Petroleum Workers Union of the Republic of Mex. v. Gomez

Citation503 S.W.3d 9
Decision Date08 September 2016
Docket NumberNO. 14-14-00807-CV, NO. 14-14-00834-CV,14-14-00807-CV
Parties The PETROLEUM WORKERS UNION OF THE REPUBLIC OF MEXICO, Appellant v. James GOMEZ, As Receiver for Arriba Limited, Appellee James Gomez, As Receiver for Arriba Limited, and Carlos Ryerson, Appellants v. The Petroleum Workers Union of the Republic of Mexico, Appellee
CourtCourt of Appeals of Texas

Brian Alan Calhoun, Dallas, TX, for Appellee

Paul V. Simon, Michael Alan Coyke, Shane McClelland, Houston, TX, George Munoz, Washington, DC, WA, for Appellants

Panel consists of Justices Christopher, Jamison, and Wise.

OPINION

Martha Hill Jamison, Justice

Who, if anyone, speaks for a Mexican union when the union leadership is mired in scandal? That is the central question in this three-way appeal concerning enforcement of a purported 2004 settlement agreement (the "Garnished Funds Agreement") attempting to finally resolve 30 years of litigation. Among other things, the Garnished Funds Agreement provided for the distribution of certain garnished funds held in a New York bank account between the Petroleum Workers Union of the Republic of Mexico (the "Union") and James Gomez, as receiver for Arriba Limited ("Arriba").1 Other provisions of the Garnished Funds Agreement concerned whether and where Arriba could enforce a 1986 default judgment it had obtained against the Union (the "1986 Judgment"). Carlos Ryerson, a former attorney for the Union, alleged a separate agreement to receive a payment of $7 million from out of the Union's share of the garnished funds (the "Ryerson Agreement").

Ultimately, all of the garnished funds were sent to Mexico for a Mexican court to determine their ownership. Arriba and Ryerson then sued the Union for breach of the agreements, and the Union counterclaimed for wrongful garnishment and breach of fiduciary duty among other allegations. The key issue for the jury to decide at trial was whether Ryerson and Noe Moreno Alvarez had authority to sign the agreements on behalf of the Union. The jury found that both men had both actual and apparent authority to sign the Garnished Funds Agreement and Alvarez had actual and apparent authority to sign the Ryerson Agreement. In its judgment, the trial court declined to award monetary damages to any party but declared that Arriba was entitled to enforce the 1986 Judgment against the Union anywhere except in Mexico. The court further awarded Arriba its court costs.

In its appeal, the Union contends: (1) the Garnished Funds Agreement is illegal under Mexican Law and therefore cannot be enforced; (2) Arriba and Ryerson are precluded from enforcing the Garnished Funds Agreement under the doctrine of res judicata; (3) the evidence is legally and factually insufficient to support the jury's finding that the signatories had actual or apparent authority to sign the Garnished Funds Agreement; (4) the Garnished Funds Agreement lacked consideration; (5) the trial court should have applied Mexican law to the authority issues; (6) the trial court erred in its jury instruction on apparent authority; (7) the trial court erred in denying motions for mistrial when evidence was revealed to the jury that had not been timely disclosed in discovery; and (8) the trial court erred in refusing to submit jury questions regarding the Union's counterclaims for wrongful garnishment and breach of fiduciary duty. In their respective appeals, Arriba and Ryerson contend the trial court erred in failing to award them monetary damages for breach of the Garnished Funds Agreement and the Ryerson Agreement. We affirm.

I. Background

The parties largely agree on the order of relevant events and the identities of the key players. The main factual disagreements revolve around the relationships between the players and the events. Essentially, Arriba contends that the Union has regularly employed a scheme of using certain people or entities to enter agreements and then claiming that those people or entities were without authority to bind the Union. Meanwhile, the Union asserts that Arriba has continually dealt with people and entities that did not have authority to bind the Union and then has sought to hold the Union accountable for the other parties' promises.

A. The 1984 Contract and 1986 Judgment

The relevant history begins in 1984 when Texas attorney David Black and businessman Billy Flanigan approached certain Mexican individuals—whom Black and others testified represented the Union—with a proposal for the refinement of residual oil from Mexican refineries.2 According to Black, the Mexican refineries were unable to process certain grades of crude oil and thus left the unrefined oil in ponds on refinery property. The proposal involved bringing the oil to refineries in the United States for processing, with all concerned parties profiting from the venture.3 According to Black, in agreeing to the deal, the Union required that Black and Flanigan form a corporation outside of the United States. Therefore, the corporation they formed, Arriba, was incorporated in the Bahamas. A contract was entered between Arriba and The Comision de Contratos del Sindicato de Trabajadores Petroleros de la Republica Mexicana (the "Commission"), which evidence indicated was the "contracting arm" of the Union.4 The terms of the agreement guaranteed that a minimum of six million barrels of residual oil would be conveyed.

In June 1985, Arriba filed a lawsuit against the Union, the Commission, and certain individuals in Harris County, Texas (sometimes, the "Judgment Debtors"), alleging breach of the 1984 contract. When the Union failed to answer in the lawsuit, Arriba took a default judgment for over $92 million in 1986.5

B. The Joint Venture Agreement, Release of 1986 Judgment, Resulting Litigation, and Second Judgment

According to Black, he then began seeking assets of the Judgment Debtors in the United States and managed to discover a safe deposit box owned by one of the individual defendants. As described by Black, Arriba soon was approached by Union representatives with an interest in resolving their disputes. A new agreement was entered in 1987, a joint venture between Arriba and Comater, S. de R.L. ("Comater").6 Under the joint venture agreement, Comater promised to deliver residual oil from Mexico to be refined in the United States. As part of this deal, Arriba signed a release of its claims against the Judgment Debtors. According to Black, as a part of the joint venture agreement negotiations, he and the Comater representative were flown to Mexico by Pemex jet to meet with the founder and then-Secretary General of the Union, Joaquin Hernandez Galacia (also known as "LaQuina").

It is undisputed that no residual oil was provided by Comater or the Union pursuant to the joint venture agreement. Thus, Arriba filed a new lawsuit in 1989, alleging breach of the joint venture agreement and claiming that the 1987 release was unsupported by consideration. Arriba named the Judgment Debtors as defendants but not Comater. Arriba received another default judgment in 1989 ("Second Judgment"). Among other things, the Second Judgment purported to rescind the 1987 release and revive the 1986 Judgment.7

In 1990, the Union filed a bill of review seeking dismissal of the Second Judgment. Although the trial court denied relief, the First Court of Appeals reversed the trial court and remanded for trial. See Comm'n of Contracts of Gen. Exec. Comm. v. Arriba, Ltd. , 882 S.W.2d 576 (Tex.App.—Houston [1st Dist.] 1994, no pet.).8 After a jury trial, the trial court entered a take-nothing judgment against Arriba, which was reversed and remanded on appeal. Arriba, Ltd. v. The Petroleum Workers Union of the Republic of Mex. , No. 10–98–00165–CV, slip op. at 5–7 (Tex.App.—Waco Oct. 27, 1999, pet. denied). That proceeding is still pending in the trial court.

C. Garnishment of Funds in New York

In May 2002, at the behest of the Mexican government, the United States government obtained a restraining order in a United States district court in New York freezing approximately $43 million in a New York bank account. Allegedly, these funds had been embezzled as a part of the Mexican political scandal commonly referred to as "Pemexgate."9 Related to this scandal, the Union's Secretary General at the time, Carlos Romero Deschamps, and the Union's second in command, Ricardo Aldana Prieto, were charged with crimes. The allegations suggested the money was to be used to illegally fund a presidential campaign in the Mexican elections. Arriba filed its own garnishment action against the funds in the Harris County trial court.

Arriba then sought to negotiate a settlement of all claims between the parties.10 But with the leadership of the Union in disarray, who could speak for the Union in such negotiations and enter into a binding settlement agreement? It is the resulting Garnished Funds Agreement, and the alleged breach thereof, that is the immediate subject of the present appeal, and the key issue is whether the individuals purporting to represent the Union were truly authorized to do so.

D. Negotiations and Garnished Funds Agreement

At this time, Arriba was represented by Stan Nelson, a Texas attorney hired by the receiver, Gomez. Nelson and Black negotiated on behalf of Arriba primarily with Ryerson, a Texas attorney who began representing the Union in Arriba matters in 1990. Ryerson was hired to represent the Union by one of its Mexican lawyers, Ruben Choreno. As part of his duties, Ryerson, who is not a trial attorney, hired other lawyers to take the lead at trial and in the appeals, but, according to numerous witnesses, continued to provide assistance and direction to the litigators and appellate specialists and maintain client contact. The Union contends, however, that by the time the funds were restrained in New York, Ryerson was no longer actively engaged in representing the Union, having taken an in-house counsel position with another company. Ryerson and Arriba, on the...

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  • CHAPTER 5 - 5-7 Consequences of Failing to Timely Respond, Amend, or Supplement
    • United States
    • Full Court Press Texas Discovery Title Chapter 5 Written Discovery: Response, Objection, Privilege Assertion; Amending or Supplementing Responses; Failure to Timely Respond; Presumption of Authenticity—Texas Rule 193
    • Invalid date
    ...and a ruling must be secured to preserve the issue for appellate review."); Petroleum Workers Union of the Republic of Mex. v. Gomez, 503 S.W.3d 9, 36 (Tex. App.—Houston [14th Dist.] 2016, no pet.) ("The Union did not raise a timely objection based on [Texas] Rule 193.6 or timely request an......

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