Permian Power Tong, Inc. v. Diamondback E&P, LLC
550 S.W.3d 642
| Tex. App. | 2017Background
- Diamondback hired Permian under a Master Services Agreement (MSA) to install intermediate casing at the Barron SW 14-11 well; casing later registered deformations on a caliper log and the well was plugged and abandoned.
- J&W Casing Inspection and the pipe mill certified and drift-tested the casing onsite before installation; manufacturer’s mill test report indicated the pipe met specifications.
- Caliper logs showed repeated, similarly located pinch/deformation marks from ~2,700' to surface at roughly 45-foot intervals; Diamondback’s expert blamed Permian’s slips/spider during installation; Permian offered alternative manufacturing and other theories.
- Diamondback sued for negligence and breach of contract; it nonsuited negligence and tried breach of contract to a jury. Jury found breach and awarded remedial and replacement damages totaling $824,137.97.
- Trial court awarded trial and conditional appellate attorney’s fees; on appeal the court affirmed liability and most damages, but (1) found replacement damages slightly excessive and suggested a remittitur of $13,588.64, and (2) found the trial attorney-fee award required segregation and remanded that portion for recalculation.
Issues
| Issue | Diamondback's Argument | Permian's Argument | Held |
|---|---|---|---|
| Legal/factual sufficiency of breach finding | Permian’s slips/spider caused consistent deformations; pre‑installation tests and manufacturer reports showed no prior defects. | Testimony was circumstantial, speculative, and other explanations (manufacturing/bucking machines) were plausible; no eyewitness proof of breach. | Evidence was legally and factually sufficient to support breach under broad‑form submission; jury could credit Diamondback’s expert. |
| Causation & mitigation | Diamondback reasonably attempted remediation (various tools, caliper log, milling) and plugging/abandoning was economical and safe. | Diamondback exacerbated damages by milling and should have used less invasive measures or allowed Permian to extricate pipe. | Diamondback’s mitigation efforts were reasonable; Permian’s mitigation arguments rejected. |
| Admissibility of vendor invoices (Exhibit 60A) | Invoices and summary supported claimed damages; summary admitted without objection and other testimony corroborated totals. | Exhibit lacked proper business‑records foundation; admission was error. | Any error harmless because similar evidence and summaries were admitted without objection. |
| Quantum of replacement damages | Invoices and summaries proved replacement drilling costs to point equivalent to abandonment; damages run until replacement well reached same phase. | Damages ceased earlier (Sept. 27 or Sept. 29, 2013); jury award included unrecoverable production‑phase costs. | Some evidence supported damages but award overstated by $13,588.64; court suggested remittitur to reduce replacement damages accordingly. |
| Attorneys’ fees (trial and appellate) | Caraway’s affidavit and detailed invoices, plus lodestar/Arthur Andersen factors, supported trial and appellate fees; appellate fees were uncontroverted. | Billing statements contained block billing, late invoices, unrelated work; failed segregation of unrecoverable fees. | Appellate‑fee award upheld as supported; trial‑level fee award must be remanded to segregate and exclude fees that do not advance recoverable claims. |
Key Cases Cited
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standard for legal sufficiency review and deference to jury credibility findings)
- Wal–Mart Stores, Inc. v. Spates, 186 S.W.3d 566 (Tex. 2006) (definition of more than a scintilla of evidence)
- Cain v. Bain, 709 S.W.2d 175 (Tex. 1986) (standard for factual sufficiency/reweighing evidence)
- Caprock Inv. Corp. v. Montgomery, 321 S.W.3d 91 (Tex. App.—Eastland 2010) (elements of breach of contract claim)
- Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106 (Tex. 2009) (remittitur procedure when some evidence supports lesser damages)
- Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (attorney‑fee segregation rule)
- El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex. 2012) (trial court discretion and proof needed for attorney’s fees)