El Paso Refining v. Scurlock Permian Corp.

• Decision Date: 18 April 2002
• Docket Number: No. 08-99-00005-CV.,08-99-00005-CV.
• Parties: EL PASO REFINING, INC., Appellant, v. SCURLOCK PERMIAN CORPORATION, Appellee.
• Court: Texas Court of Appeals

77 S.W.3d 374

EL PASO REFINING, INC., Appellant, v. SCURLOCK PERMIAN CORPORATION, Appellee.

No. 08-99-00005-CV.

Court of Appeals of Texas, El Paso.

April 18, 2002.

E. Link Beck, Beck & Given, P.C., El Paso, Timothy Patton, Timothy Patton, P.C., San Antonio, for Appellant.

Max Hendrick, James D. Thompson, Catherine Bukowski Smith, Vinson & Elkins, L.L.P., Houston, for Appellee.

BARAJAS, C.J., LARSEN, McCLURE, and CHEW, JJ., EN BANC.

OPINION ON MOTION FOR REHEARING EN BANC

SUSAN LARSEN, Justice.

Appellant El Paso Refining Inc. has filed its motion for rehearing en banc, following its initial motion for rehearing which was overruled by this Court, en banc, on March 20, 2002. For the reasons set out below, we find that the second motion is a nullity, and we therefore dismiss it for lack of jurisdiction.

Facts

The Court issued its opinion affirming the trial court's judgment on January 31, 2002. Appellant moved for rehearing on March 4, 2002. The Court overruled the motion for rehearing on March 20, 2002, without opinion and without making any changes in the original panel opinion. The motion was heard by the Court en banc.

Appellant then filed this motion for rehearing en banc on April 4, 2002.

Second motion for rehearing a nullity

The rules of appellate procedure provide that, after an earlier motion for rehearing is decided, a further motion for rehearing may be filed within 15 days if the court modifies its judgment, vacates its judgment and renders a new one, or issues an opinion in overruling a motion for rehearing. TEX.R.APP. P. 49.5. None of these conditions occurred when appellant's initial motion for rehearing was ruled upon, and its second motion for rehearing is therefore a nullity. Mapco, Inc. v. Forrest, 795 S.W.2d 700, 702 (Tex.1990) ("A second motion for rehearing not authorized by the rules is a nullity even if the court of appeals rules on it.").

Further, although appellant styles its motion one for rehearing en banc, this does not change our conclusion that it has no legal effect. TEX.R.APP. P. 49.7 allows the court to order en banc reconsideration of a panel decision during the court's plenary jurisdiction,¹ but that rule contains no provision enlarging the parties' ability to file additional motions for rehearing. Finally, we note that the initial motion was heard en banc. Appellant's motion asks for nothing more than it has already received.

Conclusion

For these reasons, we dismiss El Paso Refining Inc.'s motion for rehearing en banc for lack of jurisdiction.

Before Panel No. 1 LARSEN, McCLURE, and CHEW, JJ.

OPINION

SUSAN LARSEN, Justice.

This Court's opinion of January 31, 2002 is withdrawn and the following is substituted.

This is an appeal from a take-nothing judgment rendered against appellant/plaintiff El Paso Refining, Inc. ("EPRI") in a usury suit. EPRI raises seven points of error and contends that the trial court erred by: (1) charging the jury to apply a clear and convincing, instead of by a preponderance of the evidence, burden of proof, (2) submitting the issue of EPRI's obligor status to the jury as an instruction, (3) submitting the issue of defendant Scurlock Permian Corporation's (SP's) time-price differential defense to the jury as an instruction, (4) submitting SP's waiver defense to the jury as an instruction, (5) submitting SP's usury savings clause defense to the jury as an instruction, (6) allowing expert testimony on EPRI's standing to sue for usury and, (7) failing to order a new trial because the jury's failure to find usury was against the great weight and preponderance of the evidence.

For those reasons detailed below, we affirm the judgment of the trial court.

I. PROCEDURAL AND FACTUAL SUMMARY

In May 1986, Michael Shelton ("Shelton") formed a partnership with David Jones to acquire the Texaco Refinery ("the Refinery") in El Paso, Texas. After acquiring the Refinery, the partnership transferred it to a newly-created corporate entity, EPRI. The sole source of crude oil to the Refinery at all times relevant to this appeal was SP or its predecessors in interest.

In 1989, the 1986 partnership was absorbed into a master limited partnership, El Paso Refinery, L.P. ("LP"), to raise funds to expand the Refinery's capacity and to bring it into compliance with environmental standards. In exchange for cash and units of participation, EPRI contributed the Refinery to LP. EPRI also became LP's general partner. As EPRI's executive vice-president, Shelton was in charge of crude supply, marketing, refinery operations, and financing.

In November 1989, an amended oil sales contract ("the 1989 Contract") was executed between SP as "Seller" and LP as "Buyer." EPRI signed the contract as the guarantor of any debt LP would incur pursuant to its past, present, or future agreements with SP.

Under the 1989 Contract, LP would receive a daily supply of 26,000 barrels of SP crude. The price per barrel would be determined by the sum of a posting price, a gathering and handling allowance per barrel, and transportation costs. Payment in full for a monthly supply was due by wire transfer to SP on or before the 20th day of the month following the month of delivery. The 1989 Contract explicitly warns the signatories in full caps that "Time is of the essence in this contract."

The 1989 Contract contained extensive and unambiguous payment and default provisions. If the amount due and owing to SP exceeded the Current Collateral Value at any time, SP would notify LP. Within 24 hours, LP would be required to pay an amount sufficient to reduce the unpaid amount down at least to the Current Collateral Value.¹ SP also retained the right to terminate the contract unilaterally, withhold shipments without notice, and/or demand immediate payment of all amounts due if reasonable grounds for insecurity arose with respect to LP's performance of the contract. Interest on past due amounts would be payable at "the Highest Lawful Rate."

On the same day that the 1989 Contract was executed, EPRI executed a Continuing Guaranty agreement ("the Guaranty"). The 1989 Contract specifically incorporated the Guaranty by reference, and required that LP's performance was guaranteed pursuant to its terms. Under the Guaranty, EPRI "absolutely and unconditionally guarantee[d] to [SP] the full, prompt, and punctual payment at maturity" of all LP's then existing or thereafter arising obligations to SP. The 1989 Guaranty section entitled "Primary Liability of Guarantor" contains a single reference to EPRI as "a primary obligor."

By signing the Guaranty, EPRI agreed to waive any rights to notice it may have otherwise had if SP sought to collect any of LP's debts from EPRI. EPRI further agreed to waive any defenses, including usury, that LP could have asserted against SP. The Guaranty also ensured that SP did not have to seek payment or performance from any other entity, including LP, before it demanded payment from EPRI. The Guaranty also contained a usury savings clause that prevented interest in excess of the maximum amount permitted by law from being collected from, reserved from, or charged to EPRI.

By July 1991, the refinery expansion project was almost complete, although LP's available cash was nearly depleted due to cost overruns. A $25 million credit line for LP was arranged with Bank Brussels Lambert. EPRI also loaned LP another $7.5 million.

In July 1991, Scurlock Permian Corporation, the instant appellee, acquired Permian Operating Limited Partnership. In July 1991, the Refinery also completely shut down for a brief period to re-integrate its equipment and operations. It reopened on August 3, 1991.

Although the Refinery was closed, LP still owed SP for crude delivered in June. Because LP was short on cash, Shelton called SP and told them that payment would be late by a few days. SP responded by letter stating that it would declare a default if payment was not received by July 25 for the balance of LP's 17-odd million dollar debt to SP.

A meeting and other discussions between the two entities immediately followed receipt of this letter. SP's representative told Shelton it would no longer accept late payments and that it would declare a default or terminate the crude supply if payment was not timely received. Shelton, already upset by what he believed to be "outrageous" pricing by SP, asked for an explanation of how SP set prices. SP's representative told Shelton it felt it faced "extreme financial risk" by continuing to sell LP crude. He also told Shelton that SP would now charge a risk premium of 15 to 20 cents per barrel as part of the gathering and handling fee because of that risk. EPRI has consistently maintained that the risk premium constitutes usurious interest.

Similar discussions were held in the successive months. From August 1991 onward, SP sent EPRI pricing amendment letters advising of price changes and volumes. Invoices for deliveries were also sent. Payments based on the delivery invoices were made by wire transfer from LP to SP. Although LP did accept delivery of SP's crude, neither LP nor EPRI ever countersigned any of the price amendment letters, and LP continued to negotiate with SP over the risk premium in the gathering and handling fee component of the per barrel price billed to LP. There is no dispute that EPRI never paid for any of the crude received by LP.

LP continued to be plagued with financial difficulties. In August 1991, it was unable to pay SP. On August 23, 1991, SP declared a default and sent LP written notice of that default. In October 1991, LP was short on its payments and SP again notified LP of a default by letter.

On November 8, 1991, LP's creditors met in New York to discuss its worsening financial situation. SP attended the meeting. No solution regarding LP's liquidity problem was reached at that meeting. Immediately following the meeting, however, SP's representative told Shelton that LP had to provide SP with a $5 million guaranty before...