Phoenix Bit & Tool, Inc. v. Texaco Inc.

• Decision Date: 09 June 1994
• Docket Number: No. B14-93-00158-CV,B14-93-00158-CV
• Citation: 879 S.W.2d 277
• Parties: PHOENIX BIT & TOOL, INC., Appellant, v. TEXACO INC., Texaco Producing Inc., Texaco Oils Inc., Four Star Oil and Gas Company, and Texaco Services Inc., Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 277

879 S.W.2d 277

PHOENIX BIT & TOOL, INC., Appellant, v. TEXACO INC., Texaco Producing Inc., Texaco Oils Inc., Four Star Oil and Gas Company, and Texaco Services Inc., Appellees.

No. B14-93-00158-CV.

Court of Appeals of Texas Houston (14th Dist.).

June 9, 1994.

Rehearing Denied July 21, 1994.

Robert D. Lemon, Mitchell G. Ehrlich, Lemon, Shearer, Ehrlich, Phillips & Good, P.C., Perryton, for appellant.

John Sullivan, Denver, William T. Hankinson, Lori L. Dalton, Dallas, for appellees.

Before SEARS and LEE, JJ., and MORSE, J., Sitting by Designation.

MAJORITY OPINION

MORSE, Justice.

This is a summary judgment case. Appellant, Phoenix Bit & Tool, Inc., brought a breach of contract suit against appellees, claiming that a contract gave appellant the exclusive right to purchase used drill bits. Appellees, Texaco Inc., Texaco Producing Inc., Texaco Oils Inc., Four Star Oil and Gas Company, and Texaco Services Inc., moved for summary judgment and the trial court granted this motion. Appellant raises one point of error. We affirm.

In 1986, Texaco sent out an invitation for bids on a proposed blanket order covering the sale of used drill bits. Texaco awarded the contract to Phoenix and a blanket order, dated September 16, 1986, was prepared by Texaco providing that it covered the following material: "Such quantities of used drill bits in various sizes, that Seller may want to dispose of from the Denver, Los Angeles, Midland and New Orleans operations of [Texaco]." The contract effective term was from September 15, 1986 through March 15, 1987, but the contract continued thereafter. The contract provided for termination upon thirty days written notice. Phoenix gave Texaco thirty days written notice and the contract was terminated on March 8, 1991.

Phoenix filed suit against appellees, contending that the contract gave Phoenix the exclusive right to buy all of the used drill bits Texaco wanted to dispose of and that Phoenix was obligated to purchase such bits. The trial court entered a mediation scheduling order and the parties commenced mediation on September 11, 1992. The mediation was immediately recessed for three months because Texaco requested time to complete an audit of their records regarding used drill bits sold by Texaco. On this same day, Texaco filed a motion for summary judgment, which the court granted.

In point of error one, Phoenix contends the trial court erred in granting Texaco's motion for summary judgment. Under this broad point, Phoenix presents the following arguments: (1) the trial court violated Texas public policy, as stated in TEX.CIV.PRAC. & REM.CODE ANN. §§ 154.002, 154.003, in granting Texaco's motion pending the results of an on-going mediation proceeding which the court had ordered on its own motion; (2) the rules of construction for an unambiguous contract call for an interpretation granting the buyer the exclusive right to purchase such used drill bits that the seller may want to dispose of; (3) the exclusive right to purchase does not render the contract illegal and unenforceable pursuant to the Texas antitrust statute; (4) the intent of the parties under the contract must be drawn exclusively from the language used in the contract and not from extrinsic evidence; and (5) alternatively, the contract is ambiguous and genuine issues of material fact were present regarding the intent of the parties to the contract.

In reviewing a summary judgment, we must determine whether the movant has shown that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985). In deciding whether or not there is a disputed fact issue, we must take as true all evidence favorable to the non-movant, indulging all reasonable inferences and resolving all doubts in the non-movant's favor. Id. at 549.

Phoenix first claims the trial court violated public policy by granting summary judgment while mediation was on-going. Public policy regarding mediation is stated in the following statute:

It is the policy of this state to encourage the peaceable resolution of disputes, with special consideration given to disputes involving the parent-child relationship, including the mediation of issues involving conservatorship, possession, and support of children, and the early settlement of pending litigation through voluntary settlement procedures.

TEX.CIV.PRAC. & REM.CODE ANN. § 154.002 (Vernon Supp.1994). Section 154.003 imposes upon all trial and appellate courts the responsibility of implementing this policy. TEX.CIV.PRAC. & REM.CODE ANN. § 154.003 (Vernon Supp.1994). Other than these statutes, Phoenix admits there is no law supporting its argument.

Appellees respond that Phoenix waived this argument by failing to present it to the trial court and that no authority supports this argument. We agree with appellees that Phoenix's argument is without merit. Phoenix did not seek an order staying the summary judgment proceedings pending the outcome of mediation. Furthermore, summary judgment is a method for orderly disposition of cases.

Phoenix next claims that the rules of construction require a finding that the contract granted Phoenix the exclusive right to purchase Texaco's used drill bits. Both parties contend the contract is unambiguous. Where there is no ambiguity, the construction of a contract is a question of law for the court. Westwind Exploration, Inc. v. Homestate Sav. Ass'n, 696 S.W.2d 378, 382 (Tex.1985). In interpreting contracts, the primary concern is to ascertain and give effect to the intentions of the parties as expressed in the instrument. Zieben v. Platt, 786 S.W.2d 797, 800 (Tex.App.--Houston [14th Dist.] 1990, no writ).

Based on these rules of construction, Phoenix contends that the language of this contract expresses the intent that Phoenix was to have an exclusive right to purchase drill bits that Texaco wanted to sell. In support of this contention, Phoenix cites Ives v. City of Willimantic, 121 Conn. 408, 185 A. 427 (1936). In Ives, the city contracted to sell "such quantity of ice ... as the city owns or shall harvest [in] that period of time...." Id. 185 A. at 427. Because the contract stated that the quantity of ice to be sold was the amount the city "shall harvest," the Connecticut court held that the city was only bound to sell ice to Ives if any ice was harvested, but that the plain language of the contract did not require the city to harvest any ice. Id. 185 A. at 428.

This case does not support appellant's position. In fact, this case supports appellees' argument that Texaco was not obligated to sell any, much less all, used drill bits to appellant. The language of the blanket order indeed does not require Texaco to sell Phoenix such drill bits as it shall dispose of. Rather, the contract allows Texaco to sell Phoenix such drills as it wants to dispose of. Thus, the plain language of this order reveals that there was no intent to require Texaco to sell all used drill bits to Phoenix. Absent any indication of intent, we may not imply an obligation on Texaco's part to sell drill bits exclusively to Phoenix. Were we to imply an obligation by Texaco to sell all used drill bits exclusively to Phoenix, as Phoenix suggests, we would be revising the order and creating an agreement different from that actually entered by the parties. We are not at liberty to do this. See General Am. Indem. Co. v. Pepper, 161 Tex. 263, 339 S.W.2d 660, 661 (1960).

Appellees argue that the plain language of the contract reveals no mutuality of obligations. In support of this argument, Texaco cites Texarkana Casket Co. v. Binswanger & Co., 3 F.2d 611 (E.D.Tex.1924) and Streich v. General Motors Corp., 5 Ill.App.2d 485, 126 N.E.2d 389 (1955). Texaco did not expressly raise this specific argument in its motion for summary judgment and thus, lack of mutuality may not be raised for the first time in the appellate court. See McConnell v. Southside Indep. School Dist., 858 S.W.2d 337, 341 (Tex.1993).

Phoenix next challenges the summary judgment on the ground that an exclusive right to purchase does not render the contract illegal and unenforceable pursuant to the Texas antitrust statute. Although appellees raised this illegality argument in the trial court, they do not argue it on appeal as a ground for affirming the judgment.

The statute upon which appellees relied in the trial court was TEX.BUS. & COM.CODE ANN. § 15.05(c) (Vernon 1987), which provides:

(c) It is unlawful for any person to sell, lease, or contract for the sale or lease of any goods, whether patented or unpatented, for use, consumption, or resale or to fix a price for such use, consumption, or resale or to discount from or rebate upon such price, on the condition, agreement, or understanding that the purchaser or lessee shall not use or deal in the goods of a competitor or competitors of the seller or lessor, where the effect of the condition, agreement, or understanding may be to lessen competition substantially in any line of trade or commerce.

We first note that this statute does not make unlawful any required exclusivity of a seller's committment to deal only with the purchaser, and not the purchaser's competitors. Thus, we find that the language of the statute itself indicates its inapplicability to our facts. Furthermore, the case law construing this statute reveals another basis for upholding the trial court's judgment.

In Brown v. Faulk, 231 S.W.2d 743, 744 (Tex.Civ.App.--San Antonio 1950, orig. proceeding), the appellant alleged that a note and chattel mortgage were void because it required appellant to sell all of his milk to appellee. The court disagreed, saying:

A producer of milk has the right to contract or sell all of his production to one person if he sees fit to do so, and such an agreement is not an illegal contract in the absence of a showing that the intention was to form a monopoly or an illegal...