Blake International Rigs, L.L.C. and Blake International USA Rigs, L.L.C. v. Stallion Offshore Quarters, Inc. ( 2024 )

Affirmed and Memorandum Opinion filed July 2, 2024.
In The
Fourteenth Court of Appeals
NO. 14-22-00878-CV
BLAKE INTERNATIONAL RIGS, L.L.C. AND BLAKE INTERNATIONAL
USA RIGS, L.L.C., Appellants
V.
STALLION OFFSHORE QUARTERS, INC., Appellee
On Appeal from the 113th District Court
Harris County, Texas
Trial Court Cause No. 2018-17833
MEMORANDUM OPINION
Appellants Blake International Rigs, L.L.C. (“BI Rigs”) and Blake
International USA Rigs, L.L.C. (“BI USA”) appeal a judgment in favor of appellee
Stallion Offshore Quarters, Inc. (“Stallion”) following a bench trial. In two issues,
appellants argue: (1) the trial court erred in how it interpreted the ambiguity in the
contract language at issue; and (2) there is legally insufficient evidence supporting
the imposition of joint and several liability. We affirm.
I. BACKGROUND
In 2011, Stallion and BI USA entered into a contract for Stallion to lease
modular living units to BI USA. The lease defined the “LESSEE” as “Blake
International USA Rigs,” located at 410 S. Van Avenue in Houma, Louisiana, and
listed Michael “Beau” Blake, Jr. (“Blake”) as the contact. Blake is the President
and CEO of BI USA, and he signed the 2011 contract as the “VP of Business
Development & Admin” of “Blake International Drilling.”
On September 12, 2011, Blake International Rigs LLC (“BI Rigs”) was
formed using the same address in Houma, Louisiana. Blake is also the President
and CEO of BI Rigs.
In April of 2013, another lease was executed for the same modular units
subject to the 2011 lease (“the 2013 agreement”). This time, the contract defined
“LESSEE” as “Blake International,” with the same address in Houma, Louisiana.
Blake signed the 2013 agreement as president and CEO of “Blake International.”
Subsequently, Stallion sued BI USA and BI Rigs for breach of contract and
conversion based on the 2013 agreement, alleging that BI USA and BI Rigs were
alter egos of each other. Stallion filed a motion for partial summary judgment,
arguing that both BI USA and BI Rigs breached the 2013 agreement. In response,
appellants did not dispute that “Blake International” in the lease included BI USA,
but they disputed that it included BI Rigs. The trial court granted Stallion a partial
summary judgment that “Blake International” in the 2013 lease included BI USA.
Following a trial to the bench, the trial court entered a final judgment in
favor of Stallion on August 26, 2022, and subsequently issued findings of fact and
conclusions of law. The trial court found that the term “Blake International” in the
2013 agreement was ambiguous and that it included both BI USA and BI Rigs. The
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trial court awarded Stallion damages and rendered judgment for Stallion and
against BI USA and BI Rigs, jointly and severally, for a total amount of
$2,627,048.00 plus court costs and interest.
This appeal followed.
II. STANDARD OF REVIEW
We review a trial court’s conclusions of law de novo. Trelltex, Inc. v. Intecx,
L.L.C., 494 S.W.3d 781, 790 (Tex. App.—Houston [14th Dist.] 2016, no pet.).
When performing a de novo review, we exercise our own judgment and
redetermine each legal issue. Id. To make this determination, we consider whether
the conclusions are correct based on the facts from which they are drawn. Id.We review a trial court’s findings of fact for legal and factual sufficiency.
Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996). A party will prevail on its legal-
sufficiency challenge on an issue for which the opposing party bears the burden of
proof if there is a complete absence of evidence of a vital fact or if the evidence
offered to prove a vital fact is no more than a scintilla. Waste Mgmt. of Tex., Inc. v.
Tex. Disposal Sys. Landfill, Inc., 434 S.W.3d 142, 156 (Tex. 2014). We must credit
favorable evidence that supports the verdict if a reasonable fact finder could and
disregard contrary evidence unless a reasonable fact finder could not. See City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). Anything more than a scintilla
of evidence is legally sufficient to support a finding. See Cont’l Coffee Prods. Co.
v. Cazarez, 937 S.W.2d 444, 450 (Tex. 1996). To be more than a scintilla, the
evidence must “rise to a level that would enable reasonable and fair-minded people
to differ in their conclusions.” Gharda USA, Inc. v. Control Sols., Inc., 464 S.W.3d
338, 347 (Tex. 2015).
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III. CONTRACT AMBIGUITY
In their first issue, appellants argue the trial court erred in its identification
of “the nature and scope of the ambiguity in the 2013 Lease.” Appellants concede
in their brief that “[a]ll parties below agreed that the two-word phrase ‘Blake
International’ in the 2013 lease was ambiguous . . . .” Appellants argue that the
trial court erred when it found that “Blake International” in the 2013 lease included
two entities because the lease’s language refers to a single lessee. In essence,
appellants argue that the scope of the trial court’s finding was limited to
determining which of the two Blake entities was intended by the use of “Blake
International.”
A. APPLICABLE LAW
To recover on a breach of contract claim, a claimant must prove: (1) the
existence of a valid contract; (2) the claimant performed or tendered performance;
(3) the other party breached the contract; and (4) the claimant was damaged as a
result of the breach. USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 502
n.21 (Tex. 2018). Whether a contract is ambiguous is a question of law. URI, Inc.
v. Kleberg County, 543 S.W.3d 755, 763 (Tex. 2018). Likewise, the proper
interpretation of an unambiguous contract is a question of law. Id.A contract is ambiguous if the language is susceptible to more than one
reasonable interpretation. Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590
S.W.3d 471, 479 (Tex. 2019); Italian Cowboy Partners, Ltd. v. Prudential Ins. Co.
of Am., 341 S.W.3d 323, 333 (Tex. 2011). The ambiguity may be patent or latent.
URI, Inc., 543 S.W.3d at 765. A patent ambiguity is evident on the face of the
contract, while a latent ambiguity arises when a contract which is unambiguous on
its face is applied to the subject matter with which it deals and an ambiguity
appears by reason of some collateral matter. Id.
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The intended meaning of ambiguous contract language is a fact issue for the
trier of fact and extraneous evidence may be admitted to determine the language’s
meaning. Italian Cowboy, 341 S.W.3d at 333–34; Quality Infusion Care, Inc. v.
Health Care Serv. Corp., 224 S.W.3d 369, 379 (Tex. App.—Houston [1st Dist.]
2006, no pet.); see Gallagher Headquarters Ranch Dev., Ltd. v. City of San
Antonio, 303 S.W.3d 700, 702 (Tex. 2010) (per curiam); J.M. Davidson, Inc. v.
Webster, 128 S.W.3d 223, 229 (Tex. 2003). When a contract’s meaning is
disputed, the primary objective is to ascertain and give effect to the parties’ intent
as expressed in the instrument. URI, Inc., 543 S.W.3d at 763. Objective
manifestations of intent control, not “what one side or the other alleges they
intended to say but did not.” Id. at 763–64. “Understanding the context in which an
agreement was made is essential in determining the parties’ intent as expressed in
the agreement, but it is the parties’ expressed intent that the court must determine.”
Barrow-Shaver Res., 590 S.W.3d at 451.
B. ANALYSIS
Here, the contract shows “LESSOR” and “LESSEE” as follows:
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It is undisputed that there is no entity named “Blake International” and that
two entities (BI USA and BI Rigs) have the words “Blake” and “International” in
their name; are located at 410 S. Van Avenue in Houma, Louisiana; and have
Blake as their president and CEO. Thus, we conclude that the trial court correctly
found that there is latent ambiguity in the contract in the term “Blake International”
because an ambiguity arises when the words of the contract are applied to the
subject matter it deals with. See URI, 543 S.W.3d at 765; Barrow-Shaver, 590
S.W.3d at 479; Italian Cowboy, 341 S.W.3d at 333.
In response to Stallion’s motion for partial summary judgment on its breach
of contract claim, appellants did not dispute that “Blake International” in the 2013
agreement included BI USA. Accordingly, the trial court granted Stallion a partial
summary judgment finding that BI USA was intended to be included in the term
“Blake International,” and the issue of whether “Blake International” was intended
to include BI Rigs remained a fact question for the fact finder to resolve at trial.
See Italian Cowboy, 341 S.W.3d at 333–34.
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Appellants argue on appeal that the trial court erred in determining that
“Blake International” included both BI USA and BI Rigs because the contract uses
the singular version “LESSEE” and the language associated with “LESSEE” in the
contract is also singular. However, “LESSEE” is a defined term in the contract,
and a term may be defined as consisting of multiple items, things, or parties. See
Summit Global Contractors, Inc. v. Enbridge Energy, L.P., 594 S.W.3d 693, 707
(Tex. App.—Houston [14th Dist.] 2019, no pet.) (C.J., Frost, concurring) (“The
practice of using a singular noun as a shorthand reference for multiple parties can
confuse readers (and even writers) . . . . When a writer uses a defined term in the
singular to refer to more than one party, the writer naturally uses singular pronouns
instead of plural pronouns to refer to the parties falling within the defined term.”);
see e.g., Harrison v. Bentley Express Ltd., Inc., No. 05-00-01794-CV, 2001 WL
1360206, at *2 (Tex. App.—Dallas Nov. 7, 2001, no pet.) (resolving ambiguity of
whether “owner” in a contract was singular or plural and concluding it was plural
when parol evidence showed that the intent of the parties was that “owner”
included both owners of the two properties involved in the dispute). Therefore, we
are not persuaded by appellants’ argument. We conclude the trial court correctly
ruled that the interpretation of the ambiguous term “Blake International” is not
limited to a singular entity.
We overrule appellants’ first issue.
IV. JOINT & SEVERAL LIABILITY
In their second issue, appellants argue there is legally insufficient evidence
supporting the joint and several liability finding because “[n]one of Stallion’s
evidence demonstrated that Stallion, [BI USA], or [BI Rigs] ever stated or
impliedly expressed a belief that both Blake entities were joint lessees under the
Lease, equally obligated to pay rent and equally entitled to receive possession and
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make use of Stallion’s equipment.”
A. APPLICABLE LAW & STANDARD OF REVIEW
Defendants are jointly and severally liable for breaches of contracts to which
they are a party. Z.M. Shayjayadam3, LLC v. Omnova Sols., Inc., No. 14-19-
00623-CV, 2020 WL 6278615, at *10 (Tex. App.—Houston [14th Dist.] Oct. 27,
2020, no pet.) (mem. op.). Joint and several liability is appropriate in contract cases
when two or more persons promise the same performance. Id. If an obligation is
joint and several, then any one of the obligors may be held liable. Id.B. ANALYSIS
Whether BI Rigs and BI USA are jointly and severally liable depends on
whether the parties intended that both be parties to the contract when Blake signed
for “Blake International.” See Z.M. Shayjayadam3, LLC, 2020 WL 6278615, at
*10. As previously concluded, this was a fact question for the fact finder.
Appellants second issue on appeal challenges the legal sufficiency of the evidence
supporting the trial court’s finding that the ambiguous term “Blake International”
was intended by the parties to include BI Rigs.
Here, it is undisputed that Blake is the president and CEO for both BI USA
and BI Rigs and that he signed the 2013 contract for “Blake International” as
president and CEO. It is also undisputed that both entities have the same address
and both own and lease offshore drilling rigs in the Gulf of Mexico that utilize
modular living quarters like those leased by Stallion. The 2011 lease defined the
“LESSEE” as “Blake International USA Rigs,” and there was evidence that the
employees of BI RIGS who negotiated the 2013 lease with Stallion were aware
that “the only things that have changed from the [2011] agreement are the
company name and contact, dates, and Exhibit A.” There is also evidence that
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Blake stopped considering himself the President and CEO of BI USA when BI
Rigs started paying his salary and that his salary for 2013 was paid by BI Rigs. The
employees of BI Rigs who negotiated the 2013 lease were also involved in
operating BI USA. These BI Rigs employees never communicated during
negotiations that they were excluding BI Rigs from the negotiations for the 2013
contract. And there was evidence that BI Rigs’ officers and employees used the
term “Blake International” to refer to both BI USA and BI Rigs. Despite requesting
changes to the 2013 contract prior to its execution, the employees of BI Rigs did
not request that the term “Blake International” be modified or changed. Stallion
submitted into the record a letter from Blake to Stallion, dated July 24, 2014,
stating that BI Rigs and Stallion entered into the 2013 contract and that BI Rigs
was requesting cancellation of the contract.
It is undisputed that the parties intended to include BI USA in the 2013
agreement and there is legally sufficient evidence they intended to include BI Rigs.
The term in the contract “Blake International” is applicable to both entities and was
used to refer to both BI USA and BI Rigs by the parties. By implication, this
evidence supports a finding that the parties intended to include both BI USA and
BI Rigs as parties to the contract when they used the term “Blake International.”
We conclude that a reasonable trier of fact could have inferred that the
parties intended the term “Blake International” to include both BI USA and BI
Rigs. Because there is legally sufficient evidence that both BI USA and BI Rigs
promised the same performance in the 2013 contract, we conclude that joint and
several liability is applicable. See Z.M. Shayjayadam3, 2020 WL 6278615, at *10;
see also Nguyen v. Nguyen, No. 14-19-00913-CV, 2021 WL 786628, at *7 (Tex.
App.—Houston [14th Dist.] Mar. 2, 2021, no pet.) (mem. op.) (“When two co-
signers promise the same performance to the same promise, joint and several
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liability usually arises unless a contrary intention is apparent in the language of the
instrument.”). We overrule appellants’ second issue.
V. CONCLUSION
Having overruled both of appellants’ issues on appeal, we affirm the trial
court’s judgment.
/s/ Margaret “Meg” Poissant
Justice
Panel consists of Justices Hassan, Poissant, and Wilson.
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