Duradril, L.L.C. v. Dynomax Drilling Tools, Inc.
516 S.W.3d 147
Tex. App.2017Background
- Duradril (Texas LLC) owed DCan (Canadian corp) about $4,056,000 under a 2009 distribution agreement; parties negotiated an asset-for-debt transaction to address arrearages.
- Parties orally agreed on an asset purchase arrangement effective July 1, 2013: DCan/DUSA would take certain accounts receivable (~$701,000) and fixed assets (~$2.89M) in credit against Duradril’s debt; Ward would issue a personal note (~$454,000) and become a 5% holder/GM of DUSA for a limited term.
- After July 1, 2013 Dynomax (DCan/DUSA) operated the transferred assets, paid former Duradril employees, billed/collected receivables, and sent notices claiming an asset purchase. Liens on some transferred assets later surfaced.
- Dynomax sued Duradril and Ward seeking declaratory relief and breach-of-contract damages; a TRO issued; counterclaims by Duradril/Ward alleged fraud, conversion, economic duress, tortious interference, wrongful injunction, etc.
- A jury found (inter alia) the July 1, 2013 APA existed, Duradril and Ward breached it (not excused), Dynomax did not commit conversion or fraud, and awarded Dynomax $1,004,000. Trial court entered judgment for Dynomax against Duradril and Ward jointly and severally. Appellants appealed; this opinion affirms.
Issues
| Issue | Dynomax (Plaintiff) Argument | Duradril & Ward (Defendants) Argument | Held |
|---|---|---|---|
| Statute of Frauds / enforceability of oral APA; partial-performance exception | The oral APA is enforceable because parties fully/partially performed in a manner unequivocally referable to the agreement (collecting receivables, operating assets, employee payments, credits recorded on June 30). | Oral APA is barred by the statute of frauds; full performance (not mere partial performance) was required; jury charge should have required full performance and corroboration to a specific version. | Court affirmed: partial-performance exception instruction ("performed or partially performed in a manner unequivocally referable to the agreement") was proper; evidence legally sufficient to support partial-performance finding. |
| Capacity to sue (DCan registration in Texas) | DCan was not transacting (or, even if it were, issue was waived) and Dynomax preserved no abatement plea; any deficiency was waived. | DCan, a foreign entity, was not registered under Tex. Bus. Org. Code §9.051(b) and thus could not maintain suit in Texas; trial court erred in entering judgment for DCan. | Held waived: failure to raise capacity by verified plea in abatement waives the issue; no reversible error. |
| Ratification | Ratification was an alternative theory to defeat statute of frauds and an instruction for jury to consider. | Submission turned ratification into an independent basis for recovery; jury’s disjunctive ratification answer ("Duradril or Ward") was ambiguous and improper. | Court held ratification was not required to support judgment because breach findings and damages supported recovery; no reversible error from submission. |
| Joint and several liability / damages allocation | Single APA and breaches by both support joint-and-several liability; measure of damages was benefit-of-the-bargain tied to liens/encumbrances plus amounts Ward failed to pay. | Question 6 failed to apportion damages between Duradril and Ward and could double-count obligations; no jury finding of joint promises. | Court upheld joint-and-several award: single contract, both defendants found to have breached it, charge did not mandate double recovery, and pleadings/jury findings support joint liability. |
| Tort claims, wrongful injunction, economic duress, conversion | (Defendants) Submitted jury questions on tortious interference, wrongful injunction, economic duress, and conversion. | (Dynomax) Insufficient evidence; claims lacked necessary elements (e.g., no breach induced, no bond breach, no illegal threats). | Court affirmed exclusion of these jury issues for lack of legal/ factual support; conversion finding for Dynomax also sustained (defendants failed to preserve factual-sufficiency challenge). |
Key Cases Cited
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for legal sufficiency review and reviewing evidence in light most favorable to verdict)
- Croucher v. Croucher, 660 S.W.2d 55 (Tex. 1983) (legal-sufficiency principles regarding adverse findings)
- Dow Chem. Co. v. Francis, 46 S.W.3d 237 (Tex. 2001) (burden for challenging findings on issues plaintiff had burden to prove)
- Formosa Plastics Corp. U.S.A. v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41 (Tex. 1998) ("more than a scintilla" standard)
- Berryman’s S. Fork, Inc. v. J. Baxter Brinkmann Int’l Corp., 418 S.W.3d 172 (Tex. App.—Dallas 2013) (discussing partial-performance exception to statute of frauds)
- Nat’l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419 (Tex. 2015) (partial performance must be unequivocally referable to the agreement)
- Dynegy, Inc. v. Yates, 422 S.W.3d 638 (Tex. 2013) (statute of frauds burden-shifting between parties)
- DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) (requirements and limits of wrongful-injunction claims and bond damages)
- Holloway v. Skinner, 898 S.W.2d 793 (Tex. 1995) (one who induces breach cannot be a contracting party for tortious-interference liability)