Crimson Exploration, Inc. v. Intermarket Management, LLC

341 S.W.3d 432, 2010 Tex. App. LEXIS 8953, 2010 WL 4484020
CourtCourt of Appeals of Texas
DecidedNovember 10, 2010
Docket01-08-00774-CV
StatusPublished
Cited by10 cases

This text of 341 S.W.3d 432 (Crimson Exploration, Inc. v. Intermarket Management, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crimson Exploration, Inc. v. Intermarket Management, LLC, 341 S.W.3d 432, 2010 Tex. App. LEXIS 8953, 2010 WL 4484020 (Tex. Ct. App. 2010).

Opinion

OPINION

JIM SHARP, Justice.

Appellees, Intermarket Management, LLC, M. Scott Manolis, and Kevin McMillan (collectively “appellees”), sued appellant, Crimson Exploration, Inc., formerly known as Gulfwest Energy, Inc., 1 on a breach of indemnity contract claim. The trial court granted appellees’ summary judgment on that claim and awarded damages. The parties later agreed to the award of a certain sum of attorney’s fees to appellees in that action. Crimson filed a counterclaim for a declaratory judgment. Both sides moved for summary judgment on Crimson’s declaratory judgment counterclaim. The trial court denied Crimson’s motion for summary judgment and granted summary judgment for appellees.

*436 In three issues, Crimson appeals (1) the trial court’s grant of summary judgment in favor of appellees on the breach of indemnity contract claim, the sum of damages awarded, and the award of attorney’s fees; and (2) the trial court’s grant of summary judgment in favor of appellees on Crimson’s declaratory judgment claims, its rendering of a take-nothing judgment against Crimson, and its denial of Crimson’s summary judgment motion on those claims. We affirm the judgment of the trial court in part, reverse in part, and remand.

BACKGROUND

A. The relationship between Crimson, Intermarket, and PCA, and the “PCA lawsuit”

Crimson, an oil and gas production company, had an investment banking services agreement with PetroCapital Advisors (“PCA”). Under the agreement, PCA had the right of first refusal to provide investment banking services to Crimson from April 21, 2004 through April 21, 2006. A May 2004 agreement between Crimson and PCA settling a fee dispute also specifically referenced this right. Manolis, a director of Crimson, was involved in the settlement negotiations.

After the settlement, PCA continued to provide sendees to Crimson, including searching for a company to acquire Crimson. Crimson subsequently hired another company, Intermarket, to also help identify potential buyers of Crimson. Inter-market had ties to two Crimson executives — Crimson director Manolis, who owned Intermarket and was its director and chief executive officer, and Crimson director and chief executive officer John Loehr, who leased office space to Inter-market.

On December 31, 2004, Crimson and Intermarket signed an advisory agreement, effective July 1, 2004, setting out their business relationship. The agreement included an indemnity clause, which provides, in relevant part

Since [Intermarket] will be acting on behalf of [Crimson] in connection with the transactions contemplated by the Agreement, and as part of the consideration for the agreement of [Intermarket] to furnish its services pursuant to such Agreement, [Crimson] agrees to indemnify and hold harmless [Intermarket] and its affiliates and them respective officers, directors, partners, counsel, employees and agents and any other person controlling [Intermarket] or any of its affiliates and the respective agents, employees, officers, directors, partners, counsel and shareholders of such persons ([Intermarket] and each other person being referred to as “Indemnified Person”), to the fullest extent lawful, from and against all claims, liabilities, losses, damages, and expenses (or actions in respect thereof), as incurred, related to or arising out of or in connection with (i) actions taken or omitted to be taken by [Crimson], them affiliates, employees or agents, provided, however, that [Crimson] shall not be responsible for any losses, claims, judgments, damages, liabilities or expenses of any Indemnified Person to the extent, and only to the extent, that it is finally judicially determined that they resulted from actions taken or omitted to be taken by such Indemnified Person in bad faith, fraud, deceit, breach of contract or to be due to such Indemnified Person’s wantonness, neglect, negligence or gross negligence ...

Intermarket subsequently identified Oak Tree Capital Management LLC (“Oak Tree”) as a potential buyer for Crimson. Crimson chose the Oak Tree proposal over one offered by a company which had been identified and brought to Crimson by PCA. *437 When Oak Tree subsequently acquired majority control of Crimson, Intermarket helped Crimson obtain financing for the transaction and was paid fees for this service.

In August 2005, PCA brought suit against Intermarket, Manolis, Loehr, and McMillan 2 asserting common law and statutory fraud, negligent misrepresentation, tortious interference with contract, conspiracy, and joint enterprise. PCA alleged that Crimson, “rather than honor[ing PCA’s] right of first refusal and giv[ing] PCA the right to perform the needed investment banking services” for the Oak Tree transaction, “turn[ed] its back on its contractual obligation to PCA” and did not invite or allow PCA to perform any investment banking services for the transaction. Instead, according to PCA, Intermarket provided the investment banking services to Crimson and earned the related fees by virtue of a back-dated advisory agreement between Crimson and Intermarket. PCA alleged that this caused PCA to suffer the loss of the investment banking fees earned for the Oak Tree transaction. PCA asserted that appellees interfered with Crimson’s contract with PCA regarding PCA’s right of first refusal, made material false representations of fact or material omissions to PCA to induce PCA to enter into the May 2004 settlement agreement with Crimson, made negligent misrepresentations to PCA, and engaged in a joint enterprise and civil conspiracy with each other resulting in damage to PCA.

During the pendency of the PCA lawsuit, David Myers, counsel for Intermarket and McMillan, sent a letter to Crimson requesting written confirmation that Crimson would indemnify Intermarket and Kevin McMillan pursuant to the indemnity clause of the advisory agreement. Crimson did not provide any confirmation and did not agree to indemnify either Inter-market or McMillan for any of the fees, costs, or expenses incurred in PCA’s lawsuit. 3 After a final take-nothing judgment was entered against PCA on all its claims, 4 Myers sent another letter demanding that Crimson pay the outstanding fees and expenses incurred by all three appellees in defense of the PCA lawsuit.

B. The Breach of Indemnity Contract Lawsuit

1. Appellees’ petition and Crimson’s counterclaim

On October 11, 2007, appellees filed suit against Crimson for breach of contract for failing to satisfy the indemnity obligations of the advisory agreement. Crimson filed a verified denial, asserted numerous defenses, and raised a counterclaim for a declaratory judgment in which it requested the trial court to declare the parties’ respective rights under the agreement, including Crimson’s obligation to indemnify appellees.

2. The First Summary Judgment Ruling:

Granting appellees’ motion for traditional summary judgment on breach of indemnity contract claim

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Bluebook (online)
341 S.W.3d 432, 2010 Tex. App. LEXIS 8953, 2010 WL 4484020, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crimson-exploration-inc-v-intermarket-management-llc-texapp-2010.