Uri, Inc. v. Kleberg Cnty.
543 S.W.3d 755
| Tex. | 2018Background
- URI, Inc. and Kleberg County executed a 2004 Settlement Agreement resolving litigation over URI's uranium mining; section 11.1 conditioned resumption of mining in PAA 3 on certification that certain PAA 1 wells were "returned to suitability" if they had been suitable before PAA 1 mining began.
- Section 11.1(1)(ii) requires certification that 90% of combined baseline wells in PAA 1 and other sampled wells "whose water was suitable on a well-by-well basis before URI's mining in PAA 1 ... has been returned to suitability."
- Thirty-nine wells had pre-mining baseline data; all but one (Well I-11) were indisputably unsuitable pre-mining. Well I-11 had a 1985 sample showing suitability for irrigation and a 1987 sample showing unsuitability; URI averaged the two and concluded I-11 was not pre-mining suitable.
- Kleberg County argued the 1987 data should be disregarded (not "available" at contract execution) and that the 1985 data alone establishes a restoration obligation; the trial court and court of appeals agreed and found breach limited to Well I-11.
- The Texas Supreme Court reviewed whether the lower courts improperly used extrinsic evidence of the County's subjective intent to construe an unambiguous contract term and whether the 1987 baseline data could be considered under the contract.
Issues
| Issue | Kleberg County's Argument | URI's Argument | Held |
|---|---|---|---|
| Whether surrounding facts/circumstances may be used to alter unambiguous contract language | County: Surrounding circumstances (commissioners' meeting, knowledge of 1985 data) show parties intended only 1985 data be used, so 1987 data is excluded | URI: Contract language is plain; "baseline" and "before URI's mining" allow consideration of the 1987 data (and averaging) | Court: Extrinsic evidence cannot be used to add to or change unambiguous language; lower courts erred relying on subjective intent evidence |
| Whether the 1987 baseline data (alone or averaged with 1985) can be used to determine pre-mining "suitability" | County: "Available" in contract means publicly available/known at execution, so 1987 excluded; 1985 alone requires restoration of I-11 | URI: 1987 is valid baseline accepted by TCEQ; contract does not limit which baseline data may be considered, so 1987 (and averaging) is permissible | Court: Section 11.1 does not limit baseline data; 1987 data validly considered; URI did not breach by relying on it |
| Whether extrinsic evidence can be used to create or expose ambiguity to rewrite contract terms | County: Evidence of commissioners' expectations shows a guaranteed substantive result (at least one well would be restored) | URI: Only objective, contextual evidence may inform meaning; parties' subjective motives cannot alter text | Court: Only objective surrounding circumstances that interpret, not change, language are admissible; subjective intent cannot be used to rewrite the agreement |
Key Cases Cited
- First Bank v. Brumitt, 519 S.W.3d 95 (Tex. 2017) (surrounding circumstances may inform unambiguous contract language but cannot make it say what it does not)
- Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517 (Tex. 1995) (extrinsic evidence impermissible to contradict clear policy language; latent ambiguity inquiry is a question of law)
- City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515 (Tex. 1968) (objective intent controls; words are construed in context)
- Sun Oil Co. v. Madeley, 626 S.W.2d 726 (Tex. 1981) (surrounding circumstances can aid construction but cannot be used to vary clear contract terms)
- Gilbert Texas Constr., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118 (Tex. 2010) (interpretation focuses on parties' objective expressions; dictionary/industry usage may inform meaning)