Furmanite Worldwide, Inc. v. Nextcorp, Ltd.
339 S.W.3d 326
| Tex. App. | 2011Background
- NextCorp provided Furmanite with hosting and consulting services under a December 1, 2002 Client Service Agreement (CSA) and two Statements of Work; term and termination rights were central to the dispute.
- Exhibit A and Exhibit A.1 defined initial terms: 12-month consulting from Dec 1, 2002 and a 36-month hosting term from Apr 1, 2003, potentially extending to Mar 31, 2006; later changes amended these terms.
- Change orders were used to alter scope; opening paragraphs of most change orders stated CSA terms remained in force, but December 1, 2004 change order unilaterally modified the opening paragraph to redefine the first year and adjust the CSA date.
- Furmanite terminated hosting services in January 2007 and later demanded refunds; NextCorp sought a cancellation fee under the CSA for termination without cause.
- The crux was whether the change orders could amend the CSA term, and whether the ambiguity around 'first year of the Agreement' affected the obligation to pay the cancellation fee.
- The trial court granted NextCorp summary judgment on the cancellation fee; the court denied Furmanite’s cross-motion; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can change orders legally amend the CSA term and triggering of the cancellation fee? | Furmanite: change orders cannot amend term; ambiguity exists in the opening paragraph. | NextCorp: change orders modify the CSA term and redefine 'first year' to trigger the fee. | Ambiguity exists; remand for further proceedings; NextCorp's traditional MSJ reversed on this issue. |
| Did NextCorp waive or estop Furmanite from contesting the cancellation fee? | Furmanite: NextCorp’s conduct after termination shows waiver/estoppel. | NextCorp: continued hosting did not waive its right to the fee; no inconsistency. | No waiver or estoppel established; no-evidence MSJ affirmed on these defenses. |
| Was Furmanite entitled to judgment as a matter of law based on amendment arguments via recital language in change orders? | Furmanite: opening recital language cannot amend substantive terms; lacks authority to alter term. | NextCorp: change orders’ language is substantive and controls; recitals are not controlling. | Recitals not controlling; trial court did not err denying Furmanite’s MSJ on this ground. |
Key Cases Cited
- Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985) (traditional summary judgment standard)
- McAfee, Inc. v. Agilysys, Inc., 316 S.W.3d 820 (Tex.App.-Dallas 2010) (summary judgment standard when both sides move)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (no-evidence standard and deference to nonmovant)
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (contract ambiguity and interpretation as a matter of law)
- Hackberry Creek Country Club, Inc. v. Hackberry Creek Home Owners Ass'n, 205 S.W.3d 46 (Tex.App.-Dallas 2006) (ambiguity and contract interpretation)
- Jernigan v. Langley, 111 S.W.3d 153 (Tex. 2003) (waiver elements and intent)
- Fiengo v. Gen. Motors Corp., 962 S.W.2d 507 (Tex. 1998) (equitable estoppel elements)
- Gray & Co. v. Atlantic Housing Found., Inc., 228 S.W.3d 431 (Tex.App.-Dallas 2007) (contract terms presumed known; waiver/estoppel analysis)
- Gardner v. Smith, 168 S.W.2d 278 (Tex.Civ.App.-Beaumont 1942) (recitals and contract scope limitations)
- Simba Ventures Shreveport, L.L.C. v. Rainier Capital Acquisitions, L.P., 292 S.W.3d 173 (Tex.App.-Dallas 2009) (court may determine ambiguity on appeal)