Permian Power Tong, Inc. v. Diamondback E&P, LLC

ACCEPTED
12-16-00092-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
9/19/2016 2:38:29 PM
Pam Estes
CLERK
ORAL ARGUMENT REQUESTED FILED IN
12th COURT OF APPEALS
TYLER, TEXAS
NO. 12-16-00092-CV
9/19/2016 2:38:29 PM
PAM ESTES
Clerk
IN THE COURT OF APPEALS
FOR THE TWELFTH DISTRICT OF TEXAS AT TYLER, TEXAS
PERMIAN POWER TONG, INC.,
Appellant,
v.
DIAMONDBACK E&P, LLC,
Appellee.
On Appeal from the 441st District Court
Midland, County, Texas, Cause No. CV-49854
(Hon. Rodney W. Satterwhite)
REPLY BRIEF OF APPELLANT
Respectfully submitted,
R BRENT COOPER
brent.cooper@cooperscully.com
Texas Bar No. 04783250
DIANA L. FAUST
diana.faust@cooperscully.com
Texas Bar No. 00793717
KYLE M. BURKE
kyle.burke@cooperscully.com
Texas Bar No. 24073089
COOPER & SCULLY, P.C.
900 Jackson Street, Suite 100
Dallas, Texas 75202
TEL: (214) 712-9500
FAX: (214) 712-9540
ATTORNEYS FOR APPELLANT
TABLE OF CONTENTS
Page
TABLE OF CONTENTS........................................................................................2
TABLE OF AUTHORITIES ..................................................................................4
ARGUMENT AND AUTHORITES IN REPLY ....................................................8
I. No Legally Sufficient Evidence Permian Breached the MSA .......................8
A. No Direct or Circumstantial Evidence that Permian Breached
MSA ...................................................................................................9
B. No Competent Expert Testimony That Permian Breached the
MSA .................................................................................................14
C. Diamondback’s Complaint About Legal Sufficiency Review
Misses the Mark................................................................................16
D. Diamondback Relies on Speculation and Inference-Stacking............18
E. Equal Inference Rule ........................................................................19
II. Factually Insufficient Evidence to Support Verdict on Breach ....................20
III. No Legally or Factually Sufficient Evidence that Breach Caused
Damages .....................................................................................................22
IV. Evidence Showed that Diamondback’s Actions Damaged the Pipe.............27
V. Evidence Overwhelmingly Showed that Diamondback Failed To
Mitigate Its Damages ..................................................................................29
VI. Admission of Exhibit 60A Was an Abuse of Discretion..............................30
VII. Damage Awards Not Supported by Legally or Factually Sufficient
Evidence .....................................................................................................33
VIII. Attorney’s Fees Awards Are Not Supported by Legally or Factually
Sufficient Evidence.....................................................................................34
2
CONCLUSION AND PRAYER...........................................................................39
CERTIFICATE OF COMPLIANCE ....................................................................40
CERTIFICATE OF SERVICE..............................................................................41
APPENDIX TO REPLY BRIEF OF APPELLANT..............................................42
3
TABLE OF AUTHORITIES
Case Page(s)
Argo Data Res. Corp. v. Shagrithaya,
380 S.W.3d 249 (Tex. App.—Dallas 2012, pet. denied) .................................. 34
Black Lake Pipeline Co. v. Union Construction Co.,
538 S.W.2d 80 (Tex. 1976).............................................................................. 32
Blankenship v. Mirick,
984 S.W.2d 771 (Tex. App.—Waco 1999, pet. denied) ................................... 26
Cammack the Cook, L.L.C. v. Eastburn,
296 S.W.3d 884 (Tex. App.—Texarkana 2009, pet. denied) ............................ 35
City of Keller v. Wilson,
168 S.W.3d 802 (Tex. 2005) ....................................................................... 15-18
Coastal Terminal Operators v. Essex Crane Rental Corp.,
No. 14-02-00627-CV, 2004 WL 1795355
(Tex. App.—Houston [14th Dist.] Aug. 12, 2004, pet. denied) ........................ 38
Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp.,
136 S.W.3d 227 (Tex. 2004) ............................................................................ 25
Dawson v. Briggs,
107 S.W.3d 739 (Tex. App.—Fort Worth 2003, no pet.).................................. 26
El Apple I, Ltd. v. Olivas,
370 S.W.3d 757 (Tex. 2012) ............................................................................ 37
Feldman v. KPMG LLP,
438 S.W.3d 678 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ..................... 37
Five Star Int’l Holdings, Inc. v. Thomson, Inc.,
324 S.W.3d 160 (Tex. App.—El Paso 2010, pet. denied)................................. 37
Ford Motor Co. v. Castillo,
444 S.W.3d 616 (Tex. 2014) ................................................. 8, 11, 13, 14, 19, 20
4
Ford Motor Co. v. Ridgway,
135 S.W.3d 598 (Tex. 2004) .......................................................................19, 20
Frost Nat'l Bank v. Heafner,
12 S.W.3d 104 (Tex. App.—Houston [1st Dist.] 1999, pet. denied)................. 23
Garcia v. Gomez,
319 S.W.3d 638 (Tex. 2010) ....................................................................... 34-36
Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch,
443 S.W.3d 820 (Tex. 2014) ....................................................................... 15-17
In re E.A.K.,
192 S.W.3d 133 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) ............ 31
Interstate Northborough P’ship v. State,
66 S.W.3d 213 (Tex. 2001).............................................................................. 32
Jamshed v. McLane Exp. Inc.,
449 S.W.3d 871 (Tex. App.—El Paso 2014, no pet.) ....................................... 38
Kindred v. Con/Chem, Inc.,
650 S.W.2d 61 (Tex. 1983).....................................................................9, 13, 14
Marathon Corp. v. Pitzner,
106 S.W.3d 724 (Tex. 2003) ...................................................... 9, 11, 15, 19, 25
McGalliard v. Kuhlmann,
722 S.W.2d 694 (Tex. 1986) ............................................................................ 34
Pegasus Energy Grp. v. Cheyenne Pet. Co.,
3 S.W.3d 112 (Tex. App.—Corpus Christi 1999, pet. denied).......................... 34
Powell v. Vavro, McDonald & Assoc., L.L.C.,
136 S.W.3d 762 (Tex. App.—Dallas 2004, no pet) .......................................... 31
Sentinel Integrity Sols., Inc. v. Mistras Grp., Inc.,
414 S.W.3d 911 (Tex. App.—Houston [1st Dist.] 2013, pet. denied)..........37, 38
State Farm Lloyds v. Fitzgerald,
No. 03-99-00177-CV, 2000 WL 1125217
(Tex. App.—Austin Aug. 10, 2000, no pet.) .................................................... 23
5
Sterner v. Marathon Oil Co.,
767 S.W.2d 686 (Tex. 1989) ............................................................................ 32
Tenaska Energy, Inc. v. Ponderosa Pine Energy, LLC,
437 S.W.3d 518 (Tex. 2014) ............................................................................ 34
Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299 (Tex. 2006) ............................................................................ 36
Torrington Co. v. Stutzman,
46 S.W.3d 829 (Tex. 2000).............................................................................. 38
Varner v. Cardenas,
218 S.W.3d 68 (Tex. 2007).............................................................................. 37
6
NO. 12-16-00092-CV
IN THE COURT OF APPEALS
FOR THE TWELFTH DISTRICT OF TEXAS AT TYLER, TEXAS
PERMIAN POWER TONG, INC.,
Appellant,
v.
DIAMONDBACK E&P, LLC,
Appellee.
On Appeal from the 441st District Court
Midland, County, Texas, Cause No. CV-49854
(Hon. Rodney W. Satterwhite)
REPLY BRIEF OF APPELLANT
TO THE HONORABLE JUSTICES OF THE TWELFTH COURT OF
APPEALS:
Appellant Permian Power Tong, Inc. (“Permian” or “Appellant”) submits
this Reply Brief of Appellant, in accordance with rules 9.4 and 38 of the Texas
Rules of Appellate Procedure and all local rules of this Court. In reply to the Brief
of Appellee1 Diamondback E&P, LLC (“Diamondback” or “Appellee”), Appellant
respectfully states as follows:2
1
Appellant will cite to its Brief of Appellant as “Br.” and the Brief of Appellee as “Resp.”
2
Appellant stands on the arguments and legal authority presented in its opening brief.
Thus, to the extent Appellant may not reply herein to a particular assertion or argument or
7
ARGUMENT AND AUTHORITES IN REPLY
I. No Legally Sufficient Evidence Permian Breached the MSA
Diamondback failed to produce legally sufficient evidence that Permian
breached the MSA. A legal sufficiency challenge will be sustained when the
record confirms either: (a) a complete absence of a vital fact; (b) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered to
prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a
mere scintilla; or (d) the evidence conclusively establishes the opposite of the vital
fact. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014). In a legal
sufficiency review, the court views the evidence in the light most favorable to the
verdict. Id.
When reviewing all of the evidence in a light favorable to the verdict, courts
assume jurors made all inferences in favor of their verdict if reasonable minds
could, and disregard all other inferences in their legal sufficiency review. Id. at
620-21. When reviewing circumstantial evidence that favors the verdict, courts
must “view each piece of circumstantial evidence, not in isolation, but in light of
all the known circumstances.” Id.
citation by Appellee, this should not be construed as acquiescence by Appellant in any of
Appellee’s arguments or waiver by Appellant of any argument made in its Brief of Appellant or
in this Reply Brief.
8
If circumstantial evidence, when viewed in light of all the known
circumstances, is equally consistent with either of two facts, neither fact may be
inferred. Id. Where the circumstantial evidence is not equally consistent with
either of two facts, and the inference drawn by the jury is within the “zone of
reasonable disagreement,” a reviewing court cannot substitute its judgment for that
of the trier-of-fact. Id.
When 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, no evidence of the vital fact. E.g., Kindred v.
Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). An inference stacked only upon
other inferences, rather than upon direct evidence, is not legally sufficient
evidence. E.g., Marathon Corp. v. Pitzner, 106 S.W.3d 724, 728 (Tex. 2003).
A. No Direct or Circumstantial Evidence that Permian Breached
MSA
None of the testimony or documents Diamondback points to is legally
sufficient evidence that Permian breached the MSA. (Resp. at 19-22).
Diamondback’s “evidence” that Permian breached paragraph 11(a)(ii) of the
MSA (regarding “utmost skill” and “good and workmanlike performance”) is
nothing more than speculation or surmise. The third-party pipe inspection
referenced by Diamondback ignores that company man Jesus Villasana admitted
he only observed inspection of about the first ten pieces. (4RR181-82). Hollis did
9
not see the inspection. (3RR224). Diamondback never went back and checked
with the pipe vendor to verify the casing. (4RR18). Diamondback assumed
Permian damaged the pipe.
There was no “concession” by Permian that the pipe was not damaged when
under its control and lowered downhole. Aaron Caine simply testified he did not
remember there being a deformation or defect of the pipe. (4RR118). This is no
evidence the interior of the pipe was free from damage because Caine did not
testify he viewed the pipe interior; Hollis testified that the damage shown from the
caliper logs was the interior of the pipe (4RR61-62), and Grace testified that
exterior damage would not necessarily have been noticeable. (5RR165-66).
Moreover, the caliper logs showed damage at places above and below the
location of Permian’s slips, and showed damage areas shorter and longer than
Permian’s slips. (5RR129-131). Diamondback’s expert could not explain how the
slip could cause different lengths of damage. (4RR242).
Next, Diamondback’s “evidence” that Permian failed to comply with the
MSA’s requirement that Permian’s tools and equipment be free from defect falls
apart under the terms of the MSA. Diamondback relies on its assertion that
Permian did not keep records of the use/maintenance of tools used on the Baron
14-11 job. (Resp. at 20-22).
Nowhere does the MSA require that Permian keep such records. (CR 20).
Diamondback does not and cannot point to any provision of the MSA requiring
10
Permian to document the maintenance and testing of its equipment, what
equipment would be used on this well, or the serial numbers for such. (See id.).
Any purported failure to document the equipment used or its maintenance cannot
form the basis of a breach of the MSA. Diamondback points to no evidence that
Diamondback required Permian document the use, testing, or maintenance of its
tools or equipment. Permian cannot have breached a nonexistent provision of the
MSA.
Diamondback’s “evidence” is nothing more than an assumption: i.e.,
because no documentation exists, we assume the incorrect equipment was used
and/or it was not adequately maintained and tested. This is no evidence that
Permian breached the MSA.3 Castillo, 444 S.W.3d at 620-21; Marathon Corp.,
106 S.W.3d at 728.
Diamondback points to no evidence that Permian’s crew was not suitably
trained or sufficiently experienced. (Resp. at 21-22). Diamondback nakedly asserts
that Permian “failed to provide formal training” or “supply training manuals.” (Br.
at 21).
Nowhere does the MSA require that Permian provide “formal” training or
training manuals. (See CR17-27). The MSA simply requires that Permian’s
3
That Permian may have sent the wrong equipment to a previous job is no evidence that
wrong equipment was sent or used on this job. Even if the wrong equipment were sent out, it
could not possibly have been used due to the physical characteristics of the pipe and the
slips/dies. (5RR69-72, 102-03).
11
employees are “sufficiently experienced and suitably trained to perform the Work.”
(CR20).
Regarding training, Diamondback’s assertion that use of the term “worm”
meant Permian’s employees were inexperienced is false and a gross
mischaracterization of the testimony. (E.g., Resp. at 4, 21-22). Caine actually said
that he started as a “worm” back in 2002—eleven years before this incident—and
through training and experience progressed through the ranks to become a crew
hauler around 2012. (4RR98-100).
Caine did not admit that his crew members were “inexperienced.” (Resp. at
21-22). Caine testified that even someone called a “worm” might have 4-5 years’
experience. (4RR125-28). Caine testified that Mills, Holman, and Key had at least
six years, five years, and a year experience, respectively, that Caine had worked
with each of his crew members many times and they were experienced, and that he
had no concerns—“not even a little bit”—that any of them couldn’t do the job they
were assigned. (4RR125-28).
Clearly, Caine did not testify that his crew members were “inexperienced.”
That the four crew members had never all worked together on the same job is no
evidence they weren’t each suitably trained and experienced.
Further, Diamondback’s reliance on its expert testimony is misplaced, as
Britton admitted he had no idea how Permian’s crew was trained:
A. . . . I have no idea how the Permian men were trained.
12
Q. But yet you're willing to say that they were inadequately trained?
A. Because of the problems we had on this well, I have to assume
something was done wrong. And if they were trained properly, we
wouldn't have had these problems.
(4RR249). Castillo, 444 S.W.3d at 620-21; Kindred, 650 S.W.2d at 63.
Diamondback’s assertion that Villasana “personally witnessed these same
inexperienced ‘worms’ taking on crew chief responsibilities and operating tong
equipment that only skilled crew members should operate” again mischaracterizes
the record. (Resp. at 22). Villasana said that near the end of the casing run, “a
younger man was running the tongs.” (4RR170). Villasana did not testify that this
person was a “worm” or “inexperienced”; he testified that someone else (not from
Permian) referred to him as a worm. (4RR171-72). Villasana did not testify to the
identity of this “younger man.” (See id.). Villasana testified he did not know the
members of the Permian crew, or how much experience they each had. (4RR176).
Villasana testified that he didn’t know if the three other members of Caine’s crew
were capable of running the tongs, but if someone had three or four years’
experience, they would be capable. (4RR176-77).
Ultimately, the “evidence” Diamondback points to is no evidence that
Permian’s employees were not sufficiently experienced or suitably trained to
perform the work, as the MSA required. Castillo, 444 S.W.3d at 620-21; Kindred,
650 S.W.2d at 63.
13
B. No Competent Expert Testimony That Permian Breached the
MSA
Diamondback urges that testimony by its expert, Britton, supports that
Permian breached the MSA. (Resp. at 22-24). But Britton’s testimony is
irrelevant and based on assumptions and Britton’s lack of the facts.
Britton’s testimony about the need for “formal” training is irrelevant and
cannot form the basis of a breach of the MSA, which does not require “formal”
training or manuals. All it requires is that employees are “suitably trained” and
“sufficiently experienced.” (CR20) (emphasis supplied). Further, Britton admitted
that most casing crews get their training on the job. (4RR248-49).
Britton’s testimony that Permian’s crew was not adequately trained lacked a
factual basis. Britton admitted that “I have no idea how the Permian men were
trained” and assumed they weren’t adequately trained. (4RR249). Britton
admitted he gave his opinion without hearing Caine’s testimony about the
experience level of Caine’s crew. (4RR248). Yet, this house of cards is the basis
for Diamondback’s assertion that Permian’s crew was inadequately trained.
Castillo, 444 S.W.3d at 620-21; Kindred, 650 S.W.2d at 63.
Britton’s testimony about the MSA’s tool and equipment requirements is
irrelevant, speculative, and lacked a factual basis. Again, the MSA did not require
that Permian keep records of the tools and equipment used on the Diamondback
job or documentation on the maintenance or testing of its equipment. (CR20).
14
Britton’s speculative opinion is: because there is no documentation of tool
maintenance, we can infer it did not happen, then infer this must mean the
equipment was faulty, and finally infer that this purportedly faulty equipment
caused the problem. See Marathon Corp., 106 S.W.3d at 729-30. This testimony
lacks any factual basis because Lemons, Caine, and Bownds all testified at length
on the inspection and maintenance that occurs with every piece of equipment.
(4RR108, 113, 129-30, 5RR14-25, 64-69). See Houston Unlimited, Inc. Metal
Processing v. Mel Acres Ranch, 443 S.W.3d 820, 832–33 (Tex. 2014) (if expert's
opinion is “based on assumed facts that vary from the actual facts,” the opinion “is
not probative evidence . . . if the record contains no evidence supporting an expert's
material factual assumptions, or if such assumptions are contrary to conclusively
proven facts, opinion testimony founded on those assumptions is not competent
evidence.”); City of Keller v. Wilson, 168 S.W.3d 802, 813 (Tex. 2005). Similarly,
there is no evidence the wrong equipment was sent to the job. Britton admitted he
was not testifying that Permian brought the wrong equipment. (4RR244).4
4
Diamondback’s statements that Permian failed to follow industry protocol are misplaced.
(Resp. at 20, 23). Diamondback attempts to convert this case into a negligence case, asserting
“industry protocol” like standard of care. But Diamondback dropped its negligence suit and
proceeded only on breach of contract. (5RR8). The MSA does not require daily cleaning,
weekly inspection, bi-annual teardown, and annual x-ray tests on the slips. (See CR17-35).
Regardless, Diamondback ignores all the evidence by Caine, Lemons, and Bownds that the
equipment is cleaned, inspected, “miked,” and repaired every time before and after a job.
(4RR108, 113, 129-30, 5RR14-25, 64-69).
15
Similarly, such testimony could not support that Permian breached a
requirement to perform work with utmost skill and in a good and workmanlike
manner. (Resp. at 23). Britton’s conclusion that the caliper logs showed that
Permian’s equipment caused damage was wholly speculative. Britton could only
assume that the slips caused damage because of his belief the pipe was good when
it went into the well. (4RR204-05). Britton’s opinion that Permian used small
slips did not account for Caine’s testimony that slips were color-coded, and
checked for size and interior integrity. (4RR231-32). Britton originally opined
that the slips were too small, but there was no testimony of wrong slips or die size.
(4RR235-36). Then, Britton stated there must have been some malfunction inside
the slip. (Id.). But he did not know this because he could not examine such. (Id.).
Britton had no explanation for the different length of damage on different sections
of the pipe. (4RR241-42). He did not dispute Caine’s testimony that the pipe was
made up to optimum torque. (4RR247-48).
Ultimately, Britton’s testimony was nothing more than surmise, speculation,
and assumption, untethered from the actual facts. See Houston Unlimited, Inc.,
443 S.W.3d at 832–33; City of Keller, 168 S.W.3d at 813.
C. Diamondback’s Complaint About Legal Sufficiency Review
Misses the Mark
Diamondback’s assertion that Permian misapplied the no-evidence challenge
is misplaced. (Resp. at 24-25). The portions of Permian’s brief cited by
16
Diamondback primarily detail the lack of evidence Diamondback produced at trial.
Piece by piece, Permian demonstrated that evidence was speculative, irrelevant,
and without a factual basis. (See Br. at 30-34, 39-41, 48-49). Diamondback’s
complaint seems directed at those portions of the brief explaining that
Diamondback’s expert Britton’s opinions were without factual basis where they
did not consider the controverting evidence. (See Br. at 34-35, 42-43).
Reviewing courts cannot disregard contextual evidence, competency
evidence, circumstantial equal evidence, and conclusive evidence. City of Keller,
168 S.W.3d at 810-18. Further, courts must “rigorously examine the validity of the
facts and assumptions on which [expert] testimony is based[.]” Houston
Unlimited, 443 S.W.3d at 832–33. If an expert's opinion is unreliable because it is
“based on assumed facts that vary from the actual facts,” the opinion “is not
probative evidence.” Id. “[I]f the record contains no evidence supporting an
expert's material factual assumptions, or if such assumptions are contrary to
conclusively proven facts, opinion testimony founded on those assumptions is not
competent evidence.” Id. at 833. “[I]f an expert's opinion is based on certain
assumptions about the facts, we cannot disregard evidence showing those
assumptions were unfounded.” City of Keller, 168 S.W.3d at 813. An appellate
court conducting a no-evidence review cannot consider only an expert's bare
opinion, but must also consider contrary evidence showing it has no scientific
basis. Id.
17
And the reviewing court does not disregard contrary evidence when
reasonable jurors could not. City of Keller, 168 S.W.3d at 827. Further, evidence
that conclusively establishes the opposite of a vital fact is part of a legal
sufficiency review. Id. at 814-15. Diamondback’s complaint about Permian’s
legal sufficiency challenge is lacking.
D. Diamondback Relies on Speculation and Inference-Stacking
Diamondback indeed piles speculation and inferences on one another.
(Resp. at 25-26). While Diamondback contends that the record here differs from
Marathon Corp., as explained, all of Diamondback’s “evidence” does not say what
Diamondback claims, and its expert’s opinions are based on assumptions,
speculation, and inferences.
Again, neither Hollis, nor Bernard, nor Villasana could offer testimony that
Permian did not perform the work in a good and workmanlike manner; they had no
knowledge. (See Br. at 31-32). Diamondback’s assertion that Permian’s witnesses
testified to such is unfounded. Hollis and Villasana had no personal knowledge
that the wrong or defective tools or equipment were used; Hollis could only
“assume” the wrong slips were used. (Br. at 40). Neither Hollis nor Villasana had
knowledge on whether Permian’s crew was sufficiently trained. (Br. at 48-49).
Diamondback’s assertion that Permian’s witnesses testified otherwise
mischaracterizes the testimony.
18
That only leaves Diamondback’s expert Britton, who stacked assumptions
and inferences to conclude that Permian breached the MSA. Marathon Corp., 106
S.W.3d at 729-30. Britton testified he didn’t know how Permian’s employees were
trained, yet he assumed they were not adequately trained. (4RR249). Britton
testified he hadn’t seen documentation of the maintenance and inspection of tools
and equipment, so he assumed it didn’t happen (despite his acknowledgment he
didn’t hear Caine’s testimony regarding inspections and maintenance). (4RR231).
Britton could only “assume” the slips caused damage, after Permian shot down
Britton’s theories about overtorquing and small slips. He couldn’t explain how the
slips caused inconsistent damage. (Br. at 32-33).
Diamondback’s evidence is indeed like that in Marathon Corp. It is nothing
more than assumptions, speculation, and inference stacking. See Marathon Corp.,
106 S.W.3d at 729-30.
E. Equal Inference Rule
While Diamondback urges the equal inference rule does not apply (Resp. at
27-29), the evidence in support of Diamondback’s theory that Permian damaged
the pipe is so meager that no reasonable inference can be drawn in support of the
verdict. See Ford Motor Co. v. Castillo, 444 S.W.3d 616, 621 (Tex. 2014); Ford
Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004).
As explained, there is no direct or competent lay or expert testimony that
Permian breached the MSA. Damage to the pipe when the collars were bucked on
19
at the manufacturer was equally consistent with Diamondback’s assertion that the
pipe was without defect and that Permian damaged it. (5RR133-35). The caliper
logs did not “prove” that the slips damaged the pipe; they only showed damage to
the interior of the pipe. (See 6RR 226-33; 4RR61-62). If there had been something
defective with Permian’s slips themselves, one would expect uniform damage
along the entire casing string. This was not the case. Further, the lowest 2650’ of
pipe had no damage. (4RR256-57). Britton guessed that the additional weight
above 2650’ must have contributed to the damage, but could offer no explanation
why. (4RR257-58). Is just as consistent with pipe that was defective and could
not withstand the additional weight below it, even though Permian’s slips were the
right size and functioning properly. It also equally consistent with the pipe being
damaged or defective prior to use on the well, or that the damage was caused by
the driller. (See 4RR240). Thus, the jury could not reasonably infer that Permian
breached the MSA. See Castillo, 444 S.W.3d at 621; Ridgway, 135 S.W.3d at 601.
II. Factually Insufficient Evidence to Support Verdict on Breach
Even if Diamondback produced legally sufficient evidence of breach—and it
did not—Diamondback did not produce factually sufficient evidence of breach; the
overwhelming weight of the evidence showed that Permian did not breach the
MSA.
Diamondback produced no evidence that Permian’s employees were not
trained; Diamondback’s expert admitted he had no idea how they were trained
20
(4RR249), and admitted that casing crews receive on-the-job training. (4RR248-
49). The MSA did not require “formal” training. Nor did Permian’s crew chief
say that two of the crew members were “worms” in the sense of being
inexperienced; all members were experienced and sufficiently trained, and the
crew hauler Caine had worked with them many times before and had no
reservations about their abilities. (4RR125-28; Br. at 51-53). Even Villasana said
that when he saw someone different using the tongs to make up the joints, it looked
like the operator “knew what he was doing,” the joints “were being appropriately
made up,” and Villasana didn’t see anything that caused him concern on how the
tong was being operated. (4RR179). The only actual evidence of the level of
training was that Permian’s employees were more than sufficiently trained and
experienced. (See Br. at 51-53).
Diamondback’s evidence that Permian failed to perform the work in a good
and workmanlike manner was speculative and based on assumptions. Permian
produced overwhelming evidence that its employees used the correct tools and
equipment, that the crew could not have used the wrong slips, that no issues were
encountered during the 14-11 well casing job, and that there was no way the slips
could have caused the damage shown in the caliper logs. (Br. at 36-39).
21
Diamondback’s witnesses could only “assume” the slips caused the damage.
(3RR229-30; 4RR204-05).5
The great weight of the evidence showed that Permian complied with the
MSA’s tool and equipment maintenance requirements. (Br. at 43-47).
Diamondback’s reliance on some non-existent records-keeping requirement is
misplaced. The overwhelming weight of the evidence showed how Permian’s
tools and equipment were of the best quality and free from defect. (Br. at 43-47).
Diamondback produced no evidence that wrong or defective tools were used on the
job.
The jury had no choice but to conclude that Diamondback did not meet its
burden to show that Permian breached the MSA.
III. No Legally or Factually Sufficient Evidence that Breach Caused
Damages
The evidence is legally and factually insufficient to support a jury verdict
that Permian’s alleged breach caused Diamondback damage. (Br. at 53-58).
Diamondback’s suggestion that the “resulted from” language in the charge
created a different causation standard is incorrect. (Resp. at 33-34). The “resulted
from” language mirrors Texas Pattern Jury Charge 115.3 for breach of contract
5
Diamondback’s assertion that the caliper logs “proved uniform damage” is demonstrably
false. (See 4RR241-42, 5RR127-31; Compare 6RR226 with 6RR228). Even Diamondback’s
expert admitted the damage was not uniform. (4RR241-42).
22
cases. See Comm. On Pattern Jury Charges, State Bar of Tex., TEXAS PATTERN
JURY CHARGES: BUSINESS, CONSUMER, INSURANCE, & EMPLOYMENT, PJC 115.3
(2014). This language requires the same causation analysis in breach of contract
cases: whether the damages “are the natural, probable, and foreseeable
consequence of the defendant’s conduct.” See State Farm Lloyds v. Fitzgerald,
No. 03-99-00177-CV, 2000 WL 1125217, at *4-*5 (Tex. App.—Austin Aug. 10,
2000, no pet.) (analyzing causation under “natural, probable, and foreseeable
consequence” standard where jury charge used “resulted from” language); see also
Frost Nat'l Bank v. Heafner, 12 S.W.3d 104, 108-11 (Tex. App.—Houston [1st
Dist.] 1999, pet. denied). Diamondback points to no authority supporting that
“resulted from” language creates a different causation standard.
Diamondback’s evidence of causation was speculative and less than a mere
scintilla, even considering meager circumstantial evidence. No one could confirm
whether the third-party inspector actually inspected all 127 pieces of casing;
Villasana only witnessed approximately ten joints being inspected. (4RR181-82).
Diamondback’s assertion that Villasana “personally inspected the pipe before PPT
began its work and confirmed the pipe contained no defects” is incorrect. (Resp. at
36) (See 4RR175). The most he could say was that, “to the best of [his]
knowledge” the pipe was in “good and adequate condition.” (4RR175). Caine
could only testify he didn’t remember there being a deformation of the pipe when
it was being lifted and lowered to go in the hole (4RR118), and Lemons merely
23
said that a dented pipe would be seen with the naked eye and he wouldn’t expect
the crew to put visibly damaged pipe in the hole. (5RR49-50, 56). But Grace
testified that such damage would not necessarily have been visible in the field,
given the dark pipe. (5RR165-66).6
Diamondback’s assertion that the pipe deformations were “uniform” and at
the “exact location” where the slips gripped each joint is not accurate. (Resp. at
36, 38). The evidence showed the damage was wildly inconsistent, at different
areas below the collar, and varied in length from inches to feet. (6RR226-33;
5RR128-33; 4RR241-42).
Bownds didn’t concede Permian “caused the pipe damage.” (Resp. at 36).
Hollis said Bownds gave him the “impression” that Permian overtorqued the pipe.
(4RR79). But prior to meeting with Diamondback about the well problems,
Diamondback’s superintendent Leonard Bernard told Bownds that Permian
overtorqued the pipe (5RR84-85), that Diamondback’s people were mad at
Permian and thought it was their fault the casing was messed up, and urged
Bownds to bring some discounted invoices as an accommodation. (5RR84-88).
Bownds was ambushed at the meeting with the drilling logs (which he had no
experience reading), and felt intimidated. (5RR88-89). Diamondback was trying
6
It was dark and rainy the night Permian ran the casing. (4RR151).
24
to get him to agree that Permian overtorqued the pipe. (5RR91-92). But Bownds
did not believe Permian did anything wrong to cause the damage. (5RR 90-92).
While Diamondback points to Britton’s testimony as evidence of causation,
that testimony was wholly unsupportable, speculative, and conclusory. (See Br. at
55-58). Britton could only assume that the slips caused damage because of his
belief the pipe was good when it went into the well. (4RR204-05). He admitted he
did not know what the problem with slips was that he assumed occurred; he
admitted there was no testimony that someone put the wrong size slips/dies in.
(4RR235). He speculated and guessed that there was a malfunction in the slip
area, but did not explain the malfunction. (4RR236, 238). He admitted that he
could not explain why a slip that is about two feet in length could cause different
lengths of damage—some longer than, some shorter than, the slip—on the pipe.
(4RR242). He even conceded that if the slips were pinching the pipe, you would
see similar damage down the string, depending on the problem. (4RR234-35). See
Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232
(Tex. 2004) (conclusory or speculative opinion testimony is no evidence);
Marathon Corp., 106 S.W.3d at 729-30.
Expert Grace explained that the damage did not happen while the casing was
being run by Permian. (5RR157-58). The slips could not have caused the damage.
(5RR127-30). Britton admitted the casing could have been damaged due to the
driller (i.e., not Permian). (4RR240). Grace explained there was no way Permian
25
could have caused this damage, he was certain there was something wrong with the
pipe before it went in the hole. (5RR157). His testimony about casing damaged
from the manufacturer was based on his general experience with overseas casing
and the fact that Permian could not have caused this damage. (5RR155-58). And
again, he said any pre-existing damage would not necessarily have been visible to
the crew. (5RR165-66).7
Even if, as Diamondback asserts, Hollis (or Bownds) may have initially
believed the pipe was overtorqued, Hollis admitted he had no direct evidence the
pipe was overtorqued (4RR14-15), and admitted this was the first caliper log he’d
interpreted to indicate overtorquing. (4RR60). Britton explained that the caliper
logs would not really tell you if the pipe were overtorqued; you’d have to
physically look at the pipe. (4RR212-13). Regardless, both experts affirmatively
stated that overtorquing, even if an issue, did not cause the failure/damage.
(4RR214; 5RR136).8
7
Diamondback’s assertion that Grace’s credibility was undermined by his testimony about
environmental concerns is misleading. (Resp. at 39 n.13). Grace actually explained that
Diamondback’s purported concerns about neighborhood groundwater were unfounded because
the groundwater was already protected behind surface casing and cement. (5RR161-62).
8
The causation analysis in Dawson v. Briggs, 107 S.W.3d 739 (Tex. App.—Fort Worth
2003, no pet.) and Blankenship v. Mirick, 984 S.W.2d 771 (Tex. App.—Waco 1999, pet.
denied)—both personal injury cases—does not aid Diamondback. (Resp. at 34). In both cases
the event sued upon had been established by default or admission, leaving plaintiffs to prove the
connection between the event sued upon and the injury. Here, Diamondback cannot even
establish the event sued upon, i.e., how Permian breached the MSA. But even under the
causation standard in those cases, neither lay testimony nor expert testimony established a causal
nexus here, where the evidence showed wildly varying pipe damage (which Britton could not
26
Diamondback produced no legally or factually sufficient evidence tying any
purported breach of the MSA by Permian to damages.
IV. Evidence Showed that Diamondback’s Actions Damaged the Pipe
Hollis admitted that Diamondback’s actions removed metal from the pipe
and caused damage. (3RR146-59, 4RR27-28, 6RR429)). Yet, Diamondback
claims that all the damage was caused by Permian’s alleged breach. (Resp. at 41-
44).
Diamondback asserts that only “outside forces” caused the pipe damage.
(Resp. at 41). This ignores Hollis’s own testimony about the bits and string mills
Diamondback used to shear away metal from the interior-side of the casing.
(3RR116-18, 123-24). It also ignores Hollis’s testimony that Diamondback’s use
of the string mills could have cut the holes in the intermediate casing. (3RR146-
59; 4RR27-28). Hollis stated: “Looks like we wore holes in the casing where the
pinched in spots were.” (6RR429). Expert Grace testified that the 120-foot long
string mill assembly Diamondback used was guaranteed to cut holes in the casing.
(5RR137-38).
explain), no witness testified seeing Permian use the wrong or defective slips (or do anything
else wrong during the casing run), Britton could only assume the slips caused damage because of
his belief the pipe was good when it went into the well, and where no one witnessed the entirety
of the pipe inspection.
27
Further, there was no uniformity to the damage to a depth of 2,700 feet.
(Resp. at 42) (4RR241-42; see 6RR226-33; 5RR128-33). Even if Diamondback
had not reamed past 900 feet, Diamondback’s clumsy efforts damaged and
compromised the casing such that alternative remedial efforts were now not viable.
(5RR30-33).9
While Diamondback disputes that it could have used swages or rollers to
remediate any problem (Resp. at 43), the fact remains Diamondback didn’t, and
instead used the string mills, which assured grinding and reaming of metal and
holes in the casing. (5RR137-38). It does not change that Diamondback’s actions
could have and did damage the casing. Alternative techniques would not have
undermined the casing’s integrity and were less expensive than Diamondback
asserts. (5RR138-46). Even Hollis admitted that rollers are not abrasive and do not
grind pipe, they’re potentially less aggressive than mills. (3RR204-07).
Diamondback’s failure to cut and pull the casing, or allow Permian to do it,
caused Diamondback’s damages. (Br. at 60-62). The MSA contemplated that
Permian would have the opportunity to remedy problems, but Diamondback did
not give Permian that chance before grinding the pipe interior or plugging and
9
Diamondback relies on the pressure test as indicative that Diamondback did not cause a
hole. (Resp. at 42). It begs the question: if the casing held pressure, why did Diamondback
abandon it? Its concerns about the pipe’s integrity were unfounded.
28
abandoning the well. (Id.; see CR 20). Both Lemons and Grace testified that
cutting and pulling the casing was easy, feasible (at least before the milling
operations), and less expensive. (See Br. at 60-61). The evidence showed that
Diamondback caused or exacerbated its damages.
V. Evidence Overwhelmingly Showed that Diamondback Failed To
Mitigate Its Damages
Diamondback failed to mitigate its damages. (See Br. at 62-65).
Diamondback used aggressive string mills, shearing away pipe and cutting holes in
it, instead of using swages, rollers, or smaller tools, and failed to try cutting and
pulling the casing or give Permian the opportunity to do so. (Id.).
Diamondback suggests it gave Permian an opportunity to fix the issue, and
cites testimony by Hollis claiming that the company man—Villasana—called
Bownds sometime after Diamondback could not get down the well. (3RR156-57).
But Villasana expressly testified that he did not. (4RR175). Bownds testified that
sometime after Diamondback had run the reamer, Leonard Bernard called him and
said there was a problem and Diamondback was running reamers, but did not ask
Permian to do anything. (5RR83-84). This disproves that Diamondback did not
get a response for 3-4 days as it claims; instead it proves Diamondback did not
wait to discuss alternative measures, but immediately began its aggressive milling.
Hollis testified Diamondback did not discuss with Permian the possibility of
cutting and pulling the casing. (3RR165).
29
Britton’s testimony that Diamondback didn’t cause any damage by using the
string mills conflicts with Hollis’s admissions. ((6RR429; 3RR146-59; 4RR27-
28). Britton had no basis for asserting that Permian couldn’t cut and pull the
casing where Lemons testified he had performed this countless times. (5RR30-33,
46-47).
Grace did not “approve[] of milling as an appropriate remedial measure
under the circumstances.” (Resp. at 45). Grace said that milling would be the
“very last resort” here. (5RR160). Grace offered more reasonable alternatives that
should have been tried first: rollers, swages, smaller tools, and cutting/pulling the
casing. (See 5RR138-46). Finally, testimony from Lemons and Grace showed that
cutting and pulling the casing was easy, safe, and less expensive than plugging and
abandoning the well. (5RR30-33, 140-48).
The great weight and preponderance of the evidence proved that
Diamondback failed to mitigate its damages.
VI. Admission of Exhibit 60A Was an Abuse of Discretion
The trial court abused its discretion in admitting Exhibit 60A, where
Diamondback failed to lay the proper predicate for the admission of the invoices
under the business records exception to the hearsay rule.10
10
Diamondback’s assertion that Permian’s objection on appeal varies from that at trial is
incorrect. (Resp. at 46 n.15). The context makes clear that Permian objected that Diamondback
had not established the foundation for the documents to come in under the business records
exception to the hearsay rule. (3RR183-97; 4RR7-9). Even Diamondback’s counsel tried to
30
Hollis did not lay a proper foundation for admitting Exhibit 60A. Permian’s
counsel challenged Hollis to show his personal knowledge of who created the
invoices, whether the work in each invoice was actually performed or who
performed it, what information was used to prepare the invoices, and whether they
had been paid. (3RR195-97). Hollis could not show such knowledge. (Id.).
Diamondback’s attempt to clean up Hollis’s testimony did not rectify the problem;
Hollis offered conclusory answers that the invoices were kept in the course of
Diamondback’s business, and stated that if the invoice was in the binder it had
been paid. (4RR6-8).
Hollis had no personal knowledge of the invoices’ accuracy, and thus, failed
to demonstrate their accuracy or that Diamondback’s keeping of the invoices
created by others were done in the regular course of business. (Br. at 68-69); see
In re E.A.K., 192 S.W.3d 133, 142-43 (Tex. App.—Houston [14th Dist.] 2006, pet.
denied); Powell v. Vavro, McDonald & Assoc., L.L.C., 136 S.W.3d 762, 765 (Tex.
App.—Dallas 2004, no pet).
Exhibit 61 was merely a summary of the invoices. (9RR928-35). A
summary of business records may be admitted into evidence upon proof (1) that
the records are voluminous, (2) they have been made available to the opponent for
a reasonable period of time to afford inspection and an opportunity for cross-
establish the exception by asking questions of Hollis on the elements of Rule 803(6). (3RR192-
94; 4RR7).
31
examination, and (3) the supporting documents are themselves admissible in
evidence. See Black Lake Pipeline Co. v. Union Construction Co., 538 S.W.2d 80,
92-94 (Tex. 1976), overruled on other grounds, Sterner v. Marathon Oil Co., 767
S.W.2d 686 (Tex. 1989). A summary is no more admissible than the underlying
records. Id. Here the underlying invoices were not admissible; the Exhibit 61
summary was no evidence of damages. See id.
Hollis’s testimony was based on estimates demonstrated to be unreliable,
and his testimony about costs to remediate and replace the 14-11 well was
conclusory where he offered no detail as to the individual activities and associated
costs. (See Br. at 70 n.8). Britton’s testimony about the reasonableness of
Diamondback’s estimates of remedial and replacement damages is no evidence of
the actual costs, where Britton merely based his statement on a review of the same
invoices and similarly had no foundation for such. (4RR203).
The invoices were the only evidence attempting to demonstrate the amount
of damages. Because they were not cumulative of any other evidence, and the
judgment turned on this evidence, the erroneous admission of Exhibit 60A led to
the rendition of an improper judgment. See Interstate Northborough P’ship v.
State, 66 S.W.3d 213, 220 (Tex. 2001).
32
VII. Damage Awards Not Supported by Legally or Factually Sufficient
Evidence
As discussed and incorporated here, the damages awards by the jury for
remedial and replacement damages are not supported by legally or factually
sufficient evidence, and are excessive. (Br. at 71-72). Permian did not cause the
damage, and even if it had, Diamondback exacerbated that damage and failed to
remediate. (Id.).
While Diamondback asserts its replacement well costs extended through
September 30, 2013, the daily drilling reports showed that the intermediate casing
on the replacement well was cemented into place on September 27-28, 2013.
(6RR529). Exhibit 61 confirmed this, showing an entry for the cementing
company (O-Tex Pumping) on September 27, 2013. (9RR934).11 The drilling
reports also showed that, at the latest, Diamondback moved from the intermediate
casing to production casing on September 29, 2013. (6RR534). Thus, in addition
to the fact the evidence is legally and factually insufficient to support any damages
awarded by the jury, the amounts of damages awarded are excessive because they
awarded costs past the point Diamondback could attempt to get in the hole on the
replacement well.
11
Permian does not concede that Exhibit 61 was admissible or proved damages.
33
VIII. Attorney’s Fees Awards Are Not Supported by Legally or Factually
Sufficient Evidence
Diamondback’s evidence of attorney’s fees is legally and factually
insufficient to support the trial court findings of fact/conclusions of law numbers
11-17 (CR644-46) and findings of act Order numbers 6-9 (CR641-42) and
judgment. (Br. at 73-79).
Findings of fact are not binding if there is no evidence to support the finding
or the contrary is established as a matter of law. Tenaska Energy, Inc. v.
Ponderosa Pine Energy, LLC, 437 S.W.3d 518, 523 (Tex. 2014); McGalliard v.
Kuhlmann, 722 S.W.2d 694, 696–97 (Tex. 1986). In determining what the law is
and applying the law to the facts, a trial court has no discretion. Tenaska Energy,
437 S.W.3d at 523. The legal conclusions of the trial court are not binding on
appellate courts. Argo Data Res. Corp. v. Shagrithaya, 380 S.W.3d 249, 264 (Tex.
App.—Dallas 2012, pet. denied) (citing Pegasus Energy Grp. v. Cheyenne Pet.
Co., 3 S.W.3d 112, 121 (Tex. App.—Corpus Christi 1999, pet. denied)).
Generally, the determination of reasonable attorney's fees is a question of
fact and “‘the testimony of an interested witness, such as a party to the suit, though
not contradicted, does no more than raise a fact issue to be determined by the
jury.’” Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010). But even
uncontradicted affidavits are assailable when they are not clear, direct and positive,
and not free from contradiction, inaccuracies, and circumstances tending to cast
34
suspicion thereon. Id. Uncontradicted affidavits are certainly not conclusive. Id.
An uncontroverted affidavit is generally sufficient to support an award of
attorney’s fees only when it sets forth the affiant’s qualifications, his opinion
regarding reasonable attorney's fees, and the basis for his opinion.” Cammack the
Cook, L.L.C. v. Eastburn, 296 S.W.3d 884, 894 (Tex. App.—Texarkana 2009, pet.
denied) (emphasis added).
The affidavits and attachments Diamondback submitted to support
attorney’s fees failed to provide evidence to support the findings of
fact/conclusions of law. (CR269-70). While the affidavit provides a listing of the
attorneys involved in the case and their rates, it says nothing about the experience,
reputation, or ability of each lawyer performing the services (only Bill Caraway’s
resume is attached). (CR268-74). The assertion that “The fees charged in this case
are customarily charged in this area for the same or similar services for attorneys
with similar levels of experience, reputation, and ability, considering the nature
and complexity of the matters in controversy, the time limitations imposed, and the
results obtained” does not fill this gap. (CR273). Similarly, there is no basis to
support fees by the legal assistants, where the affidavit makes only conclusory
statements. (CR270; Br. at 76).
Diamondback’s affidavit did not establish fees as a matter of law where it
was not clear, direct, and positive, and not free from contradiction, inaccuracies,
and circumstances tending to cast suspicion thereon, especially where Caraway
35
provided no basis for much of his opinions. Even if it were some evidence of a
reasonable fee, which is not conceded, it is certainly not conclusive. Garcia, 319
S.W.3d at 642.
And parties are indeed required to segregate recoverable attorney’s fees:
[I]f any attorney's fees relate solely to a claim for which such fees are
unrecoverable, a claimant must segregate recoverable from
unrecoverable fees . . . it is only when discrete legal services advance
both a recoverable and unrecoverable claim that they are so
intertwined that they need not be segregated.
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313–14 (Tex. 2006). The
court does not look at the legal work as a whole, but parses the work into
component tasks to determine which tasks relate to recoverable claims. See id.
Contrary to Diamondback’s assertions (Resp. at 53), its exhibits are rife with
entries regarding insurance work that are unrecoverable, e.g.: “research on direct
insurance claims in Texas,” “research regarding reservation of rights letter,”
“research regarding additional insured status,” “review primary insurance policy
for claims.” (CR 592-96). Caraway’s affidavit does not state or explain why such
insurance research and work is solely part of the breach of contract action; he
makes conclusory statements that he “believes” that none of the fees relate solely
to claims for which attorneys’ fees are unrecoverable. (CR 273). It was
36
Diamondback’s burden to segregate and prove recoverability of attorney’s fees; it
failed to do so. See Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007).12
Diamondback failed to provide legally or factually sufficient evidence of
conditional appellate attorney’s fees. (Br. at 77-78). While Diamondback relies on
Caraway’s affidavit to establish such fees, that affidavit is without factual basis and
wholly conclusory where Caraway offered only generalized estimates of $150,000
for an appeal to the court of appeals, $50,000 for a petition for review, and $25,000
for oral argument. (CR271). Caraway provided no opinion on the “complex
factual and legal issues” or the “significant labor” that would be involved in an
appeal. (CR271-72). Evidence of conditional appellate fees requires more than
generalized estimates of fees. Sentinel Integrity Sols., Inc. v. Mistras Grp., Inc.,
414 S.W.3d 911, 930 (Tex. App.—Houston [1st Dist.] 2013, pet. denied).
The El Apple13 analysis is entirely appropriate. Diamondback undertook the
lodestar method to attempt to prove its attorney’s fees, by asserting the hourly fee
for various attorneys and then claiming the fees based on the time expended on the
litigation based, and employed this method in attempting to estimate appellate
12
Feldman v. KPMG LLP, 438 S.W.3d 678, 688 (Tex. App.—Houston [1st Dist.] 2014, no
pet.) provides no support; the attorney affirmatively stated that 100% of his time was spent on
recoverable claims). And in contrast to Five Star Int’l Holdings, Inc. v. Thomson, Inc., 324
S.W.3d 160, 171 (Tex. App.—El Paso 2010, pet. denied), Diamondback’s exhibit indicates the
expenses at issue were performed in pursuit of claims or defenses outside of the breach of
contract claims. (See CR 592-96).
13
El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 761 (Tex. 2012).
37
attorneys’ fees. (See CR271). While the lodestar method might not be required in
breach of contract cases, as Diamondback asserts, that is the method Diamondback
pursued and proposed lodestar findings of fact and conclusions of law to support
the award that the trial court ultimately signed. (See CR644-66; Appx. Tab A).14
It cannot now run from it after failing to prove up the fees.15 Further, El Apple’s
requirements apply to conditional appellate fees for estimated future work. See
Sentinel Integrity Sols., 414 S.W.3d at 930. That none of the work had been
performed does not excuse the requirements. See id. Caraway’s affidavit failed to
provide legally sufficient evidence of appellate attorney’s fees.
14
Permian requested that Diamondback’s proposed findings of fact and conclusions of law
be included in the clerk’s record (CR653), but they were omitted. They are attached here as
Appendix A. Permian has requested that the clerk supplement the record. Regardless, it is clear
the trial judge edited then signed Diamondback’s proposed findings and conclusions. (CR644-
66).
15
Diamondback’s assertion that Permian did not raise a specific objection regarding El
Apple is misplaced. (Resp. at 55). Permian objected to all evidence and affidavits submitted to
support the attorney’s fees award, and challenged the legal and factual sufficiency of the
attorney’s fees in post-trial motions (CR427-33, 566-67, 585-90, 623-24, 632). An attorney fee
award must be supported by competent evidence. Jamshed v. McLane Exp. Inc., 449 S.W.3d
871, 883 (Tex. App.—El Paso 2014, no pet.) (citing Torrington Co. v. Stutzman, 46 S.W.3d 829,
852 (Tex. 2000)). And if an affidavit speaks in generalities, it is no evidence of conditional
appellate fees. See Sentinel Integrity Sols., 414 S.W.3d at 930; see also Coastal Terminal
Operators v. Essex Crane Rental Corp., No. 14-02-00627-CV, 2004 WL 1795355, at *8 (Tex.
App.—Houston [14th Dist.] Aug. 12, 2004, pet. denied) (conclusory statements regarding
appellate fees constituted no evidence to support the reasonableness of fees). Because
Diamondback failed to submit legally sufficient evidence of appellate attorney’s fees, a judgment
awarding such fees cannot stand. Sentinel Integrity Sols., 414 S.W.3d at 930; Cf. Jamshed, 449
S.W.3d at 884.
38
Ultimately, Diamondback did not produce legally or factually sufficient
evidence to support the attorney’s fees awards. (See Br. at 73-78).
CONCLUSION AND PRAYER
THEREFORE, Appellant Permian Power Tong, Inc. respectfully prays this
Court sustain its issues on appeal, reverse the trial court’s December 10, 2015 Final
Judgment, render a judgment that Diamondback takes nothing on its claims,
dismiss all of Diamondback’s claims with prejudice, and remand for consideration
and determination of Permian’s attorney’s fees recoverable under the MSA, tax
Permian’s costs against Diamondback, and grant Permian such other and further
relief as this Court deems just. Alternatively, based on the factual insufficiency of
the evidence, this Court should reverse the Final Judgment and remand for new
trial, or suggest a significant remittitur of damages, or, further, reverse the award of
attorney’s fees and remand that issue for further proceedings.
39
Respectfully submitted,
COOPER & SCULLY, P.C.
By: /s/Diana L. Faust
R. BRENT COOPER
brent.cooper@cooperscully.com
Texas Bar No. 04783250
DIANA L. FAUST
diana.faust@cooperscully.com
Texas Bar No. 00793717
KYLE M. BURKE
kyle.burke@cooperscully.com
Texas Bar No. 24073089
900 Jackson Street, Suite 100
Dallas, Texas 75202
TEL: (214) 712-9500
FAX: (214) 712-9540
COUNSEL FOR APPELLANT
PERMIAN POWER TONG, INC.
CERTIFICATE OF COMPLIANCE
I hereby certify that this Reply Brief of Appellant was prepared using
Microsoft Word 2010, which indicated that the total word count (exclusive of those
items listed in rule 9.4(i)(1) of the Texas Rules of Appellate Procedure, as
amended) is 7,495 words.
/s/Diana L. Faust
DIANA L. FAUST
40
CERTIFICATE OF SERVICE
I hereby certify that I served a true and correct copy of this Reply Brief of
Appellant upon on all counsel of record, via efile, on this the 19th day of
September, 2016.
Mr. David E. Keltner VIA EFILE
david.keltner@kellyhart.com
Ms. Marianne M. Auld
marianne.auld@kellyhart.com
Mr. Matthew D. Stayton
matt.stayton@kellyhard.com
Kelly Hart & Hallman, L.L.P.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Counsel for Appellee
Mr. Bill B. Caraway VIA EFILE
bill.caraway@kellyhart.com
Kelly Hart & Hallman, L.L.P.
508 W. Wall Street, Suite 444
Midland, Texas 75202
Counsel for Appellee
/s/Diana L. Faust
DIANA L. FAUST
41
ORAL ARGUMENT REQUESTED
NO. 12-16-00092-CV
IN THE COURT OF APPEALS
FOR THE TWELFTH DISTRICT OF TEXAS AT TYLER, TEXAS
PERMIAN POWER TONG, INC.,
Appellant,
v.
DIAMONDBACK E&P, LLC,
Appellee.
On Appeal from the 441st District Court
Midland, County, Texas, Cause No. CV-49854
(Hon. Rodney W. Satterwhite)
APPENDIX TO REPLY BRIEF OF APPELLANT
In compliance with rule 38.1(j) of the Texas Rules of Appellate Procedure,
Appellant Permian Power Tong, Inc. submits this Appendix to its Reply Brief of
Appellant containing the following items:
Tab A: February 1, 2016 Plaintiff’s Proposed Findings of Fact and
Conclusions of Law
D/950986v5
42
APPENDIX TAB “A”
CAUSE NO. CV 49854
DIAMONDBACK E&P LLC, § IN THE DISTRICT COURT OF
Plaintiff,
VS. § MIDLAND COUNTY, TEXAS
PERMIAN POWER TONG, INC., §
Defendant. § 441ST JUDICIAL DISTRICT
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Pursuant to the Texas Rules of Civil Procedure, the Court hereby makes the
following findings of fact and conclusions of law:
1. The parties stipulated and agreed that all awards of attorneys' fees and costs
would be submitted to the Court, by affidavit, following the jury trial.
2. Section 25 of the Master Service Contract ("MSC") between Diamondback
E&P, LLC's predecessor in interest and Permian Power Tong, Inc. states that if
either party files suit to enforce any rights under the MSC, the prevailing party
shall be entitled to recovery of reasonable attorney's fees and costs.
3. Diamondback E&P, LLC ("Diamondback") filed suit to enforce certain
rights under the MSC, including breach of contract claims, and sought damages.
4. Diamondback is the prevailing party. Diamondback was awarded damages
totaling $824,137.97.
5. Diamondback is entitled to recover its reasonable attorneys' fees and costs
under the MSC.
6. Diamondback is entitled to recover its reasonable attorneys' fees and costs
under section 38.001(8) of the Texas Civil Practice and Remedies Code.
7. On November 11, 2015, Diamondback submitted the following evidence in
support of its claim for reasonable and necessary attorneys' fees and costs: (i) the
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Affidavit and resume of attorney Bill B. Caraway, (ii) relevant billing invoices and
timecards for legal services rendered in this case, and (iii) summary charts of the
attorneys' fees and costs incurred for legal services rendered in this case.
8. Following objections by Permian Power Tong to redacted invoices and
alleged block billing, on November 19, 2015, Diamondback submitted the
following supplemental evidence in support of its claim for reasonable and
necessary attorneys' fees and costs: (i) the Supplemental Affidavit of Bill B.
Caraway, and (ii) complete and unredacted billing invoices and timecards for legal
services rendered in this case.
9. On December 2, 2015, Permian Power Tong raised additional objections and
moved to strike the supplemental evidence submitted by Diamondback, Permian
Power Tong offered no evidence to contradict or dispute any evidence or
supplemental evidence proffered by Diamondback in support of an award of
attorneys' fees and costs.
11. The hourly rates charged by Diamondback's attorneys and legal assistants
are consistent with those rates customarily charged in Midland County, Texas, and
are reasonable and necessary based on each attorney's experience, reputation and
ability.
12. The fees charged by Diamondback's attorneys and legal assistants are
reasonable and necessary considering the complexity of the matters in controversy,
the skill required, the time spent, the time limitations imposed, the results obtained,
the nature and length of the relationship with the client, and the preclusion of
accepting other representations while working on this case.
13. All attorneys' fees and court costs sought by Diamondback in this case are
reasonable and necessary. All attorneys' fees and court costs sought by
Diamondback in this case are supported by sufficient evidence. It is equitable and
just for Diamondback to recover its attorneys' fees and costs in this case.
14. Diamondback incurred reasonable and necessary attorneys' fees totaling
$319,761.50 for representation through trial and completion of proceedings in the
trial court.
15. Diamondback will incur $150,000.00 for representation through appeal to
the Court of Appeals, if necessary.
16. Diamondback will incur $50,000.00 for representation through the Petition
for Review stage at the Supreme Court of Texas, if necessary,
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17. Diamondback will incur $25,000.00 for representation through oral
argument at the Supreme Court of Texas, if necessary.
18. Diamondback incurred reasonable court costs totaling $3,512.90.
19. All fees for legal services rendered in this case are recoverable and
permitted; thus, there is no requirement that fees be segregated among claims for
which fees are recoverable and not recoverable.
20. Permian Power Tong's objections to evidence in support of attorneys' fees
are overruled, and its motion to strike (dated December 2, 2015) is denied.
SIGNED this day of February, 2016.
Rodney W. Satterwhite
Judge Presiding
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