Gulftide Gas Corp. v. Cox

699 S.W.2d 239, 92 Oil & Gas Rep. 364, 1985 Tex. App. LEXIS 7091
CourtCourt of Appeals of Texas
DecidedAugust 29, 1985
Docket01-84-00608-CV
StatusPublished
Cited by10 cases

This text of 699 S.W.2d 239 (Gulftide Gas Corp. v. Cox) 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
Gulftide Gas Corp. v. Cox, 699 S.W.2d 239, 92 Oil & Gas Rep. 364, 1985 Tex. App. LEXIS 7091 (Tex. Ct. App. 1985).

Opinion

OPINION

COHEN, Justice.

Appellees sued appellant alleging breach of contract, fraud, and breach of fiduciary duty. In accordance with the jury’s verdict, judgment was rendered against appellant for actual damages of $383,077.32, plus pre-judgment interest, and punitive damages of $1,149,231.96.

The facts are not in dispute. In June 1977, appellees, who were producers of natural gas, contracted with appellant, a gas transmission company, for appellant to purchase gas at a base price of $1.90/per thousand cubic feet, hereafter called “mcf.” Appellant represented to appellees that it had an agreement, which was not yet signed, to resell the gas to Allied Chemical Corp. for $1.95/mcf. Although appellant and Allied had not signed a contract, their contract was to be attached, on execution, as an exhibit to the contract here at issue. The contract herein provided:

3. On the first day of the second Accounting Period and of each Accounting Period thereafter, the price provided in subparagraph a. above [$1.90/mcf] shall be escalated by three cents (3.0) per mcf, such first day being hereafter referred to as the Date of Escalation.
4. Buyer’s Gas Sales Contract for this gas (attached hereto as Exhibit “C”) provides that in lieu of the escalation described in Paragraph 3 above, Buyer shall have the right to annually redetermine its sales price. Should [appellant] redetermine his gas sales contract, it hereby agrees that eighty percent of any increase above its then current price resulting from such redetermination shall be payable to [appellees].

The contract between appellant and ap-pellees was executed on or about July 7, 1977. The contract between appellant and Allied was signed on or about October 21, 1977. The first deliveries of gas occurred in December 1977. The price that appellant received from Allied for gas purchased from appellees was not $1.95/mcf, as represented, but $2.05/mcf, in accordance with the October 21, 1977, contract between appellant and Allied. When appellant and appellees entered their contract, a form contract without prices stated was attached as an example of the contract that appellant expected to enter with Allied, purportedly at the price of $1.95/mcf. However, when appellant actually signed its contract with Allied some 3V2 months later, the price was $2.05/mcf.

Appellant never informed appellees of this fact. Instead, appellant furnished ap-pellees what purported to be its contract with Allied, but which, in fact, misstated the sale price to Allied as being $1.95/mcf when, in fact, the true price of gas sold to Allied was $2.05/mcf. Appellant retained the entire difference in price between $1.95/mcf and $2.05/mcf, forwarding none to appellees. This was found by the jury to be a fraud, a breach of contract, and a breach of fiduciary duty. In addition, the jury found that appellant’s representations made before it entered the July 7, 1977, contract with appellees were fraudulent. The jury awarded damages against appellant for selling appellees’ gas for $2.05/mcf while falsely representing to appellees that it was being sold for $1.95/mcf.

*242 We are faced at the outset by a challenge to our jurisdiction raised in point of error five, in which appellant contends that the district court erred in entering judgment before the Federal Energy Regulatory Commission ruled on its petition pending before the Commission. Appellant argues that the trial court should have declined to enter judgment until the Commission exercised its “primary jurisdictional responsibility of determining whether the jury’s award in this matter is commensurate with the uniform regulatory policies established by the [Natural Gas Policy Act] and its implementing regulations.” The trial court overruled appellant’s request and entered judgment without waiting for a determination by the Commission.

We first observe that appellant does not contend, and the record does not reflect, that the jury’s award based upon a $2.05/mcf price would be in violation of price ceilings set by federal law. We further note that the establishment of federal ceiling prices did not preempt the contractual power of private parties, as long as the selling price did not exceed the ceiling prices. Pennzoil Co. v. Federal Energy Regulatory Commission, 645 F.2d 360, 381 (5th Cir.1981). Further, the federal regulatory scheme does not generally preempt the authority of state and federal courts to determine contractual authority for contract escalations in intrastate contracts, such as the one here involved. “The federal scheme of regulation under the NGA and NGPA is limited in its displacement of state regulatory authority.” Id. at 385. We conclude that we have jurisdiction to decide this casé and overrule the fifth point of error.

The first point of error asserts that the district court erred in entering judgment, because the jury’s answers to Special Issues 1, 3, and 6 are inconsistent. Appellant asserts that the jury found that the base price of the gas sold to Allied was $1.95/mcf, and in addition, also found that the base price was not $1.95/mcf. The special issues in question stated:

SPECIAL ISSUE NO. 1
Do you find from a preponderance of the evidence that the $2.05 price set out in defendant’s Exhibit No. 7 resulted from a redetermination?
ANSWER: WE DO
SPECÍAL ISSUE NO. 3
Do you find from a preponderance of the evidence
(a) that Gulftide represented to the plaintiffs that it had an agreement to resell Plaintiffs’ gas at a base price of $1.95/mcf?
ANSWER: WE DO
(b) that that representation was false?
ANSWER: WE DO
(c) that Gulftide knew the representation was false when it was made?
ANSWER: WE DO
(d) that Gulftide made the representation with intent to induce plaintiffs to rely and act upon it?
ANSWER: WE DO
(e) that the representation involved a material existing fact as opposed to a minor or trivial detail?
ANSWER: WE DO
(f) that the plaintiffs entered into a contract with Gulftide in reliance on Gulftide’s representation?
ANSWER: WE DO
(g) that the representation of Gulftide was a proximate cause of injury, if any, to the plaintiffs?
ANSWER: WE DO

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Bluebook (online)
699 S.W.2d 239, 92 Oil & Gas Rep. 364, 1985 Tex. App. LEXIS 7091, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gulftide-gas-corp-v-cox-texapp-1985.