TXU Portfolio Management Co. v. FPL Energy, LLC
328 S.W.3d 580
| Tex. App. | 2011Background
- TXU Portfolio Management Co., L.P. (n/k/a Luminant Energy Co., L.L.C.) sues Wind Farms for deficiency payments for failing to deliver minimum annual renewable energy/credits under three contracts.
- Wind Farms counterclaim that TXUPM breached by not ensuring adequate transmission capacity in the McCamey area, causing ERCOT curtailments.
- Trial court granted Wind Farms’ partial summary judgment on section 2.03 interpretation and held the liquidated-damages clause unenforceable; jury awarded TXUPM some damages but the court later entered a take-nothing judgment based on cover findings.
- Final judgment (trial court): Wind Farms take nothing on damages; TXUPM owe $3.075 million related to letters of credit; court found 2.03 unambiguous to require transmission capacity and liquidated-damages unenforceable.
- On appeal, TXUPM challenges 2.03 construction, declaratory-judgment rulings, and trial-amendment denial; Wind Farms cross-appeals challenging damages and evidentiary rulings.
- The court (a) reverses the trial court’s construction of 2.03, (b) renders that 2.03 does not require TXUPM to provide transmission capacity to deliver Net Energy, and (c) renders the liquidated-damages clause enforceable; (d) affirms take-nothing on damages for Wind Farms and remands for further proceedings to resolve remaining issues
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 2.03 obligates TXUPM to provide transmission capacity | TXUPM argues 2.03 requires transmission capacity as part of delivering Net Energy. | Wind Farms contend 2.03 broadly requires TXUPM to ensure adequate capacity. | TXUPM does not have such obligation under 2.03. |
| Whether the liquidated-damages provision is an unenforceable penalty | Wind Farms contend the $50/MWh deficiency rate is a penalty. | TXUPM asserts the rate is a reasonable forecast of damages. | Liquidated-damages clause is enforceable. |
| Impact of the trial court’s summary judgments on damages and the 2006 deficiencies | TXUPM sought broader damages, including 2006 deficiencies. | Wind Farms argue damages should be limited by prior rulings. | TXUPM abandoned 2006 claims; appellate accord renders remand unnecessary for those aspects; remaining judgment set accordingly. |
| Whether TXUPM was entitled to damages for deficiencies beyond the trial’s scope | TXUPM contends damages should reflect defined deficiencies. | Wind Farms dispute broader damages. | Remanded for further proceedings consistent with 2.03 and enforceability ruling. |
Key Cases Cited
- MCI Telecommunications Corp. v. Texas Utilities Elec. Co., 995 S.W.2d 647 (Tex.1999) (contract interpretation; unambiguous contracts construed by plain meaning)
- Vincent v. Bank of America, N.A., 109 S.W.3d 856 (Tex.App.-Dallas 2003) (interpretation; consider writing as a whole; extrinsic evidence limited)
- Coker v. Coker, 650 S.W.2d 391 (Tex.1983) (intent of the parties; enforce contract as written)
- National Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517 (Tex.1995) (use of surrounding circumstances in contract interpretation)
- Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726 (Tex.1982) (contract interpretation; surrounding circumstances permissible)
- Maxus Exploration v. Moran Bros., Inc., 773 S.W.2d 358 (Tex.App.-Dallas 1989) (specific language controls over general terms)
- Murphy v. Cintas Corp., 923 S.W.2d 663 (Tex.App.-Tyler 1996) (difficulties in estimating damages; enforceability of liquidated damages)
- Baker v. International Record Syndicate, Inc., 812 S.W.2d 53 (Tex.App.-Dallas 1991) (liquidated damages; reasonableness and estimation of harm)
- Fluid Concepts, Inc. v. DA Apartments Ltd., P'ship, 159 S.W.3d 226 (Tex.App.-Dallas 2005) (penalty vs. liquidated damages; burden of proof)