Tex. Black Iron, Inc. v. Arawak Energy Int'l Ltd.

• Decision Date: 06 December 2018
• Docket Number: NO. 14-17-00748-CV,14-17-00748-CV
• Citation: 566 S.W.3d 801
• Parties: TEXAS BLACK IRON, INC., Appellant v. ARAWAK ENERGY INTERNATIONAL LTD., Appellee
• Court: Texas Court of Appeals

566 S.W.3d 801

TEXAS BLACK IRON, INC., Appellant

v.ARAWAK ENERGY INTERNATIONAL LTD., Appellee

NO. 14-17-00748-CV

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

Opinion filed December 6, 2018

Rehearing En Banc Denied February 21, 2019

Robert M. Corn, Houston, TX, for Appellant.

David A. Baay, Maryann Zaki, Garrett Gibson, Houston, TX, for Appellee.

Panel consists of Justices Boyce, Jamison, and Brown.

Marc W. Brown, Justice

Texas Black Iron, Inc. (TBI), and Arawak Energy International Ltd. entered into a purchase order agreement for oil and gas drilling equipment. Arawak prepaid for the entire purchase order. TBI failed to deliver certain equipment and refunded a portion of the prepaid amount to Arawak. Arawak returned some of the equipment and sought a refund under the buy-back provision of the purchase order. TBI refused to pay. Arawak filed claims against TBI and applied for a temporary injunction.¹ TBI filed counterclaims against Arawak. Arawak moved for traditional and no-evidence summary judgment. The trial court granted Arawak’s motion on its contract claim and on TBI’s contract and fraud counterclaims. The trial court awarded Arawak damages, attorney’s fees, costs, and pre- and postjudgment interest. The trial court also granted Arawak’s motion to strike TBI’s amended answer and counterclaims.

TBI challenges the trial court’s final judgment in seventeen issues. We conclude that the trial court properly granted summary judgment in Arawak’s favor on its contract claim and TBI’s contract and fraud counterclaims. We also conclude that the trial court acted within its discretion in striking TBI’s amended answer and counterclaims. We conclude that the trial court erred in its award of attorney’s fees to Arawak, as well as in its awards for costs and prejudgment interest. Accordingly, we affirm the trial court’s final judgment in part and reverse it in part and remand for additional proceedings in accordance with this opinion.

I. BACKGROUND

In early 2016, Arawak approached TBI to discuss purchasing various sizes—including 13-5/8", 20", and 26"—of casing and casing pup joints for an exploratory well Arawak planned to drill in the United Arab Emirates (UAE). Arawak and TBI negotiated the terms of the sale, which were reduced to writing in a one-page purchase order. Steve Yamin, the president of TBI, and Shahveer Kapadia, a director of Arawak, both executed the purchase order on February 22, 2016. The stated delivery date was April 11, 2016. The shipping terms were "DDP Umm Al Quwain, UAE." TBI was to pay any duty on the equipment.

The purchase order stated: "PAYMENT TERMS: WITHIN 3 BUSINESS DAYS AFTER RECEIPT OF CORRECT INVOICE." The purchase order also stated:

BUY-BACK CONDITION. 75% OF PURCHASE VALUE AFTER DELIVERY OF RETURNED CASING TO VENDOR'S UMM AL QUWAIN YARD AND INSPECTION AT BUYER'S EXPENSE.

TBI sent Arawak a commercial invoice with wire instructions. Arawak prepaid $2,843,579.70 as requested in the invoice. TBI received and accepted this payment.

TBI failed to deliver the 13-5/8" equipment, for which Arawak had paid TBI $1,112,743.00. TBI informed Arawak that Arawak would need to locate the 13-5/8" equipment itself from another supplier. TBI refunded Arawak $400,000.00 for the 13-5/8" equipment.

TBI delivered the 20" and 26" equipment. Arawak did not use and returned certain equipment—namely, 1,023.2 meters of the 26" casing, 1,421.6 meters of the 20" casing, and one 20" casing pup. Applying the 75% buy-back price, the return value of this equipment was $768,304.00. Arawak sought a refund from TBI under the buy-back provision. TBI did not pay Arawak anything for this equipment.

Arawak filed suit against TBI in October 2016. Arawak originally brought claims for breach of contract and suit on sworn account, and later amended to add a claim for conversion.² TBI answered with a general denial and filed counterclaims against Arawak for breach of contract, fraud and fraudulent inducement, and violations of the DTPA.³

In May 2017, Arawak filed a no-evidence and traditional motion for summary judgment. Arawak moved for traditional summary judgment on its contract claim. Arawak argued that there was no material fact issue because the parties entered into an agreement; Arawak tendered performance by paying for the equipment; TBI breached the purchase order by failing to deliver the 13-5/8" equipment and by refusing to honor the buy-back provision on the 20" and 26" equipment; and Arawak sustained total damages of $1,481,047.00.⁴

Arawak moved for no-evidence summary judgment on TBI’s contract and fraud claims. Arawak argued that TBI had no evidence that Arawak breached the agreement or that Arawak made any material misrepresentations. Arawak also moved for traditional summary judgment on TBI’s contract and fraud claims.

TBI filed a first amended answer, in which for the first time it alleged various affirmative defenses, and a first amended counterclaim, which added claims for tortious interference, and concerted action and/or conspiracy. Arawak filed a motion to strike TBI’s amended answer and counterclaims. TBI filed a response, and Arawak filed a reply.

TBI filed a response to Arawak’s summary-judgment motion.⁵ TBI included its objections to Arawak’s summary-judgment evidence. With regard to Arawak’s contract claim, TBI argued that Arawak did not conclusively establish its performance; TBI did not breach the buy-back provision; and TBI’s performance was excused by Arawak’s material breach, Arawak’s fraud, the parties' mutual mistake, Arawak’s interference, frustration of purpose, commercial impracticability, and impossibility. With regard to TBI’s counterclaims, TBI argued that it raised material fact issues on Arawak’s breach and fraudulent misrepresentation and that Arawak had not shown it was entitled to traditional summary judgment on TBI’s contract and fraud claims.

Arawak filed a reply in support of its summary-judgment motion and responded to TBI’s objections. Arawak argued that to avoid summary judgment on Arawak’s claims and TBI’s counterclaims TBI needed to introduce evidence to create fact issues in support of both its affirmative defenses and counterclaims, and that TBI failed to do so. Arawak also objected to Yamin’s declaration.⁶

On June 22, 2017, the trial court signed orders granting Arawak’s motion for summary judgment and motion to strike.⁷ The trial court ordered Arawak to submit its affidavit for attorney’s fees. The trial court also signed an order on TBI’s objections to Arawak’s summary-judgment evidence. The trial court sustained TBI’s objections to the pleadings Arawak attached to its summary-judgment motion, as well as to one email.⁸ The trial court overruled all TBI’s other objections.

Arawak submitted a brief in support of its attorney’s fees, as well as an affidavit from its counsel regarding attorney’s fees and costs with attached invoices. TBI filed a response, including an objection to Arawak’s counsel’s affidavit,⁹ and attached a counter-declaration from TBI’s counsel.

Arawak filed a motion for entry of final judgment.¹⁰ TBI filed a response, including objections to the exhibits attached to Arawak’s motion. The trial court overruled these objections.

On August 22, 2017, the trial court signed its final judgment in favor of Arawak. The trial court ordered that Arawak recover $1,481,047.00 from TBI due to TBI’s breach of contract; Arawak recover $166,493.67 incurred as reasonable and necessary attorney’s fees; Arawak recover $16,611.08 incurred as costs; Arawak was entitled to $77,641.36 representing 5% prejudgment on $1,664,151.74, beginning September 7, 2016, until the day before judgmentwas entered; TBI take nothing from Arawak; Arawak receive 5% postjudgment interest on the total judgment amount of $1,741,793.11; and Arawak shall be entitled to recover attorney’s fees and costs "[s]hould TBI further appeal."

TBI filed a deposit in lieu of supersedeas bond and timely appealed.

II. ANALYSIS

TBI presents seventeen issues on appeal. Five issues complain of the trial court’s error in granting summary judgment on Arawak’s breach-of-contract claim. Three issues complain of the trial court’s error in granting summary judgment on TBI’s contract counterclaim. Three issues attack the trial court’s granting summary judgment on TBI’s fraud and fraudulent misrepresentation counterclaim. One issue challenges the trial court’s rulings on TBI’s objections to Arawak’s summary-judgment evidence. In three issues, TBI argues that the trial court erred in its awards of attorney’s fees, prejudgment interest, and costs. In its last two issues, TBI contends that the trial court abused its discretion in striking TBI’s amended answer and counterclaims. We consider related issues together.

A. Arawak’s breach-of-contract claim

1. Applicable law and standard of review

We review a trial court’s granting of a summary judgment de novo. Valence Operating Co. v. Dorsett , 164 S.W.3d 656, 661 (Tex. 2005). When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant, indulging every reasonable inference and resolving any doubts in the nonmovant’s favor. Cantey Hanger, LLP v. Byrd , 467 S.W.3d 477, 481 (Tex. 2015). Where, as here, a trial court’s order granting summary judgment does not specify the ground or grounds relied on for its ruling, we must affirm summary judgment if any of the grounds advanced is meritorious. Carr v. Brasher , 776 S.W.2d 567, 569 (Tex. 1989) ; Oliphint v. Richards , 167 S.W.3d 513, 516 (Tex. App.—Houston [14th Dist.] 2005, pet. denied) (citing FM Props. Operating Co. v. City of Austin , 22 S.W.3d 868, 872 (Tex. 2000) ).

Traditional. Courts properly render traditional summary judgment if the motion and evidence show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c) ; Nixon v. Mr. Prop. Mgmt. Co. , 690 S.W.2d 546, 548 (Tex. 1985). "A plaintiff moving for summary judgment must conclusively prove all...