MPG Petroleum, Inc. v. Crosstex CCNG Marketing, Ltd., No. 13-05-609-CV (Tex. App. 10/5/2006)
| Decision Date | 05 October 2006 |
| Docket Number | No. 13-05-609-CV.,13-05-609-CV. |
| Parties | MPG PETROLEUM, INC. Appellant, v. CROSSTEX CCNG MARKETING, LTD., CROSSTEX ENERGY SERVICES, L.P., AND CROSSTEX ENERGY SERVICES, GP, LLC, Appellees. |
| Court | Texas Court of Appeals |
On Appeal from the 343rd District Court of San Patricio County, Texas.
Before Chief Justice VALDEZ and Justices YAÑEZ and CASTILLO.
Appellant, MPG Petroleum, Inc. ("MPG"), sued Appellees, Crosstex CCNG Marketing, Ltd., Crosstex Energy Services, L.P., and Crosstex Energy Services, G.P., L.L.C. (collectively "Crosstex"), for breach of contract, fraud, and negligent misrepresentation. The trial court granted a combined traditional and no-evidence motion for summary judgment in favor of Crosstex on the breach of contract claim, and a no-evidence motion for summary judgment in favor of Crosstex on fraud and negligent misrepresentation claims. In two issues, MPG contends the trial court erred in: (1) granting Crosstex's traditional and no-evidence motion for summary judgment on the breach of contract claim; and (2) granting Crosstex's no-evidence summary judgment on the remaining claims. For the reasons that follow, we affirm the trial court's judgment.
Crosstex is the owner and operator of a natural gas pipeline that crosses MPG's leasehold. MPG and Crosstex entered negotiations whereby Crosstex would buy 100% of the natural gas produced by MPG's well. MPG and Crosstex signed a "letter agreement" dated March 12, 2003, stating that MPG would build a flow line from its well to Crosstex's Gregory Gathering System. MPG later decided that the flowline would be too expensive to do this. As a result, Crosstex and MPG developed a new plan whereby the natural gas would be delivered directly to Crosstex's newly-acquired Ingleside-to-Refugio eight-inch pipeline that crossed MPG's leasehold. MPG and Crosstex memorialized the new plan in a second letter agreement, dated April 10, 2003.
The April 10, 2003 letter agreement stated that MPG would commit 100% of its natural gas output from the well. MPG would construct flow lines to deliver the gas from the well to the "agreed upon points of interconnection ('Points of Delivery') between the facilities of MPG and Crosstex."1 MPG would also be financially responsible for the purchase and installation of the required fittings, valves, and measuring equipment at a cost of $12,500. The agreement also outlined the term, price, and gas quality specification.
After the April 10, 2003 letter agreement, MPG and Crosstex continued to negotiate the measuring equipment's location and the flow line's specifications. The negotiations included a field meeting in mid-May 2003, whereby the parties met to discuss the exact location of the measuring equipment. Negotiations continued into September 2003 to identify the measuring equipment's location. The parties were not able to agree on a location. The formal contract mentioned in the letter agreement was never signed.
On April 6, 2004, approximately seven months after negotiations ceased, MPG filed suit. The trial court granted a hybrid traditional and no-evidence summary judgment on the breach of contract claim, and a no-evidence summary judgment on the fraud and negligent misrepresentation claims on June 21, 2005.
The function of a summary judgment is to eliminate patently unmeritorious claims and defenses, not to deprive litigants of the right to a jury trial. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 n. 5 (Tex. 1979). We review de novo a trial court's order granting a traditional motion for summary judgment. Joe v. Two Thirty-Nine Joint Venture, 145 S.W.3d 150, 156 (Tex. 2004). The traditional summary judgment movant has the burden of showing that no genuine issue of material fact exists, and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). As defendant, Crosstex is entitled to summary judgment if it conclusively negated an essential element of MPG's breach of contract cause of action. S.W. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). Crosstex bears the burden of proof and all doubts about the existence of a genuine issue of material fact are resolved against it. See Nixon, 690 S.W.2d at 548-49. All evidence and any reasonable inferences must be viewed in the light most favorable to MPG. Id.
A no-evidence motion for summary judgment is equivalent to a pretrial directed verdict, and this court applies the same legal sufficiency standard of review. Ortega v. City Nat'l Bank, 97 S.W.3d 765, 772 (Tex. App.-Corpus Christi 2003, no pet.) (op. on reh'g). In an appeal of a no-evidence summary judgment, this Court reviews the evidence in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences. Merrill Dow Pharms., Inc. v. Harner, 953 S.W.2d 706, 711 (Tex. 1997). We review a no-evidence summary judgment de novo. Id. If the nonmovant produces evidence that raises a genuine issue of material fact, summary judgment is improper. Tex. R. Civ. P. 166a(i). All that is required of the nonmovant is to produce a scintilla of probative evidence to raise a genuine issue of material fact. Ortega, 97 S.W.3d at 772. There is less than a scintilla of evidence when the evidence is "so weak as to do no more than create a mere surmise or suspicion" of a fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). There is more than a scintilla of evidence when the evidence allows reasonable and fair-minded people to differ in their conclusions. Id. The burden of producing evidence is entirely on the non-movant; the movant has no burden to attach any evidence to the motion. Tex. R. Civ. P. 166a(i).
No-evidence points will be sustained when: (a) there is a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a scintilla; or (d) the evidence conclusively establishes the opposite of a vital fact. King Ranch, 118 S.W.3d at 751. When the trial court does not specify the basis upon which it granted summary judgment, the appellate court must affirm if any one of the movant's theories has merit. Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).
In its first cause of action, MPG alleges that Crosstex breached the April 10, 2003 letter agreement. Crosstex moved for a hybrid traditional and no-evidence summary judgment against MPG's breach of contract claim on the following grounds: (1) there was no meeting of the minds as to the point of delivery (points of interconnection), an essential element of the contract; (2) there was a lack of consideration; and (3) MPG was not injured by the alleged breach. Crosstex's motion was not clearly segregated into traditional and no-evidence summary judgment grounds. MPG, however, did not lodge an exception to any ambiguity in the motion. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342-43 (Tex. 1993). The trial court granted summary judgment, but did not specify whether its grant pertained to the traditional motion, the no-evidence motion, or both. We must, therefore, analyze the no-evidence summary judgment first, followed by the traditional summary judgment. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004).
In general, a contract is legally binding only if its terms are sufficiently definite to enable a court to understand the parties' obligations. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). The Restatement asserts that contract terms are reasonably certain "if they provide a basis for determining the existence of a breach and for giving an appropriate remedy." Restatement (Second) of Contracts § 33(2) (1981). Of the several elements required for a legally binding contract, two important elements are that the parties (1) have a meeting of the minds and (2) communicate consent to the terms of the agreement. Smith v. Renz, 840 S.W.2d 702, 704 (Tex. App.-Corpus Christi 1992, writ denied).
Whether an agreement fails for indefiniteness is a question of law to be determined by the court. See T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). A binding contract may be formed if the parties agree on the material terms, even if they leave other provisions for later negotiation. Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 556 (Tex. 1972) (citing 1 Corbin on Contracts (1963) 87-91). Where a contract leaves essential terms open for future negotiation and adjustment, there is no binding contract that can be enforced. See T.O. Stanley Boot, 847 S.W.2d at 221; Engelman Irrigation Dist. v. Shields Bros., 960 S.W.2d 343, 352 (Tex. App.-Corpus Christi 1997, pet. denied). Texas courts favor validating transactions rather than voiding them, but courts may not create a contract where none exists and they generally may not add, alter, or eliminate essential terms. Oakrock Exploration Co v. Killam, 87 S.W.3d 685, 690 (Tex. App.-San Antonio 2002, pet. denied).
A letter agreement may be binding even though it refers to the drafting of a future, more formal agreement. See Foreca, S.A. v. GRD Dev. Co., Inc., 758 S.W.2d 744, 746 (Tex. 1988). But an agreement to make a future contract is enforceable only if it is "specific as to all essential terms, and no terms of the proposed agreement may be left to future negotiations." Fort Worth Indep. Sch. Dist., 22 S.W.3d at 846 (quoting Foster v. Wagner, 343 S.W.2d 914, 920-21 (Tex. App.-El Paso 1961,...
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