WPS, INC., Appellant, v. EXPRO AMERICAS, LLC, Appellee. Surface Production Systems, Inc., Cross-Appellant, v. WPS, Inc., Cross-Appellee.
No. 01-10-00041-CV.
Court of Appeals of Texas, Houston (1st Dist.).
Jan. 31, 2012.
Rehearing Overruled May 29, 2012.
369 S.W.3d 384
TERRY JENNINGS, Justice.
Having sustained in part and overruled in part Appellants’ first issue, having sustained in part and overruled in part Appellants’ second issue, and having not reached the remainder of Appellants’ issues, we reverse the portion of the trial court‘s judgment relating to Druce Properties‘s claims against Matlock Place and render judgment that Druce Properties take nothing against Matlock Place. We also reverse the remainder of the trial court‘s judgment and remand this case for a new trial consistent with this opinion.
DAUPHINOT, J. dissents without opinion.
Patricia Hair, Phelps Dunbar, LLP, Houston, TX, for Appellee.
Panel consists of Justices JENNINGS, HIGLEY, and BROWN.
OPINION
TERRY JENNINGS, Justice.
Appellant/cross-appellee, WPS, Inc. (“WPS“), challenges the trial court‘s take-nothing judgment, entered after a jury trial, against it and in favor of appellee, Expro Americas, LLC (“Expro Americas“), in WPS‘s suit against Expro Americas and its subsidiary, appellee/cross-appellant, Surface Production Systems, Inc. (“SPS“), for breach of contract, quantum meruit, and promissory estoppel. In its sole issue, WPS contends that the trial court erred in granting Expro Americas judgment notwithstanding the verdict on the ground that there is no evidence supporting the jury‘s findings against Expro Americas.
Expro Americas, in its cross-points,1 challenges the jury‘s findings made against it, and it joins SPS, in SPS‘s cross-appeal, challenging the trial court‘s judgment entered against SPS on WPS‘s claims. In eight issues, Expro Americas and SPS contend that there is no evidence that there was an enforceable contract between them and WPS for the purchase of specially made equipment, Expro Americas and SPS‘s requirement in its purchase orders that they first issue a “release to proceed” before WPS was to make the “specialized equipment” rendered any promise “illusory,” the requirement of the issuance of a “release to proceed” constituted a “condition precedent,” the “progress payment and cancellation charges” awarded to WPS by the jury are not legally recoverable damages on WPS‘s breach-of-contract claim, the trial court erred “in commenting on the evidence and erroneously instructing the jury as to contract interpretation,” there is no evidence to support WPS‘s quantum meruit or promissory estoppel claims, and the trial court erred in not admitting into evidence Expro Americas and SPS‘s pretrial offers to WPS to “pay cancellation charges.”
Factual and Procedural Background
In early 2006, SPS, a wholly-owned subsidiary of Expro Americas, was involved in negotiations with Conoco Venezuela to work on the development of an oil and gas field in Venezuela. In furtherance of this proposed development, SPS solicited WPS, which was in the business of making gas compressors, for a proposal to construct three gas injection compressor packages to be installed at an offshore Interim Production Facility (the “IPF“) for the temporary processing of crude oil.
Following preliminary negotiations between the parties, Tom Caime, WPS‘s engineering supervisor, submitted to SPS on April 10, 2006 a proposal for the delivery of three gas compressor packages with a total net price of $4,143,066 and an estimated “ship date” of “20-22 weeks after order acceptance by an officer of WPS.” Caime set forth detailed “terms of payment” with 10% of the purchase price due “[u]pon WPS[‘s] acceptance of order,” a cancellation charge of “2% of contract value” if the order was cancelled “within 30 calendar days,” and separate charges payable to certain providers of component parts, including $27,000 for Reliance, the proposed supplier of the motors, and $107,000 for Dresser-Rand, the proposed supplier of the compressors. Caime noted that WPS‘s proposal was subject to its “standard terms and conditions of sale,” which he attached, and the “Crine/Logic terms and conditions,” which had been previously provided to WPS by SPS, were “currently under review.”
On April 11, 2006, Kevin Galvin, SPS‘s vice president, sent WPS a letter expressing “Expro‘s” “intent to issue a Purchase Order” for the three injection compressors for a total price of $4,143,066, but requiring that delivery be “on or before September 5, 2006.” In regard to “[p]ayment [t]erms,” Galvin provided that $217,361 would be paid “on submittal of mechanical installation drawings” and 10% would be paid upon obtaining a “Release to Proceed (to be before [May 11, 2006]).” Galvin noted that terms and conditions were “to be agreed” upon and a “[c]onfirming [p]urchase [o]rder” would be issued “on or before ... April 17, 2006.”
On April 12, 2006, Caime, in response to “Expro‘s” “letter of intent,” sent Galvin a reply e-mail stating that WPS needed an “immediate Release to Proceed” before it could begin work and “order the critical equipment without which the price and delivery of our supply will be extended.” Caime noted that “any delay in the purchase” would cause “the supply of [the] packages [to] suffer,” WPS could not order equipment without the Release to Proceed, and it could not “proceed very far with engineering and design without vendor drawings, studies, and data that are not forthcoming without our purchase of that equipment.” Caime explained that the Dresser-Rand compressor price that WPS used in its proposal was set to expire the next day, a price increase would apply afterwards, and other “vendor proposals” would also expire before the “suggested [May 11] date.” Caime requested other “modifications” to the letter of intent, including a shipping date calculated 20 to 22 weeks from acceptance of “written” and “firm” purchase order, “cancellation charges as noted in [WPS‘s] proposal,” and terms of payment of 10% “with purchase order” and 10% on submittal of “approval drawings.” Caime requested an agree-
On April 12, 2006, Galvin, in a reply e-mail to Caime, stated that WPS was “released to proceed on the order subject to” the conditions that “[i]f [the] order [is] cancelled on or before May 11, 2006, ... Expro‘s financial liability is the cancellation charges per your proposal” and the terms and conditions “need to be agreed for the [purchase order].” Galvin agreed to “incorporate [WPS‘s] payment terms into the [purchase order]” and noted that he “plan[ned] to issue” the purchase order the next day, but was “waiting” on “approval.” Caime immediately responded with an e-mail stating that WPS would “await [SPS‘s] purchase order tomorrow” and “order the capital equipment immediately thereafter.”
Also on April 12, 2006, Griselda Ibarra, a SPS business analyst, sent Caime an e-mail with an attached purchase order (the “first purchase order“). She stated that the first purchase order was being provided “to proceed with the purchase of the [g]as [i]njection [c]ompressors.” The first purchase order provided for a delivery date of September 12, 2006, a total net price of $4,143,066 for the purchase of three gas injection compressor packages, a “[d]eposit to secure the delivery of the specified equipment in order to meet the Project schedule” in the amount of $414,307 (10% of the total purchase price) that would be payable “[u]pon [a]cceptance of this [o]rder,” and the payment of another 10% “[u]pon submittal of [d]rawings and Release to Proceed (to be on or before [May 8, 2006]).” It further provided that the order would be “subject to mutual agreement of [t]erms and [c]onditions between WPS and Expro” and “valid until [May 8, 2006] unless Expro issue[d] a revised [p]urchase [o]rder to proceed.”
On April 13, 2006, Tom Sawyer, responding by e-mail to Galvin on behalf of WPS regarding the first purchase order, explained that WPS could not accept the first purchase order “in its present form and content” and the parties “must resolve these issues today before 2:00 p.m. or risk missing the deadline for the Dresser-Rand price increase.” Sawyer also forwarded Galvin an e-mail from Caime wherein he provided more detail about WPS‘s concerns. In this e-mail, Caime noted that the delivery date should instead be September 14, 2006 (22 weeks from April 13, 2006); the “order amount” was insufficient in that it covered only 10% of the order value and did not “cover the cost of the equipment“; and the first purchase order provided for the payment of the “second 10%” “only after” WPS received a release to proceed, which would not allow WPS to “get paid for the drawings.” Caime further noted that the first purchase order was set to “expire[] on May 8th” and contained “no specific mention of cancellation charges.” Caime explained that WPS would “have to order a lot of material before May 8, [2006]” to satisfy the purchase order and comply with the delivery date and there would “be other charges from vendors that [would] also apply.” Caime stated that WPS needed to obtain an agreement “today” before WPS ordered the motors and compressors, the purchase order “ha[d] to be for the full amount of $4,143,066,” and WPS “ha[d] to have a full release subject to the cancellation charges stated in [WPS‘s] proposal and other [substantiated] costs.” Caime explained that WPS needed these agreements “today,” otherwise, WPS would have to wait until May 8th and “rebid this thing to SPS.”
However, later that same day, Caime, in regard to the first purchase order, sent Ibarra another e-mail stating that the first purchase order was “limited to the purchase of the gas compressors,” it was “ac-
Also on April 17, 2006, Sawyer sent Galvin an e-mail stating that WPS expected to receive a revised purchase order with a “full release to proceed.” On April 18, 2006, Ibarra sent Caime a revised purchase order (the “second purchase order“), which contained the revisions concerning the price and the cancellation fees, but retained a delivery date of September 12, 2006 and the total price of $4,143,066. The second purchase order further stated that “Expro‘s liability for cancellation of the order on or before [May 8, 2006] [would be] $217,361.32,” it would be subject to mutual agreement to terms and conditions, $414,307 (10% of the total price) would be payable “[u]pon [a]cceptance of this [o]rder,” another 10% would be payable “[u]pon submittal of [d]rawings and Release to Proceed (to be on or before [May 8, 2006],” and it would be “valid until [May 8, 2006] unless Expro issue[d] a revised Purchase Order to proceed.”
On April 18, 2006, Caime circulated the second purchase order to others at WPS, noting that there were “still problems” regarding the May 8, 2006 “cessation date” and the “limitation of charges for cancellation.” He explained that if the order was “acceptable today,” the delivery date should instead be September 19, 2006. Detailing the cancellation charges that would be calculated on May 8, 2006 from Dresser-Rand, Reliance, and WPS, which totaled $189,449, Caime noted that the proposed cancellation liability of $217,361 was “not enough.” He explained that this would “not cover” WPS for “coolers, valves, pipe, studies, etc.” if WPS was to “proceed diligently from this point,” but it “would be OK if [WPS] only did engineering and no further procurement until” obtaining a full release. If that were the case, a delivery date would have to be calculated after May 8, 2006. Caime concluded that if WPS “act[ed] towards a September delivery then [WPS] need[ed] a statement that ‘all valid costs associated with cancellation will be to [SPS‘s] account,’ or [WPS] should do only engineering until the release date.”4
It is undisputed that SPS did not issue a revised purchased order by April 28, 2006.5 Nevertheless, communications continued between the parties about outstanding matters associated with the project. On May 2, 2006, Sawyer sent Finol an e-mail as a “reminder that a response to [WPS‘s] list of deficiencies to the Expro/SPS Purchase Order” and a full release was “[d]ue on May 8, 2006” and the parties needed to establish a date the next week for a project “kick off” meeting.
On May 5, 2006, representatives of SPS, including Finol, and WPS, including Caime and Sawyer, met at “Expro‘s” office in Houston for the “Gas Injection Compressor Kick Off Meeting.” Finol recorded the minutes of this meeting, which reflect, among other things, that Caime was “handling over from Proposal to the Project Stage” and Matt Hulin had been assigned as the WPS Project Manager. The minutes also reflect that a project schedule was to be issued “on Monday,” a “vendor data list and status” was to be issued the “next week,” and the compressor delivery days were scheduled for September 7, 14, and 21. The minutes further reflect that WPS informed the parties that “design ha[d] not yet initiated,” SPS had “express[ed] concerns about the Engineering being [three] weeks late,” and WPS had “express[ed] that they [would] meet the due date.” On May 8, 2006, the parties traded further e-mails about project specifications. Hulin then sent Finol a letter
mail, Sawyer agreed with Caime‘s comments, but noted that Sawyer had been “assured by Nelson Oliveros” of Conoco that, in the event “the Expro Group” cancelled the order, WPS would “be made whole” as Conoco would “purchase the units direct from WPS or pay all cancellation charges.” Sawyer recommended accepting the second purchase order so that the equipment could enter the “production schedule ASAP,” and he noted that he would contact the “Expro [G]roup” regarding cancellation costs. Although SPS makes arguments in its appellate briefing concerning this alleged promise from Conoco, there are no claims against Conoco before us.
On May 9, 2006, Ibarra sent Caime another revised purchase order (the “third purchase order“), in which Expro noted that the dates in the second purchase order had been changed. The third purchase order provided for a delivery date of September 21, 2006, reflected a total purchase price of $4,143,066, stated that “Purchaser gives his full release to proceed and will pay all valid costs associated with any order cancellation,” noted that the order was “subject to mutual agreement of [t]erms and [c]onditions between WPS and Expro,” provided for payment of $414,307 “[u]pon [a]cceptance of this [o]rder,” provided for the payment of another 10% “[u]pon submittal of [d]rawings and Release to Proceed (to be on or before [May 11, 2006]),” and stated that the order was “valid until [May 11, 2006] unless Expro issue[d] a revised purchase order to proceed.” A May 9, 2006 WPS internal e-mail reflects that the third purchase order complied in some respects with WPS‘s order acceptance form but did not comply in all respects because “the full release date has been extended” to May 11, 2006. As is detailed below, the parties then subsequently traded e-mails regarding project specifications, drawings, and other matters relevant to the project.
In response to an SPS inquiry, Sawyer, on May 12, 2006, sent Galvin an e-mail detailing, as of June 2, 2006, the “Major Equipment Cancellation Charges,” including $325,000 for the motors and at least $160,000 for the compressors. He also noted that he was waiting on information from the cooler vendor. On May 16, 2006, Finol sent Sawyer an “official notice” that the purchase order had “been cancel[led].” Finol instructed WPS to “stop all the work that is going on now and prepare and submit the cancellation fees as of today.” He also apologized for “all the problems” that the cancellation may have caused.
WPS, on May 20, 2006, sent SPS an invoice detailing “valid costs associated with order cancellation per executed purchase order” and “payment of cancellation fee” per the purchase order. The invoice reflected costs associated with cancellation, including $139,008 for the Dresser-Rand compressors, $292,340 for the Reliance Motors, and $9,928 for the Amercool Process Coolers, for a total of $441,276. The invoice further reflected a “cancellation fee” of $414,306.60.
SPS then filed against WPS a declaratory judgment action regarding its “rights and duties with respect to WPS in relation to the purchase of gas compressor packages.” Expro Americas subsequently intervened in the suit. SPS alleged that the parties had failed to reach an agreement on the terms and conditions of a contract; no contract existed between them; if a contract existed, it was based on the April 10, 2006 proposal; the cancellation fee of $217,361.32 was the amount owed to WPS; the terms of any contract were ambiguous; and it was SPS‘s intent to only pay cancellation fees in the event of cancellation. WPS then filed its answer and counterclaims against Expro Americas and SPS for breach of contract, quantum meruit, and promissory estoppel.
After trial, in regard to WPS‘s breach-of-contract claim, the jury found that Expro Americas and SPS had agreed to purchase three gas injection compressors from WPS for $4,143,066 “with a payment ... of 10% on acceptance” and “all valid costs resulting from order cancellation.” The jury further found that both Expro Americas and SPS had failed to comply
Liability of Expro Americas
In its sole issue, WPS argues that the trial court erred in granting Expro Americas judgment notwithstanding the verdict because Expro Americas issued two “relevant purchase orders,” it is “identified as the decision-making entity in the three other purchase orders issued by its subsidiary [SPS],” its “name appears throughout written correspondence between” the parties, it issued the “full release to proceed” to WPS, and it “agreed to be responsible to WPS for damages caused by order cancellation.”
In response, Expro Americas asserts that there is no evidence that it was a party to any agreement with WPS, the negotiations and purchase orders “were between employees of SPS and WPS ex-
clusively,” the name “The Expro Group” is a trade name and does not refer to a specific company, the reference to Expro Americas in the third purchase order7 “was a clerical error,” and Kevin Galvin signed the third purchase order on behalf of SPS and had no authority to sign it on behalf of Expro Americas.
A trial court may grant a motion for judgment notwithstanding the verdict if a directed verdict would have been proper.
To determine whether there is sufficient evidence to support the jury‘s findings
The first and second purchase orders identify the purchaser as SPS and contain the contact information for SPS, but also include references to Expro. Significantly, the third purchase order identifies “Expro Americas, Inc.” as the purchaser, includes references to “Expro” and SPS, and contains the contact information for “Expro Americas.” The third purchase order was sent to WPS with a cover letter stating that it was being sent by Griselda Ibarra, a business analyst for SPS, who described it as a “revised” order. Like the first two purchase orders, the third purchase order, within its terms, referred to “Expro” without making any distinction concerning which particular corporate “Expro” entities were involved in the transaction. Following cancellation of the project, WPS submitted its invoice to Kevin Galvin at SPS.
The undisputed evidence at trial reveals that Expro Americas is SPS‘s parent company and the “Expro Group” is a “trade name.” Eric Nelson, who is Expro Americas‘s in-house counsel, but who also appeared as SPS‘s corporate representative at trial, stated that Expro Americas had “no involvement whatsoever with this project” because it “is an upstream oil and gas service company” that provides services like well testing, wireline work, and subsea well intervention—“[t]hings that are unrelated to engineering production facilities.” In regard to the third purchase order, which is the critical contractual document in this case, Nelson testified that Ibarra had mistakenly printed it on an Expro Americas form and it should have instead been printed on an SPS form. Although Expro Americas asserts that the jury could not disregard this evidence, neither it nor SPS offered any detailed evidence to explain how Ibarra, who was allegedly only an employee of SPS, could have accidentally accessed and used Expro Americas‘s purchase orders. Additionally, as discussed below, neither Expro Americas nor SPS offered any reasoned explanation as to why other high-level Expro Americas and SPS personnel who reviewed the purchase order had failed to alert anyone that the transacting party was SPS and not Expro Americas, at least until the dispute arose.
In addition to the fact that Expro Americas is the contracting party identified in the third purchase order, WPS contends that it presented evidence that the term “Expro,” as used in other correspondence, purchase orders, and documents, could have been used to refer to “Expro Americas.” WPS asserts that “the documents issued from the SPS/Expro Americas side of the negotiations created confusion be-
Although Expro Americas presented some contrary evidence, legally sufficient evidence supports the jury‘s findings that Expro Americas was a contracting party. As noted above, the third purchase order, which is the most important contractual document in this case and which provided WPS with the important “release to proceed,” expressly identifies “Expro Americas Inc.” as the purchaser. It also includes the contact information for Expro Americas and contains other references to Expro. Tom Sawyer of WPS testified that when WPS received the third purchase order, WPS “noticed” the identity of the contracting party. Sawyer explained that “on one they use SPS, and the other they use Expro. The[y] use them interchangeably and together.” Sawyer further explained that when WPS received the third purchase order, WPS did not call and ask “where‘s SPS.” The identification of Expro Americas as the contracting party, he explained, was not a concern because “continually it was SPS/Expro Group” throughout the parties’ dealings. The jury could have considered Sawyer‘s testimony as evidence that the identification of Expro Americas as the purchaser in the third purchase order was consistent with WPS, SPS, and Expro Americas‘s prior business practices of treating both Expros Americas and SPS as parties contracting with WPS.
Tom Caime of WPS similarly testified that he considered the contracting entity “to be one entity, Expro/SPS” because “[t]hat‘s how they presented themselves. That‘s how their paperwork was. Their e-mails [were] interchangeable.” Caime stated that he “didn‘t see any distinction” between the companies. When asked about who he believed Galvin represented in his communications, Caime noted that because he had seen Galvin‘s name on “Expro” and SPS documents, he “assume[d] [Galvin] represent[ed] whatever piece of paper he sends me.” Although Expro Americas asserts that “Expro,” when used in the general sense, could have referred only to the “Expro Group” and not “Expro Americas,” it has not cited any evidence conclusively establishing this assertion. Again, although there is evidence that the “Expro Group” is a trade name, and although Nelson‘s testimony may suggest that this trade name refers to a group of “Expro” companies and not to any specific company, there is no conclusive evidence that use of the terms “Expro Americas” and “Expro” in the relevant communications and purchase orders exclusively referred only to SPS or the Expro Group and not Expro Americas.
WPS also presented evidence of another purchase order that was issued to another vendor on the IPF project. This order, like the third purchase order issued to WPS, identifies “Expro Americas, Inc.” as the contracting party. The jury could have considered this order in evaluating Expro Americas‘s assertion, and specifically the credibility of Nelson‘s testimony, that Expro Americas had no involvement in the IPF project. The jury could have also considered this evidence in rejecting Expro Americas‘s argument that any general reference to Expro in the transactional documents could only have referred to SPS or the trade name “Expro Group” and not Expro Americas.
Moreover, Nelson admitted that SPS had never submitted a corrected third
Breach of Contract
In their first issue, Expro Americas and SPS argue that they did not enter into an enforceable contract to purchase equipment from WPS because there is no evidence that WPS accepted an offer from SPS, the evidence conclusively establishes that there was no meeting of the minds between the parties, and material terms were left open for future negotiation. In their second and third issues, Expro Americas and SPS argue that the “requirement” that they had to first provide WPS with a “release to proceed” prevented the formation of an enforceable contract because this requirement “rendered any promise illusory” and was a “condition precedent to liability or performance of any agreement.”
We will sustain a legal-sufficiency or “no-evidence” challenge if the record shows one of the following: (1) a complete absence of evidence of a vital fact, (2) rules of law or evidence bar the court from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence establishes conclusively the opposite of a vital fact. City of Keller, 168 S.W.3d at 810. In conducting a legal-sufficiency review, a “court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it.” Id. at 822. If there is more than a scintilla of evidence to support the challenged finding, we must uphold it. Formosa Plastics Corp. USA v. Presidio Eng‘rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex.1998). “‘[W]hen the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence.‘” Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex.2004) (quot-
jury, their evidence that Galvin was an SPS employee. They suggest that this evidence necessarily establishes that Galvin lacked the authority to bind Expro Americas. However, as outlined above, WPS presented evidence that (1) the third purchase order is on Expro Americas‘s letterhead and, as such, identifies Expro Americas as a contracting party, (2) the third purchase order was received and reviewed by several representatives of Expro Americas and SPS, including Galvin and Nelson, who would have know whether the issuing of the third purchase by Expro Americas was a “mistake,” (3) there is no evidence that anyone at Expro Americas or SPS raised this alleged mistake until much later and after the dispute arose, (4) prior to the issuance of the third purchase order, the parties had used “Expro” generally throughout their correspondence and dealings and neither Expro Americas nor SPS made any efforts to clarify the identity of the contracting party, (5) the testimony that Expro Americas did not engage in the type of work at issue was contradicted by other purchase orders issued by Expro Americas in conjunction with the project, and (6) Expro Americas‘s explanation for this alleged mistake was very limited, even though Expro Americas was the only party that could have offered further admissible evidence on this matter. Thus, although Expro Americas and SPS did present evidence that Galvin was an SPS employee, the jury could have reasonably believed that when Galvin signed the third purchase order, he had the actual or apparent authority to bind Expro Americas. In light of this contextual evidence, the jury was not required to accept the evidence that the third purchase order was issued by mistake and signed by a representative that lacked the authority to bind Expro Americas.
In conducting a factual-sufficiency review, we must consider, weigh, and examine all of the evidence that supports or contradicts the jury‘s determination. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.1989); London v. London, 192 S.W.3d 6, 14-15 (Tex.App.-Houston [14th Dist.] 2005, pet. denied). We may set aside the verdict only if the evidence that supports the jury‘s finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong or unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); Nip v. Checkpoint Sys., Inc., 154 S.W.3d 767, 769 (Tex.App.-Houston [14th Dist.] 2004, no pet.).
The jury found that Expro Americas and SPS agreed to purchase three gas injection compressors from WPS for $4,143,066 “with a payment ... of 10% on acceptance” as well as “all valid costs resulting from order cancellation,” both Expro Americas and SPS failed to comply with the agreement, and WPS was entitled to $855,342.55 in damages. The elements of a valid contract are “(1) an offer, (2) an acceptance, (3) a meeting of the minds, (4) each party‘s consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding.” DeClaire v. G & B McIntosh Family Ltd. P‘ship, 260 S.W.3d 34, 44 (Tex.App.-Houston [1st Dist.] 2008, no pet.). The determination of a meeting of the minds, and thus offer and acceptance, is based on the objective standard of what the parties said and did and not on their subjective state of mind.10 Baroid Equip., Inc. v. Odeco
The testimony of the witnesses and the documents in the record reveal that, during the course of the negotiations between the parties spanning April and May 2006, Expro Americas and SPS were generally attempting to limit their commitment to WPS until they could obtain firmer commitments from Conoco, but, at the same time, Expro Americas and SPS were seeking to ensure that, in the event the construction of the IPF proceeded, they could satisfy the deadlines imposed by Conoco. In contrast, WPS was attempting to solicit firmer commitments from Expro Americas and SPS because, in order to provide them with delivery of the compressor packages by the required September time frame, WPS needed to both order component parts and also commence its own work. As a result of these conflicting positions and interests, the number of documents relevant to the formation of the contractual relationship is substantial.
As early as April 13, 2006, WPS informed Expro Americas and SPS that, pursuant to the first purchase order, it was compelled to order the compressors from Dresser-Rand. This evidence, together with the evidence establishing that the parties had subsequently acknowledged that the compressors had been ordered and there would be cancellation charges, supports an implied finding that the parties had a meeting of the minds at least with respect to that portion of the purchase order. The evidence establishes that WPS ordered the compressors to avoid a price increase that would have been passed to Expro Americas and SPS, WPS communicated this fact to them, and they raised no objections. In fact, subsequent documents, including the minutes of the kick-off meeting, which was held at the “Expro” location, support an implied finding that Expro Americas and SPS consented to this action. Moreover, after third purchase order was cancelled, Waldemar Finol, on behalf of “The Expro Group-SPS Inc.,” instructed WPS to both stop work and submit cancellation charges, thus acknowledging that the parties had a contractual relationship for both the timely acquisition of equipment and the performance of work. Thus, contrary to Expro Americas and SPS‘s assertion, there is ample evidence that the parties entered into an enforceable contract.
In regard to whether the parties entered into a contract on the terms that the trial court submitted to the jury, we note that the evidence supports an implied finding that, at a minimum, the parties, following the issuance of the first purchase order, entered into a contract regarding the purchase of certain component parts and the payment of cancellation charges. Thereafter, WPS replied with a conditional acceptance to the second purchase order. WPS also stated that its conditional acceptance depended upon the receipt of a revised purchase order by April 28, 2006. Although it is undisputed that Expro Americas and SPS did not issue a revised purchase order by this date, the evidence in the record reveals that the parties continued their discussions and negotiations over those matters that had yet to be resolved. Written communications reveal that the parties operated as if they had
do not directly address the parties’ dispute regarding the applicability of these provisions to our appellate review because we conclude that, under the charge as given, sufficient evidence supports the jury‘s findings.
Expro Americas and SPS submitted their revised third purchase order on May 9, 2006, agreeing in writing to virtually all of the matters that had remained unresolved to that date. They, for the first time, agreed upon the delivery date of September 21, 2006, which WPS had previously demanded. And the record supports an implied finding that, even before May 9, 2006, the parties were operating with the understanding that the September 21, 2006 delivery date controlled and WPS was already performing its work even though Expro Americas and SPS had waited several weeks to issue the revised third purchase order.11 Second, and most impor-
tantly, Expro Americas and SPS provided in the third purchase order a “full release to proceed” and agreed to “pay all valid costs associated with any order cancellation.” In his testimony, Galvin conceded that the term “Release to Proceed” “basically means that one party is in agreement,” authorizing the other party to go forward. Galvin also stated that it would be fair to interpret the “Release to Proceed” language as authorizing WPS to “immediately” go forward. The evidence indicates that WPS had previously sought the release to proceed so that it could “diligently” perform its obligations under the contract. The jury could have reasonably concluded that WPS, having now obtained the release in the third purchase order and Expro Americas and SPS‘s promise to pay cancellation charges and a 10% initial payment, was contractually obligated to perform and meet the delivery date. And, the third purchase order specifically included the requested payment terms of WPS.
One potential issue that remained was that Expro Americas and SPS had not stricken the language that the order was valid until May 11, 2006 unless “Expro” issued a revised “purchase order to proceed.” And Expro Americas and SPS did not alter the language that the second 10% payment would not be made until they provided a release to proceed. However, neither of these matters would have precluded the formation of an enforceable contract for the terms stated. As noted above, the third purchase order contained an unconditional release to proceed. Additionally, there is no evidence that Expro Americas and SPS ever issued another revised order affecting the validity of the
in the third purchase order. Thus, the jury could have reasonably inferred that WPS‘s work had to have commenced before May 9, 2006.
WPS presented sufficient evidence that it relied upon the third purchase order to continue its work so that it could furnish Expro Americas and SPS the compressor packages by the agreed upon delivery date. For example, on May 9, 2006, Ibarra sent WPS representatives “specifications, drawings, and datasheet[s]” relevant to the compressors. On May 10, 2006, Hulin e-mailed Finol the “preliminary General Arrangement Drawing for the Expro Project,” and Hulin solicited Finol‘s general comments and recommendations on the “overall layout” as well as location of the “Variable Volume Pockets for the Cylinders” in relationship to the “edges of the skid.” The jury could have reasonably found that this evidence established that WPS was proceeding diligently in performing its duties under the contract. On May 11, 2006, Hulin sent Finol an e-mail inquiring about technical issues associated with the “attachment system for the compressor skid to the barge floor.” On May 12, 2006, Hulin furnished Expro Americas and SPS with an updated project schedule and vendor document delivery schedule. The record contains numerous other e-mails and documents illustrating that WPS, throughout this time frame, was performing services under the contract by ordering component parts and working with vendors. On May 12, 2006, in response to Galvin‘s inquiry about possible cancellation charges, Williamson at WPS stated that it was ordering “I beams today” so “cancellation charges” were “increasing.” Sawyer then e-mailed Galvin, asking that he “keep [him] posted on the progress” of the project and explaining that WPS was “moving ahead in order to maintain our targeted delivery dates for the compressor packages.” Again, from all of this evidence, the jury could have reasonably found that both parties were aware that WPS was operating under the terms of the third purchase order to timely deliver the compressors.
Expro Americas and SPS argue that they did not have an enforceable contract with WPS because the terms and conditions of any agreement were left open for future negotiations. We recognize that, “[i]n order to be legally binding, a contract must be sufficiently definite in its terms so that a court can understand what the promisor undertook.” T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex.1992); see also Lamajak, Inc. v. Frazin, 230 S.W.3d 786, 793 (Tex.App.-Dallas 2007, no pet.) (“For an enforceable contract to exist, the legal obligations and liabilities of the parties must be sufficiently definite.“). The material terms of the contract must be agreed upon before a court can enforce the contract, and “[w]here an essential term is open for future negotiation, there is no binding contract.” T.O. Stanley Boot Co., 847 S.W.2d at 221; Lamajak, 230 S.W.3d at 793 (“The contract must be certain and clear as to all essential terms or the contract will fail for indefiniteness.“). Here, WPS, in its conditional acceptance of the third purchase order, did not reassert its previous requests concerning other terms and conditions and accepted the contract on the governing terms. Even if these matters had not been resolved, there is nothing in the record to substantiate Expro Americas and SPS‘s assertion that a previously unidentified term or condition precluded the formation of an enforceable contract. Although Expro Americas and SPS cite us to various terms and conditions that were not agreed upon, the jury could have concluded from the evidence presented that there simply were no remaining unresolved material terms that precluded the parties from entering into a contractual relation-
Finally, in regard to Expro Americas and SPS‘s argument that the purchase orders were illusory because of the requirement of a “Release to Proceed,” which they considered to be a condition precedent, we note that their third purchase order actually contained an unequivocal release to proceed. There is evidence that, at the time they had issued the third purchase order, WPS had already been performing in anticipation of timely delivering the compressor packages. To the extent that there is any merit to Expro Americas and SPS‘s arguments regarding the release to proceed, those arguments were mooted by the issuance of the release.12
We overrule Expro Americas and SPS‘s first, second, and third issues.
Damages
In their fourth issue, Expro Americas and SPS argue that the trial court “erred in instructing [the jury] on the measure of damages” and WPS presented “no evidence of damages recoverable for breach of contract” because neither of the damage elements submitted by the trial court, i.e., the “agreed payments” and the “cancellation charges,” “define[d] a measure of damages recognized by Texas law for breach of contract.” Expro Americas and SPS further assert that WPS presented no evidence of “benefit of the bargain” or reliance damages, “cancellation charges ... are not damages,” there is “no evi-
dence of any expenditure made by WPS,” and the “agreed progress payments” and the cancellation charges do not provide any evidence of the “reasonable value of any goods or services.”
At the trial court‘s charge conference, Expro Americas and SPS objected to the submitted breach-of-contract damages question on the ground that there is no evidence “of any of the elements of contract damages,” “lost profits,” or “reliance damages.” Expro Americas and SPS also tendered a question that would have instructed the jury to award “[e]xpenditures made by [WPS] in preparation for or performance of the agreement, if any.” After refusing Expro Americas and SPS‘s tender, the trial court asked the jury to determine the amount of damages that would fairly and reasonably compensate WPS for its damages caused by Expro Americas and SPS‘s breach. It instructed the jury that it could consider as the “elements of damages” “the amount of any agreed payments to WPS” and “valid cancellation charges that WPS incurred in connection with the cancellation of the agreement.” The jury found that WPS was entitled to $855,342.55 in damages, which generally comported with the amounts invoiced by WPS, i.e., the cancellation charges payable to the component providers, approximately $441,000, and the initial “agreed payment” owed to WPS, approximately $414,000.
WPS, in regard to the jury instruction and its incurred cancellation charges, presented evidence of the amounts that it invoiced for each cancellation charge, and these amounts totaled approximately $441,000.13 WPS also introduced into evi-
the right to issue a revised order did not preclude WPS from relying upon the order‘s release to proceed diligently in satisfying the terms stated in the order.
The third purchase order expressly provided that Expro Americas and SPS would pay WPS “all valid costs associated with any order cancellation.” In fact, when Expro Americas and SPS sent WPS their cancellation notice, they expressly instructed WPS to submit the cancellation fees. Yet, Expro Americas and SPS ultimately refused to pay the cancellation charges, based, at least in part, upon their contention that they had not formed a contractual relationship with WPS. We have detailed above the evidence supporting the jury‘s finding that the parties did form a contractual relationship. We have also detailed the evidence demonstrating that the terms of the parties’ contract included, among other things, Expro Americas and SPS‘s agreement to “pay all valid costs associated with any order cancellation.” The trial court‘s instruction to the jury that it could consider these cancellation charges in awarding damages is supported by the evidence. Moreover, the trial court‘s instruction was consistent with the instruction actually tendered by Expro Americas and SPS, which would have allowed the jury to consider WPS‘s expenditures made in preparation for or perform-
WPS owed to third-party equipment providers and amounts claimed by WPS once the con-
ance of the agreement. Accordingly, we hold that the trial court did not err in instructing the jury that it could consider, in determining the damages caused by Expro Americas and SPS‘s breach, the cancellation charges incurred by WPS. See Chung v. Lee, 193 S.W.3d 729, 733 (Tex.App.-Dallas 2006, pet. denied) (providing that party that has made substantial investment in performing agreement that is later breached may seek return of investment through recovery of reliance damages); see also E.A. FARNSWORTH, CONTRACTS § 12.16, at 888-89 (1982) (noting as examples of reliance damages party‘s expenditures for labor and materials and other costs of preparation and purchaser‘s spending money or making commitments for advertising, acquiring premises and equipment, hiring employees, and the like). We further conclude that, although there is some conflicting evidence on the amounts of cancellation charges owed or paid by WPS as a result of Expro Americas and SPS‘s cancellation of the contract, WPS presented legally and factually sufficient evidence to support an award of approximately $441,000 based upon incurred cancellation charges.
In regard to the jury instruction pertaining to the “agreed payments,” WPS presented evidence that the terms of the parties’ contract included Expro Americas and SPS‘s agreement to pay WPS an initial payment of approximately $414,000 “upon acceptance” of the order. It is undisputed that Expro Americas and SPS failed to make this initial payment. As detailed above, WPS presented evidence demonstrating that, prior to receipt of the cancellation notice, WPS was, pursuant to the contract, performing in an effort to timely deliver the compressor packages by
tract was cancelled.
Based upon this evidence, the jury could have rejected Expro Americas and SPS‘s arguments that WPS was not owed any amounts under the contract for its performance prior to receipt of the cancellation notice. Instead, the jury could have reasonably found from the testimony and documentary evidence that WPS had engaged in substantial work in the performance of the contract. Additionally, in determining the appropriate amount of damages to award, the jury could have also considered the amount of the initial payment, agreed to by Expro Americas and SPS, due to WPS. The jury could have reasonably found that the amount of the agreed payment related to the value of
the services provided by WPS in furtherance of the contract.14 Here, WPS presented testimony that the agreed-upon first and second 10% payments related to the work that WPS was required to perform upon acceptance of the contract. For example, WPS presented evidence that, during negotiations, it was concerned about the payment structure because a 10% initial payment only covered “order value” but would not have “cover[ed] the cost of equipment” that it needed to procure. WPS was also concerned that, unless modified, the payment structure would not have allowed it to “get paid” for its drawings, vendor charges, and studies. From the evidence, the jury could have reasonably inferred that an amount generally consistent with the initial agreed payment represented the approximate value of the services and work that WPS was required to perform upon accepting the purchase order and during the weeks prior to the contract‘s cancellation, i.e., working with vendors, making staffing decisions, and participating and engaging in technical discussions and work. Moreover, the trial court‘s instruction merely allowed the jury to consider the amount of any agreed payments; the instruction did not compel the jury to award the amount of the agreed payment.15 Thus, we cannot
We overrule Expro Americas and SPS‘s fourth issue.17
Jury Instruction
In their fifth issue, Expro Americas and SPS argue that the trial court erred “in commenting on the evidence and erroneously instructing the jury that it could read together separate documents to form a contract because there was no evi-
is actually an unenforceable penalty because WPS did nothing in furtherance of the contract other than to “accept” it, Expro Americas and SPS ignore the conflicting evidence on this point. Moreover, although the issue is not clearly raised on appeal, we note that a party asserting that a contractual provision constitutes an unenforceable penalty bears the burden of demonstrating the applicability of this defense. See Fluid Concepts, Inc. v. DA Apartments Ltd. P‘ship, 159 S.W.3d 226, 231 (Tex.App.-Dallas 2005, no pet.). Here, Expro Americas and SPS‘s argument is that WPS is achieving a windfall because it performed no work other than merely “accepting” the purchase order. As we have discussed at length, WPS presented evidence that it undertook significant efforts in performance of the contract. The jury also could have considered Expro Americas and SPS‘s arguments in determining the amount of damages to award to WPS because, as we note, the trial court simply instructed the jury that it could consider the cancellation charges and agreed payments, but its instruction did not compel an award of these amounts.
dentiary basis for this submission, this instruction pertains to a “matter for the court and not the jury,” it is a “rule of contract construction, not of contract formation,” and “it presupposes that the parties have made an enforceable contract.”
The instruction about which Expro Americas and SPS complain provided,
Separate documents or contracts pertaining to the same transaction may be read together to ascertain the parties’ intent, even if the parties executed the instrument at different times and the instruments do not expressly refer to each other.
Expro Americas and SPS acknowledge that this instruction is generally a correct statement of law. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex.2000) (providing that it is “well-established law that instruments per-
agreed payments in determining the appropriate amount of damages to award to WPS to compensate it for its work performed in furtherance of the contract. Here, the parties, sophisticated business entities, contractually agreed that WPS would be entitled to certain payments, including a 10% initial payment. WPS presented testimony from which the jury could have reasonably inferred that the first (and possibly even the second) agreed payment was negotiated to compensate WPS for the services that it was required to provide in furtherance of the contract upon accepting the contract. Although an alternative jury instruction might have more generally referred to a reliance measure of damages, we conclude that the trial court, given the evidence before it, did not commit reversible error in instructing the jury that it could consider the agreed payments in determining the amount of damages to award to WPS.
At trial, Expro Americas and SPS objected to the trial court‘s instruction on the ground that the evidence in the case demonstrated that “if there was any contract, it was contained within one particular purchase order and not in a series of documents.” Although we are not aware of any authority providing that a jury may not be instructed in accord with this well-settled point of law, we conclude that the complaint being raised on appeal, i.e., the trial court erred in instructing the jury as it did because the instruction pertains to contract formation rather than contract construction, has been waived. See
plaint that there was no evidentiary support for the trial court‘s instruction, as this is the complaint that Expro Americas and SPS asserted at trial.
We conclude that there was an evidentiary basis for the trial court‘s instruction and the jury was entitled to consider multiple documents in determining the parties’ intent regarding the ordering of certain component parts and the remainder of the purchase order. The jury was permitted to consider the first, second, and third purchase orders, the conditional acceptance form of WPS, and the e-mails between the parties regarding the terms. As discussed above, these documents were relevant to the jury‘s consideration of whether the third purchase order reflected the resolution of the remaining material terms. Accordingly, we hold that the trial court did not err in instructing the jury on separate documents as relevant to ascertaining the parties’ intent.
We overrule Expro Americas and SPS‘s fifth issue.18
Offer to Pay Cancellation Charges
In their eighth issue, Expro Americas and SPS argue that the trial court erred in not admitting into evidence pretrial offers made by Expro Americas and SPS to WPS to “pay cancellation charges” because Expro Americas and SPS were entitled to prove that they had complied with the contract by attempting to pay cancellation fees and WPS had failed to mitigate its damages.
Evidence of “furnishing or offering or promising to furnish ... a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount is not
At trial, Expro Americas and SPS sought to admit into evidence a July 10, 2007 letter to WPS in which it stated that it was “reaffirm[ing] its position on cancellation fees,” its total liability was $217,361.32, “Expro” understood that it might be “commercially advantageous to complete the procurement of the Reliance electric motors in lieu of order cancellation,” and “[i]n order to expedite this matter and as an effort of good will, Expro offers $325,000 for settlement.” Additionally, in this letter, SPS requested that WPS “revise the subject invoice” for $325,000 and “resubmit for approval and payment.” Expro Americas and SPS also sought to introduce testimony from Eric Nelson, its in-house counsel, and Sawyer that, in August 2007, SPS increased its settlement offer to $414,000.
Despite their pretrial settlement offers, Expro Americas and SPS‘s primary factual contention at trial was that they did not form an enforceable contract with WPS. Based upon their theory, they vig-
orously disputed their liability for both the cancellation charges as well as the initial payment due to WPS. The jury found against Expro Americas and SPS on both issues, awarding WPS damages for both the cancellation fees and the first payment required by the purchase order. The jury awarded WPS damages well in excess of the amounts offered in settlement. We conclude that, regardless of whether there was a basis on which the trial court could have admitted Expro Americas and SPS‘s evidence of either settlement offer, Expro Americas and SPS have failed to explain how, under these circumstances, the exclusion of its proposed settlement offers probably caused the rendition of an improper judgment. See
We overrule Expro Americas and SPS‘s eighth issue.
Conclusion
We reverse the trial court‘s judgment notwithstanding the verdict in favor of Expro Americas. We render judgment in favor of WPS on its breach-of-contract claims against Expro Americas. Accordingly, we render judgment that WPS recover damages from Expro Americas and SPS, jointly and severally, in the sum of $855,342.55, and we further render judgment that Expro Americas and SPS are jointly and severally liable for the prejudgment interest, attorney‘s fees, court costs,
Justice BROWN, dissenting.
HARVEY BROWN, Justice, dissenting.
I join in the Court‘s opinion except for the portion that affirms the damages awarded to WPS, Inc. (WPS). I would sustain the fourth issue brought by Expros Americas, LLC (Expro) and Surface Production Systems, Inc. (SPS), and hold that the trial court erred in its instruction on the measure of damages for “agreed payments.” Further, I would reach and sustain Expro and SPS‘s sixth and seventh issues and hold that WPS was not entitled to recover on its quantum meruit or promissory estoppel claims. Therefore, I dissent.
Damages
The trial court‘s damages instruction directed the jury to consider two elements of damages “and none other:” (1) “the amount of any agreed payments to WPS” and (2) “valid cancellation charges that WPS incurred in connection with the cancellation of the agreement” by SPS. While there were two damages elements in the instruction, the jury was only asked one question combining both elements. The jury found that WPS was entitled to $855,342.55 in damages. This amount generally comports with the amounts invoiced by WPS, which included the cancellation charges payable to the component providers ($441,276.25) and the first “agreed payment” due under the contract upon WPS‘s acceptance of the order ($414,307).
As an initial matter, I agree with the Court that the trial court did not err in instructing the jury that, as part of the damages, WPS could recover the “cancellation charges.” The “agreed payments”
were not, however, an appropriate measure of damages. Therefore, I would sustain Expro and SPS‘s contention that the “progress payment“—or as used in the jury charge the “agreed payments“—is not “a legally recoverable measure of damages for breach of contract.”
“The ultimate goal in measuring damages for a breach-of-contract claim is to provide just compensation for any loss or damage actually sustained as a result of the breach.” Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 328 (Tex.App.-Houston [14th Dist.] 2003, pet. denied). There are three damage measures for breach of contract claims: expectancy, reliance, and restitution. Quigley v. Bennett, 227 S.W.3d 51, 56 (Tex.2007) (citing RESTATEMENT (SECOND) OF CONTRACTS § 344 (1981)); see also Intercontinental Grp. P‘ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 666 (Tex.2009) (Brister, J., dissenting, joined by O‘Neill, Wainwright and Medina, JJ.) (“Breach of contract damages include lost profits (expectancy), out-of-pocket expenses (reliance), and restitution“); Chung v. Lee, 193 S.W.3d 729, 733 (Tex.App.-Dallas 2006, pet. denied) (“damages for breach of contract protect three interests: a restitution interest, a reliance interest, and an expectation interest“). “Expectancy damages award the benefit of a plaintiff‘s bargain; reliance damages compensate for the plaintiff‘s out-of-pocket expenditures; restitution damages restore what the plaintiff has conferred on the defendant.” Quigley, 227 S.W.3d at 56. The “agreed payments” are not an accurate reflection of any of these three measures of damages.
1. Restitution
WPS did not allege that it conferred any benefit on Expro and SPS, nor did it seek restitution damages.1
materials provided by the claimant. See City of Harker Heights, Tex. v. Sun Meadows Land, Ltd., 830 S.W.2d 313, 317 (Tex.App.-Austin 1992, no writ) (stating that restitution “focuses on forcing the defendant to disgorge benefits that it would be unjust to keep, rather than on compensating the plaintiff. The principle that underlies the remedy of restitution is the avoidance of unjust enrichment.“); RE-STATEMENT (SECOND) OF CONTRACTS § 373 (1981) (stating that in case of partial performance caused by other party‘s breach, injured party, as alternative measure of damages, may recover “restitution for any benefit that he has conferred on the other party by way of part performance or reliance.“).
“The most common interest protected in breach of contract cases is the expectation, or benefit of the bargain, interest. Protecting this interest seeks to restore the non-breaching party to the same economic position in which it would have been had the contract not been breached—thus giving the party the benefit of its bargain.” Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882, 888-89 (Tex.App.-Dallas 2004, pet. denied); see also Bowen v. Robinson, 227 S.W.3d 86, 96 (Tex.App.-Houston [1st Dist.] 2006, pet. denied) (noting that in breach of contract claims, “the normal measure of damages is just compensation for the loss or damage actually sustained, commonly referred to as the benefit of the bargain“). WPS‘s expectation interest is measured by its expected receipts under the contract plus consequential losses caused by SPS‘s breach, less any cost or other loss that WPS avoided by not having to perform.2 See RESTATEMENT (SECOND) OF CONTRACTS § 347 (1981); Qaddura, 141 S.W.3d at 889; Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741, 760 (Tex.App.-El Paso 2000, no pet.); Lafarge Corp. v. Wolff, Inc., 977 S.W.2d 181, 187 (Tex.App.-Austin 1998, pet. denied).
Under this measure of damages, WPS could have recovered the total of all “agreed payments” owed under the contract (expected receipts) plus the cancellation charges (consequential losses), less the costs WPS would have had to incur to complete performance (avoided costs).3 But WPS did not offer any evidence of its costs savings from not having to fully perform. An expectancy measure of damages does not authorize recovery of expected revenues, or even some portion of expected revenues, without also accounting for costs saved. See, e.g., Kormanik v. Seghers, 362 S.W.3d 679, 689-90 (Tex.App.-Houston [14th Dist.] 2011, no pet.) (rejecting argument that expectation damages were proven as matter of law when claimant produced evidence of expected revenues but failed to produce evidence of costs that he would have incurred to fully perform agreement), supplemented on overruling of rehearing, 362 S.W.3d 679 (Tex.App.-Houston [14th Dist.] 2012, no pet. h.) (addressing new jurisdictional ar-
3. Reliance
WPS‘s evidence, and the trial court‘s charge, most closely corresponded to a reliance measure of damages. Reliance damages are designed to restore the status quo at the time before the contract was made. Geis v. Colina Del Rio, 362 S.W.3d 100, 112 (Tex.App.-San Antonio 2011, pet. filed). Reliance damages are measured as the out-of-pocket expenditures made by one party in reliance on the actions of another party, not by the amount of lost profits and sales. Sterling Chems., Inc. v. Texaco Inc., 259 S.W.3d 793, 798 (Tex.App.-Houston [1st Dist.] 2007, pet. denied). A party that has made a substantial investment in performing an agreement that is breached is entitled to have that investment returned through recovery of reliance damages. Chung, 193 S.W.3d at 733.
The Court renders damages in favor of WPS by assuming that the jury‘s damages finding reflects an award of the $414,307 initial agreed payment due under the contract and treating that amount as a proxy for the costs incurred by WPS in commencing its performance of the contract. While I agree with the Court that there is evidence that WPS began performance of the contract in an effort to deliver the compressor packages by the September deadline and incurred some costs in doing so, and that such costs are recoverable as reliance damages, the jury was not instructed to consider those costs. Nor was the jury instructed to consider the initial agreed payment less any cost savings.5 It
4. Conclusion
Under an expectancy measure of damages, the trial court properly could have instructed the jury to consider the “agreed payments” plus the “cancellation charges,” but only if it also instructed the jury to consider any costs saved by WPS as a result of not having to complete its performance under the contract. Under a restitution measure of damages, the trial court could have instructed the jury to consider both the “cancellation charges” but the second element of damages would have been the costs incurred by WPS in performing before SPS cancelled the parties’ contract. The trial court‘s damages question did neither. SPS objected to the trial court‘s instruction and tendered to the trial court an instruction that reflected a proper measure of reliance damages. Therefore, the trial court erred in instructing the jury to automatically award the amount of the agreed payments without regard to whether WPS performed services and made expenditures in these amounts in reliance on the contract.6
We should sustain SPS‘s fourth issue.
Quantum Meruit and Promissory Estoppel
Because I would sustain SPS‘s fourth issue, I now address Expro and SPS‘s sixth and seventh issues, in which they argue that WPS was not entitled to recover on its claim for quantum meruit or promissory estoppel. Generally, recovery under quantum meruit or promissory estoppel is not available when a party has an express contract that covers those matters for which it seeks recovery. See Truly v. Austin, 744 S.W.2d 934, 936 (Tex.1988) (stating that, as general rule, recovery under theory of quantum meruit is prohibited if express contract covers services or materials for which claimant seeks recovery). In its briefing, WPS agrees that, because it had an enforceable contract with SPS, it is not entitled to a judgment on its claims for quantum meruit or promissory estoppel. Because WPS concedes it is not entitled to seek recovery through its quantum meruit and promissory estoppel claims in light of the fact that an express contract controls, we should sustain SPS‘s sixth and seventh issues.
Conclusion
In conclusion, I believe we should reverse and remand the case.