Summary
stating that courts are not permitted to create a contract where none exists
Summary of this case from Ibe v. Nat'l Football LeagueOpinion
No. 13-05-609-CV
Memorandum Opinion Delivered and Filed October 5, 2006.
On Appeal from the 343rd District Court of San Patricio County, Texas.
Before Chief Justice VALDEZ and Justices YAÑEZ and CASTILLO.
MEMORANDUM OPINION
Appellant, MPG Petroleum, Inc. ("MPG"), sued Appellees, Crosstex CCNG Marketing, Ltd., Crosstex Energy Services, L.P., and Crosstex Energy Services, G.P., L.L.C. (collectively "Crosstex"), for breach of contract, fraud, and negligent misrepresentation. The trial court granted a combined traditional and no-evidence motion for summary judgment in favor of Crosstex on the breach of contract claim, and a no-evidence motion for summary judgment in favor of Crosstex on fraud and negligent misrepresentation claims. In two issues, MPG contends the trial court erred in: (1) granting Crosstex's traditional and no-evidence motion for summary judgment on the breach of contract claim; and (2) granting Crosstex's no-evidence summary judgment on the remaining claims. For the reasons that follow, we affirm the trial court's judgment.
I. FACTUAL AND PROCEDURAL HISTORY
Crosstex is the owner and operator of a natural gas pipeline that crosses MPG's leasehold. MPG and Crosstex entered negotiations whereby Crosstex would buy 100% of the natural gas produced by MPG's well. MPG and Crosstex signed a "letter agreement" dated March 12, 2003, stating that MPG would build a flow line from its well to Crosstex's Gregory Gathering System. MPG later decided that the flowline would be too expensive to do this. As a result, Crosstex and MPG developed a new plan whereby the natural gas would be delivered directly to Crosstex's newly-acquired Ingleside-to-Refugio eight-inch pipeline that crossed MPG's leasehold. MPG and Crosstex memorialized the new plan in a second letter agreement, dated April 10, 2003.
The April 10, 2003 letter agreement stated that MPG would commit 100% of its natural gas output from the well. MPG would construct flow lines to deliver the gas from the well to the "agreed upon points of interconnection ('Points of Delivery') between the facilities of MPG and Crosstex." MPG would also be financially responsible for the purchase and installation of the required fittings, valves, and measuring equipment at a cost of $12,500. The agreement also outlined the term, price, and gas quality specification.
Quote taken from the April 10, 2003 letter agreement. The location of this point, or these points, of interconnection is at the center of the dispute. Crosstex alleges that the interconnection point is a material or essential element of the agreement, and the interconnection point was left up to future negotiation. According to Crosstex, there was, therefore, no "meeting of the minds," and thus no contract.
After the April 10, 2003 letter agreement, MPG and Crosstex continued to negotiate the measuring equipment's location and the flow line's specifications. The negotiations included a field meeting in mid-May 2003, whereby the parties met to discuss the exact location of the measuring equipment. Negotiations continued into September 2003 to identify the measuring equipment's location. The parties were not able to agree on a location. The formal contract mentioned in the letter agreement was never signed.
On April 6, 2004, approximately seven months after negotiations ceased, MPG filed suit. The trial court granted a hybrid traditional and no-evidence summary judgment on the breach of contract claim, and a no-evidence summary judgment on the fraud and negligent misrepresentation claims on June 21, 2005.
II. STANDARD OF REVIEW A. Traditional Summary Judgment Standard of Review
The function of a summary judgment is to eliminate patently unmeritorious claims and defenses, not to deprive litigants of the right to a jury trial. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 n. 5 (Tex. 1979). We review de novo a trial court's order granting a traditional motion for summary judgment. Joe v. Two Thirty-Nine Joint Venture, 145 S.W.3d 150, 156 (Tex. 2004). The traditional summary judgment movant has the burden of showing that no genuine issue of material fact exists, and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). As defendant, Crosstex is entitled to summary judgment if it conclusively negated an essential element of MPG's breach of contract cause of action. S.W. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). Crosstex bears the burden of proof and all doubts about the existence of a genuine issue of material fact are resolved against it. See Nixon, 690 S.W.2d at 548-49. All evidence and any reasonable inferences must be viewed in the light most favorable to MPG. Id.
B. No-Evidence Summary Judgment Standard of Review
A no-evidence motion for summary judgment is equivalent to a pretrial directed verdict, and this court applies the same legal sufficiency standard of review. Ortega v. City Nat'l Bank, 97 S.W.3d 765, 772 (Tex.App.-Corpus Christi 2003, no pet.) (op. on reh'g). In an appeal of a no-evidence summary judgment, this Court reviews the evidence in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences. Merrill Dow Pharms., Inc. v. Harner, 953 S.W.2d 706, 711 (Tex. 1997). We review a no-evidence summary judgment de novo. Id. If the nonmovant produces evidence that raises a genuine issue of material fact, summary judgment is improper. Tex. R. Civ. P. 166a(i). All that is required of the nonmovant is to produce a scintilla of probative evidence to raise a genuine issue of material fact. Ortega, 97 S.W.3d at 772. There is less than a scintilla of evidence when the evidence is "so weak as to do no more than create a mere surmise or suspicion" of a fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). There is more than a scintilla of evidence when the evidence allows reasonable and fair-minded people to differ in their conclusions. Id. The burden of producing evidence is entirely on the non-movant; the movant has no burden to attach any evidence to the motion. Tex. R. Civ. P. 166a(i).
No-evidence points will be sustained when: (a) there is a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a scintilla; or (d) the evidence conclusively establishes the opposite of a vital fact. King Ranch, 118 S.W.3d at 751. When the trial court does not specify the basis upon which it granted summary judgment, the appellate court must affirm if any one of the movant's theories has merit. Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).
III. DISCUSSION A. Breach of Contract Claim
In its first cause of action, MPG alleges that Crosstex breached the April 10, 2003 letter agreement. Crosstex moved for a hybrid traditional and no-evidence summary judgment against MPG's breach of contract claim on the following grounds: (1) there was no meeting of the minds as to the point of delivery (points of interconnection), an essential element of the contract; (2) there was a lack of consideration; and (3) MPG was not injured by the alleged breach. Crosstex's motion was not clearly segregated into traditional and no-evidence summary judgment grounds. MPG, however, did not lodge an exception to any ambiguity in the motion. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342-43 (Tex. 1993). The trial court granted summary judgment, but did not specify whether its grant pertained to the traditional motion, the no-evidence motion, or both. We must, therefore, analyze the no-evidence summary judgment first, followed by the traditional summary judgment. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004).
In general, a contract is legally binding only if its terms are sufficiently definite to enable a court to understand the parties' obligations. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). The Restatement asserts that contract terms are reasonably certain "if they provide a basis for determining the existence of a breach and for giving an appropriate remedy." Restatement (Second) of Contracts § 33(2) (1981). Of the several elements required for a legally binding contract, two important elements are that the parties (1) have a meeting of the minds and (2) communicate consent to the terms of the agreement. Smith v. Renz, 840 S.W.2d 702, 704 (Tex.App.-Corpus Christi 1992, writ denied).
Whether an agreement fails for indefiniteness is a question of law to be determined by the court. See T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). A binding contract may be formed if the parties agree on the material terms, even if they leave other provisions for later negotiation. Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 556 (Tex. 1972) (citing 1 Corbin on Contracts (1963) 87-91). Where a contract leaves essential terms open for future negotiation and adjustment, there is no binding contract that can be enforced. See T.O. Stanley Boot, 847 S.W.2d at 221; Engelman Irrigation Dist. v. Shields Bros., 960 S.W.2d 343, 352 (Tex.App.-Corpus Christi 1997, pet. denied). Texas courts favor validating transactions rather than voiding them, but courts may not create a contract where none exists and they generally may not add, alter, or eliminate essential terms. Oakrock Exploration Co v. Killam, 87 S.W.3d 685, 690 (Tex.App.-San Antonio 2002, pet. denied).
A letter agreement may be binding even though it refers to the drafting of a future, more formal agreement. See Foreca, S.A. v. GRD Dev. Co., Inc., 758 S.W.2d 744, 746 (Tex. 1988). But an agreement to make a future contract is enforceable only if it is "specific as to all essential terms, and no terms of the proposed agreement may be left to future negotiations." Fort Worth Indep. Sch. Dist., 22 S.W.3d at 846 (quoting Foster v. Wagner, 343 S.W.2d 914, 920-21 (Tex.App.-El Paso 1961, writ ref'd n.r.e.)). It is well settled law that an agreement that leaves material matters open for future adjustment and agreement that never occur, is not binding upon the parties and merely constitutes an agreement to agree. Id.
The April 10, 2003 letter agreement left the delivery point open for future negotiation. The letter agreement states the point of delivery to be "at the agreed upon points of interconnection (Points of Delivery) between the facilities of MPG and Crosstex." Crosstex contends in its summary judgment motion that point-of-delivery is an essential term in a gas purchase agreement. MPG does not dispute this point, but contends that the letter agreement sufficiently described the point of delivery. We disagree.
The letter agreement, by its very terms, left the point of delivery up to future negotiation. The letter agreement was not specific as to all essential terms because it left the point of delivery to future negotiations. See Fort Worth Indep. Sch. Dist., 22 S.W.3d at 846. Reviewing the evidence in the light most favorable to MPG, we find that the April 10, 2003 letter agreement was an unenforceable agreement to agree. The trial court properly granted no-evidence summary judgment. Because resolution of this issue on no-evidence grounds is dispositive, we need not address the traditional summary judgment grounds. See Ridgway, 135 S.W.3d 598 at 600; Tex.R.App.P. 47.1. We overrule MPG's first issue.
B. Fraud and Negligent Misrepresentation Claims
As a preliminary matter, MPG complains on appeal that because there was not adequate time for discovery, the trial court should have denied Crosstex's no-evidence summary judgment. When a party contends that it has not had adequate opportunity for discovery before a summary judgment hearing, it must file either an affidavit explaining the need for further discovery or a verified motion for continuance. Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 647 (Tex. 1996). MPG did neither, and any complaint on this issue is waived. Tex.R.App.P. 33.1(a)(1); Tenneco Inc., 925 S.W.2d at 647.
1. Fraud
In its suit, MPG alleged that Crosstex engaged in common law fraud. To recover for common law fraud, MPG must prove that: (1) Crosstex made a material representation; (2) the representation was false; (3) the representation was made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion; (4) Crosstex made the representation with the intention that it should be acted on by MPG; (5) MPG acted in reliance on the misrepresentation; and (6) MPG thereby suffered injury. See Johnson v. Brewer Pritchard, P.C., 73 S.W.3d 193, 211 n. 45 (Tex. 2002); Ernst Young v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001); T.O. Stanley Boot, 847 S.W.2d at 222. A promise of future performance constitutes an actionable misrepresentation if the promise was made with no intention of performing at the time it was made. See Schindler v. Austwell Farmers Coop., 841 S.W.2d 853, 854 (Tex. 1992). While intent is determined at the time the party makes the representation, it may also be inferred from the party's subsequent acts after the representation is made. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986). But the mere failure to perform a contract is not evidence of fraud. See Schindler, 841 S.W.2d at 854.
In its no-evidence motion for summary judgment, Crosstex contended that MPG produced no evidence for any of the requisite elements. Specifically, Crosstex sought to show that MPG failed to produce evidence that (1) Crosstex made a false representation knowingly, or recklessly without any knowledge of the truth; (2) MPG justifiably relied on Crosstex's representations; and (3) MPG suffered damages. To defeat the motion, MPG was required to produce a scintilla of probative evidence as to each element to raise a genuine issue of material fact. See Ortega, 97 S.W.3d at 772.
To establish the requisite elements of fraud, MPG referenced the attached affidavit of Margaret P. Graham, MPG's owner and president. Graham stated:
Defendants' representations concerning the location on Plaintiff's Brammer leasehold where the connection to its pipeline would be made were either false at the time they were made, or Defendants concealed that they had no intention of establishing a connection on this leasehold acreage. I would not have signed [the April 13, 2003 letter] [sic] if I had known Defendants had no intention of providing a connection to their pipeline on this acreage; were going to immediately begin looking for an off-site location for a point of connection; and were going to deny that any agreement for a connection point on the Brammer #3 lease acreage was ever reached.
A summary judgment may be based on the uncontroverted testimonial evidence of an interested witness if the evidence is clear, positive, direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted. Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997). Affidavits must set forth facts and cannot be conclusory. Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996). "Subjective beliefs" are not susceptible to being readily controverted, and are, therefore, not competent summary judgment evidence. Tex. Div.-Tranter, Inc. v. Corrozza, 876 S.W.2d 312, 314 (Tex. 1994).
Viewing MPG's summary judgment evidence in the light most favorable to MPG, we conclude that MPG failed to produce competent summary judgment evidence to raise a genuine issue of material fact regarding the requisite element that Crosstex made a false representation knowingly, or recklessly without any knowledge of the truth. The trial court properly granted summary judgment on MPG's fraud claim.
2. Negligent Misrepresentation
In its third cause of action, MPG alleged that Crosstex negligently misrepresented certain information in its dealings with MPG. To recover for negligent misrepresentation, MPG must prove that: (1) Crosstex made a representation in the course of its business, or in a transaction in which it has a pecuniary interest; (2) Crosstex supplied "false information" for the guidance of others; (3) Crosstex did not exercise reasonable care or competence in obtaining or communicating the information; and (4) MPG suffered pecuniary loss by justifiably relying on the representation. Fed. Land Bank Ass'n v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991). The sort of "false information" contemplated in a negligent misrepresentation case is a statement of existing fact, not a promise of future conduct. Key v. Pierce, 8 S.W.3d 704, 709 (Tex.App.-Fort Worth 1999, pet. denied); Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex.App.-Houston [14th Dist.] 1999, pet. denied). Crosstex asserted in its no-evidence summary judgment motion that MPG produced no evidence that Crosstex made a false statement, or that MPG justifiably relied on any representation Crosstex made.
In its response to the no-evidence summary judgment motion, MPG referenced the attached affidavit of Margaret P. Graham. In her affidavit, Graham identifies as "false information" told by Crosstex to her that it would connect to the pipeline on her leasehold and place the sales meter at the pipeline. MPG's response also references the deposition of Scott Brown, a Crosstex employee. Brown states in his deposition that the April 10, 2003 letter agreement contemplated the meter being placed right next to the pipeline. Graham also states in her affidavit that Crosstex's representations were "either false at the time they were made, or [Crosstex] concealed that they had no intention of establishing a connection on the leasehold acreage."
Despite Graham's subjective belief that she was given false information, this type of promise of future conduct is not the type of "false information" contemplated by the tort of negligent misrepresentation. See Key, 8 S.W.3d at 709. Such statements are not statements of existing fact, and are not actionable in negligent misrepresentation. Id. at 709. Reviewing this evidence regarding MPG's negligent misrepresentation claim in the light most favorable to MPG, we conclude that MPG's summary judgment evidence failed to raise a genuine issue of material fact as to the "false information" element of their claim. The trial court properly granted Crosstex's no-evidence summary judgment on this motion.
We overrule MPG's second issue.
IV. CONCLUSION
The trial court properly granted Crosstex's no-evidence summary judgment motions. We affirm the trial court's judgment.
CONCURRING AND DISSENTING MEMORANDUM OPINION
Crosstex filed a traditional motion for summary judgment as to MPG's claim for breach of contract, and a no-evidence motion as to MPG's other claims, including those for fraud and negligent misrepresentation. Both motions were granted by the trial court. I concur with the majority's conclusion as to the breach of contract claim, but for different reasons. Because I conclude the trial court erred in granting summary judgment as to the negligent misrepresentation and fraud claims, I respectfully dissent as to those claims.
Although Crosstex asserted in its first summary judgment motion that it was brought as both a traditional and a no-evidence motion, I find nothing in the motion itself directed to no-evidence grounds. See Tex. R. Civ. P. 166a(i).
I. Breach of Contract
Crosstex alleges, essentially, that no contract was ever finalized because it and MPG never agreed on the points of interconnection or delivery between MPG's well and Crosstex's pipeline. The parties initially executed a March 12, 2003, letter agreement, by which MPG was to build a flow line from its well to Crosstex's Gregory Gathering System. When it was determined that this was too expensive, the parties renegotiated to provide for delivery into Crosstex's newly-acquired Ingleside-to-Refugio 8" pipeline that crossed MPG's leasehold. The letter agreement executed April 10, 2003, provides for the gas to be delivered at the "agreed upon points of interconnection ('Points of Delivery') between the facilities of MPG and Crosstex." It also provides that upon execution of the letter agreement, a "formal contract incorporating the above terms" will be forwarded for execution. In issue is whether the letter agreement is sufficiently clear to reflect a meeting of the minds as to the points of delivery.
Crosstex also alleged a lack of consideration, and no injury from any alleged breach.
A. Standard of Review
The function of summary judgment is to eliminate patently unmeritorious claims and defenses, not to deprive litigants of the right to a jury trial. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 n. 5 (Tex. 1979); Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex. 1972); Alaniz v. Hoyt, 105 S.W.3d 330, 344 (Tex.App.-Corpus Christi 2003, no pet.). On appeal, the standard of review for the grant of a motion for summary judgment is determined by whether the motion was brought on no-evidence or traditional grounds. See Tex. R. Civ. P. 166a(i), (c); Alaniz, 105 S.W.3d at 344; Ortega v. City Nat'l Bank, 97 S.W.3d 765, 771 (Tex.App.-Corpus Christi 2003, no pet.) (op. on reh'g).
We review de novo a trial court's grant or denial of a traditional motion for summary judgment. Alaniz, 105 S.W.3d at 345; Ortega, 97 S.W.3d at 771. The movant bears the burden of showing both that no genuine issue of material fact exists, and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Alaniz, 105 S.W.3d at 345. In deciding whether there is a genuine issue of material fact, we take evidence favorable to the non-movant as true. Alaniz, 105 S.W.3d at 345. We make all reasonable inferences and resolve all doubts in favor of the non-movant. Id.
B. Construction of A Written Agreement
In construing a written agreement, the primary concern of this Court is to ascertain the true intent of the parties as expressed in the instrument. Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). We give terms their plain, ordinary, and generally accepted meaning unless the contract shows the parties used them in a technical or different sense. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996) (citing W. Reserve Life Ins. Co. v. Meadows, 261 S.W.2d 554, 557 (Tex. 1953)). If a contract is capable of more than one reasonable interpretation, it is ambiguous; if, however, the contract can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and we will construe it as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); Cook Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 131 (Tex.App.-Houston [14th Dist.] 2000, pet. dism'd).
The parties' interpretation of a contract is parol evidence, and parol evidence of intent is not admissible to create an ambiguity. Friendswood Dev. Co. v. McDade Co., 926 S.W.2d 280, 283 (Tex. 1996); Zurich Am. Ins. Co. v. Hunt Petroleum (AEC), Inc., 157 S.W.3d 462, 465 (Tex.App.-Houston [14th Dist.] 2004, no pet.). Only after an agreement has been determined to be ambiguous can parol evidence be considered to help ascertain the parties' true intent. McDade, 926 S.W.2d at 283; Hunt, 157 SW.3d at 465; Mescalero Energy, Inc. v. Underwriters Indem. Gen. Agency, Inc., 56 S.W.3d 313, 319 (Tex.App.-Houston [1st Dist.] 2001, pet. denied). This Court may conclude a contract is ambiguous, even though the parties do not so contend. Hunt, 157 S.W.3d at 465. When a contract is ambiguous, summary judgment is improper because the interpretation of the contract becomes a fact issue. Id. (citing Coker, 650 S.W.2d at 394; Cook, 15 S.W.3d at 131). In determining whether a contact is ambiguous, we look to the contract as a whole, in light of the circumstances present when the contract was executed. Sun Oil Co. (Del.) v. Madeley, 626 S.W.2d 726, 731 (Tex. 1981); Hunt, 157 S.W.3d at 465; Mescalero, 56 S.W.3d at 319; see Hewlett-Packard Co. v. Benchmark Elecs., Inc., 142 S.W.3d 554, 561 (Tex.App.-Houston [14th Dist.] 2004, pet. denied) ("We construe a contract from a utilitarian standpoint, bearing in mind the particular business activity sought to be served."). The contract may be read in light of the surrounding circumstances to determine whether an ambiguity exists. Sun Oil, 626 S.W.2d at 731-32; Cardwell v. Sicola-Cardwell, 978 S.W.2d 722, 727 (Tex.App.-Austin 1998, pet. denied). We may "consider the commercial context of the transaction" to aid in our interpretation. Intratex Gas Co. v. Puckett, 886 S.W.2d 274, 278 (Tex.App.-El Paso 1994, no writ). This commercial context, however, is limited to the "ordinary terms, customs and usages then in effect" in the industry. See id.; Atwood v. Rodman, 355 S.W.2d 206, 216 (Tex.Civ.App.-El Paso 1962, writ ref'd n.r.e.).
[E]ven though a written contract be unambiguous on its face, parol evidence is admissible for the purpose of applying the contract to the subject with which it deals. . . . It merely permits proof of the then existing circumstances, in order to enable the court to apply the language used therein to the facts as they then existed. It can do no more than explain the doubtful relations of the instrument consistently with the relations of the parties, the subject matter of the contract, and the other incidents thereof.
Murphy v. Dilworth, 151 S.W.2d 1004, 1005-06 (Tex. 1941) (citations omitted).
When a contract is silent, the question is not one of interpreting the language but rather one of determining its effect. Hewlett-Packard, 142 S.W.3d at 562 (citing Lidawi v. Progressive County Mut. Ins. Co., 112 S.W.3d 725, 731 (Tex.App.-Houston [14th Dist.] 2003, no pet.)). A factfinder may not be called upon to construe the legal effect of an agreement or to supply an essential term upon which the parties did not mutually agree. Id. (citing Thompson v. CPN Partners, L.P., 23 S.W.3d 64, 71 (Tex.App.-Austin 2000, no pet.)).
C. The Evidence
Crosstex's motion for summary judgment attaches as evidence the March and April letter agreements, and later communications dated between June and October 2003 relating to continuing efforts to identify the exact location for the points of interconnection and metering equipment. Crosstex contends that the points of delivery or interconnection were never finalized, and that the contract therefore failed. The evidence reflects that costs varied considerably, depending upon the manner and location of the connections, and were a factor in the communications.
Evidence was tendered to suggest that Crosstex considered the originally contemplated location (which MPG's Martha Graham contends was agreed), adjacent to the existing lease-access road, to be less than adequate because of recent rains and flooding.
MPG contends that the contract is sufficiently clear, and ensuing negotiations were required only because Crosstex refused to honor its earlier agreement. MPG further contends that "even if the point of delivery was uncertain from the face of the April 10, 2003 agreement," a contract for the sale of natural gas is a contract for the sale of goods falling under the Texas Business and Commerce Code. Tex. Bus. Com. Code Ann. § 2.107 (Vernon 1994). Section 2.308 is therefore applicable, and it provides that, absent a specified place for delivery, delivery is at the seller's place of business. Id. § 2.308. In this instance, MPG argues, that is "the point at where the parties knew the gas was located." MPG contends that delivery from a well to a pipeline located on the well's lease acreage is a "logical and consistent usage of trade," such that the place of delivery was "on the Brammer # 3 leasehold," and that this is sufficient.
MPG relies on Tex. Farm Bureau Cotton Ass'n v. Stovall, 253 S.W. 1101 (Tex. 1923) for the proposition that description of delivery points need not be absolutely certain, but only reasonably certain. The Stovall Court found the place of delivery was fixed with "reasonable certainty." Id. at 1106. However, the contract at issue described the place of delivery as "at the warehouse controlled by the Association, or at the nearest public warehouse, if the Association controls no warehouse in that immediate district; or by shipment as directed. . . ." Id. at 1103. Such a description is utterly lacking here, and I would not extend Stovall to the circumstances of this case as suggested by MPG.
In its response to the motion for summary judgment, MPG tendered evidence including the letter agreements, various communications dated after April 2003, and the affidavit of MPG's Martha Graham to show that the parties had agreed that MPG was to lay a flow line to the sale meters which would be located next to Crosstex's Ingleside-to-Refugio line where it entered the Brammer #3 leasehold property; this would be the location of the points of delivery. MPG also filed a supplemental response, attaching deposition testimony of Crosstex's Scott Brown in support of this contention. Brown testified that "[t]he meter would be at the Ingleside Refugio line;" however, Brown also added that they "would tap into-tie into the Ingleside Refugio line at some point that we hadn't determined yet." In its supplemental response, MPG presented the same arguments as set forth in its appellate brief: that the points of delivery were sufficiently certain from the face of the agreement and, even if they were not, the understanding of the parties at the time of the agreement made the points of delivery reasonably certain and legally sufficient.
D. Analysis
None of the evidence tendered in conjunction with the motion for summary judgment on the breach of contract claim dates to a time prior to the letter agreements. None of it shows that the specific locations of the points of interconnection were already defined or were part of the circumstances present when the contract was executed. Graham's affidavit states "[t]here were no negotiations between MPG and Crosstex as to the preparation of the March 12, 2003 and the April 10, 2003 gas purchase and sale agreements." While this does not preclude the assertion that the points of delivery were discussed and resolved, she does not make that assertion. The agreement itself simply states delivery will be at the "agreed upon points of interconnection."
While the parol evidence rule precludes admission of prior or contemporaneous agreements which are inconsistent with the written agreement, see Hallmark v. Port/Cooper-T. Smith Stevedoring Co., 907 S.W.2d 586, 590 (Tex.App.-Corpus Christi 1995, no pet.), the parties' evidence here may properly be considered inasmuch as it is neither prior nor contemporaneous, and it does not contradict any terms of the agreement. See Robinson v. Texas Auto. Dealers Ass'n, 387 F.3d 416, 424 (5th Cir. 2004).
The parol evidence rule similarly does not preclude enforcement of prior contemporaneous agreements which are collateral to, not inconsistent with, and do not vary or contradict the express or implied terms or obligations thereof. Hallmark v. Port/Cooper-T. Smith Stevedoring Co., 907 S.W.2d 586, 590 (Tex.App.-Corpus Christi 1995, no pet.) (citing Hubacek v. Ennis State Bank, 317 S.W.2d 30, 32 (Tex. 1958); Boy Scouts of Am. v. Terminal Sys., Inc., 790 S.W.2d 738, 745 (Tex.App.-Dallas 1990, writ denied)). It does provide that terms in "a writing intended by the parties as a final expression of their agreement . . . may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented." Robinson v. Texas Auto. Dealers Ass'n, 387 F.3d 416, 424 (5th Cir. 2004) (citing Tex. Bus. Com. Code Ann. § 2.202 (Vernon Supp. 2006)). In the appeal before us, no argument has been made of a separate collateral agreement as to the location of the points of delivery. I note that Graham's second affidavit, filed with MPG's response to the no-evidence motion for summary judgment on other claims, does reference communications prior to the execution of the agreements, and is relevant to the negligent misrepresentation and fraud claims.
For an agreement to be enforceable, the parties must have agreed on its essential terms. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). Parties may agree upon some contractual terms, understanding them to be an agreement, and leave other contract terms to be made later. Id.; Komet v. Graves, 40 S.W.3d 596, 602 (Tex.App.-San Antonio 2001, no pet.); Hardin Constr. Group, Inc. v. Strictly Painting, Inc., 945 S.W.2d 308, 312-13 (Tex.App.-San Antonio 1997, orig. proceeding); Tex. Oil Co. v. Tenneco, Inc., 917 S.W.2d 826, 830 (Tex.App.-Houston [14th Dist.] 1994), rev'd on other grounds sub nom. Morgan Stanley Co., Inc. v. Tex. Oil Co., 958 S.W.2d 178 (Tex. 1997). It is only when an essential term is left open for future negotiation that there is nothing more than an unenforceable agreement to agree. T.O. Stanley Boot, 847 S.W.2d at 221; Tex. Oil Co., 917 S.W.2d at 830 ; Komet, 40 S.W.3d at 602. Such an agreement is void as a contract. Tex. Oil Co., 917 S.W.2d at 830.
Here, no party contends that identification of the points of delivery is not an essential term. In fact, Graham's affidavit states that the "April 10, 2003 agreement, prepared and agreed to by Crosstex contains all of the essential terms. . . ." MPG's position has consistently been that the points of delivery are adequately described in the agreement, and can be delineated by reference to the lease name, well number, name of the pipeline, and the county in which all the "facilities" of the parties interconnect.
The agreement does not clearly define the location of the points of delivery or interconnection. Subsequent communications reflect disagreement as to their location, and reinforce the position that the location was not readily determined from the circumstances before the parties. Whether or not a subsequent agreement was reached is not before us, since to so find would require us to conclude that this was not an "essential term" of the contract. Issues not expressly presented to the trial court by written motion or response to the motion for summary judgment cannot sua sponte be considered as grounds for reversal. Tex. R. Civ. P. 166(a); McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993). We may only consider the record as it existed at the time of the motion. San Jacinto River Auth. v. Duke, 783 S.W.2d 209, 210 (Tex. 1990) (citing Central Educ. Agency v. Burke, 711 S.W.2d 7, 9 (Tex. 1986)).
Section 2.308 provides that, absent a specified place for delivery, delivery is either at the seller's place of business, or, "in a contract for sale of identified goods which to the knowledge of the parties at the time of contracting are in some other place, that place is the place for their delivery." Tex. Bus. Com. Code Ann. § 2.308 (Vernon 1994). Section 2.202 of the code similarly provides that a written agreement may be explained or supplemented by evidence of consistent additional terms, unless the writing has been intended as a complete and exclusive statement of the terms of the agreement. Id. § 2.202 (Vernon Supp. 2006). The section relating to the statute of frauds does not enumerate the point of delivery as critical to enforcement of an agreement. Id. § 2.201 (Vernon 1994). The code reflects that a written agreement is enforceable if the specified place of delivery may be readily determined from the circumstances, or it is a non-essential term on which agreement may be reached later. See T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d at 221; Komet v. Graves, 40 S.W.3d 596, 602 (Tex.App.-San Antonio 2001, no pet.).
Accordingly, on the record before us, I agree we must uphold the summary judgment granted in favor of Crosstex on the breach of contract claim.
II. No-Evidence Motion for Summary Judgment
Subsequent to the filing of the motion for summary judgment as to the breach of contract claim, Crosstex filed a no-evidence motion addressing other claims, including those for negligent misrepresentation and fraud.
A. Standard of Review
A no-evidence motion for summary judgment asserts that there is no evidence of one or more essential elements of a claim on which the adverse party will bear the burden of proof at trial. Tex. R. Civ. P. 166a(i); Alaniz, 105 S.W.3d at 344; Scripps Tex. Newspapers, L.P. v. Belalcazar, 99 S.W.3d 829, 840 (Tex.App.-Corpus Christi 2003, pet. denied). This type of motion must specifically identify the elements of the claim for which there is no evidence. Meru v. Huerta, 136 S.W.3d 383, 386 (Tex.App.-Corpus Christi 2004, no pet.). Conclusory motions or general no-evidence challenges to an opponent's case are not appropriate under this rule. Id. at 387.
We apply the same legal-sufficiency standard of review to a no-evidence summary judgment as we apply to a directed verdict. Alaniz, 105 S.W.3d at 344; Belalcazar, 99 S.W.3d at 840. "Like a directed verdict, then, the task of the appellate court is to determine whether the plaintiff has produced any evidence of probative force to raise fact issues on the material questions presented." Belalcazar, 99 S.W.3d at 840 (quoting Jackson v. Fiesta Mart, 979 S.W.2d 68, 70 (Tex.App.-Austin 1998, no pet.)).
The movant has no burden to attach any evidence to a no-evidence motion for summary judgment. See Tex. R. Civ. P. 166a(i); Ortega, 97 S.W.3d at 772. The non-movant bears the entire burden of producing evidence to defeat a no-evidence motion for summary judgment. Alaniz, 105 S.W.3d at 344. To raise a genuine issue of material fact, all that is required of the non-movant in responding to a no-evidence motion for summary judgment is to produce a scintilla of probative evidence. Alaniz, 105 S.W.3d at 344; Ortega, 97 S.W.3d at 772. "Less than a scintilla of evidence exists when the evidence is 'so weak as to do no more than create a mere surmise or suspicion' of a fact." Alaniz, 105 S.W.3d at 344; see Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). Conversely, more than a scintilla exists when the evidence "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Ortega, 97 S.W.3d at 772 (quoting Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994)); see Alaniz, 105 S.W.3d at 344. As in a traditional summary judgment, in a no-evidence summary judgment, "all evidence is to be construed in favor of the non-movant, to whom every reasonable inference is allowed and on whose behalf all doubts are resolved." Belalcazar, 99 S.W.3d at 840.
B. The Motion and Evidence
With respect to the negligent misrepresentation and fraud claims, Crosstex contends there is no evidence of a material representation that Crosstex knew was false when made, or that was made negligently, recklessly, or without knowledge of its falsity. Crosstex further argues there is no evidence of any justifiable reliance on the misrepresentation, such that MPG would not have entered into the transaction had the representation not been made. On appeal, Crosstex treats the negligent misrepresentation and fraud claims as one for fraudulent inducement and concludes that since MPG cannot prove it entered into a binding agreement, the claims fail as a matter of law. I disagree that the claims are so construed. More relevantly, Crosstex also contends that the evidence tendered by MPG is conclusory and therefore incompetent, and constitutes no evidence.
In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001); Ernst Young v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001) (setting out the elements of a fraud claim).
Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n. 24 (Tex. 2003) (citing Fed. Land Bank Ass'n v. Sloane, 825 W.W.2d 439, 442 (Tex. 1991)), setting out the elements for a claim of negligent misrepresentation; see McCamish, Martin, Brown Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 791 (Tex. 1999).
"The tort of negligent misrepresentation frequently involves a defendant's statement that a contract exists, upon which the plaintiff relies, only later to discover that the contract has been rejected or never completed. Thus, negligent misrepresentation is a cause of action recognized in lieu of a breach-of-contract claim, and is not usually available when a contract is in force between the parties." N.Y. Life Ins. Co. v. Miller, 114 S.W.3d 114, 124 (Tex.App.-Austin 2003, no pet.) (citing Sloane, 825 S.W.2d at 440-442; Airborne Freight Corp. v. E.R. Lee Enter., 847 S.W.2d 289, 295 (Tex.App.-El Paso 1992, writ denied)).
Graham tendered a second affidavit in response to the no-evidence motion for summary judgment. In it, she states that she participated in discussions leading up to the execution of the April 2003 agreement. She delineates details of conversations identifying location and costs of the interconnections. She states:
In my conversations with Scott Brown, Defendants' representative, it was represented that the location of the point of delivery under Exhibit A-1 for gas produced from Plaintiff's Brammer # 3 well was at the eastern boundary of the Brammer #3 leasehold where Defendants' Ingleside to Refugio 8" line enters the leasehold, immediately adjacent to the only existing lease access road.
Graham goes on to state:
I would not have signed Exhibit A-01 if I had known the Defendants had no intention of providing a connection to their pipeline on this acreage; were going to immediately begin looking for an off-site location for a point of connection . . . Defendants also made other misrepresentations, including a representation that they had reached an agreement with Elaine Klanika [the off-site neighbor] for a connection point on her property. . . . Defendants never obtained any such agreement with Ms. Klanika.
Graham delineates damages sustained as a result of MPG's reliance on the representation and the subsequent failure to make the interconnection, including the payment of shut in royalties, recompletion of the well in an oil zone, loss of acreage in the lease, and loss of sales of casinghead gas.
The affidavit sets out a specific location which was allegedly represented as the point of interconnection, and which MPG understood to be the agreed-upon location. It identifies a specific statement or misrepresentation alleging that agreement for right-of-way to establish points of interconnection not on the Brammer #3 leasehold had been reached with a neighboring landholder. Graham's affidavit identifies allegedly false statements by Crosstex representatives, and asserts that MPG would not have entered into the agreement but for its reliance, to its detriment, on those misrepresentations.
MPG's petition also includes detailed statements alleging the date of specific meetings, Crosstex's proposal to locate the points of delivery offsite on adjoining property owned by Ms. Klanika and to which MPG had no right of access, and that Crosstex then undertook on its own to gain that right-of-way agreement. MPG asserts (1) that in repeated phone calls inquiring of status, Crosstex assured MPG that agreement would be reached with Klanika and (2) that Crosstex, in a facsimile dated July 30, 2003 (included as evidence), represented that it had obtained the Klanika right-of-way agreement. Attached is an invoice for associated construction costs which includes an itemization for right-of-way expenses.
MPG, in Graham's affidavit, also expands on the actions foregone to its detriment, because it relied on Crosstex, and the damages sustained as a result.
C. Analysis 1. Fraud
With respect to the fraud claim, I agree that summary judgment may be based on uncontroverted testimony evidence of an interested witness if it is clear, positive, direct, otherwise credible and free from contradictions and inconsistencies, and could have been controverted. Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997) (per curiam). Such affidavits may not be conclusory. Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (per curiam). The majority concludes that Graham's testimony as to the existence of the representations, and her assertions that MPG would not have entered into the agreement without the representation are merely "subjective," not readily controverted, and therefore not competent summary judgment evidence. Accordingly, the majority finds that MPG failed to tender competent summary judgment evidence and upholds the no-evidence summary judgment in favor of Crosstex on the fraud claim. I respectfully disagree.
First, summary judgment below was not based on Graham's affidavit. In this instance, summary judgment was based on the no-evidence motion tendered by Crosstex. MPG bore the burden to bring forward at least a scintilla of evidence that a misrepresentation had been made and relied upon. Alaniz, 105 S.W.3d at 344; Ortega, 97 S.W.3d at 772.
Cf. Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex 1997) (per curiam).
Secondly, I would conclude that the Graham affidavit does more than simply make conclusory statements, and in fact does provide a sufficient factual basis for its conclusions. To constitute valid summary judgment evidence, an affidavit must do more than offer mere legal conclusions or subjective opinions. See Randall v. Dallas Power Light Co., 752 S.W.2d 4, 5 (Tex. 1988) (per curiam); Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984). An affidavit avoids being conclusory when it provides underlying facts to support its legal conclusions. Rizkallah v. Conner, 952 S.W.2d 580, 587 (Tex.App.-Houston [1st Dist.] 1997, no writ).
The question of initial representations as to location of the interconnections is addressed in detail, and is sufficient to constitute more than a scintilla of evidence. The affidavit also details alleged representations relating to the Klanika property and, along with evidence of communications, clearly suggests that access to the Klanika property was considered and discussed. The invoice forwarded July 30 includes an itemized cost for right-of-way. These assertions are readily controvertible. With respect to reliance, I agree that a party's subjective beliefs are no more than conclusions and are not competent summary judgment evidence. Tex. Div.-Tranter v. Carrozza, 876 S.W.2d 312, 314 (Tex. 1994) (per curiam). However, Graham's affidavit does more than simply state that but for the representations, MPG would not have entered into the agreement. Graham spells out in detail particular actions or options available but foregone because MPG relied upon Crosstex, and the resulting alleged damages are also identified with particularity. Accordingly, I consider this more than "subjective" opinion or belief, and sufficient to constitute more than a scintilla of evidence.
2. Negligent Misrepresentation
With respect to the negligent misrepresentation claim, the majority concludes that the alleged misrepresentations relate not to existing facts but rather to promises of future conduct and, as such, constitute no evidence of a false statement as to an existing fact on which a party could justifiably rely thereon.
To constitute negligent misrepresentation, a false representation must have been made to an existing fact, and not as a promise of future conduct. Miller, 114 S.W.3d at 124; Key v. Pierce, 8 S.W.3d 704, 709 (Tex.App.-Fort Worth 1999, pet. denied).
The statement that Crosstex had already agreed to the location in accord with the phone conversations preceding the April 2003 agreement is not a statement of future intent.
By contrast, an argument not raised, that it "would in the future agree," clearly would constitute a conditional promise of future conduct which could not sustain a claim for negligent misrepresentation. Miller, 114 S.W.3d at 124; Mikish v. Exxon Corp., 979 S.W.2d 700, 702 (Tex.App.-Houston [14th Dist.] 1998, pet. denied); Airborne Freight, 847 S.W.2d at 298.
The majority and I have already determined that the parties did not express agreement as to the points of delivery within the confines of the April 2003 letter agreement, which instead used the reference to "agreed upon locations." However, the language of the agreement also does not state that the locations are "to be agreed upon." Indeed, Graham contends in her affidavit that the points of delivery "[were] represented" as being at a particular place. In such circumstances, I conclude this alleged representation is not one relating to future conduct, but rather one relating to an existing fact, and I conclude the affidavit is sufficiently specific to constitute more than a scintilla of evidence and to raise a fact question on this point. Moreover, the alleged representations are sufficiently grounded in background fact and detail to do more than offer mere legal conclusions or subjective opinions. See Randall, 752 S.W.2d at 5; Brownlee, 665 S.W.2d at 112. I further find the evidence sufficient to suggest that MPG relied on the representations and consequently did not pursue alternative gas purchasers during this time.
Having not been addressed in the April 2003 letter agreement, a contemporaneous accord as to the locations of the points of delivery would not be inconsistent with or contradict the expressed terms of the agreement. See Hallmark, 907 S.W.2d at 590.
I similarly conclude that more than a scintilla of evidence, including affidavit testimony and documentary evidence, was tendered to suggest that Crosstex had represented that it had reached an agreement with Klanika as to right of way. This alleged statement is similarly not one of future conduct but of an existing fact. I recognize that any such representation was made later in time and could not have been relied upon when entering into the contract; it could, however, have been a factor in continuing reliance and any delay that aggravated damages sustained, if any. See Miller, 114 S.W.3d at 124.
III. Conclusion
Accordingly, I concur with the majority opinion as to the motion for summary judgment on the breach of contract claim. As for the negligent misrepresentation and fraud claims, I conclude that sufficient competent summary judgment evidence was raised, constituting more than a scintilla, as to representations of existing facts to preclude a no-evidence summary judgment. I therefore respectfully dissent in part. I would reverse the trial court's order granting summary judgment as to these claims and remand for further proceedings.