New Process Steel, L.P. v. Sharp Freight Systems, Inc.

Opinion issued April 13, 2006

  In The

Court of Appeals

For The

First District of Texas

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NO. 01-04-00764-CV

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NEW PROCESS STEEL, L.P., Appellant

V.

SHARP FREIGHT SYSTEMS, INC., Appellee

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On Appeal from the 215th District Court

Harris County, Texas

Trial Court Cause No. 2003-03267

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MEMORANDUM OPINION

          In this appeal from a bench trial, appellant, New Process Steel, L.P., (“New Process”) challenges the judgment of the trial court in favor of appellee, Sharp Freight Systems, Inc. (“Sharp”) on New Process’s breach of contract and negligent misrepresentation claims. In two issues on appeal, New Process raises contentions which we construe as arguing that the evidence conclusively established that Sharp breached its contract with New Process or, alternatively, that the great weight and preponderance of the evidence shows that Sharp made negligent misrepresentations to New Process.

          We affirm.

Background

          New Process is a steel processing facility that provides steel to customers nationwide and in Mexico. To meet transportation needs, New Process formed an agreement with Sharp. On April 25, 2002, Sharp contracted with Mega, a trucking carrier, to transport New Process’s steel door skins. Mega transported New Process’s materials via a trailer to Laredo, Texas. The trailer arrived safely in Laredo, and Nepi, Inc., a freight forwarder, cleared the materials through customs. Tracomsa, a Mexican transportation company, took possession of the trailer in Mexico to deliver the materials to a final destination in Nuevo Leon, Mexico. During this final stage of the trip, Tracomsa’s truck had an accident that rendered the materials unsalvageable. New Process’s customer, Premdor, refused to accept the damaged materials.

          New Process continued doing business with Sharp until Sharp refused to pay for the damaged steel door skins. New Process sued Sharp for breach of contract and negligent misrepresentation. In its first amended petition, New Process described the breach of contract as follows: “Sharp contracted with New Process to safely transport New Process’s products to its customers in Mexico. Sharp destroyed the shipment and failed to deliver the products to New Process’s customer and thereby breached its contract with New Process.”

          After a bench trial, the trial court found that New Process contracted with Sharp to carry New Process’s products to Laredo, Texas, that the bill of lading constituted the entire contract between New Process and Sharp, and that Sharp fulfilled its part of the bargain. The court further found that Sharp contracted with Mega to transport the shipment from Houston to Laredo, that New Process contracted with Nepi to take control of the shipment as the freight forwarder, and that either New Process or Nepi contracted with Tracomsa to transport the shipment to Nuevo Leon, Mexico. Thus, Sharp was not liable to New Process for damages to the steel door skins that occurred after Sharp fulfilled its obligations to New Process. New Process appeals from the trial court’s findings. The trial court did not distinguish between findings of fact and conclusions of law.

  Standard of Review

          In an appeal from a bench trial, a trial court’s findings of fact have the same weight as a jury’s verdict. Amador v. Berrospe, 961 S.W.2d 205, 207 (Tex. App.—Houston [1st Dist.] 1996, writ denied). Because New Process does not specify the level of scrutiny it wants applied to the record, we will review both the legal and factual sufficiency of the evidence supporting the judgment. We review the legal and factual sufficiency of the evidence by the same standards applied in reviewing evidence supporting a jury’s answer. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). If a party attacks the legal sufficiency of an adverse finding on an issue as to which he bears the burden of proof, then he must demonstrate on appeal that the evidence conclusively established all vital facts in support of the issue. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989). In reviewing such a “matter of law” challenge, we examine the record for evidence that supports the challenged finding and ignore evidence to the contrary. Id. If no evidence exists to support the finding, we examine the entire record to determine if the contrary proposition is established as a matter of law. Id.

          In reviewing a factual-sufficiency point, we consider all the evidence supporting and contradicting the finding. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We set aside the verdict only if the finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).

          We review de novo a trial court’s conclusions of law and uphold them on appeal if the judgment can be sustained on any legal theory supported by the evidence. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794–95 (Tex. 2002); In re Moers, 104 S.W.3d 609, 611 (Tex. App.—Houston [1st Dist.] 2003, no pet.). An appellant may not challenge a trial court’s conclusions of law for lack of factual sufficiency, but we review the legal conclusions drawn from the facts to determine their correctness. BMC Software Belgium, 83 S.W.3d at 794. Unchallenged findings of fact are binding on the court of appeals “unless the contrary is established as a matter of law, or if there is no evidence to support the finding.” McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex. 1986). In a bench trial, the trial court, as factfinder, is the sole judge of the credibility of the witnesses. Southwestern Bell Media, Inc. v. Lyles, 825 S.W.2d 488, 493 (Tex. App.—Houston [1st Dist.] 1992, writ denied). The trial court has the right to accept or reject any part or all of a witness’s testimony. See Hood v. Texas Indem. Ins. Co., 209 S.W.2d 345, 346 (Tex. 1948). The court may believe one witness and disbelieve others and may resolve inconsistencies in any witness’ testimony. See McGalliard v. Kuhlmann, 722 S.W.2d 694, 697 (Tex. 1986).

Breach of Contract

          In its first issue regarding its breach of contract claim, New Process challenges the following findings:

                    1.       New Process Steel, L.P. (“New Process”) contracted with Sharp Freight Systems, Inc. (“Sharp”) for the carriage of its products to Premdor, in Laredo, Texas.

                    2.       The bill of lading dated on or about April 25, 2002 constitutes the contract between the parties.

                    3.       The invoice dated May 13, 2002 does not constitute any part of the agreement between the parties.

                    4.       On or about April 25, 2002, Sharp accepted a shipment of New Process’s steel products for delivery to Laredo, Texas.

                    6.       Sharp fulfilled its contractual obligations upon the delivery in Laredo, Texas and in all ways complied with its contract.

                    7.       On or about April 25, 2002, Sharp arranged for Mega to transport the shipment from Houston to Laredo, Texas.

                    8.       On or about April 25, 2002, Nepi, Inc. (“Nepi”) took possession of the steel product and arranged for Tracomsa to transport the shipment to Premdor, the consignee in Nuevo Leon, Mexico.

                    10.     Sharp did not arrange for Tracomsa to transport the shipment to Nuevo Leon, Mexico.

                    11.     New Process hired Nepi as the freight forwarder.

                    12.     Nepi or New Process entered into an agreement with Tracomsa to transport the shipment to Nuevo Leon, Mexico where Premdor, the consignee, would take possession of the shipment.

                    14.     Sharp was not the agent of Mega Carriers, Inc. (“Mega”).

                    17.     New Process paid $350.00 to the forwarding agency, Nepi, Inc.

                    20.     No act/or omission of Sharp proximately caused New Process actual damages.

                    22.     New Process entered into an agreement with Nepi, Inc. as its freight forwarder, to take control of the shipment, clear customs and take control of the shipment to a warehouse in Mexico.

          The parties do not dispute that they entered into an agreement for Sharp to arrange transportation of New Process’s materials. However, the parties do dispute the terms of the agreement. New Process maintains that it had an agreement with Sharp to transport its materials from Houston to its customer, Premdor, in Monterrey, Mexico. New Process argues that the terms of the contract originated from a “series of instruments created by the parties during their course of dealing, including the initial agreements between Tammy Ward and Steven White.” New Process contends that when the parties exchanged a bill of lading and an invoice from Sharp, the parties completed the agreement. Essentially, New Process contends that the contract consists of negotiations between the parties, New Process’s bill of lading, and an invoice from Sharp, which together evince a partially memorialized and partially oral contract under which Sharp undertook to transport the steel door skins from Houston to Monterrey. Sharp contends that the agreement consisted solely of the bill of lading which specified that Sharp would arrange transportation to Laredo, Texas only.

          The elements of a valid contract are (1) an offer; (2) an acceptance; (3) a meeting of the minds; (4) each party’s consent to the terms; and, in the case of a written contract, (5) execution and delivery of the contract with the intent that it be mutual and binding. Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied); Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex. App.—San Antonio 1999, pet. denied). The determination of a meeting of the minds, and thus offer and acceptance, is based on the objective standard of what the parties said and did, not on their subjective states of mind. Copeland, 3 S.W.3d at 604. The parties must agree to the material terms of a contract before a court can enforce the contract. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). A contract, whether written or oral, must define its essential terms with sufficient precision to enable the court to determine the obligations of the parties. Estate of Eberling v. Fair, 546 S.W.2d 329, 333 (Tex. Civ. App.—Dallas 1976, writ ref’d n.r.e.).

          Findings 1, 2, 3, 4, 6, 7, and 20

          Here, the agreement between New Process and Sharp is comprised of the April 25, 2002 bill of lading and the May 13, 2002 invoice. See Jones v. Kelley, 614 S.W.2d 95, 98 (Tex. 1981). These documents contain all the essential terms of the parties’ agreement. See Stinger v. Stewart & Stevenson Serv., Inc., 830 S.W.2d 715, 720 (Tex. App.—Houston [14th Dist.] 1992, writ denied) (holding that to have a binding contract, essential terms must be sufficiently certain to define rights of parties). The bill of lading, which was drafted by New Process, describes the materials to be shipped and states where to ship the materials. The bill of lading states that the destination is Premdor C/O Nepi, Inc. in Laredo, Texas and that the carrier is Sharp/Mega. The invoice provides the cost to arrange shipping of the materials, in this case, $895.00. Also, the invoice states under the “Description” heading, “Nepi, Inc.–Laredo, TX.” The testimony of Carl Eaton, Sharp’s regional vice-president, confirmed that this line indicated where Sharp delivered the product. Moreover, Eaton’s testimony supports the trial court’s findings that Sharp agreed to arrange shipping from Houston to Laredo. Specifically, Eaton testified that Sharp agreed to deliver the materials to Laredo, Texas. Because the agreement called for Sharp to arrange shipping to Laredo, Texas only, and because the damage to New Process’s steel happened in Mexico, no act by Sharp caused damages to New Process. Based on the bill of lading, the invoice, and the evidence presented at trial, we conclude that legally sufficient evidence supports the trial court’s findings 1, 4, 6, 7 and 20. Thus, although the trial court’s conclusions of law in findings 2 and 3 are erroneous, we will not reverse the judgment, because the controlling findings of fact support a correct legal theory.

          New Process contends, however, that the evidence presented at trial shows that the trial court’s findings are factually insufficient. Specifically, New Process argues that Steven White, the transportation manager at New Process, testified that before the shipment date he had conversations with Tammy Ward, a sales representative for Sharp, that a shipping route to Premdor in Monterrey would cost $895. New Process also cites to Ward’s testimony as agreeing that it would cost $895 to ship to Premdor.

          We note that Ward’s testimony was inconsistent and conflicted at different points and was contradicted by testimony from Eaton. Furthermore, Ward did not testify that Sharp would arrange shipping all the way to Monterrey, Mexico. Rather, she testified that transportation of the shipment down to Mexico was $895. She also testified that Sharp contracted with Mega to transport New Process’s materials to Mexico. Eaton testified, however, that Sharp agreed to deliver the materials to Laredo, Texas to Nepi in care of or for the beneficial owner of Premdor. We take judicial notice that Laredo, Texas is on the border between the United States and Mexico and that the city extends on the other side of the border as Nuevo Laredo.

          Ward’s testimony is ambiguous. If it is construed as testimony that New Process contracted with Sharp to arrange delivery of the steel door skins to the border, it is consistent with the written contract. If it is construed as testimony that New Process contracted with Sharp to arrange delivery to Nuevo Leon, it is inconsistent with the written documents and other testimony. Prior oral statements inconsistent with the terms of a subsequent written agreement are barred from consideration by the parol evidence rule. See Gonzalez v. United Bhd. of Carpenters and Joiners of Am., 93 S.W.3d 208, 211 (Tex. App.—Houston [1st Dist.] 2003, no pet.). Accordingly, we hold that the trial court’s above-stated findings are supported by legally and factually sufficient evidence.

          Findings 8, 10, 11, 12, 17, and 22

          The other challenged findings, concerning transportation of the steel door skins into Mexico to its final destination, are both consistent with the evidence and our interpretation of the contract. Essentially, the trial court found that Nepi, the freight forwarder that was hired by New Process for $350.00, took possession of the materials in Laredo and had Trancomsa transport the materials to Premdor. The court further found that either New Process or Nepi hired Trancomsa to make the delivery to Premdor. Finally, the court found that New Process had an agreement with Nepi to take control of the shipment, clear customs, and deliver the shipment to a warehouse in Mexico.

          Here, the evidence shows that Nepi was the freight forwarder hired by Premdor to handle the customs documents so that the materials could enter Mexico. The bill of lading expressly states that the materials were to be shipped to Premdor C/O of Nepi, Inc. in Laredo. In addition, Eaton testified that Sharp was to deliver the materials to Nepi. Eaton also testified that once the truck was delivered to Laredo, the trailer was turned over to Nepi, which turned the trailer over to a Mexican carrier. Although New Process argues that there is no evidence in the record that Nepi arranged for carriage, Eaton testified that he did not know who hired Tracomsa, but that he understood that Nepi would have been the one to hire the Mexican carrier to transport the materials to the final destination. New Process’s exhibit four indicates that Nepi generated a bill of $350.00 and that New Process included this amount in its demand letter to Sharp. Accordingly, we conclude that legally and factually sufficient evidence supports the trial court’s findings.

          Finding 14

          New Process does not disagree with the trial court’s finding 14, but contends that Mega, which transported the shipments to Laredo, was an agent of Sharp. Because this issue is irrelevant to our disposition, we decline to address it. See Tex. R. App. P. 47.1.

          We overrule New Process’s first issue on appeal.  

Negligent Misrepresentation

          In its second issue on appeal, New Process argues that the trial court’s findings on its negligent misrepresentation claim are factually insufficient. In its negligent misrepresentation claim, New Process challenges the following findings:

          21.     No representative of Sharp made any false representation to any representative of New Process regarding Sharp’s liability for the shipment in the event the shipment was damaged or destroyed while in transport.

          23.     Sharp’s representations were not a proximate cause of any injury or damage suffered by New Process.

          24.     Sharp had no duty to New Process independent of the duty arising from the April 25, 2002 bill of lading. Accordingly, damages, if any, arising from any alleged misrepresentation are barred. The only loss that New Process suffered as a consequence of Sharp’s acts or omissions, if any, is the subject matter of the bill of lading.

          The elements of a claim for negligent misrepresentation are as follows: 1) a representation was made by the defendant in the course of the defendant’s business, or in a transaction in which the defendant has a pecuniary interest; 2) the defendant supplied false information for the guidance of others in their business; 3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and 4) the plaintiff suffered pecuniary loss by justifiably relying upon the representation. Federal Land Bank Ass’n v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991); Zipp Indus., Inc. v. Ranger Ins. Co., 39 S.W.3d 658, 668 (Tex. App.—Amarillo 2001, no pet.). The sort of “false information” contemplated in a negligent misrepresentation case is a statement of existing fact, not a promise of future conduct. See Swank v. Sverdlin, 121 S.W.3d 785, 802 (Tex. App.—Houston [1st Dist.] 2003, pet. denied); Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex. App.—Houston [14th Dist.] 1999, pet. denied).

          New Process contends that Tammy Ward, on behalf of Sharp, made negligent misrepresentations to the effect that if something were to happen to New Process’s materials, Sharp would pay for any damages.

          We hold that New Process’s claim that Sharp made a negligent misrepresentation cannot stand because the misrepresentation, if any, was a promise of future conduct—that if New Process’s materials were damaged at some unforeseeable time in the future, Sharp would pay for those damages. Because the evidence shows that Sharp’s statements concern future conduct, rather than a statement of existing fact, New Process cannot recover on its negligent misrepresentation claim. See Swank, 121 S.W.3d at 802.

          We overrule New Process’s second issue on appeal.

Conclusion

          We affirm the judgment of the trial court.

                                                             Evelyn V. Keyes

                                                             Justice

Panel consists of Justices Nuchia, Keyes, and Hanks.