ETC Intrastate Procurement Co. v. JSW Steel (USA), Inc.

• Decision Date: 16 March 2021
• Docket Number: NO. 14-19-00915-CV,14-19-00915-CV
• Citation: 620 S.W.3d 168
• Parties: ETC INTRASTATE PROCUREMENT COMPANY, LLC, Appellant/Cross-Appellee v. JSW STEEL (USA), INC., Appellee/Cross-Appellant
• Court: Texas Court of Appeals

620 S.W.3d 168

ETC INTRASTATE PROCUREMENT COMPANY, LLC, Appellant/Cross-Appellee

v.JSW STEEL (USA), INC., Appellee/Cross-Appellant

NO. 14-19-00915-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed March 16, 2021

David E. Harrell Junior, Jonathan Pelayo, Christopher B. Dove, Houston, for Appellant.

Jill Hale, James Hicks Jr., Stacy Obenhaus, Mike Seely, Houston, for Appellee.

Panel consists of Justices Bourliot, Zimmerer, and Spain.

Frances Bourliot, Justice

In this case, we must decide whether the parties agreed to arbitrate their dispute involving the sale and delivery of pipe for an oil and gas pipeline. The answer depends on which documents, among a price quotation, purchase order, and order acknowledgment, form the parties' agreement. This scenario, although seemingly common, has not often been addressed in Texas jurisprudence. We also address whether a trial court may award postjudgment interest that was not awarded by the arbitrator. Concluding that the trial court did not abuse its discretion in ordering the dispute to arbitration and confirming the arbitration award but erred in awarding postjudgment interest, we affirm the trial court's final judgment as modified.

Background

ETC Intrastate Procurement Company, LLC constructs oil and gas pipelines. ETC sent JSW Steel (USA), Inc. a request for quotation (RFQ) for the fabrication and delivery of pipe for an oil and gas pipeline project. A timeline of major events follows:

• January 30, 2018: ETC emailed JSW its RFQ. The email included a list of "Applicable Attachments," including "ETC STANDARD TERMS AND CONDITIONS # 112." The terms and conditions had a clause entitled "Entire Agreement," stating:

This purchase order and any documents referred to therein constitute the entire agreement between the parties hereto and supersedes all prior proposals, negotiations and counterproposals. This instrument is intended by the parties as a final expression of their agreement and as a complete and exclusive statement of the terms thereof. No course of prior dealings between the parties shall be relevant to supplement or explain any term used in this agreement. Acceptance or acquiescence in a course or performance rendered under this agreement shall not be relevant to determine the meaning of this agreement even though the accepting or acquiescing party has knowledge of the nature of the performance and opportunity for objection.

• February 1, 2018: JSW emailed ETC a price quotation that stated, "Quotation is valid through close of business February 07, 2018." The price quotation included pricing, quantity, specifications, and payment terms, and stated that the final production schedule was "to be agreed upon at the time of the order placement." JSW's "Sales Policy Terms and Conditions of Sale" were attached to the email and stated:

The terms and conditions written on our order acceptance and on this page constitute the entire contract between you and us (the "Contract"). All sales by us are made subject to these terms and conditions. We expressly reject any different or additional terms or conditions contained in any documents submitted by you. Course of dealing, course of performance and usage of trade, to the extent that they modify, add to or detract from this Contract, shall not be binding on us.

• February 14, 2018: ETC emailed JSW a "DRAFT purchase order," which includes a section that says, "ATTACHMENTS AS THEY APPLY TO THIS PURCHASE ORDER: ETC Std Terms & Conditions #112." These terms and conditions were not attached.

• February 15, 2018: ETC emailed JSW a "purchase order." Like the draft, the purchase order also includes a section that says, "ATTACHMENTS AS THEY APPLY TO THIS PURCHASE ORDER: ETC Std Terms & Conditions #112." Again, the terms and conditions were not attached.

• February 16, 2018: JSW emailed ETC an "Order Acknowledgement" that also includes the following comment: "ATTACHMENTS AS THEY APPLY TO THIS PURCHASE ORDER: ETC Std Terms & Conditions #112."

• March 8, 2018: An ETC representative emailed JSW and stated, "I failed to attached [sic] the Terms & Conditions associated with this purchase, please find them attached. All other documents are the same as those sent on 2/15/2018." The "Terms & Conditions associated with this purchase" were the same ones that had been sent to JSW with the RFQ on January 30.

JSW made the last pipe delivery on July 4, 2018. ETC contends the applicable terms and conditions required delivery by June 5, 2018. JSW contends the applicable terms and conditions allowed an estimated delivery due date. ETC paid JSW approximately $7.4 million after making a deduction for purported late delivery fees. JSW asserts that ETC still owed it nearly $1 million, plus attorney's fees and interest.

JSW commenced arbitration and filed this lawsuit to compel arbitration against ETC and its parent company Energy Transfer, LP, seeking a declaration that the parties' contract required arbitration. JSW asserted that ETC is an agent or the alter ego of Energy Transfer. After a hearing, the trial court signed an order compelling arbitration.

The arbitrator concluded that JSW's terms and conditions, including an arbitration agreement, were part of the parties' agreement and awarded JSW actual damages, attorney's fees, arbitration fees, and interest "until paid or a judgment is entered" against ETC. The arbitrator denied JSW's claims against Energy Transfer. The trial court rendered judgment confirming the arbitrator's award but in addition awarded JSW postjudgment interest.

Discussion

In two issues, ETC challenges the trial court's order compelling arbitration and awarding postjudgment interest. In its appeal, JSW contends the trial court erred in setting the postjudgment interest rate at 5% per annum instead of 18% per annum. We first address whether the parties were bound to arbitrate their dispute. Then we address the issues involving postjudgment interest.

I. Did the parties agree to arbitrate their dispute?

In its first issue, ETC contends the trial court erroneously ordered the parties to arbitrate their dispute. According to ETC, its terms and conditions control the parties' agreement and do not include an arbitration agreement. JSW asserts to the contrary that its terms and conditions apply, which include an arbitration agreement.

In the trial court, a party seeking to compel arbitration bears the burden to establish that an arbitration agreement exists and that the claims presented fall within its scope. Nationwide Coin & Bullion Reserve, Inc. v. Thomas , No. 14-19-00632-CV, ––– S.W.3d ––––, ––––, 2020 WL 6741694, at *2 (Tex. App.—Houston [14th Dist.] Nov. 17, 2020, no pet. h.) (citing In re Oakwood Mobile Homes, Inc. , 987 S.W.2d 571, 573 (Tex. 1999) (per curiam) (orig. proceeding), abrogated on other grounds by In re Halliburton Co. , 80 S.W.3d 566 (Tex. 2002) (orig. proceeding) ). Whether an arbitration clause is enforceable is subject to de novo review. In re Labatt Food Serv., L.P. , 279 S.W.3d 640, 643 (Tex. 2009). But whether the parties reached an agreement to arbitrate can involve questions of fact. Compare Morgan v. Bronze Queen Mgt. Co. , 474 S.W.3d 701, 706–07 (Tex. App.—Houston [14th Dist.] 2014, no pet.) ("The parties dispute whether there was acceptance of an offer creating an implied agreement to arbitrate.... Whether the parties reached an agreement is a question of fact."), with Read v. Sibo , No. 14-18-00106-CV, 2019 WL 2536573, at *2–3 (Tex. App.—Houston [14th Dist.] June 20, 2019, pet. denied) (mem. op.) (involving whether the parties intended to agree to arbitrate based on the agreement's terms within the document itself). We review a trial court's decision to grant or deny a motion to compel arbitration under an abuse of discretion standard, deferring to the trial court's factual determinations if they are supported by evidence and reviewing legal determinations de novo.¹ Rodriguez v. Tex. Leaguer Brewing Co. , 586 S.W.3d 423, 427 (Tex. App.—Houston [14th Dist.] 2019, pet. denied) (citing In re Labatt Food Serv. , 279 S.W.3d at 643 ); see also Read , 2019 WL 2536573, at *2.

A. Trial court's comments after the case went to arbitration are immaterial.

The trial judge held a hearing on JSW's motion to confirm the arbitration award. During the hearing, the trial judge stated that he had sent the case to arbitration because the case was too complicated for a jury, as follows: "[I]n all due respect to our jury system, by the time the jury heard all this information, I'm not sure they would have come to a decision. That's actually why I went with the arbitration, to be honest with you." ETC argues this statement shows the trial court granted the motion compelling arbitration "for an illegitimate reason." However, the trial court did not make findings of fact and conclusions of law in support of its order compelling arbitration. In such cases, the judgment of the trial court implies all necessary fact findings in support of the judgment, and we must affirm the judgment if it can be upheld on any legal theory that finds support in the evidence. See Rodriguez, 586 S.W.3d at 432. The statement the trial judge made after the case was arbitrated is immaterial.

B. ETC accepted JSW's offer.

ETC argues that its purchase order was the offer and JSW's order acknowledgement was the acceptance forming the parties' contract, so that ETC's terms and conditions apply. JSW contends that its price quotation was the offer and ETC's purchase order was the acceptance, so that JSW's terms and conditions apply. The parties agree that Texas's version of the Uniform Commercial Code applies to the parties' agreement because it involves the sale of goods. See Summit Glob. Contractors, Inc. v. Enbridge Energy, Ltd. P'ship , 594 S.W.3d 693, 700 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (citing Tex. Bus. & Com. Code § 2.102 ). When the UCC applies, we do not consider common law principles that conflict with the UCC. See Contractors Source, Inc. v....