Natural Gas Clearing. v. Midgard Energy Co.
| Decision Date | 08 May 2003 |
| Docket Number | No. 07-01-0282-CV.,07-01-0282-CV. |
| Citation | 113 S.W.3d 400 |
| Parties | NATURAL GAS CLEARINGHOUSE, Appellant, v. MIDGARD ENERGY COMPANY, formerly known as Maxus Exploration Company, Appellee. |
| Court | Texas Court of Appeals |
Beverly Ray Burlingame, Craig A. Haynes, Thompson & Knight, L.L.P., Dallas, for appellant.
Eric A. Hillerman, Harlow L. Sprouse, Sprouse Smith & Rowley, P.C., Amarillo, for appellee.
Before JOHNSON, C.J., QUINN, J., and BOYD, S.J.1
Natural Gas Clearinghouse (NGC) appeals from a final judgment awarding damages to Midgard Energy Company, formerly Maxus Exploration Company (Maxus), for breach of contract. It argues, through 11 issues, that 1) it did not breach the contract, 2) the testimony of Maxus' expert witness was inadmissible and constituted no evidence of damages, 3) a portion of the award includes "speculative damages" which could not be awarded, 4) the amount of prejudgment interest awarded was inaccurate, and 5) the amount of attorney's fees awarded was inaccurate. We affirm the judgment in part and reverse and remand in part.
Before us is the latest chapter in the continuing saga of Maxus versus NGC. Having initially reversed, in part, a summary judgment granted to Maxus, see Natural Gas Clearinghouse v. Midgard Energy Co., 23 S.W.3d 372 (Tex.App.-Amarillo 1999, pet. denied), we remanded the cause for further proceedings. Upon remand, a trial was had to the court. As a result of same, the trial court found that NGC had breached its agreement with Maxus to deliver a specified quantity of gas over a term of five years. This breach caused Maxus to suffer damages in the amount of $2,781,415.73. Furthermore, the trial court awarded Maxus pre and post judgment interest and attorney's fees. NGC appealed once again.
The agreement in question underwent amendment after its inception. The relevant provisions in existence at the time of the breach follow:
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14.9 Successors and Assigns—This agreement shall be binding upon and will inure to the benefit of the parties hereto, their respective successor and assigns, and upon any assignment or transfer of this agreement or of any interest by either party in the facilities herein described, the assignee shall agree and be deemed hereby to have agreed to perform the obligations hereunder of the assigning party relative to the facilities or property so assigned....
Furthermore, the trial court found that in April of 1993, NGC began reducing deliveries of gas to Maxus. Approximately ten months later, it stopped all deliveries. This was so because the gathering system was acquired by Apache Corporation, which entity subsequently transferred it to Transok Gas Gathering Company.
The trial court made other findings, which no one disputes. First among these is the determination that NGC represented that it owned the Muletrain Lateral and Moorewood East Lateral systems through which gas was to be transferred to Maxus. Moreover, this finding comports with NGC's representation in paragraph 2.1 of the contract wherein it stated that it "owns... the necessary facilities for the delivery of gas to the Processing Plant." The necessary facilities included the NGC Muletrain and Moorewood East Laterals. Additionally, this finding is of import because, according to the testimony, the entity gathering the gas ordinarily had the contractual right to process and remove the liquids from it. Other pertinent, and undisputed, findings are that 1) NGC represented that it had "`control of certain volumes of gas available for processing,'" and 2) "Transok offered to take over NGC's position under the Maxus contract and pay NGC consideration for it, but NGC refused."
Through its first three issues, NGC contends that, upon a "proper construction" of the contract, it did not breach same nor is there evidence of a breach. The "proper construction" alluded to is one which simply obligated it to provide Maxus the gas that it owned or controlled and transported through the two Laterals so long as it owned or controlled the gas. Since it no longer owned or controlled either Lateral or the gas transported through them once Apache and then Transok acquired the Laterals, its obligation to provide gas to Maxus ended. And, because it was not obligated to provide that gas to Maxus, it did not breach the contract, NGC concludes. We disagree and overrule the points.
As can be seen, resolution of this dispute entails interpretation of the contract and its amendments. Thus, various rules regulating the construction of contracts are worth noting. First, we must remember that construing an unambiguous contract involves a question of law. Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d at 26; Borders v. KRLB, Inc., 727 S.W.2d 357, 359 (Tex.App.-Amarillo 1987, writ ref'd n.r.e.). Because it does, we need not defer to any interpretation afforded it by the trial court. Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d at 26. Second, when interpreting an instrument, we strive to give effect to its parties' intent. Id. Furthermore, that intent is garnered from the language of the contract, which language is considered in its entirety. Id. That is, we peruse the complete document to understand, harmonize, and effectuate all of its provisions. Id. So too must we afford the words contained in the agreement their plain, ordinary, and generally accepted meaning, unless the instrument requires otherwise. Id.; Sun Operating, Ltd. v. Holt, 984 S.W.2d 277, 285 (Tex. App.-Amarillo 1998, pet. denied).
Finally, in applying the foregoing rules we may not rewrite the agreement to mean something it did not. Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d at 26; Borders v. KRLB, Inc., 727 S.W.2d at 359. Simply put, we cannot change the contract merely because we or one of the parties comes to dislike its provisions or thinks that something else is needed. HECI Explor. Co. v. Neel, 982 S.W.2d 881, 888-89 (Tex.1998); Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d at 26. This is so because parties to the agreement are considered masters of their own choices. They are entitled to select what terms and provisions to include in a contract before executing it. And, in so choosing, each is entitled to rely upon the words selected to demarcate their respective obligations and rights. In short, the parties strike the deal they choose to strike and, thus, voluntarily bind themselves in the manner they choose. Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d at 26. And, that is why parties are bound by their agreement as written. Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d at 26; Emmer v. Phillips Petroleum Co., 668 S.W.2d 487, 490 (Tex. App.-Amarillo 1984, no writ). For a court to change the parties' agreement merely because it did not like the contract, or because one of the parties subsequently found it distasteful, would be to undermine not only the sanctity afforded the instrument but also the expectations of those who created and relied upon it. Cross Timbers Oil Co. v. Exxon Corp., 22 S.W.3d at 26-7. With this said, we turn to the agreement before us.
Through the preamble and paragraph 2.1 of the contract, NGC represented to Maxus that it 1) owned the gas gathering system, which included the Muletrain and Moorewood East Laterals, and 2) had control of a certain quantity of the gas transported through it which was available for processing. Then, according to paragraphs 3.1 and 10.1 of the amendments, it promised to provide Maxus, for five years, with a specific amount of that gas via the pipe that it purportedly owned. Natural Gas Clearinghouse v. Midgard Energy...
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