Howell Crude Oil Co. v. Donna Refinery Partners, Ltd.

928 S.W.2d 100, 1996 WL 308222
CourtCourt of Appeals of Texas
DecidedAugust 8, 1996
Docket14-94-00498-CV
StatusPublished
Cited by79 cases

This text of 928 S.W.2d 100 (Howell Crude Oil Co. v. Donna Refinery Partners, Ltd.) 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
Howell Crude Oil Co. v. Donna Refinery Partners, Ltd., 928 S.W.2d 100, 1996 WL 308222 (Tex. Ct. App. 1996).

Opinion

OPINION

JOE L. DRAUGHN, Justice (Assigned).

Howell Crude Oil Company (“Howell”) appeals from a jury verdict in favor of Donna Refinery Partners Ltd. (“Donna”) arising out of the sale of crude oil. 1 Donna alleged violations of the DTPA, negligent misrepresentation, fraud, and breach of contract based on alleged false statements made by Howell representatives during contract negotiations and Howell’s failure to deliver crude oil as promised. The jury found in favor of Donna on all causes of action and awarded Donna actual damages for lost profits and loss of refinery enterprise on each theory of recovery as well as additional damages, exemplary damages, and attorney’s fees. The trial court disregarded the actual damages for loss of refinery enterprise and the actual and exemplary damage findings based on negligent misrepresentation and fraud. The trial court entered judgment for Donna under the DTPA and awarded damages totaling nearly $675,000, plus post-judgment interest. Howell raises five points of error primarily attacking the jury’s actual damage findings. Donna raises three cross-points contending the trial court erred in disregarding the jury’s tort damage findings and in assessing 1/4 of the court costs against Donna. We affirm the judgment awarding Donna damages on its DTPA claim but modify the judgment to allow Donna to recover all of its court costs.

Facts

In April 1988, Donna commenced operations of a small oil refinery located near McAllen, Texas. The refinery was designed to refine the locally produced, light sweet condensate. In July 1988, Donna executed a “purchase and sale” agreement with Me-tallgesellschaft Corp. (“MG”) for the purchase of crude oil as feedstock. Pursuant to this agreement, Donna located suppliers and negotiated contract terms. At Donna’s instruction, MG then paid for the feedstocks “up front” and charged Donna its cost, plus a mark-up of $.21 a barrel. Donna was not required to repay MG until it sold the refined products. However, as security in the event of a default by Donna, MG took title to the feedstocks and stored them in tanks leased from Donna. This arrangement allowed MG to “foreclose” on the feedstocks without resorting to the courts. The parties dispute whether MG and Donna had an agency relationship or a “buyer-seller” relationship.

In any event, MG, on behalf of Donna, entered into supply agreements with Koch Oil Company (“Koch”) and Coastal States Trading Company (“Coastal”). The agreement with Koch was what was known in the industry as a “30-day evergreen” contract, which automatically renewed unless one party cancelled or demanded a change in terms upon thirty-days notice. Donna initially had *105 difficulty obtaining a crude supply from Koch and when Koch did supply the crude, the quality of the oil was deficient. These deficiencies were eventually corrected.

In late 1988, Koch raised its price several times. During this time, Donna also submit ted a bid to provide JP-4, a military specification jet fuel, to the United States government. Because of Koch’s price increases, Donna’s refinery manager, Robert Wilt, sought alternative sources of crude for the government contract. Through broker, Charles Linton, Wilt learned Howell was interested in selling crude to Donna. In October 1988, Linton introduced Wilt to Howell's Vice-President, James Stewart. At a meeting held in Stewart’s office, Wilt told Stewart about Donna’s problems with Koch and that Donna was interested in a deal. After this meeting, Donna and MG began negotiations with Howell to replace the Koch contract.

At the heart of this lawsuit is a meeting at Houston’s Restaurant in Houston, Texas. The meeting took place in October 1988 and was attended by Wilt, Linton, and Stewart. The meeting was also attended by Howell’s President, James Buford, and MG’s Vice-President, Mike Schwartz. The parties’ recollections of the conversations at this meeting conflict. According to Wilt and Schwartz, the Howell representatives stated they were going to obtain the crude oil from Shell Oil Company’s McAllen Ranch Field. The Shell field produced a quality of crude that made it less costly to refine JP-4. Wilt told Stewart he had tried unsuccessfully in the past to purchase barrels from the Shell field. Wilt also warned Stewart about Donna’s problems with Koch and the financial consequences to Donna of cancelling the Koch contract. However, Stewart assured Wilt that he (Stewart) and the Shell representative had a close relationship and it was a “done deal.” Because he was afraid Koch might cancel its contract with Donna, Wilt told the Howell representatives to keep the transaction confidential. Wilt, Schwartz, and Linton left the meeting at Houston’s with the understanding an agreement had been reached. Stewart and Buford denied there was any promise to supply crude from the Shell McAllen Ranch Field or any other specific field. In fact, they conceded Howell never at any time obtained a commitment from Shell Oil Company to supply crude from the Shell McAllen Ranch Field. Stewart and Buford also denied any discussion about the Koch contract.

In November 1988, MG’s contract administrator, Valerie Lang, telephoned Stewart requesting written confirmation of the deal before cancelling the Koch contract. According to Lang, Stewart assured her of a deal. Stewart denied this. Stewart testified the parties had reached an agreement only as to price but not as to quantity, which was contingent on Howell securing a commitment from suppliers, including Shell. On November 30, 1988, Lang and Stewart exchanged telexes detailing the terms of a contract. Donna contends these telexes evidence the contract, while Howell contends they were merely proposals and counter-proposals because there was no agreement on a letter of credit.

The next day, MG cancelled the contract with Koch, effective January 1, 1989, as required by the thirty-day notice provision of the Koch contract. Shortly after cancellation, Schwartz received a telephone call from Koch’s oil trader advising him that Koch had just renewed its contract with Shell. Alarmed by this, Schwartz tried unsuccessfully to contact Stewart and Buford at Howell. In mid-December, Schwartz finally saw Buford at a social gathering. According to Schwartz, Buford not only assured him that Howell had obtained the crude, but never questioned the existence of the contract. Buford testified Schwartz merely asked about the status of negotiations and he never told Schwartz there was a contract.

Shortly thereafter, either Stewart or Buford notified Schwartz that Howell did not obtain the Shell contract and would not be delivering the crude. At a meeting attended by Schwartz, Lang, Wilt, Stewart, and Buford at MG’s offices in late December or early January, Howell was advised that Donna’s contract with Koch had been cancelled because of the Howell contract. Howell denied the existence of any such contract, but offered to help supply MG and Donna with needed feedstocks. MG subsequently refused Howell’s offer.

*106 Because of the collapse of the Howell deal in late December, Donna was unable to obtain feedstocks from any other supplier for January delivery and thus, was forced to seek reinstatement of the Koch contract. Koch agreed to reinstate the contract but at a significantly higher price. By January 1989, Donna was awarded the government contract to make JP-4, with the first delivery due on April 1, 1989.

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Cite This Page — Counsel Stack

Bluebook (online)
928 S.W.2d 100, 1996 WL 308222, Counsel Stack Legal Research, https://law.counselstack.com/opinion/howell-crude-oil-co-v-donna-refinery-partners-ltd-texapp-1996.