cairo's contract for bulk nitrogen, Eagle Roscoe's contract for bulk oxygen, Eagle Wichita Falls's contract for bulk nitrogen, and Eagle Wichita Falls's contract for bulk oxygen all specifically provided in Exhibit A that the applicable surcharge is zero.
Paragraph 6 provided as follows: “Unless otherwise specifically prescribed in this [a]greement, any notices in connection herewith shall be sent by overnight mail or confirmed facsimile transmission to the respective addresses" set forth in Exhibit A. Exhibit A of each agreement provided that "[i]n the event of any conflict between the terms and conditions of this Exhibit A and the Agreement, the terms and conditions of this Exhibit A shall prevail." Paragraph 12(a) provided that "[i]f a legal or equitable proceeding is instituted by [Matheson] against [Eagle] to enforce its rights and [Matheson] prevails, [Eagle] shall pay all of [Matheson]'s costs and expenses (including attorneys' fees)."
Matheson sent fourteen written notices of price increases to various Eagle locations, as follows: (1) notice dated November 16, 2015, sent to Eagle Elkhart and referring to Eagle Elkhart and Eagle Roscoe by account numbers as the affected accounts[2], stating that the price of bulk nitrogen and bulk oxygen would both increase by 5%; (2) notice dated December 17, 2015, sent to Eagle Roscoe and identifying Eagle Roscoe as the affected account, providing for a 10% delivery fee increase and a 5% increase in the price of "FG BK[;]"[3] (3) notice dated December 17, 2015, sent to Eagle Cairo, identifying Eagle Cairo as the affected account, and stating that the delivery fee would increase by 10% and "NI BK" would increase by 5%; (4) notice dated January 17, 2016, sent to Eagle Roscoe, identifying Eagle Roscoe by account number as the affected account, and providing for a 15% increase on "liquid tank[;]" (5) notice dated November 15, 2016, sent to Eagle Elkhart and referring to Eagle Roscoe and Eagle Cairo as the affected accounts, stating that the price of bulk nitrogen ("NI BK") would increase by 10%, bulk oxygen ("OX BK") would increase by 5%, "vessel rental" would increase by 10%, and delivery fee would increase by 10%; (6) notice dated December 18, 2016, sent to Eagle Wichita Falls and referring to Eagle Wichita Falls's account number, stating that the price of nitrogen would increase by 10% and the price of oxygen would increase by 10%; (7) notice dated June 26, 2017, sent to Eagle Elkhart, identifying the affected accounts as Eagle Elkhart (packaged), Eagle Elkhart (bulk), and Eagle Wichita Falls, and providing that the price of "ALL packaged gas" would be increased by 15%; (8) notice dated June 26, 2017, sent to Eagle Cairo and identifying the affected account as Eagle Cairo, providing that the price of nitrogen would increase by 15% and the delivery fee would be increased by 10%; (9) notice dated June 26, 2017, sent to Eagle Elkhart and identifying the affected accounts as Elkhart (packaged), Elkhart (bulk), and Eagle Wichita Falls, providing that the price of nitrogen would increase by 15%, the price of oxygen would increase by 15.38%, the delivery fee would increase by 10%, and "Equipment Rental" would increase by 10%; (10) notice dated March 26, 2018, sent to Eagle Cairo, and stating that the following energy surcharges would be levied "due to record cold temperatures in the Northeastern United States in January of 2018: "$0.1645/ccf delivered" for bulk liquid oxygen, "$0.1645/ccf" delivered for bulk liquid nitrogen, and "$0.3295/ccf delivered" for bulk liquid argon, covering "the period January 1, 2018 through January 31, 2018[;]" (11) notice dated November 15, 2018, sent to Eagle Elkhart and identifying the affected accounts as Eagle Roscoe, Elkhart (packaged), Elkhart (bulk), Eagle Wichita Falls, and Eagle Cairo, and stating that the price of nitrogen would increase by 15%, the price of oxygen would increase by 15%, delivery fee would increase by 10%, and "Facility Fee" would increase by 10%; (12) notice dated December 21, 2018, sent to Eagle Elkhart and identifying the affected account as Eagle Wichita Falls, stating that the "Facility Fee" would increase by 10%; (13) notice sent to Eagle Elkhart, dated January 14, 2019, which did not identify any specific accounts by name or number, stating that due to "an exceptional surge in demand for commercial drivers without a commensurate supply available" a nationwide driver shortage occurred, and "to reliably supply our customers, MATHESON has implemented a Driver Availability Charge that began appearing on your invoices starting 12/14/2018[;]" and (14) notice dated May 16, 2019, sent to Eagle Elkhart and identifying the affected account as Eagle Wichita Falls, stating that the "Facility Fee" would increase by 10% and the delivery fee would increase by 10%.
Eagle eventually filed a declaratory judgment action against Matheson, in which Eagle sought a declaration of its rights as to the product supply agreements. Specifically, Eagle asked for a declaration of (1) the validity of Matheson's price increases pursuant to Paragraph 5(a) of the agreements, (2) the meaning of the phrases “bona fide firm written offer” and “responsible producer,” (3) “the impossibility of Eagle's compliance,” (4) the unconscionability of the price increases, term and term renewal provisions, and price revision provisions, (5) the correct amounts due under the agreements, if any, and (6) Eagle's ability to terminate the agreements. According to Eagle, Matheson “systematically attempted to force a number of unwarranted and unlawful price increases and charges on Eagle[,]” and Eagle asserted that the price increases were “retaliatory and unconscionable.”
Eagle conceded that it received each of the written notices, but contended that numerous notices were ineffective because they were not sent to the address or...
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