475 S.W.3d 265
Tex.2015Background
- Wildcatting in Bulgaria for coalbed methane involved CBM Energy, Carlton, and two investors; the owner-CBM and Carlton formed a joint venture with Carlton’s funding, later amended; Phillips/EurEnergy entered to supplant Carlton; Crichlow and Huddleston provided market/value analyses; jury awarded Carlton $66.5M actual damages plus $8.6M exemplary damages, later remittitur to $31.16M was accepted.
- CBM sought two-year extension conditioned on $600,000 letter of credit; Carlton funded initial tranche and attempted to fund second, but disputes over timing and conditions arose; Philllips and EurEnergy later acquired control and asserted alter ego relationships; EurEnergy eventually settled with Phillips; ultimate appellate posture involved remittitur and alter ego liability questions.
- Huddleston and Crichlow offered multiple models for valuing Carlton’s 38% stake, but the jury adopted a value ($66.5M) far exceeding those projections; the trial court remitted to $31.16M, and the court of appeals’ posture was partially reversed on damages and alter ego issues.
- The Texas Supreme Court (Tex.App.—Houston [1st Dist.], 2012) affirmed in part, reversed in part, and remanded for further proceedings consistent with its opinion.
- The court ultimately concluded that reasonable certainty does not bar all recovery, but does constrain recovery of damages; it affirmed alter ego liability for CabelTel and Syntek West as acting through EurEnergy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Carlton proved lost profits with reasonable certainty | Carlton argues profits-based value was within market norms | Phillips/defendants contend profits were speculative | Not all damages recoverable; reasonable certainty applies differently for market value proofs but not to bar all recovery |
| Whether the 66.5M value is supported by evidence | Carlton asserts Crichlow/Huddleston support value | Phillips argues evidence is conjectural | Damages not supported by reliable proof; remittitur appropriate to $31.16M under market-values framework |
| Whether evidence supports alter ego liability of CabelTel and Syntek West | EurEnergy’s control by Phillips implicates alter ego | Statutory preemption claims; common law limits and trial mode | Alter ego liability established as a matter of law against CabelTel and Syntek West |
| Whether remittitur was proper | Carlton accepted remittitur to avoid retrial | Damages should be based on verdict | Remittitur upheld in lieu of new trial; issues to be revisited on remand |
Key Cases Cited
- Ford Motor Co. v. Castillo, 444 S.W.3d 616 (Tex. 2014) (loss-of-profits proof must be certain but damages may be remitted)
- Miga v. Jensen, 96 S.W.3d 207 (Tex. 2002) (lost profits require reasonable certainty)
- Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276 (Tex. 1994) (profits must be proven with certainty or market value established)
- White v. Southwestern Bell Tel. Co., 651 S.W.2d 260 (Tex. 1983) (market value and damages principles)