in Re Eastman Chemical Company and Eastman in Its Assumed or Common Name

CourtCourt of Appeals of Texas
DecidedJune 20, 2019
Docket13-18-00268-CV
StatusPublished

This text of in Re Eastman Chemical Company and Eastman in Its Assumed or Common Name (in Re Eastman Chemical Company and Eastman in Its Assumed or Common Name) 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
in Re Eastman Chemical Company and Eastman in Its Assumed or Common Name, (Tex. Ct. App. 2019).

Opinion

NUMBER 13-18-00268-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

IN RE EASTMAN CHEMICAL COMPANY AND EASTMAN IN ITS ASSUMED OR COMMON NAME

On Petition for Writ of Mandamus.

MEMORANDUM OPINION Before Chief Justice Contreras and Justices Benavides and Hinojosa Memorandum Opinion by Chief Justice Contreras Relator Eastman Chemical Company1 (Eastman) filed a petition for writ of

mandamus contending that the respondent trial court2 abused its discretion, leaving it

without an adequate appellate remedy, by denying Eastman’s motion to transfer based

on a mandatory venue provision. See TEX. CIV. PRAC. & REM. CODE ANN. § 15.011. This

1 Referred to as “Eastman Chemical Company and Eastman in its Assumed or Common Name” in

the pleadings. 2 The respondent in this original proceeding is the Honorable Robert J. Vargas, presiding judge of

Nueces County Court at Law No. 1. Court requested and received a response to the petition from real party in interest, Gulf

Hydrogen and Energy, Inc. (Gulf), and Eastman filed a reply to the response. We will

conditionally grant relief.

I. BACKGROUND

Gulf filed the underlying suit in Nueces County on July 25, 2013. In its live petition,

Gulf alleged that it contracted with Resurgence Asset Management (RAM) in 2007 to

purchase the stock of Sterling Chemicals, Inc. (Sterling) for $392.5 million. Sterling’s

primary asset is a chemical plant located in Texas City, which is in Galveston County.

Due to a conflict between RAM and Gulf, along with the 2008 financial crisis, the closing

of the deal was delayed and eventually cancelled, even though Gulf had allegedly spent

over $2 million preparing for the acquisition.

In 2011, Gulf again sought to purchase Sterling and began meeting and discussing

the acquisition with “potential financial partners.” On June 22 of that year, however,

Eastman agreed to purchase Sterling for $100 million. The Eastman-Sterling agreement

provided for a 40-day period, ending on August 1, 2011, during which Sterling could

entertain other offers for the purchase of its stock.

Gulf’s co-owner Kenneth Berry began discussions with Eastman executive Mike

Humby and Eastman attorney David Woodmansee. According to Gulf, Humby and

Woodmansee attempted to dissuade Gulf from making a bid for Sterling, and they told

Sterling’s shareholders that there were no other interested bidders.

Ultimately, according to Gulf, an oral agreement was reached under which Gulf

would refrain from submitting a bid for Sterling. In exchange, after Eastman completed

its purchase of Sterling, “[Gulf] would receive the right to operate three deep waste

injection wells” at the Texas City plant, “including sufficient tankage and access to barge,

2 truck and rail transportation to operate those wells commercially.” According to Gulf,

Eastman “promised to execute any necessary writings after it closed on Sterling.”

However, after Eastman closed on its acquisition of Sterling on August 9, 2011, Eastman

executive Jerry Matthew “denied and repudiated” the oral agreement.

Gulf’s live petition alleged breach of contract, fraud, fraud by non-disclosure, fraud

by inducement, statutory fraud, and promissory estoppel, and it sought actual damages

that “greatly exceed” $1 million, along with attorney’s fees and costs. The petition stated

that Nueces County is a proper venue “because a substantial part of the events or

omissions giving rise to [Gulf’s] claims occurred” there. More specifically, it alleged that

“many of the actions or omissions that constitute Eastman’s culpable conduct in this

matter took place in and/or were directed towards” Nueces County; that Gulf’s “acts,

dealings, and communications in forming the deal took place” in Nueces County; and that

Gulf’s principal office and principal place of business is located in Nueces County. In a

section regarding damages, the petition also stated: “[Gulf] specifically disclaims that it

is seeking recovery of real property or an estate or interest in real property.”

Eastman answered the suit and moved to transfer venue on August 13, 2013. The

motion to transfer argued that: (1) mandatory venue lies in Galveston County because

Gulf’s suit “seeks recovery of real property or an interest in real property located in

Galveston County”; and (2) alternatively, permissive venue lies in Galveston County

because “[a]ll or a substantial part of the events or omissions giving rise to [Gulf]’s claims

occurred in Galveston County.”3 In an amended motion to transfer filed on July 18, 2017,

3 As part of its argument for permissive venue in Galveston County, Eastman’s motion to transfer stated in part: Eastman denies Gulf Hydrogen’s venue facts supporting permissive venue in Nueces County. More specifically, Eastman denies that “many of the actions or omissions that constitute Eastman’s culpable conduct in this matter took place in and/or were directed

3 Eastman argued that the mandatory venue statute applies because Gulf “seeks

enforcement of an agreement or compensation for loss from an agreement concerning

rights and interests in real property” located in Galveston County. See id. Gulf filed a

response arguing in part that Eastman had waived its motion to transfer “by waiting over

four years to have it heard” and “by requesting affirmative relief from [the trial court] on

over a dozen occasions.” Eastman filed a reply to the response.

At a hearing on December 7, 2017, Gulf argued in part that Eastman failed to

specifically deny the venue facts alleged in Gulf’s petition; therefore, according to Gulf,

the trial court was bound to take its venue allegations as true, and Gulf had no burden to

produce prima facie proof thereof. See TEX. R. CIV. P. 87(3)(a). Gulf further argued that

Eastman waived its motion to transfer because it did not seek a hearing on its original

2013 motion until 2017. The trial court took the matter under advisement. Later, the court

granted leave for Gulf to file an affidavit to provide prima facie proof of its venue facts.

Gulf then submitted “supplemental evidence” in support of its response to the motion to

transfer.

On January 3, 2018, the trial court signed an order denying Eastman’s amended

motion to transfer. This original proceeding followed.

II. DISCUSSION

Eastman argues by two issues that the trial court erred by (1) denying its amended

motion to transfer, and (2) permitting Gulf to submit additional venue evidence under

Texas Rule of Civil Procedure 87(3)(d).

towards Nueces County.” Eastman further denies that “[Gulf]’s acts, dealings, and communications in forming the deal took place in Nueces County, Texas.” (Citations omitted.)

4 A. Standard of Review

To obtain relief by writ of mandamus, a relator ordinarily must establish that an

underlying order is void or a clear abuse of discretion and that no adequate appellate

remedy exists. In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig.

proceeding). A relator seeking to enforce a mandatory venue provision, however, need

not prove that it lacks an adequate appellate remedy; instead, it is only required to show

that the trial court clearly abused its discretion by failing to transfer the case. See In re

Lopez, 372 S.W.3d 174, 176 (Tex. 2012) (orig. proceeding) (per curiam); In re Mo. Pac.

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