Automated Ingredient Systems, L.L.C. v. Hiller Carbon, LLC ( 2024 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-23-00028-CV
__________________
AUTOMATED INGREDIENT SYSTEMS, L.L.C., Appellant
V.
HILLER CARBON, LLC, Appellee
__________________________________________________________________
On Appeal from the 253rd District Court
Liberty County, Texas
Trial Cause No. CV-18-13055
__________________________________________________________________
MEMORANDUM OPINION
This permissive interlocutory appeal arises from a contract-formation dispute
involving a battle of forms in which appellee Hiller Carbon, LLC requested that
appellant Automated Ingredient Systems, L.L.C. (“AIS”) submit a proposal that
involved the sale of fabricated equipment. In its sole issue, AIS questions whether
Hiller Carbon agreed to the proposal in AIS’s form and to the terms and conditions
it attached to its form, which contain a provision waiving consequential damages.
1
AIS and Hiller Carbon filed cross-motions for partial summary judgment on AIS’s
affirmative defense of waiver, and the trial court granted Hiller Carbon’s motion and
denied AIS’s motion. We affirm the trial court’s order.
BACKGROUND
After Hiller Carbon approached AIS about providing various equipment,
Luke Ungashick, a member of AIS, sent Hiller Carbon an email and attached
Revised AIS Proposal 216516R2-LU that described the equipment in detail, which
included components of a coke pellet manufacturing system, that AIS offered to
make and deliver, and included the price of $599,981.00, quantity, payment terms,
and delivery dates.1 Ungashick’s email stated that “[i]f this proposal is acceptable to
you and the project moves forward, would you be so kind as to simply shooting me
a text or email? If I can enter this one earlier on our schedule . . ., I’ll feel much more
comfortable with the delivery schedule.”
However, page 17 of 17 of Proposal 216516R2-LU specifically provides the
following:
1We note that AIS submitted several proposals, but only two of its proposals
are relevant to this appeal.
2
“Customer Acceptance of Proposal:
I hereby accept the proposal referenced in this document prepared by
Automated Ingredient Systems, LLC. I acknowledge receipt of and accept the
attached proposal terms and conditions of Automated Ingredient Systems,
LLC.
Company: ______________________________________________
Authorized Signature: _____________________________________
Print Name and Title: _____________________________________
Date: ___________________
Please return a copy of this entire signed proposal via mail, fax or email to:
Automated Ingredient Systems, LLC
240 Main Street
Grandview, MO 64030
Fax: 816-331-1181
Luke_ungashick@ais-kc.com
Respectfully Submitted,
/s/ Luke Ungashick
Luke Ungashick, Manager
Automated Ingredient Systems, LLC”
In addition, the bottom of each page of the proposal states that “THIS PROPOSAL
AND ACCEPTANCE ARE SUBJECT TO THE TERMS AND CONDITIONS
ATTACHED TO THE QUOTATION.”
On the very next page, a one-page document titled: “AUTOMATED
INGREDIENT SYSTEMS, L.L.C. PROPOSAL - ADDITIONAL TERMS AND
CONDITIONS” (“T&Cs”), were also attached to the email, and section 1 provides
that:
3
[t]his proposal may be accepted by the BUYER only on the terms set
forth herein by signing a copy of this proposal and delivering to
SELLER at address set forth on the face hereof. No terms or conditions,
whether written or oral, in addition to or different from those contained
in this proposal shall be part of the agreement of the parties. …
Section 1 also states “[t]his proposal is the final, complete and exclusive statement
of the offer and its acceptance by BUYER is hereby expressly limited to the terms
and conditions hereof[,]” and “no subsequent agreements or communications in any
way modifying any provisions of this offer shall be binding unless made in writing
and signed by an authorized officer of the SELLER.” Section 9 of the T&Cs contains
a provision that expressly waives consequential damages and states as follows:
[AIS] shall not be liable under any circumstances for any indirect,
special, incidental or consequential loss, damage or injury of any kind
of nature, including but not limited to . . . loss of use of goods or any
other property of [Hiller Carbon] or others, or loss of profits, products
or production.
Furthermore, section 18 of the T&Cs contains a provision that any issues were to be
governed by the laws of the State of Missouri, and “… that any claim or dispute
arising out of or relating to this agreement must be resolved by either the Circuit
Court of Jackson County, Missouri at Kansas City or the United States District Court
for the Western District of Missouri.” Finally, section 20 of the T&Cs contains a
provision that expressly waives trial by jury.
4
However, it should be noted that no corporate representative of Hiller Carbon
signed AIS’s Proposal 216516R2-LU. Instead, Jesse Perez, Hiller Carbon Chief
Financial Officer, sent Ungashick an email with an attached signed PURCHASE
ORDER in the same amount of $599,981.00 P.O. NUMBER DTX-PP-001
“pursuant to AIS’[s] revised proposal 216516R2-LU.” Perez’s email asked that
Ungashick “countersign under my signature on the attached, and we will put the
down payment in line for payment within the next 7-10 days.” Linda Ungashick,
AIS’s Manager and Chief Financial Officer, signed Hiller Carbon’s purchase order
DTX-PP-001 in the amount of $599,981.00. Purchase order DTX-PP-001 shows
Hiller Carbon agreed to purchase “AIS EQUIPMENT AND COMPONENTS” and
that the “(EQUIPMENT AND COMPONENT DETAILS ARE LISTED ON AIS
PROPOSAL 216516R2-LU[.])” Purchase order number DTX-PP-001 does not
indicate Hiller Carbon made any changes, objections, or complaints about Proposal
216516R2-LU.
AIS sent Hiller Carbon additional proposals for equipment, including Change
Order # 01 in the additional amount of $55,500.00 (per AIS’s Proposal 216561R1-
LU) and Revised Proposal 216558R1-LU in the amount of $79,760.00, both of
which contained the same general terms as Proposal 216516R2-LU along with the
same T&Cs. Hiller Carbon sent AIS new purchase orders, Hiller Carbon’s
5
PURCHASE ORDER Numbers DTX-PP-001 (Revision 1) in the same additional
amount of $55,500.00 and DTX-PP-005 in the same amount of $79,760.00, which
described the equipment as “AIS EQUIPMENT AND COMPONENTS” and
indicated the “(EQUIPMENT AND COMPONENT DETAILS ARE LISTED ON
…)” AIS Proposals 216516R2-LU, 216561R1-LU, and 216558R1-LU. Perez, Hiller
Carbon’s CFO, signed Hiller Carbon’s PURCHASE ORDER Numbers DTX-PP-
001 (Revision 1) and DTX-PP-005, but he never signed any of AIS’s proposals or
change order. That said, AIS did not countersign Hiller Carbon’s PURCHASE
ORDER Numbers DTX-PP-001 (Revision 1) or DTX-PP-005.
After AIS designed and supplied the equipment and components for the pellet
system in Hiller Carbon’s plant, the plant exploded. After the explosion, AIS sued
Hiller Carbon for failing to fully pay Hiller Carbon’s PURCHASE ORDER
Numbers DTX-PP-001 (Revision 1) and DTX-PP-005 for services, materials, and
equipment that AIS had manufactured and delivered in accordance with AIS’s
proposals. AIS alleged causes of action for breach of contract, quantum meruit,
violating the Prompt Pay Act, to foreclose a mechanic’s and materialman’s lien
secured by a bond, and it sought a declaratory judgment. Hiller Carbon denied
liability, asserted affirmative defenses and counterclaims, and sought damages and
attorney’s fees. AIS filed a First Amended Original Answer denying liability and
6
asserting, among others, the affirmative defense of express waiver, which it based
on the no-consequential damages provision in the proposal. The no-consequential
damages provision under section 9 of AIS’s T&Cs states:
[AIS] shall not be liable under any circumstances for any indirect,
special, incidental or consequential loss, damage or injury of any kind
of nature, including but not limited to . . . loss of use of goods or any
other product of [HILLER CARBON] or others, or loss of profits,
products or production.
AIS and Hiller Carbon filed cross-motions for partial summary judgment on
AIS’s affirmative defense of express waiver, and both motions concerned whether
the parties agreed to the T&Cs attached to AIS’s proposal. In its Partial Motion for
Summary Judgment Against AIS’s Affirmative Defense of Express Waiver, Hiller
Carbon argued that it’s PURCHASE ORDER Numbers DTX-PP-001 (Revision 1)
and DTX-PP-005 are the operative contracts and that AIS’s T&Cs do not apply.
Hiller Carbon argued the contracts at issue do not provide any waiver language
limiting Hiller Carbon’s rights and remedies and that the additional T&Cs, which
are governed by Missouri law, are contrary to Texas and Missouri law. Hiller Carbon
further argued AIS accepted the one-page Purchase Orders without any changes, the
Purchase Orders address all the contract’s essential terms, AIS cannot establish that
Hiller Carbon agreed to be bound to the T&Cs or that the T&Cs were incorporated
by reference into the Purchase Orders, and that AIS’s affirmative defense of express
7
waiver should be dismissed because the Purchase Orders are binding, stand-alone
contracts that do not include any waiver language.
AIS filed a Cross-Motion for Summary Judgment, arguing that Hiller
Carbon’s Purchase Orders incorporated AIS’s proposals by direct reference and thus
incorporated the additional T&Cs. AIS argued that its Proposals were sufficiently
detailed price quotations that were firm offers under section 2.205, and the additional
T&Cs, which were attached to the Proposals, specifically rejected additional or
different terms and limited acceptance to the Proposals’ terms. See Tex. Bus. & Com.
Code Ann. § 2.205 (defining “firm offers”). AIS further argued that the contract was
formed when Hiller Carbon accepted AIS’s Proposal, which included the T&Cs,
without rejecting or limiting the T&Cs. AIS also argued the Proposals and T&Cs are
not separate documents but a single document inclusive of its attachments, and the
T&Cs are specifically referenced as an attachment and mentioned on every single
page of the Proposals.
AIS argued the breach of contract and breach of warranty damages Hiller
Carbon seeks in its lawsuit are barred by the terms of the parties’ agreements, that
include the T&Cs, which state that AIS shall have no warranty obligations with
respect to any goods furnished but not manufactured by AIS. AIS also claims that
the remedies against AIS shall be limited to repair or replacement by AIS of any
8
goods furnished and labor performed by AIS, and per AIS’s T&Cs warranty waiver
provision AIS “shall not be liable under any circumstances for any indirect,
special, incidental or consequential loss, damage or injury of any kind of nature,
including . . . loss of use of goods or any other property of BUYER or others, or
loss of profits, products or production.”
Hiller Carbon filed a Reply in Support of its Motion for Summary Judgment
and Response to AIS’s Motion for Summary Judgment, arguing that AIS’s
affirmative defense of waiver fails because Linda Ungashick, AIS’s Manager and
Chief Financial Officer, signed Hiller Carbon’s purchase order DTX-PP-001 in the
amount of $599,981.00, and by its conduct AIS agreed to Hiller Carbon’s
PURCHASE ORDER Numbers DTX-PP-001 (Revision 1) and DTX-PP-005, even
though they were not countersigned by AIS, which are the contracts. Hiller Carbon
argued that it did not accept AIS’s Proposals by Hiller Carbon issuing its Purchase
Orders, because AIS’s Proposal and T&Cs stipulate that “[t]his proposal may be
accepted by the BUYER [HILLER CARBON] only on the terms set forth
herein by signing a copy of this proposal and delivering to SELLER [AIS] at
address set forth on the face hereof.” Hiller Carbon explained the Proposals
provided a signature block for Hiller Carbon to sign and complete, and it is
undisputed that it did not sign the Proposals as required. Hiller Carbon argued that
9
its refusal to sign the Proposals is deemed a rejection of the Proposals, and its
Purchase Orders are deemed as counteroffers. Hiller Carbon further argued that
AIS’s Proposals together with the T&Cs were not incorporated by reference into the
Purchase Orders and that there is ample evidence to support its contractual and extra-
contractual claims.
AIS filed a Reply to Hiller Carbon’s Response to Plaintiff’s Cross-Motion for
Summary Judgment. AIS argued that Hiller Carbon was not required to sign the
Proposals because AIS allowed other “‘reasonable under the circumstances’ options
to serve as acceptance[,]” as indicated by Ungashick’s offer email, which states “[i]f
this proposal is acceptable to you and the project moved forward, would you be so
kind as to simply shooting [sic] me a text or email?” AIS explained that Hiller
Carbon responded by emailing Purchase Orders and stating that the signed Purchase
Order was pursuant to AIS revised proposal 216516R1-LU, and AIS followed by
emailing its confirmation of the order and including a copy of the T&Cs, which state
“[t]his proposal may be accepted by the BUYER only on the terms set forth herein
by signing a copy of this proposal and delivering to SELLER at address set forth on
the face hereof.” AIS argued the T&Cs are not an extraneous document but an
essential and indispensable part of the Proposal that states on every page that “THIS
PROPOSAL AND ACCEPTANCE ARE SUBJECT TO THE TERMS AND
10
CONDITIONS ATTACHED TO THE QUOTATION.” AIS further argued that
Hiller Carbon incorporated the entire Proposals into the Purchase Orders, not those
that just concerned the details about the equipment and the components of the
project.
The trial court conducted a hearing on AIS’s Cross-Motion for Summary
Judgment and Hiller Carbon’s Partial Motion for Summary Judgment, during which
AIS’s counsel argued that Hiller Carbon’s email shows it modified the method of
acceptance, which was by text or email if acceptable, and that the UCC does not
prevent such a modification because the offer and acceptance is intended to “remain
flexible in its applicability to be enlarged as new media of communication develop
or as the time-saving present day media come into general use.” AIS’s counsel noted
that the parties transacted entirely through email, which constituted their course of
dealing and established the relationship and contract. Hiller Carbon complained that
AIS was asking the trial court to strike out portions of the T&Cs, like the requirement
that Hiller Carbon sign the purchase order, despite the merger clause that states
“[t]his proposal is the final, complete, and exclusive statement of the offer and its
acceptance by the buyer[.]”
The trial court granted Hiller Carbon’s Partial Motion for Summary Judgment
Against AIS’s Affirmative Defense of Express Waiver and denied AIS’s Cross-
11
Motion for Summary Judgment. The trial court granted AIS’s Motion for Permissive
Appeal, finding that an immediate appeal of its order would likely materially
advance the ultimate termination of the lawsuit. The trial court found its order
involved the controlling question of law as to which there is a substantial ground for
difference of opinion: “Did Plaintiff and Defendant agree to the terms and conditions
attached to, and referenced in, Plaintiff’s proposal?”
ANALYSIS
In its sole issue, AIS argues that Hiller Carbon’s Purchase Orders accepted
AIS’s Proposals and the attached T&Cs and agreed to be bound by the T&Cs. AIS
argues that Hiller Carbon’s Purchase Orders stated Hiller Carbon agreed to purchase
the equipment and component details that are listed in AIS’s Proposals, and thereby
incorporated the Proposals and the attached T&Cs by reference. AIS maintains that
Hiller Carbon’s Purchase Orders are an acceptance of its Proposal under the Uniform
Commercial Code (“UCC”). See Tex. Bus. & Com. Code Ann. § 2.207.
Hiller Carbon argues its Purchase Orders and not AIS’s Proposals are the
operative agreements and that its Purchase Orders did not incorporate AIS’s T&Cs
by reference. Hiller Carbon maintains that under the UCC and Texas common law
an offer that requires a specific method of acceptance may only be accepted by the
method provided, which in this case was by signing and returning AIS’s Proposal.
12
Hiller Carbon argued that it did not accept AIS’s Proposal but sent a Purchase Order,
which was a counteroffer that AIS signed and accepted. Hiller Carbon maintains that
while its Purchase Orders reference the equipment in AIS’s Proposals, its Purchase
Orders do not incorporate by reference AIS’s Proposals or the separate T&Cs.
We review summary judgment orders de novo. Provident Life & Accident Ins.
Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). The party moving for traditional
summary judgment must establish that (1) no genuine issue of fact exists, and (2) it
is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a; Randall’s Food
Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995). If the moving party
produces evidence entitling it to summary judgment, the burden shifts to the non-
movant to present evidence that raises a fact issue. Walker v. Harris, 924 S.W.2d
375, 377 (Tex. 1996). In determining whether there is a disputed material fact issue
precluding summary judgment, evidence favorable to the nonmovant will be taken
as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985). We
review the summary judgment record “in the light most favorable to the nonmovant,
indulging every reasonable inference and resolving any doubts against the motion.”
City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005); see also Mosaic
Baybrook One, L.P. v. Simien, 674 S.W.3d 234, 252 (Tex. 2023) (citation omitted).
13
When both parties move for summary judgment on the same issue and the
trial court grants one motion and denies the other, the reviewing court considers the
summary judgment evidence presented by both parties and determines all the
questions presented. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289
S.W.3d 844, 848 (Tex. 2009). If the reviewing court determines that the trial court
erred, the reviewing court renders the judgment the trial court should have rendered.
Id. We must affirm the summary judgment if any grounds asserted in the motion are
meritorious. Tex. Workers’ Comp. Comm’n v. Patient Advocates of Tex., 136 S.W.3d
643, 648 (Tex. 2004).
Whether a contract is ambiguous is a question of law for the court and is
subject to de novo review. Bowden v. Phillips Petroleum Co., 247 S.W.3d 690, 705
(Tex. 2008). To determine whether a contract is ambiguous, a court looks at the
contract as a whole and considers the circumstances at the time of the agreement.
Sadler Clinic Ass’n, P.A. v. Hart, 403 S.W.3d 891, 895 (Tex. App.—Beaumont
2013, pet. denied) (citation omitted). A court attempts to give effect to the parties’
intent as expressed in the agreement. Id. An ambiguity does not exist simply because
the parties offer conflicting interpretations of an agreement. See id. If an agreement
can be given a clear and definite legal meaning, then it is not ambiguous as a matter
of law. See id.; see also Zarkasha Enter., Inc. v. Old Republic Title Ins. Co. of
14
Conroe, No. 09-20-00057-CV, 2021 WL 3774710, at *11 (Tex. App.—Beaumont
Aug. 26, 2021, no pet.) (mem. op.) (citations omitted). However, if an agreement
contains an ambiguity, summary judgment is improper because the interpretation of
the contract is a fact issue. See Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1985);
Zarkasha Enter., Inc., 2021 WL 3774710, at *11.
In this appeal, the parties do not agree that Texas’s version of the UCC applies
to the parties’ agreement. See Summit Glob. Contractors, Inc. v. Enbridge Energy,
Ltd. P’ship, 594 S.W.3d 693, 700 (Tex. App.—Houston [14th Dist.] 2019, no pet.)
(citing Tex. Bus. & Com. Code Ann. § 2.102) (explaining when the UCC applies).
“When the UCC applies, we do not consider common law principles that conflict
with the UCC.” See ETC Intrastate Procurement Co., LLC v. JSW Steel (USA), Inc.,
620 S.W.3d 168, 174 (Tex. App.—Houston [14th Dist.] 2021, no pet.) (citation
omitted). “To the extent there is no conflict, common law principles complement the
UCC.” Id. (citing Tex. Bus. & Com. Code Ann. § 1.103(b) (“Unless displaced by
the particular provisions of this title, the principles of law and equity . . . shall
supplement its provisions.”)) (other citation omitted).
The parties present alternate theories upon which to render summary
judgment, but they disagree about whether their dispute is governed by section 2.207
of the U.C.C. Tex. Bus. & Com. Code Ann. § 2.207. Yet even though Hiller Carbon
15
doesn’t agree the issues involving the parties’ dispute are governed by the U.C.C., it
agrees that the parties’ dispute “is about contract formation . . . and the UCC and
Texas common law are consistent in all relevant respects.”
A legally enforceable contract consists of: (1) an offer; (2) acceptance in strict
compliance with the offer’s terms; (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. Parker Drilling Co. v. Romfor Supply Co., 316 S.W.3d
68, 72 (Tex. App.—Houston [14th Dist.] 2010, pet. denied) (citations omitted); see
also USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 501 n.21 (Tex. 2018);
Sullivan v. Smith, 110 S.W.3d 545, 548 (Tex. App.—Beaumont 2003, no pet.). To
form a binding contract, the party to whom the offer is made must accept the offer
in strict compliance with its terms and communicate such acceptance to the party
making the offer for the acceptance to be binding. See Parker Drilling Co., 316
S.W.3d at 73–74 (explaining that purported acceptance that changes or qualifies
material terms constitutes a rejection and counteroffer instead of acceptance);
Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21, 25–26 (Tex. App.—
Houston [14th Dist.] 2005, no pet.).
On the other hand, the formation of a contract under the UCC occurs “in any
manner sufficient to show agreement, including conduct by both parties which
16
recognizes the existence of such a contract” and “[a]n agreement sufficient to
constitute a contract for sale may be found even though the moment of its making is
undetermined.” Tex. Bus. & Com. Code Ann. § 2.204(a), (b). “Unless otherwise
unambiguously indicated by the language or circumstances[,] . . . an offer to make a
contract shall be construed as inviting acceptance in any manner and by any medium
reasonable in the circumstances[.]” Id. § 2.206(a)(1).
However, the broad acceptance allowed under the UCC set forth above is not
applicable in this appeal because AIS’s Proposals required strict performance in
order to be accepted by Hiller Carbon. Here, the summary judgment evidence does
not establish that Hiller Carbon accepted AIS’s Proposals in strict compliance with
the Proposals’ terms and communicated such acceptance to the party making the
offer such that acceptance was binding. See Parker Drilling Co., 316 S.W.3d at 73–
74; Advantage Physical Therapy, Inc., 165 S.W.3d at 25–26; see also In re Beyond
The Arches, Inc., No. 09-04-126-CV, 2004 WL 1699900, at *3 (Tex. App.—
Beaumont July 29, 2004, orig. proceeding) (mem. op.). AIS’s Proposals, which
included pricing, quantity, equipment descriptions, payment terms, and Luke
Ungashick’s signature, were sufficiently detailed to qualify as firm offers. See ETC
Intrastate Procurement Co., LLC, 620 S.W.3d at 174 (citation omitted); Tubelite,
819 S.W.2d at 804; see also Tex. Bus. & Com. Code Ann. § 2.205. Yet, AIS’s
17
Proposals unambiguously provided that Hiller Carbon could accept the Proposal
“only on the terms set forth herein by signing a copy of this proposal and
delivering to SELLER[,]” and thus, did not invite acceptance in any manner and
by any medium reasonable under the circumstances. Cf. Tubelite, 819 S.W.2d at 803
(citing Tex. Bus. & Com. Code Ann. § 2.206(a)(1)). While AIS’s Proposals are
offers capable of acceptance by Hiller Carbon, the Proposals limited acceptance only
to Hiller Carbon signing and returning the Proposal. See Crest Ridge Constr. Grp.,
Inc. v. Newcourt Inc., 78 F.3d 146, 153 (5th Cir. 2011) (Benavides, J., concurring).
The record shows that AIS’s Proposals limited acceptance to a specified
manner and that Hiller Carbon never accepted AIS’s Proposals because it did not
perform the specific mode of acceptance; thus, no contract was formed. See Criswell
v. Deutsche Bank Nat’l Tr. Co. as Trustee for FFMLT Tr. 2005-FF2, 747 F. App’x
984, 985 (5th Cir. 2019) (stating where an offer prescribes the manner of acceptance,
its terms in this respect must be complied with to create a contract); see also J.D.
Fields & Co. v. U.S. Steel Int’l, Inc., 426 F. App’x 271, 280 (5th Cir. 2011)
(reasoning that a price quote was an offer because it was void of any conditional
language and did not limit acceptance to a specified manner); J.D. Fields & Co. v.
Shoring Engineers, 391 F. Supp. 3d 698, 704 (S.D. Tex. 2019) (explaining that offer
18
in form of email did not limit acceptance to a particular method so assent to email
would conclude the deal).
Additionally, contracts require mutual assent to be enforceable, and without
evidence that Hiller Carbon signed and delivered the Proposals to AIS with the intent
to be bound, AIS has failed to show its Proposals were binding contracts. See Baylor
University v. Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007). The summary judgment
evidence includes the affidavit of Martin Hiller, Hiller Carbon’s CEO, who averred
that after reviewing AIS’s Proposal, Hiller Carbon issued a PURCHASE ORDER
Number DTX-PP-001 as a counteroffer to AIS and asked that AIS accept the
Purchase Order by providing a copy with a countersignature to indicate acceptance.
Linda Ungashick, who was acting for AIS, signed and dated Hiller Carbon’s
PURCHASE ORDER Number DTX-PP-001. Hiller also explained that it issued
PURCHASE ORDER Numbers DTX-PP-001 (Revision 1) and DTX-PP-005 as
offers to AIS and that all the Purchase Orders identified the agreed-to terms, such as
pricing, quantity, payout details, and completion deadlines. Hiller averred that Hiller
Carbon never signed AIS’s Proposals and never signed or consented to AIS’s T&Cs.
Based on this record, we conclude that AIS’s Proposals are not enforceable
contracts, that Hiller Carbon’s Purchase Orders are offers that AIS accepted, and that
Hiller Carbon’s PURCHASE ORDER Numbers DTX-PP-001, DTX-PP-001
19
(Revision 1) and DTX-PP-005 are enforceable, and are the legally enforceable
contracts at issue. 2 See Parker Drilling Co., 316 S.W.3d at 72–74; Advantage
Physical Therapy, Inc., 165 S.W.3d at 25–26; see also Maverick Int’l, Ltd. v.
Occidental Mukhaizna LLC, No. 1:10CV782, 2011 WL 13134197, at *3 (E.D. Tex.
Mar. 1, 2011) (“A buyer’s purchase order submitted in response to a price quotation
is usually deemed to be an offer.”).
Further, we note that Hiller Carbon’s Purchase Orders do not adopt or
incorporate AIS’s Proposals or the attached T&Cs, but instead merely describe the
equipment as “AIS EQUIPMENT AND COMPONENTS” and indicate the
“(EQUIPMENT AND COMPONENT DETAILS ARE LISTED ON …)” AIS
Proposals 216516R2-LU, 216561R1-LU, and 216558R1-LU. The doctrine of
incorporation by reference provides that “an unsigned paper may be incorporated by
reference in the paper signed[.]” Owen v. Hendricks, 433 S.W.2d 164, 166 (Tex.
1968); see also Trico Marine Servs. Inc. v. Stewart & Stevenson Tech. Servs., Inc.,
73 S.W.3d 545, 549 (Tex. App.—Houston [1st Dist.] 2002, orig. proceeding [mand.
2Although Linda Ungashick only countersigned Hiller Carbon’s PURCHASE
ORDER Number DTX-PP-001 on AIS’s behalf, Hiller Carbon has shown that by
AIS’s conduct it agreed to Hiller Carbon’s PURCHASE ORDER Numbers DTX-
PP-001 (Revision 1) and DTX-PP-005, even though they were not countersigned by
AIS, and AIS does not dispute that it performed under these other two Purchase
Orders.
20
denied]). “The language used is not important provided the document signed by the
defendant plainly refers to another writing.” Owen, 433 S.W.2d at 166. Plainly
referring to a document requires more than merely mentioning the document. Bob
Montgomery Chevrolet, Inc. v. Dent Zone Cos., 409 S.W.3d 181, 189 (Tex. App.—
Dallas 2013, no pet.) (holding that unsigned document may be incorporated by
reference into signed contract by referring to unsigned contract, however plainly
referring to a document requires more than merely mentioning that document). The
language in the signed document must show the parties intended for the other
document to become part of the agreement. Id. Furthermore, the incorporated
document must be referenced by name. Stewart & Stevenson, LLC v. Galveston
Party Boats, Inc., No. 01-09-00030-CV, 2009 WL 3673823, at *11 (Tex. App.—
Houston [1st Dist.] Nov. 5, 2009, no pet.) (mem. op.); Gray & Co. Realtors, Inc. v.
Atl. Hous. Found. Inc., 228 S.W.3d 431, 436 (Tex. App.—Dallas 2007, no pet.).
“[A]s a matter of contract law, incorporation by reference is generally
effective to accomplish its intended purpose where, . . . the provision to which
reference is made has a reasonably clear and ascertainable meaning.” JS & H Constr.
Co. v. Richmond Cnty. Hosp. Auth., 473 F.2d 212, 215 (5th Cir. 1973). “However,
merely referencing another document, without more, ‘does not incorporate the entire
document when the language used in the incorporation clause does not indicate the
21
parties’ intent to do so.’” Ihde v. HME, Inc., No. 4:15-CV-00585-CAN, 2016 WL
11372445, at *4–5 (E.D. Tex. June 16, 2016) (citation omitted) (holding a
Subcontract Agreement’s Arbitration Clause was not incorporated by reference
because the Purchase Order’s language limited the Subcontract Agreement to the
job’s specifications); see Valero Mktg. & Supply Co. v. Baldwin Contracting Co.,
Inc., No. CIVA-H-09-2957, 2010 WL 1068105, at *4 (S.D. Tex. Mar. 19, 2010)
(holding that Sales Acknowledgment that makes reference to the General Terms and
Conditions does not contain language that clearly and expressly state that the
agreement is subject to the General Terms but reflects an objective intent to
incorporate the General Terms only for a limited purpose that all quoted prices are
subject to the General Terms); cf. Castillo Info. Tech. Servs., LLC v. Dyonyx, L.P.,
554 S.W.3d 41, 46–47 (Tex. App.—Houston [1st Dist.] 2017, no pet.) (explaining
that parties intended to enter into an agreement consisting of three documents and
construed those documents together where parties executed a Consultant Agreement,
which included an attached Statement of Work, and the Purchase Order referenced
the Consulting Agreement and included language mirroring the statement of work).
Hiller Carbon’s Purchase Orders describe the equipment to be purchased as
“AIS EQUIPMENT AND COMPONENTS” and merely reference that the
“(EQUIPMENT AND COMPONENT DETAILS ARE LISTED ON …)” AIS
22
Proposals 216516R2-LU, 216561R1-LU, and 216558R1-LU. Hiller Carbon’s
Purchase Orders reference to noncontractual materials, such as equipment and
component details listed on AIS’s Proposals, is not enough to establish that the
parties intended to incorporate by reference AIS’s entire Proposal that Hiller Carbon
never signed or its attached T&Cs, which are not referenced by name in the Purchase
Orders. See Bob Montgomery Chevrolet, Inc., 409 S.W.3d at 189; Stewart &
Stevenson, LLC, 2009 WL 3673823, at *11; Gray & Co. Realtors, Inc., 228 S.W.3d
at 436. Rather, Hiller Carbon’s Purchase Orders reference AIS’s Proposals for the
limited purpose of identifying the particular equipment and components that Hiller
Carbon was offering to purchase. Without a clear manifestation that the parties
intended for AIS’s Proposals and attached T&Cs to become part of the contract, we
cannot conclude that AIS’s Proposals and attached T&Cs, which include the express
waiver of consequential damages, were incorporated into the agreed terms of the
parties’ contract by reference. See Ihde, 2016 WL 11372445, at *4–5; Valero Mktg.
& Supply Co., 2010 WL 1068105, at *4.
CONCLUSION
We hold the trial court correctly determined that Hiller Carbon’s Purchase
Orders do not incorporate by reference AIS’s Proposals and attached T&Cs.
Accordingly, since Hiller Carbon is not bound by AIS’s T&Cs that include the
23
express waiver of consequential damages, we overrule AIS’s sole issue and affirm
the trial court’s order granting Hiller Carbon’s motion for partial summary judgment
on AIS’s affirmative defense of express waiver and denying AIS’s motion.
AFFIRMED.
W. SCOTT GOLEMON
Chief Justice
Submitted on December 8, 2023
Opinion Delivered February 15, 2024
Before Golemon, C.J., Horton and Wright, JJ.
24