Edascio, L.L.C. v. Nextiraone L.L.C.

• Decision Date: 22 May 2008
• Docket Number: No. 01-07-00362-CV.,01-07-00362-CV.
• Citation: 264 S.W.3d 786
• Parties: EDASCIO, L.L.C., Appellant, v. NEXTIRAONE L.L.C., Appellee.
• Court: Texas Court of Appeals

264 S.W.3d 786

EDASCIO, L.L.C., Appellant, v. NEXTIRAONE L.L.C., Appellee.

No. 01-07-00362-CV.

Court of Appeals of Texas, Houston (1st Dist.).

May 22, 2008.

Rehearing Overruled July 21, 2008.

D. Scott Funk, James J. Ormiston, Looper, Reed & McGraw, P.C., Houston,

TX, Stephen G. Tipps, Jennifer Kingaard, Baker Botts L.L.P., Houston, TX, for Appellant.

Sean Gorman, LeBoeuf, Lamb, Greene & MacRae, L.L.P., James E. Doyle, Doyle, Resptrepo, Harwin & Robbins, LLP, Houston, TX, for Appellee.

Panel consists of Chief Justice RADACK and Justices JENNINGS and BLAND.

OPINION

TERRY JENNINGS, Justice.

Appellant, Edascio, L.L.C. ("Edascio"), challenges the trial court's entry of a judgment notwithstanding the verdict in favor of appellee, NextiraOne L.L.C. ("NextiraOne"), in Edascio's suit against NextiraOne for breach of contract. In a single issue, Edascio contends that the trial court erred in rendering the judgment notwithstanding the verdict on the ground that "the profits that Edascio would have earned under a sales outsourcing agreement, but for NextiraOne's breach of that very agreement, were `indirect, special, or consequential damages' and thus barred under the limitation of liability clause in the contract." In four cross-issues, NextiraOne contends that the parol evidence rule barred evidence of a purported oral agreement on which Edascio based its breach of contract claim, there was no evidence to support the jury's damages award, the trial court impermissibly commented on the weight of the evidence in question one of the jury charge, and the trial court erred in submitting questions two and four of the jury charge.

We conclude that the parol evidence rule barred the introduction of the evidence on which Edascio based its breach of contract claim and on which the jury awarded Edascio damages and, thus, that the trial court did not err in granting NextiraOne judgment notwithstanding the verdict. We therefore affirm the trial court's second corrected final judgment ("final judgment") that Edascio take nothing by its suit against NextiraOne.

Factual and Procedural Background

As alleged in its fourth amended counterclaim, Edascio entered into negotiations to provide sales outsourcing services to NextiraOne, a provider of voice and data telecommunication services. NextiraOne allegedly represented that it would assign to Edascio all of its customer accounts "having fewer than 200 telephone/data ports" on an exclusive basis and that the commissions earned on sales to these accounts would be sufficient to allow Edascio to make a profit. On September 26, 2002, in reliance upon these representations, Edascio entered into a Sales Outsourcing Agreement ("SOA") with NextiraOne.

Edascio asserted that NextiraOne breached the SOA by, among other things, failing to assign all of its customer accounts with fewer than 200 ports, not assigning Edascio any accounts until two months after the required date, and assigning "less than half of the customer accounts" that NextiraOne represented it would assign.

Edascio tried its breach of contract claim to a jury.¹ The SOA, which was introduced into evidence at trial, provided that NextiraOne "desire[d] to engage Edascio to solicit orders for NextiraOne's products and services through an outsourced sales force pursuant to the terms and conditions of the SOA." During trial, and on appeal, the parties focused on certain provisions of the SOA, which we set forth below.

In regard to the accounts that were to be serviced by Edascio pursuant to the SOA, the SOA did not identify any specific accounts by name or category, but instead the SOA generally provided,

1.1 "Account(s)" or "Customers" shall mean those pre-existing NextiraOne accounts or customers to which Edascio shall be assigned or which Edascio shall procure pursuant to this Agreement. NextiraOne reserves the right to provide only such Account information to Edascio that is directly related to Customers assigned to Edascio in the Territory (as defined below).

1.2 "Authorized Products and Services" shall mean those NextiraOne products and services which NextiraOne grants Edascio the right to market and sell to Accounts in the Territory (as defined below). The Authorized Products and Services shall include, but not be limited to, the list of products and services attached to this Agreement as Appendix 1.

....

1.15 "Territory" shall mean the NextiraOne Accounts indicated on the attached Appendix 5. The Territory shall not include any of the NextiraOne customers, sites, locations, or those of their affiliates and subsidiaries (the "Excluded Accounts") attached to this Agreement as Appendix 5. The Territory may be expanded or reduced after the Effective Date by mutual agreement of the parties.

(Emphasis added).

Appendix 5, attached to the SOA, did not identify any specific customer accounts and was largely blank. Appendix 5 stated only,

Appendix 5

Excluded Accounts

The attached list of NextiraOne customers are excluded from Edascio Territory. Any branch, subsidiary or affiliated company of any account on this list is also excluded from Edascio. This list will be updated quarterly to reflect new account additions.

No additional lists were attached to Appendix 5 or to the SOA. However, as discussed in more detail below, the parties agreed at trial that certain accounts were in fact transferred electronically and assigned by NextiraOne to Edascio in December 2002, several months after the effective date of the SOA.

Paragraph 5.1 of the SOA required Edascio to "employ and retain Sales Representatives to solicit and market the Authorized Products and Services in the Territory." More specifically, paragraph 5.2 required Edascio "to employ a minimum of twelve (12) Sales Representatives within (90) days of the Effective Date" of the SOA.

Section 9 of the SOA set forth detailed commission terms. Paragraph 9.1 provided that "[a]s compensation for soliciting and procuring Orders pursuant to this Agreement, NextiraOne shall pay Edascio a commission for the sale of Authorized Products and Services." Paragraph 9.2 provided that NextiraOne shall pay Edascio a percentage of the pricing margin "for all sales of Authorized Products and Services to Customers and Net New Customers in the Territory."

Paragraph 15.3 of the SOA contained a limitation of liability clause, which provided,

15.3 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL,

OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, OR COMMISSIONS OR ANTICIPATED COMMISSIONS, OR EXPENDITURES, INVESTMENTS, OR COMMITMENTS MADE IN CONNECTION WITH THIS AGREEMENT, WHICH ARISE OUT OF ANY ACTION, WHETHER SOUNDING IN TORT OR IN CONTRACT, BECAUSE OF ANY PERFORMANCE OR FAILURE TO PERFORM, ANY OBLIGATION UNDER THIS AGREEMENT, OR FOR TERMINATION OF THIS AGREEMENT FOR ANY REASON. This Section 15.3 shall survive termination of this Agreement for any reason.

Finally, Paragraphs 18.2 and 18.12 of the SOA provided,

18.2 Agreement Prevails. The terms and conditions of this Agreement shall govern all transactions between the Parties and, to the extent of any conflicts or inconsistencies between this Agreement and its Exhibits, Appendices and Attachments, this Agreement shall control.

18.12 Entire Agreement. This Agreement represents the entire agreement between the parties and supersedes all prior written and oral representations. No amendment to this Agreement shall be effective unless it is in writing, dated subsequent hereto, refers explicitly to this Agreement and is signed on behalf of NextiraOne and Edascio by their duly authorized representatives.

The SOA did not expressly provide that NextiraOne was assigning all of its customers with fewer than 200 ports to Edascio. Rather, as stated in its pleadings, Edascio's suit against NextiraOne was based on Edascio's contention that the SOA "was not a fully integrated contract" as the SOA did "not address one of the most important aspects of the deal—the identity of the customers that NextiraOne was obligated to assign to Edascio." Edascio asserted that it was "necessary to look outside the [SOA] to determine which customers were subject to the [SOA], i.e., it [was] necessary to refer to the parties' oral agreement, consistent with NextiraOne's representations, that NextiraOne would promptly assign to Edascio all accounts for customers having telecommunications systems with fewer than 200 ports."²

At trial, James Button, Edascio's owner, testified that he had previously been employed as the Chief Operating Officer of TIC Enterprises, another sales outsourcing business, and that NextiraOne had initially contacted TIC about outsourcing its sales operations to TIC for its customers who had fewer than 200 ports. In the course of its negotiations, NextiraOne represented that the total number of these accounts to be assigned numbered approximately 45,000. On April 26, 2002, Button learned that TIC's parent company intended to sell TIC, and Button immediately called NextiraOne's president, Rick Snyder, with whom Button had been working on behalf of TIC regarding the proposed sales outsourcing agreement. Button informed Snyder that, although TIC might be sold, he intended to acquire the assets of TIC, form a new company, and continue discussions with NextiraOne regarding the proposed sales outsourcing agreement. Button contended that, from this point forward, he was negotiating on behalf of a newly formed business that he would subsequently incorporate in September 2002 and name Edascio.

Button stated that at a meeting in May 2002, NextiraOne showed him a hard copy of a list of "small and medium sized customers having fewer than 200 ports" that NextiraOne intended to assign to Edascio. Button did not recall the number of customers identified on this hard copy list, but he maintained that the volume "was consistent with what we had been told before that...