Parker Drilling Co. & Parker Drilling Co. (bolivia) S.A v. Romfor Supply Co. & Romfor West Africa Ltd

• Decision Date: 12 August 2010
• Docket Number: No. 14-08-00875-CV.,14-08-00875-CV.
• Citation: 316 S.W.3d 68
• Parties: PARKER DRILLING COMPANY & Parker Drilling Company (Bolivia) S.A., Appellantsv.ROMFOR SUPPLY COMPANY & Romfor West Africa Ltd., Appellees.
• Court: Texas Court of Appeals

316 S.W.3d 68

Court of Appeals of Texas,

Houston (14th Dist.).

PARKER DRILLING COMPANY & Parker Drilling Company (Bolivia) S.A., Appellantsv.ROMFOR SUPPLY COMPANY & Romfor West Africa Ltd., Appellees.

No. 14-08-00875-CV.

June 8, 2010.

Rehearing Overruled Aug. 12, 2010.

COPYRIGHT MATERIAL OMITTED

Jeffrey L. Oldham, Andrew F. Spalding, Nell Frances Connally, Houston, for appellants.

Larry D. Harvey, Houston, for appellees.

Panel consists of Justices YATES, FROST, and BROWN.

OPINION

LESLIE YATES, Justice.

Appellants Parker Drilling Company and Parker Drilling Company (Bolivia) S.A. (collectively “Parker”) appeal from a judgment entered in favor of appellees Romfor Supply Company and Romfor West Africa Ltd. (collectively “Romfor”) in a breach of contract case. In three issues, Parker argues the evidence is legally insufficient to support the jury's finding of a contract between Parker and Romfor, the trial court erred as a matter of law in awarding damages against Parker, and the trial court's award of attorney's fees in favor of Romfor is erroneous. Because we find the evidence is legally insufficient to support the jury's finding of a contract between Parker and Romfor, we reverse the trial court's judgment and render judgment that Romfor take nothing.

I. Background

Parker and Romfor are companies engaged in drilling for oil in various locations throughout the world. In early 2003, Romfor learned that Parker was selling equipment out of its worldwide fleet. Romfor expressed interest in purchasing one of Parker's oil rigs located in Nigeria (“Rig 220”) because it was planning to begin drilling operations in the Congo along with Caroil S.A., Romfor's French venture partner. Romfor and Parker signed a letter of intent for Romfor to purchase Rig 220 for $800,000. Before a contract was finalized, Parker informed Romfor that it was withdrawing its offer to sell Rig 220 because it had accepted a third party's offer. Parker subsequently provided Romfor with a list of other rigs available for sale, and Romfor decided to pursue an agreement to purchase a rig located in Bolivia (“Rig 118”) for $1,745,000. Romfor's president, Stuart Breckon, travelled to Bolivia in May 2003 to inspect Rig 118 and determined the rig needed certain repairs before being transported to the Congo. Following Breckon's visit to Bolivia, Parker and Romfor entered into an agreement (the “Service Agreement”) under which Parker would repair Rig 118 and Romfor would pay Parker for the repairs. A contract for the sale of Rig 118 was finalized in June 2003, and Parker shipped Rig 118 to the Congo during the last week of June 2003 after completing the repairs requested by Romfor.

While in Bolivia, Breckon learned that Parker was winding down drilling operations in that country and was looking to sell much of its equipment located there. Breckon signed a document offering to purchase eleven pieces of equipment from Parker for $84,000 (“Romfor's Offer”). Included in these eleven pieces of equipment were three Gardner Denver PZ-9 mud pumps (the “Mud Pumps”), ¹ which Romfor offered to purchase for $6,000 each. Parker did not officially respond to Romfor's Offer; however, Parker shipped the eight items other than the Mud Pumps to Africa along with Rig 118, and Romfor later paid Parker for these eight items. After Rig 118 left Bolivia, Patricia Carreras, Parker's financial administrator, informed Breckon that Parker intended to sell the Mud Pumps to SOCO Bolivia S.R.L. (“SOCO”) ² for $21,429, and that SOCO would be responsible for refurbishing and exporting the pumps.

Parker subsequently invoiced the pumps to SOCO (the “Parker/SOCO Invoice”) and SOCO finished repairing the pumps. Over the next several months, SOCO repeatedly asked Romfor to pay the pumps' purchase price and repair costs, and continually informed Parker that it could not pay for the pumps because Romfor had not yet paid SOCO for them. In January 2004, Parker notified SOCO that it was cancelling the sale of the Mud Pumps because SOCO had not paid the purchase price. SOCO cancelled the Parker/SOCO Invoice in February 2004 and Parker regained possession of the pumps. In April 2004, Parker invoiced the Mud Pumps to SOCO again after SOCO informed Parker that it had received an offer from a third party to purchase the pumps for $90,000. Parker re-sold the pumps to SOCO for $21,429. SOCO kept all of the profit from the subsequent sale to the third party.

After being notified that Parker had regained possession of the pumps, Romfor demanded that Parker refund Romfor $68,680, the total amount SOCO had invoiced Romfor for repairing and storing the Mud Pumps. Parker refused to refund any amount, claiming there was no contract for the sale of the Mud Pumps between itself and Romfor. Romfor filed suit against Parker in March 2006, alleging that Parker and Romfor contracted for the sale of the Mud Pumps and that Parker breached this contract. The jury found that Parker agreed to sell the Mud Pumps to Romfor and that Parker failed to comply with the agreement. The jury then awarded Romfor $68,571 in damages. The trial court entered final judgment in Romfor's favor, awarding Romfor $90,000 in damages ³ and $100,000 in attorney's fees, along with additional contingent attorney's fees for appeal.

Parker raises three issues on appeal. In its first issue, Parker argues the evidence is legally insufficient to show the formation of a contract between Parker and Romfor for the sale of the Mud Pumps. Next, Parker asserts there is legally insufficient evidence to support the jury's damage award of $68,571 and the trial court's final damage award of $90,000. Finally, Parker contends the trial court's award of $100,000 in attorney's fees should be reversed because it is legally unsupportable.

II. Analysis

A. Standard of Review

In its first issue, Parker alleges there is no evidence of a contract between Parker and Romfor for the sale of the Mud Pumps. In a legal sufficiency or no-evidence review, we determine whether the evidence would enable reasonable and fair-minded individuals to reach the verdict under review. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). While conducting this review, we credit favorable evidence if reasonable jurors could and disregard contrary evidence unless reasonable jurors could not. See id. Jurors are the sole judges of the credibility of the witnesses and the weight to give their testimony, and we cannot impose our own opinions to the contrary. Id. at 819. We must consider the evidence in the light most favorable to the finding under review and indulge every reasonable inference that would support it. See id. at 822. We must, and may only, sustain no-evidence points when either (1) the record reveals a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence conclusively establishes the opposite of the vital fact. See id. at 810.

B. Elements of Contract Formation

To recover for breach of contract, a plaintiff must show (1) the existence of a valid contract, (2) the plaintiff performed or tendered performance, (3) the defendant breached the contract, and (4) the plaintiff suffered damages as a result of defendant's breach. Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex.App.-Houston [14th Dist.] 2005, pet. denied). A legally enforceable contract consists of (1) an offer, (2) acceptance in strict compliance with the terms of the offer, (3) a meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Wal-Mart Stores, Inc. v. Lopez, 93 S.W.3d 548, 555-56 (Tex.App.-Houston [14th Dist.] 2002, no pet.); see also AKIB Constr., Inc. v. Neff Rental, Inc., No. 14-07-00063-CV, 2008 WL 878935, at *3 (Tex.App.-Houston [14th Dist.] Apr. 3, 2008, no pet.) (mem. op.). Whether the parties reached an agreement is a question of fact. Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21, 24 (Tex.App.-Houston [14th Dist.] 2005, no pet.). Whether an agreement is legally enforceable, however, is a question of law. See id.; Gaede v. SK Invs., Inc., 38 S.W.3d 753, 757 (Tex.App.-Houston [14th Dist.] 2001, pet. denied).

In this case, there is no writing signed by Parker acknowledging its acceptance of Romfor's Offer.⁴ However, the jury could properly imply the formation of a contract between Parker and Romfor from any conduct by both parties recognizing the existence of a contract. See Tex. Bus. & Com.Code Ann. § 2.204(a) (Vernon 2009); Adams v. H & H Meat Prods., Inc., 41 S.W.3d 762, 771 (Tex.App.-Corpus Christi 2001, no pet.); see also Wal-Mart, 93 S.W.3d at 557 (describing implied contracts as those inferred from the acts and conduct of the parties when the facts and circumstances show a mutual intent to contract). The existence of an implied contract involves inferences drawn from circumstantial evidence and is therefore a question of fact. See Domingo v. Mitchell, 257 S.W.3d 34, 40 (Tex.App.-Amarillo 2008, pet. denied); Ishin Speed Sport, Inc. v. Rutherford, 933 S.W.2d 343, 348 (Tex.App.-Fort Worth 1996, no writ). Questions of contract formation must be resolved on objective standards, based upon the meaning reasonably conveyed by the parties' actions and words rather than their uncommunicated subjective intentions. Harrison v. Williams Dental Group, P.C., 140 S.W.3d 912, 916 (Tex.App.-Dallas 2004, no pet.); Angelou v. African Overseas Union, 33 S.W.3d 269, 278 (Tex.App.-Houston [14th Dist.] 2000, no pet.). We view the conduct and circumstances surrounding the transaction from a reasonable person's interpretation at that particular point in time. Wal-Mart, 93 S.W.3d at 557-58.

According to Parker, the only contract for the sale of the Mud Pumps shown by the evidence is between Parker...