ETC Texas Pipeline, Ltd. v. XTO Energy Inc. ( 2024 )

Opinion filed September 12, 2024
In The
Eleventh Court of Appeals
__________
No. 11-22-00350-CV
__________
ETC TEXAS PIPELINE, LTD., Appellant
V.
XTO ENERGY INC., Appellee
On Appeal from the 385th District Court
Midland County, Texas
Trial Court Cause No. CV57367
OPINION
This is an appeal from a summary judgment in a contractual dispute.
Appellant, ETC Texas Pipeline, Ltd. (ETC), and Appellee, XTO Energy Inc. (XTO),
are sophisticated parties who entered into a contract for the gathering and processing
of gas. The parties established the basic structure for their working relationship
when they executed a Gathering and Processing Agreement (GPA) in 2011. The
GPA did not require the parties to enter into any specific transaction for the gathering
and processing of gas; however if they chose to do so, an Individual Transaction
Confirmation (ITC) would “amend” the agreement by adding practical details of the
contractual relationship. The parties did enter into one such ITC agreement, dated
October 1, 2013 (2013 ITC), and later amended the 2013 ITC on October 1, 2016
(2016 ITC).
The parties disagree as to the scope and construction of the operative
contracts, particularly regarding whether XTO has an exclusive commitment to
supply all gas extracted from the Dedicated Acreage to ETC, and whether ETC has
a right to recover expectancy damages and reliance damages as a result of gas having
been sold by XTO to entities other than ETC. Additionally, there is a dispute about
the sufficiency of the Dedicated Acreage map, and whether the map itself voids the
contract under the statute of frauds. Having heard multiple motions for summary
judgment, the trial court entered a final judgment for XTO. We reverse and remand
in part, and we affirm in part.
Background and Procedural History
In 2011, ETC and XTO created and executed a base agreement (the GPA) to
guide the structure of their relationship—XTO would produce gas, which would pass
to a receipt point and to an ETC plant for processing. The GPA was intended to
apply to any future ITCs created for the gathering and processing of gas. The ITC
(and its amendments) and the GPA were intended to constitute a single integrated
agreement, with discrepancies to be resolved in favor of the ITC terms.
The 2016 ITC amended the original 2013 ITC. ETC claims, and XTO does
not deny, that, over time, the parties amended the ITC a total of twelve times—each
including the following statement: “The Agreement is amended to the extent noted
herein. In all other respects, it is confirmed and shall continue in full force and
effect.” The amendments largely included changes to descriptions about the
gathering systems, to the “fees and throughout commitment” section (considering
2
changes to MMBtu amounts), and updates to Receipt Points—including the latitude
and longitude identification and/or legal descriptions of those points. Both the 2013
ITC and the 2016 ITC include the same map of the Dedicated Acreage, as well as a
provision indicating that the gathering and processing subject to the contract is
contained within the area depicted on the map.1
In its brief on appeal ETC claims, among other things, that:
The parties worked together successfully for several years. XTO
produced a substantial amount of gas from the [Dedicated Acreage],
ETC received and processed it, and new facilities were built as needed.
XTO then sold the improved gas to third parties while ETC earned fees
for gathering and improving the gas.
In 2019, ETC claims that, at a semi-annual meeting, XTO admitted to sending gas
from the Dedicated Acreage area to ETC competitors, leading ETC to believe that
XTO breached the exclusivity clause in the agreement. Section 4.1 of the GPA
reads:
Shipper hereby dedicates for gathering and processing hereunder all of
the Gas owned or controlled by Shipper or an Affiliate of Shipper that
is produced from the area depicted on the map attached to the applicable
ITC as Appendix 1.
XTO claims on appeal that ETC did not have the capacity to take all the gas XTO
produced, causing XTO to “flare” (i.e., burn) some of the gas instead of being able
to sell it.
In May 2020, ETC sought injunctive relief against XTO in Dallas County. A
temporary restraining order was granted, but following a hearing, the TRO was
dissolved, and ETC’s request for injunctive relief was denied. The case was
This Dedicated Acreage map is drawn using “bubbles” to circle broad multi-county areas on a map
1
of West Texas without outlines of specific sections, blocks, or legal descriptions of same.
3
subsequently transferred to Midland County. The final judgment from the Midland
County district court is at issue in this appeal.
In the Midland trial court, ETC raised claims related to damages. In response,
XTO filed a traditional and no-evidence motion for partial summary judgment on
ETC’s theories of damages and a motion to exclude ETC’s damages evidence,
alleging that it was untimely, irrelevant, and unreliable. In the traditional motion for
summary judgment, XTO argued that the “Limitation of Liability” provision in
Section 13.2 of the GPA prohibited ETC from recovering lost profit damages. The
trial court granted the motion in part—only as it related to lost profits—ordering that
ETC was “not entitled to request or recover direct or indirect lost profits should it
prevail on its claims and causes of action.” The trial court denied the remainder of
the motion—including the no-evidence motion for summary judgment.
In a motion to exclude ETC’s damages evidence, XTO argued that the
evidence that ETC attempted to use to prove damages was not only lost profit
damages prohibited by the GPA but was barred by Rule 193.6(a) of the Texas Rules
of Civil Procedure because it was untimely provided. See TEX. R. CIV. P. 193.6.
The trial court granted the motion to exclude ETC’s damages evidence and further
ordered that ETC could not introduce evidence in support of its claim for damages.
XTO also filed a motion for partial summary judgment based on the statute of
frauds. XTO argued that the Dedicated Acreage map violated the statute of frauds—
meaning that, by incorporation, there was no valid Dedicated Acreage defined within
the ITCs. XTO claimed that the Dedicated Acreage map was invalid because the
“dotted boundary” of the superimposed circular bubbles on the West Texas map
would have a corresponding width of approximately 4,000 feet (when considered to
scale on the map). This, XTO argued, rendered the map—and only the map—
unenforceable under the statute of frauds.
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The trial court signed its final judgment on December 9, 2022. The trial court
ruled that: (1) the area depicted by the Dedicated Acreage map was unenforceable
under the statute of frauds, but excepted from that ruling those tracts within the
Dedicated Acreage, which had been more fully described with legal descriptions in
written amendments to the 2016 ITC; (2) pursuant to Rule 166a of the Texas Rules
of Civil Procedure, ETC take nothing on its claims for breach of contract, fraud in
the inducement, fraud and string along fraud, negligent misrepresentation, unjust
enrichment, and quantum meruit; (3) ETC’s and XTO’s declaratory judgment claims
were dismissed without prejudice as moot as a result of the statute of frauds ruling;
and (4) XTO would recover from ETC all of XTO’s taxable court costs under
Rule 131. The trial court’s ruling on the statute of frauds, together with all prior
orders and nonsuits by ETC and XTO, were incorporated into and constituted the
trial court’s final judgment.
ETC presents five issues for review on appeal: (1) XTO did not conclusively
establish its statute of frauds defense; (2) XTO did not conclusively negate ETC’s
right to expectancy damages; (3) XTO did not conclusively negate ETC’s proof of
reliance damages; (4) XTO did not conclusively negate ETC’s right to seek equitable
relief; and (5) any remand on damages should also include ETC’s tort and quasi-
contract claims. We address the issues in the order they were presented on appeal.
Issue One: Statute of Frauds
In ETC’s first issue, it argues that the statute of frauds does not apply to this
contract due to the statute’s exceptions, but that even if it did, it is fully satisfied by
the writing. ETC includes analysis related to three purported exceptions to the
statute of frauds: ratification, estoppel, and partial performance. The trial court
determined that only a small part of the ITC was void under the statute of frauds—
that area which was depicted by the Dedicated Acreage map. Any tracts within the
Dedicated Acreage, which were identified with legal descriptions, were excluded
5
from the trial court’s ruling. Although we agree that the statute of frauds is
applicable here, we reverse and remand to the trial court for further proceedings.
Standard of Review and Applicable Law
“We review an order granting summary judgment de novo, generally taking
as true all evidence favorable to the nonmovant and indulging every reasonable
inference in the nonmovant’s favor.” Concho Res., Inc. v. Ellison, 627 S.W.3d 226,
233 (Tex. 2021) (citing Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661
(Tex. 2005)). A party moving for traditional summary judgment has the burden of
establishing that there is no genuine issue of material fact and that it is entitled to
judgment as a matter of law. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844, 848 (Tex. 2009); Provident Life & Accident Ins. Co. v. Knott, 128
S.W.3d 211, 215 (Tex. 2003). “[A] defendant who conclusively negates at least one
essential element of a cause of action or conclusively establishes all the elements of
an affirmative defense is entitled to summary judgment.” KCM Fin. LLC v.
Bradshaw, 457 S.W.3d 70, 79 (Tex. 2015).
When, as here, the trial court specifies the ground on which the motion for
summary judgment was granted, the court of appeals should consider the ground
ruled on, but may also consider, in the interest of judicial economy, other grounds
preserved for appellate review that the trial court did not rule on. Gamma Grp.,
Inc. v. Home State Cnty. Mut. Ins. Co., 342 S.W.3d 762, 765–66 (Tex. App.—Dallas
2011, pet. denied) (citing Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626
(Tex. 1996)). The Court in Cates explained that this limited consideration by an
appellate court prevents the higher court from usurping the trial court’s authority to
consider and rule on issues before it—thereby also denying the appellate court the
benefit of the trial court’s decision on the issue—if, for example, the appellate court
affirms a summary judgment on an independent ground that was not specifically
considered by the trial court. Cates, 927 S.W.2d at 626. In this case, the final
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judgment makes it clear that the trial court’s decision was based upon XTO’s statute
of frauds argument.
XTO pled the statute of frauds as an affirmative defense and thus had the
initial burden to establish that the statute of frauds applied. See TEX. BUS. & COM.
CODE ANN. § 26.01 (West 2023); TEX. R. CIV. P. 94. “Whether a contract comes
within the statute of frauds is a question of law, which we review de novo.” Dynegy,
Inc. v. Yates, 422 S.W.3d 638, 642 (Tex. 2013). Contending that a contract is
unenforceable under the statute of frauds is an affirmative defense. See TEX. R.
CIV. P. 94. “To obtain summary judgment on an affirmative defense, a defendant
must plead and conclusively establish each element of an affirmative defense
thereby rebutting the plaintiff’s cause of action.” Biko v. Siemens Corp., 246 S.W.3d
148, 159 (Tex. App.—Dallas 2007, pet. denied) (citing City of Houston v. Clear
Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979)).
When an agreement falls under the statute of frauds, the statute of frauds
generally requires that the agreement be in writing and signed by the person(s)
“charged with the promise or agreement”—or by a person authorized to sign for him.
BUS. & COM. § 26.01(a). The statute of frauds applies to a variety of “promise[s] or
agreement[s],” including conveyances of real property and agreements that cannot
be performed within one year from the making of the agreement. See id. at
§ 26.01(b)(4), (b)(6). Oil and gas interests constitute real property; thus, any
agreement for the transfer or assignment of a mineral interest must comply with the
statute of frauds. Anderson Energy Corp. v. Dominion Okla. Tex. Expl. & Prod.,
Inc., 469 S.W.3d 280, 295 (Tex. App.—San Antonio 2015, no pet.) (citing Long
Trusts v. Griffin, 222 S.W.3d 412, 416 (Tex. 2006) (per curiam)). When a contract
provides that it is to span a duration of more than one year, it is subject to the statute
of frauds. See Farone v. Bag’n Baggage, Ltd., 165 S.W.3d 795, 800 (Tex. App.—
Eastland 2005, no pet.).
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Analysis
First, we agree with the trial court that the contract is subject to the statute of
frauds. We disagree, however, with the trial court’s ruling and final judgment to the
extent that it found that a portion of the contract does not meet the statute’s
requirements. We also disagree with XTO that the contract falls within the statute
of frauds because it is a conveyance of real property.2 In this regard, the contract
specifies that it is a service contract. The GPA specifies that the agreement is for
the “Tender of Gas and Gathering Services,” and both the 2013 ITC and 2016 ITC
indicate that the contract governs the service of “Shipper”—XTO’s—reserved
capacity. The ITCs each include the conditions under which dedicated gas may be
temporarily or permanently released, but it is clear that these are circumstances for
nonperformance of the contract, rather than performance. See Farone, 165 S.W.3d
at 800. And although the 2016 ITC includes a calculation for the “Gatherer’s Share”
(the “Gatherer” being ETC), it does not shift the purpose of the contract from a
service contract to a contract for the transfer of a mineral interest and, in turn, a
contract for the sale of real property.
Instead, the contract is subject to the statute of frauds because the 2013 ITC
and 2016 ITC include contract terms, or agreements, that require performance
beyond one year. See BUS. & COM. § 26.01(b)(6). “An agreement that fixes a
definite period longer than a year during which performance shall continue indicates
that the parties did not contemplate earlier performance.” Walker v. Tafralian, 107
2
The cases cited by XTO on appeal all relate to the transfer of oil and gas leases or the working
interest in such a lease. See Long Trusts, 222 S.W.3d at 416 (the respondent agreed to pay part of drilling
and operating costs in exchange for an assignment of part of the working interest in producing wells); U.S.
Pipeline Corp. v. Kinder, 609 S.W.2d 837, 838–39 (Tex. App.—Fort Worth 1980, writ ref’d n.r.e.) (the
seller and buyer contracted to sell and purchase natural gas produced in the seller’s dedicated acreage and
title ultimately passed from the seller to the buyer); see also B&A Pipeline Co. v. Dorney, 904 F.2d 996,
997 (5th Cir. 1990) (the parties entered into a gas purchase contract where the seller was to sell and deliver
to the buyer natural gas produced from a designated area). Here, the transfer is only for ETC to transport
and process the gas at issue, not to take ownership of it.
8
S.W.3d 665, 669 (Tex. App.—Fort Worth 2003, pet. denied) (citing Mann v. NCNB
Tex. Nat’l Bank, 854 S.W.2d 664, 668 (Tex. App.—Dallas 1992, no writ); Vess
Beverages, Inc. v. Paddington Corp., 886 F.2d 208, 213 (8th Cir. 1989)). The term
in the 2016 ITC begins on November 1, 2016 and continues through July 31, 2029—
a period that is undisputedly longer than one year. The contract has been
memorialized in writing, with the primary dispute centering on the Dedicated
Acreage map—Appendix 1 to both the 2013 ITC and 2016 ITC—and whether the
map is sufficiently clear under the statute of frauds writing requirement.3
XTO argues that the Dedicated Acreage map as drawn is not sufficient to
satisfy the writing requirement for the statute of frauds. We disagree. To satisfy the
statute of frauds, the writing must either “furnish within itself, or by reference to
some other existing writing, the means or data by which the [property] to be
conveyed may be identified with reasonable certainty.” Anderson, 469 S.W.3d at
295 (emphasis added) (quoting Long Trusts, 222 S.W.3d at 416). The purpose of
the statute of frauds is “to prevent fraud and perjury in certain kinds of transactions
by requiring agreements to be set out in a writing signed by the parties.” Kalmus v.
Oliver, 390 S.W.3d 586, 589 (Tex. App.—Dallas 2012, no pet.) (quoting Haase v.
Glazner, 62 S.W.3d 795, 799 (Tex. 2001)). That purpose is foiled if we do not
consider the function of the Dedicated Acreage map as it relates to the agreement in
its entirety.
It is clear from the GPA and the ITCs, as well as the evidence in the record,
that the Dedicated Acreage map was never meant to provide the specific receipt
points and processing centers that were subject to the agreements. Instead, the
Dedicated Acreage map was meant to provide a general area—to be further defined
3
We do not include with this opinion a copy of the Dedicated Acreage map because, while illegible
reproductions appear elsewhere in the record, the only marginally readable map provided is a part of the
record that was sealed by the trial court.
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by XTO—in which the parties were to do business together. In other words, the map
was intended to confine the agreement to these particular counties, rather than to
make the agreement subject to any area in the State of Texas. From the Dedicated
Acreage map, either party may view which counties are affected, where the pipeline
falls, and the location of major roadways. But the record on appeal lacks information
related to specifics which would allow a more complete analysis. There are
obviously areas within the map that are clearly shown as included acreage—notably
Midland and Glasscock Counties with diminutive exceptions. To the contrary, none
of Reagan County is circled as part of the Dedicated Acreage map except for a
modest portion of the northwest corner. The record also lacks information about the
produced gas in dispute—what leases it came from and where those leases are
located. Those leases may be clearly identifiable within an area shown on the
Dedicated Acreage map for statute of frauds purposes—or not, depending on the
county 4—but it is impossible to identify any specific leases from the map. We
conclude that XTO did not meet its burden to show that the entire map was void
under the statute of frauds as applied to the disputed breach.
Additionally, the map itself indicates that XTO would provide further
“specific lease information and plats” to ETC. These constitute another “existing
writing” referenced in the document, that can be consulted to determine the specific
“boundary” of the Dedicated Acreage map. See generally Anderson, 469 S.W.3d at
295. Further, the ITC amendments provide the latitude and longitude of the
meters—“receipt points”—which are subject to the agreement, as well as various
acquired and divested XTO acreage. This constitutes additional written information
4
For a lease in Reagan County, there might very well be a statute of frauds defense based on the
lack of specificity of the Dedicated Acreage map regarding that specific county, but for leases in Midland
and Glasscock Counties, a statute of frauds defense based on the lack of specificity of the map would be
more difficult.
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furnished in the document to assist with the determination of the area referred to as
the Dedicated Acreage.
XTO only argued that the Dedicated Acreage map was not sufficient enough
to meet the statute of frauds and was, therefore, unenforceable. This is a broad
argument. In any event, XTO conceded that the specifically dedicated “receipt
points,” which are identified with latitude and longitude coordinates, are sufficiently
specific and enforceable. Clarity in the “receipt points” is necessary, as that is where
the gas is delivered and received into the gathering system. Thus, based on the
purpose of the map as it relates to the service contract, as well as the ability to discern
the boundaries with another “existing writing,” the Dedicated Acreage map is not
void in toto under the statute of frauds.
XTO’s summary judgment evidence, with regard to the disputed gas that was
allegedly processed by entities other than ETC, does not conclusively demonstrate
that the dedication of such acreage is void under the statute of frauds. Therefore, we
need not address Appellant’s arguments regarding the applicability of three
exceptions that allow for the enforcement of a contract otherwise unenforceable
under the statute of frauds: ratification, estoppel, and partial performance. See
TEX. R. APP. P. 47.1.
We also sustain ETC’s first issue to the effect that the Dedicated Acreage
map is not void in its entirety under the statute of frauds.
Issues Two and Five: Expectancy Damages
In ETC’s second issue, it argues that the contract’s damage limitation clause
was misinterpreted, resulting in the exclusion of lost profits as recoverable “direct”
damages. In response, XTO argues that the trial court correctly excluded recovery
of all lost profit damages. As set forth below, we affirm the judgment of the trial
court to the extent that it excluded ETC’s recovery of all lost profit damages. In so
11
doing, we overrule ETC’s fifth issue, that any remand on damages should also
include ETC’s tort and quasi-contract claims.
Standard of Review
We review de novo the trial court’s ruling on XTO’s motion for summary
judgment. See Concho Res., 627 S.W.3d at 233. Where, as here, there is a claim of
breach of contract, “[w]e must construe contracts by the language contained in the
document, with a mind to Texas’s strong public policy favoring preservation of the
freedom to contract.” FPL Energy, LLC v. TXU Portfolio Mgmt. Co., 426 S.W.3d
59, 67 (Tex. 2014) (citing El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389
S.W.3d 802, 811–12 (Tex. 2012)); see also Cross Timbers Oil Co. v. Exxon Corp.,
22 S.W.3d 24, 26 (Tex. App.—Amarillo 2000, no pet.) (“In short, the parties strike
the deal they choose to strike and, thus, voluntarily bind themselves in the manner
they choose.”). “[S]ophisticated parties have broad latitude in defining the terms of
their business relationship.” Sundown Energy LP v. HJSA No. 3, Ltd. P’ship, 622
S.W.3d 884, 889 (Tex. 2021) (quoting FPL Energy, LLC, 426 S.W.3d at 67).
“[C]ourts are obliged to enforce the parties’ bargain according to its terms.” Id.
(citing Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 646 (Tex. 1996) (“We
have long held that courts will not rewrite agreements to insert provisions parties
could have included or to imply restraints for which they have not bargained.”)).
“[C]ourts may not rewrite a contract under the guise of interpretation.” Id.; see also
Provident Fire Ins. Co. v. Ashy, 162 S.W.2d 684, 687 (Tex. [Comm’n Op.] 1942)
(“Parties make their own contracts, and it is not within the province of this court to
vary their terms in order to protect them from the consequences of their own
oversights and failures in nonobservance of obligations assumed.” (quoting Dorroh-
Kelly Mercantile Co. v. Orient Ins. Co., 135 S.W. 1165, 1167 (1911))); E. Tex. Fire
Ins. Co. v. Kempner, 27 S.W. 122, 122 (1894) (“[W]here the language is plain and
unambiguous, courts must enforce the contract as made by the parties, and cannot
12
make a new contract for them, nor change that which they have made under the guise
of construction.”).
When we interpret a contract, we begin with the contract’s express language.
Nettye Engler Energy, LP v. BlueStone Nat. Res. II, LLC, 639 S.W.3d 682, 689 (Tex.
2022). We interpret the contract in its “plain, grammatical, and ordinary” meaning
unless the instrument shows the parties used the terms in a technical sense, or a plain
interpretation would “clearly defeat the parties’ intentions.” Id. at 690. We must
first decide what the parties intended as evidenced in the written agreement. In
construing a written contract, our primary objective is to determine the true
intentions of the parties as expressed in the writing. Italian Cowboy Partners, Ltd. v.
Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex.2011). We are to consider
the entire writing “in an effort to harmonize and give effect to all the provisions of
the contract so that none will be rendered meaningless.” Coker v. Coker, 650 S.W.2d
391, 393 (Tex.1983). If the written agreement is so worded that it can be assigned
a certain or definite legal meaning or interpretation, it is not ambiguous, and a court
will construe the agreement as a matter of law. Id. In construing a written contract,
the terms are typically given their plain, ordinary, and generally accepted meaning.
Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996).
Analysis
ETC and XTO memorialized their agreement by creating and executing the
GPA and subsequent ITCs, which were subject to the agreements contained in the
GPA. In the GPA, the parties created a “Limitation of Liability” which reads:
Notwithstanding anything to the contrary in this Agreement, any
remedies or damages arising from a breach of this Agreement by either
Gatherer or Shipper shall be limited to the actual direct and foreseeable
costs, losses, or damages caused by or resulting from the breach and
incurred by the Party claiming damages. No Party shall be liable to any
other Party for any loss of profit or anticipated profit, business
interruption, loss of revenue, loss of use, loss of contract, loss of good
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will, increased cost of working or loss of business opportunity, nor for
any indirect loss, consequential loss, or exemplary damages suffered by
a Party or any other person, all or any part of which arise out of or
related to this Agreement or the performance or breach of this
Agreement, or to any act or omission related to this Agreement, whether
in contract, warranty, tort (including but not limited to negligence and
willful misconduct), strict liability, or any other theory in contract law,
or equity. For the purposes of this Agreement, “direct costs, losses, or
damages” shall not include any cost, expense, loss, award or damage
suffered or incurred by a Party in respect of any actions, proceedings,
claims, or demands made against that Party by any of its customers or
any other Person.
ETC argues that the first sentence of this clause allows for the recovery of lost profits
as direct damages. XTO disagrees, claiming that the second sentence does not
distinguish between direct or indirect lost profit damages and, therefore, bars any
such damages. ETC points to this court’s opinion in Continental Holdings, Ltd. v.
Leahy, which also interpreted a limitation of liability provision. See 132 S.W.3d
471, 475 (Tex. App.—Eastland 2003, no pet.). In Continental Holdings, the relevant
clause provided that: “Neither [party] shall bear any liability to the other for loss of
production, loss of profits, loss of business or any other indirect or consequential
damages.” Id. ETC seems to argue that, because Continental Holdings
acknowledged that lost profit damages may be classified as “direct” or “indirect”
damages, a no limitation of liability clause could waive both forms of lost profit
damages. See id. But our conclusion in Continental Holdings does not support this
assertion.
Here, the parties contemplated the recovery of “actual direct and foreseeable
costs, losses, or damages caused by or resulting from the breach and incurred by the
Party claiming damages.” Then, the parties agreed per the terms of the contract that,
“No Party shall be liable to any other Party for any loss of profit or anticipated
profit . . . nor for any indirect loss, consequential loss, or exemplary damages
14
suffered.” (emphasis added). Even with the limitation of liability clause language in
Continental Holdings, which seemingly grouped loss of profits with indirect or
consequential damages, we held that the plain, ordinary, and generally accepted
meaning of the term “loss of profits” includes direct and indirect damages.
Continental Holdings, 132 S.W.3d at 477. Here, the clause’s language is even more
distinct than it was in Continental Holdings. The permitted recovery of certain direct
damages is identified first, and loss of profits (among other damages) is precluded.
Using the plain meaning of “loss of profits,” we conclude that the GPA’s limitation
of liability clause is unambiguous, and the parties have waived both direct and
indirect loss of profit damages. ETC’s second issue is overruled.
Issue Three: Reliance Damages
In ETC’s third issue, it claims that the trial court abused its discretion when it
foreclosed the recovery of reliance damages and excluded all of ETC’s evidence that
related to reliance damages. ETC claims that the untimely disclosure of evidence
allegation only referred to a single spreadsheet and did not maintain that all
claimed reliance damages evidence was untimely. XTO disagrees, claiming ETC
did not timely disclose reliance damages and failed to establish an exception under
Rule 193.6.
Standard of Review and Applicable Law
“A court of appeals reviews a trial court’s decision under Rule 193.6(a) for
abuse of discretion.” Jackson v. Takara, 675 S.W.3d 1, 6 (Tex. 2023). In general,
a trial court abuses its discretion if it acts arbitrarily, unreasonably, or without regard
to any guiding rules and principles. Galindo v. Prosperity Partners, Inc., 429
S.W.3d 690, 697 (Tex. App.—Eastland 2014, pet. denied) (citing Downer v.
Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985)). This occurs
when either (1) the trial court fails to analyze or apply the law correctly, or (2) with
regard to factual issues and matters committed to its discretion, the trial court
15
can reasonably reach only one decision based on the record but failed to do so.
Mid Continent Lift & Equip., LLC v. J. McNeill Pilot Car Serv., 537 S.W.3d 660,
672 (Tex. App.—Austin 2017, no pet.).
A party who fails to timely make, amend, or supplement a discovery response
may not introduce into evidence the material or information that was not timely
disclosed unless the trial court finds that (1) there was good cause for the failure
to timely provide the information or (2) the failure to timely provide the
discovery response will not unfairly surprise or prejudice the other party. TEX. R.
CIV. P. 193.6(a). The proponent of the evidence has the burden to establish a
basis for allowing the introduction of the evidence or testimony, and the record
must support a finding of good cause or lack of unfair surprise or prejudice.
Id. R. 193.6(b).
The good cause exception allows a trial court to excuse a party’s failure to
comply with a discovery deadline in difficult or impossible circumstances. PopCap
Games, Inc. v. MumboJumbo, LLC, 350 S.W.3d 699, 718 (Tex. App.—Dallas 2011,
pet. denied). Inadvertence, lack of surprise, or the uniqueness of the offered
evidence alone will not constitute good cause. See id.To determine if the untimely discovery would unfairly surprise or prejudice
the other party, we consider the purpose of Rule 193.6. See Mid Continent, 537
S.W.3d at 672 (collecting cases). The purpose of Rule 193.6 is to: (1) promote
responsible assessment of settlement, (2) prevent trial by ambush, and (3) give the
other party the opportunity to prepare rebuttal to expert testimony. See In re
D.W.G.K., 558 S.W.3d 671, 680 (Tex. App.—Texarkana 2018, pet. denied).
Accordingly, to establish the absence of unfair surprise or prejudice, the party
seeking to offer the testimony of an untimely-disclosed witness or to introduce
untimely-disclosed evidence must establish that the other party had enough evidence
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to reasonably assess settlement, to avoid trial by ambush, and to prepare rebuttal to
expert testimony. Id.Analysis
ETC characterizes XTO’s argument about the untimely-disclosure-of-
damages evidence as “a single spreadsheet.” ETC claims this spreadsheet was
nothing more than a supplement following a discovered inaccuracy. However, ETC
admits on appeal that the supplemental spreadsheet was produced on June 24, 2022.
Unless otherwise ordered, pretrial disclosures are typically timely if made at least
thirty days before trial. See TEX. R. CIV. P. 194.4(b). Although June 24 is more than
thirty days before the August 2022 trial setting, a Rule 11 agreement shows that the
parties amended the factual discovery period to close on May 15, 2022. ETC does
not contest this May deadline on appeal. As the disclosure on June 24 was untimely
under the Rule 11 agreement, the burden was on ETC to show either good cause for
the delay or that the delay would not cause unfair prejudice or unfair surprise. See
TEX. R. CIV. P 193.6(b).
For good cause, ETC only claims that the supplemental spreadsheet was done
“just weeks after discovering that an earlier version was inaccurate.” This does not
constitute either a difficult or an impossible circumstance. See PopCap Games, 350
S.W.3d at 718. Inadvertently providing an erroneous document in discovery alone
does not constitute good cause. Id. Absent any other showing for delay, we
conclude ETC has not met its burden under the good cause exception to Rule 193.6.
As for the second exception, ETC only claims that XTO had plenty of time
before trial to review the document and it was a routine supplementation; therefore,
XTO did not suffer any unfair prejudice. Considering the purposes of Rule 193.6,
we conclude that inaccurate information, provided in an amended disclosure in an
untimely manner, does not allow for the promotion of a responsible assessment of
settlement or the proper preparation of rebuttal expert testimony. See D.W.G.K., 558
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S.W.3d at 680. ETC has failed to provide support in the record that it meets either
purpose—that good cause exists or that the untimely produced discovery would not
cause unfair prejudice or unfair surprise to XTO. We further note that this argument
from ETC is their only argument for the lack of unfair surprise or unfair prejudice
exception on appeal. Because this exception must be supported by evidence in the
record, this bare statement alone is insufficient to meet their burden under
Rule 193.6. See TEX. R. CIV. P 193.6(b). We decline to scour the record for
Appellant to search for additional proof to satisfy their burden under the rule.
Accordingly, we conclude that the trial court did not abuse its discretion when
it excluded the complained-of evidence. This holding, however, does not preclude
the trial court from reconsidering and establishing new discovery deadlines on
remand, should such action be deemed necessary, for future pretrial proceedings.
ETC’s third issue is overruled.
Issue Four: Equitable Relief
ETC’s fourth issue relates to the trial court’s denial of ETC’s request for
specific performance—an equitable remedy. Because we are remanding the case to
the trial court for further proceedings, we cannot say that no remedy at law is
available at this juncture. See Lauret v Meritage Homes of Tex., LLC, 455 S.W.3d
695, 700 (Tex. App.—Austin 2014, no pet.) (A party seeing an equitable remedy—
such as specific performance—must prove that legal remedies would not adequately
compensate for the injuries suffered.); Am. Hous. Res., Inc. v. Slaughter, 597 S.W.2d
13, 15 (Tex. App.—Dallas 1980, writ ref’d n.r.e.) (“A fundamental rule of equity is
that a court will not grant specific performance unless it is shown that no adequate
remedy exists at law.”). Here, ETC cannot prove that there is no legal remedy for
the alleged injuries it suffered, as the trial court has not yet considered the validity
of the complaints alleged in their pleadings. Further, we have clarified what
damages ETC may seek under the parties’ contractual limitation of liability clause—
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if such damages are determined to be appropriate on remand. If such damages are
not available, we will not preclude the trial court’s consideration of available
equitable relief, if any. As a result, we overrule ETC’s fourth issue.
This Court’s Ruling
We reverse the judgment of the trial court to the extent that it found the
Dedicated Acreage map was unenforceable in toto under the statute of frauds, and
to the extent that the trial court’s judgment ordered Appellant (ETC) take nothing on
its claims for breach of contract, fraud in the inducement, fraud and string along
fraud, negligent misrepresentation, unjust enrichment, and quantum meruit. In all
other aspects, we affirm the judgment of the trial court. We remand this case to the
trial court for further proceedings consistent with this opinion.
W. BRUCE WILLIAMS
JUSTICE
September 12, 2024
Panel consists of: Bailey, C.J.,
Trotter, J., and Williams, J.
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