Ureteknologia De Mex. S.A. De C.V. v. Uretek (USA), Inc.
| Decision Date | 17 January 2020 |
| Docket Number | CIVIL ACTION NO. H-16-2762 |
| Citation | 434 F.Supp.3d 517 |
| Parties | URETEKNOLOGIA DE MEXICO S.A. DE C.V., et al., Plaintiffs, v. URETEK (USA), INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Isaac Villarreal, Andrew T. Green, McCathern, PLLC, Houston, TX, for Plaintiffs.
Ramon Miguel del Villar, Attorney at Law, Eugene B Wilshire, Jr, Wilshire and Scott, John Paul Venzke, The Venzke Law Firm LLP, Houston, TX, for Defendants.
Pending before the court is Defendant Uretek (USA)'s ("Uretek") Motion for Judgment as a Matter of Law (Doc. 121), the response thereto, and Uretek's reply. For the reasons discussed below, the motion is GRANTED IN PART AND DENIED IN PART .
This case is the second of two related business disputes between these parties to go to trial.
Uretek owns the rights to a patented technology for concrete rehabilitation and repair using expansive polyurethane foam and a deep injection process.1 A 2003 Sublicense Agreement with Ureteknologia de Mexico S.A. de C.V. ("UdeM") allowed UdeM to exclusively market the Uretek processes and products in Mexico.2 A number of disputes arose concerning the parties' respective performances under that Sublicense Agreement, and a lawsuit was filed by Uretek in July 2011.3 In that lawsuit, Uretek complained that UdeM breached the contract by failing to purchase a minimum amount of products and services; UdeM argued that these alleged breaches were excused by later agreements between the parties.4
The case was tried to a jury in April 2013.5 The jury found that: (1) Uretek failed to show that it was fraudulently induced to enter into a June 2010 Amendment to the 2003 Sublicense Agreement; (2) Uretek agreed to the June 2010 Release; and (3) Uretek ratified both the June 2010 Amendment to the 2003 Sublicense Agreement and the June 2010 Release.6 Based on these answers, the jury did not reach Uretek's liability questions concerning whether UdeM breached the 2003 Sublicense Agreement by failing to purchase certain amounts of polyurethane in 2010 and by failing to pay full price for services rendered by Uretek in 2009.7
Uretek appealed the court's final judgment.8 On October 29, 2014, the Fifth Circuit Court of Appeals affirmed the take-nothing judgment.9
On September 13, 2016, Plaintiffs UdeM and Urelift S.A. de C.V. ("Urelift"), both Mexican corporate entities, filed this contract and tort action alleging that Structural Plastics, Inc., ("SPI"), entered a scheme with Uretek, Brent Barron ("Barron"), president of Uretek, and Randall Brown, vice president of Uretek, to use SPI as a conduit to "circumvent, breach, interfere with and/or baldly disregard the terms" of the 2003 Sublicense Agreement by selling Uretek products and processes into Mexico to competitors of UdeM and Urelift.10 SPI is owned by Mindy and Galen Howard, the daughter and son-in-law of Barron.11
The parties tried this case to a jury in March 2019 on four issues related to whether Uretek breached the 2003 Sublicense Agreement's covenant not to compete by: (1) selling its products or application services in Mexico; (2) engaging in any other enterprise that would reduce the value of the Uretek processes or the rights granted to Plaintiffs; (3) selling or causing to be sold the Uretek processes or products in Mexico; and (4) violating the exclusive sublicense granted to UdeM and Urelift for Mexico.12 The jury answered affirmatively on all four liability questions.13
Turning to damages, the jury awarded UdeM liquidated damages in the amount of $1,460,000 and awarded Urelift $6,110,000 in lost profits on four completed projects, $2,650,000 in lost profits on an unrealized contract for the Chapultepec project, and $4,310,000 in lost profits for an unrealized government contract for soil stabilization on a line of Mexico City's Sistema de Transporte Colectivo ("STC"), a project commonly referred to as "Metro Linea A."14 Uretek challenges the jury's verdict on damages.
1. The Evidence Relevant to Damages
Testimony relevant to damages was provided by Francisco Alvarez ("Alvarez"), Barron, Galen Howard, Luis Sosa ("Sosa"), and Bruce Blacker ("Blacker").
Alvarez created UdeM and Urelift.15 UdeM is the holding company that owns a part of the stock of Urelift, and Urelift is a "one stop company where we analyze in depth all geotechnical, geophysical issues related to problems with soils, rocks, stability of structures."16 UdeM is licensed to use the Uretek process and products in Mexico based on the 2003 Sublicense Agreement with Uretek.17 The Uretek process stabilizes soil underneath bridges, buildings, monuments and other structures that have been sinking over time by injecting polymers into the ground.18 UdeM did not perform any work utilizing the rights in the sublicense agreement; all work utilizing the licensed Uretek process was performed by Urelift.19
In 2009, Urelift received a "sole source" designation through which it sold the Uretek process to a government department at a price, 735.34 pesos ($21.90) per kilogram, that was approved by a government commission.20 Urelift also obtained non-sole-source contracts: (1) Caminos y Puentes Federales de Ingresos y Servicios Conexos ("CAPUFE") with a start date in October 2013; (2) Secretaria de Infrastructura y Obra Publica ("SIOP") #1 with a start date in December 2013; (3) SIOP #2 with a start date in August 2014; and (4) Grupo Fiananciero Banorte S.A. de C.V. ("GFB") with a start date in May 2015.21 All of these competitively bid projects were awarded at polymer prices of less than 735.34 pesos per kilogram.22 Alvarez admitted that with the exception of the first contract, Urelift did not utilize any Uretek product for any subsequent project after 2009, and acquired polymers from other companies, despite representing to customers that it was using Uretek products.23
Alvarez testified, over objection, that these four clients refused to deem their respective contracts as sole-source contracts and required Urelift to bid on these projects because there was competition in the marketplace.24 The jury was instructed to disregard the hearsay testimony of what Alvarez's clients told him about competition.25 Alvarez reduced Urelift's bid price to 223.55 pesos per kilogram for the CAPUFE project, 612.3726 pesos per kilogram on SIOP #1, 294.23 pesos per kilogram for SIOP #2, and 628.73 pesos per kilogram on the GFB contract.27 He stated that he showed the clients the document in which another government agency had deemed Urelift's licensed process as "sole source," and was asked by his counsel, "Did that change their mind?"28 He responded:29
A. It did. It did but we had to sacrifice pricing.
Q. At that time[,] did you know who was competing with you -
A. No.
Urelift lost more than thirteen million pesos in 2015 based on competition per Alvarez.30 Alvarez was again asked who was Urelift's competition in 2015.31 The following dialog ensued:
Q. Competition from who[m]?
A. I don't have proof of the competition.
Q. Oh, well you don't - you had competition you don't know who it was?
A. I know who it was.
Q. You have no proof of who?
A. No.
Q. True? True you have no proof?
A. I don't have proof. Sorry. Yes, there is proof. There is proof.
Q. Well is it -
A. There is proof that we found out about that in 2017.
Q. Can you point me to a document that proves that you had competition for that [second] job?
A. I'm looking for the document[,] and it is part of this trial, and I will look for it.
Q. But you don't know who the competitor was, correct?
A. I do.
Q. Well do you have proof that you had a competitor for that job?
A. When I find the document, I will not do hearsay[;] I will prove it with the document.32
However, the trial ended without any document being produced by Urelift to support Alvarez's testimony that he knew who Urelift's competition was before 2016.
In May 2016, ALSO Construccion y Supervision ("ALSO"), which was owned by Sosa and Abel Guzman ("Guzman"), a former independent contractor for Urelift, was awarded a sole-source bid on the Chapultepec project.33 Alvarez affirmed that, had Urelift been permitted to submit a bid on that project, it would have.34 The court sustained the objection to the follow-up question asking whether Alvarez believed Urelift would have been awarded the contract if allowed to bid because the question called for speculation.35
In July 2016, Urelift was an unsuccessful bidder on Mexico City's Metro Linea A project.36 Alvarez obtained documents through a public record request in Mexico that showed that ALSO was awarded the Metro Linea A project. The two unsuccessful bidders, Urelift and Comsa Emte, S.A. de C.V. ("Comsa Emte"), were both disqualified for not fulfilling either the legal requirements, the technical requirements, or the economic requirements set out in the bid package.37 In a letter dated July 27, 2016, Urelift was advised of fourteen specific reasons its bid was rejected by Mexico City.38 The reasons ranged from undercapitalization to costs that exceeded the market price.39 Of the three bids considered on the project, ALSO's bid was the lowest ($51,578,440.41 pesos) and Urelift's was the highest ($122,613,104.18 pesos).40
One document supporting ALSO's successful bid on the Metro Linea A project was a July 20, 2016 letter addressed to ALSO from SPI with a letter attached from Uretek confirming that SPI could purchase Uretek's stabilizing products for the injection services.41
At a later time, Alvarez was asked:42
Q. So all we can say today is that you may have had competition before ALSO, but you didn't know what that - who that competition was?
A. Would you like to rephrase your question?
Q. Well you can't say you didn't have competition in Mexico prior to ALSO, can you, sir?
A. Yes, we have competition.
Alvarez reviewed Trial Exhibit 140,43 a list of contracts Urelift...
To continue reading
Request your trial