Mastec North America, Inc. v. El Paso Field Services, L.P., No. 01-07-00319-CV (Tex. App. 5/6/2010)
| Decision Date | 06 May 2010 |
| Docket Number | No. 01-07-00319-CV.,01-07-00319-CV. |
| Parties | MASTEC NORTH AMERICA, INC. AND MASTEC, INC., Appellants, v. EL PASO FIELD SERVICES, L.P. AND GULFTERRA SOUTH TEXAS, L.P. F/K/A EL PASO SOUTH TEXAS, L.P., Appellees. |
| Court | Texas Court of Appeals |
On Appeal from the 334th District Court, Harris County, Texas, Trial Court Cause No. 2004-39579.
Panel consists of Justices JENNINGS, KEYES, and HIGLEY.
This is a breach of contract dispute brought by appellants, MasTec North America, Inc., and MasTec, Inc. (collectively, "MasTec"), against appellees, El Paso Field Services, L.P. and Gulfterra South Texas, L.P., f/k/a El Paso South Texas, L.P. (collectively, "El Paso"). El Paso engaged MasTec to replace a butane pipeline for a lump sum of $3.6 million, known as the "Butane Shuttle Replacement Project" ("Project"). MasTec submitted its bid on the Project based on information in El Paso's bid package, which included, inter alia, the "Station and Land Pipeline Construction Contract" ("Contract") and El Paso's specifications, which were incorporated into the Contact. In the Contract specifications, El Paso asserted that it used due diligence in locating any "foreign crossings"1 in the pipeline right-of-way and that there were 280 such crossings. During construction, however, MasTec encountered 794 foreign crossings, which required additional construction measures and increased its costs substantially. MasTec sued El Paso to recoup the additional expenses. A jury found that El Paso breached the due diligence provision of the Contract specifications and awarded $4,763,890 in damages to MasTec. Subsequently, on the motion of El Paso, the trial court granted judgment notwithstanding the verdict ("JNOV") in favor of El Paso, concluding that the lump-sum provisions of the Contract allocated the risk of unidentified foreign crossings to MasTec and holding that MasTec take nothing by its claims. MasTec appeals.
In its sole issue, MasTec contends that the trial court erred by granting JNOV in favor of El Paso because the trial court's interpretation of the Contract improperly rendered the due diligence provision a nullity and shifted the risk of costs associated with unidentified foreign crossings to MasTec. In the alternative, MasTec contends that (a) the Contract is ambiguous and must be strictly construed against El Paso, or (b) that MasTec is entitled to recover under its quantum meruit theory.
On July 23, 2009, we reversed and remanded for entry of judgment consistent with the jury's verdict and for assessment of attorney's fees in favor of MasTec. El Paso moved for rehearing. We grant the motion, withdraw the opinion dated July 23, 2009, and issue this opinion in its stead. Our disposition and judgment remain unchanged.
We reverse and remand for entry of judgment consistent with the jury's verdict and for assessment of attorney's fees in favor of MasTec.
El Paso is one of the world's largest energy companies. MasTec is a construction company that was established in the 1930s and has annual gross revenue exceeding $1 billion.
At the time of the events, El Paso owned a butane pipeline that extended from Houston to Corpus Christi. The pipeline was originally constructed in the 1940s as an emergency supply line during the war. Because of its age and because it was deemed too shallow (buried less than 12 inches underground), El Paso contracted for its replacement, which took place in phases. This lawsuit involves Phase II of the replacement—a 68-mile, 8-inch diameter line extending from Victoria to Nueces Bay.2
El Paso invited MasTec to bid on the replacement Project, which was to include removal of the existing pipeline and the construction of a new pipeline in the same location. MasTec hired Bill White, who is considered by MasTec to be "a pipeline-construction veteran," as its general manager. White attended El Paso's "pre-bid meeting" on April 22, 2003, at which El Paso distributed bid packages containing the job description, the location of the pipeline, drawings or maps, known as "alignment sheets," and the Contract.
According to El Paso's bidding instructions,
The purpose of the alignment sheets was to show "foreign crossings," which are obstacles that cross the pipeline right of way—such as other pipelines, utilities, roads, rivers, fences, wells, cables, and concrete structures. Substantial costs are involved in maneuvering around these structures during pipeline construction and de-construction. El Paso had hired Gullett & Associates, an engineering company, to produce the alignment sheets.
The invitation to the pre-bid meeting stated, At the meeting, Jackie Ross, who was initially a consultant to El Paso and later became the full-time assistant to the project manager on this Project, told the contractors that El Paso would normally conduct a tour of the pipeline, but that there would be too many cars in this case and that each of the contractors was encouraged to "fly the route."
After the pre-bid meeting, White and his son, Mike, flew by helicopter over the pipeline route, familiarizing themselves with the topography and landing several times to check soil conditions. Mike testified by deposition that he carried the alignment sheets in his lap during the flight for orientation, but that he could not see foreign crossings from the air. White also drove along portions of the pipeline to which he had access. According to White, MasTec and the other contractors were specifically prohibited from entering certain private properties along the route, including the O'Connor Ranch. El Paso later claimed that the contractors were permitted to enter the restricted areas for inspection if they arranged for an escort by an El Paso representative.
Pursuant to El Paso's written bidding instructions, MasTec's bid and completed Contract, including lump-sum price schedule, were due 12 business days later, on May 8, 2003. This date was later amended to May 15, 2003.
The Contract, which MasTec was to sign and submit with its bid, provides as follows, in pertinent part:
2.1 SCOPE OF WORK
[MasTec] agrees, at its cost, that it shall (except as otherwise provided for in the Contract or Drawings) furnish all necessary materials, supplies, labor, tools, equipment superintendence, apparatus and machinery, including without limitation, transportation and all other items necessary to perform the Work for the construction and completion of, and shall construct, install, complete, and deliver to [El Paso] in a good and workmanlike manner, in strict compliance with the Contract and all applicable laws, rules, regulations, ordinances and permits, all of the Work set forth in Exhibit "A," "Scope of Work and Addendums" (attached hereto), all in accordance with the provisions of this Contract.
. . . .
For and in consideration of the performance of the Work by [MasTec] and subject to the terms and conditions of this Contract, [El Paso] agrees to pay and [MasTec] agrees to accept compensation as set forth in the attached Exhibit "B-1," Contract Price Schedule.
. . . .
4.6 COMPENSATION FOR DELAYS IN PERFORMANCE OF WORK
a) By [MasTec]: All delays in the performance of the Work resulting from causes other than those attributable to [El Paso] shall be at the cost and expense of [MasTec]. . . .
b) By [El Paso]: For delays in the performance of the Work attributable to [El Paso], it is agreed that the compensation and/or amounts due [MasTec] in full and complete settlement of such delays shall be as follows: [various lump sum settlement or reimbursement options].
. . . .
7.1 REPRESENTATIONS AND WARRANTIES
. . . .
e) [MasTec represents] [t]hat its duly authorized representative has visited the site of the Work, is familiar with the local and special conditions under which the Work is to be performed and has correlated the on site observations with the requirements of the Contract and has fully acquainted itself with the site, including without limitation, the general topography, accessibility, soil structure, subsurface conditions, obstructions and all other conditions pertaining to the Work and has made all investigations essential to a full understanding of the difficulties which may be encountered in performing the Work, and that anything in this Contract or in any representations, statements or information made or furnished by [El Paso] or any of its representatives notwithstanding, [MasTec] assumes full and complete responsibility for any such conditions pertaining to the Work, the site of the Work or its surroundings and all risks in connection therewith;
f) That it possesses a high level of experience and expertise in the business, administration, construction management and superintendence of projects of the size, complexity and nature of the Work and that it will perform the Work with the care, skill and diligence of such a Contractor;
g) That the Contract is sufficiently complete and detailed for [MasTec] to perform the Work required to produce the results intended by the Contract and comply with all the requirements of the Contract; . . .
8.1 CONTRACTOR'S CONTROL OF THE WORK
a) . . . .
. . . .
7. [MasTec] represents that it has had an opportunity to examine, and has carefully examined, all of the Contract documents and has fully acquainted...
To continue reading
Request your trial