Avia Energy Development, L.L.C., Avia De Mexico S. De R.L., De C.V., and James E. Musselman v. Isthmus Customhouse Brokers, Inc., and Clay Tank Trucks, Inc.--Appeal from 381st Judicial District Court of Starr County

MEMORANDUM OPINION
No. 04-02-00210-CV

AVIA ENERGY DEVELOPMENT, LLC, Construcciones Protexas, S.A. de C.V.,

Avia de Mexico, S. de R.L. de C.V., and James C. Musselman,

Appellants
v.
CLAY TANK TRUCKS, INC. and Isthmus Customhouse Brokers, Inc.,
Appellees
From the 381st Judicial District Court, Starr County, Texas
Trial Court No. DC-99-225
Honorable John A. Pope, III, Judge Presiding

Opinion by: Karen Angelini, Justice

Sitting: Sarah B. Duncan, Justice

Karen Angelini, Justice

Sandee Bryan Marion, Justice

Delivered and Filed: June 25, 2003

AFFIRMED IN PART, REVERSED AND REMANDED IN PART, REVERSED AND RENDERED IN PART

This appeal arises from a contractual dispute. Avia Energy Development, LLC, Construcciones Protexas, S.A. de C.V., Avia de Mexico, S. de R.L. de C.V. (collectively, "the Companies") entered into a written contract with Clay Tank Trucks, Inc. ("Clay") in which Clay agreed to enter Mexico and move oil and gas drilling rigs for the Companies. In exchange, the Companies agreed to pay Clay $75,000. In connection with this contract, James C. Musselman, part owner of Avia Energy, executed a "Personal Guaranty of Contractual Agreement with Indemnity," guaranteeing any sums owed to Clay. The Companies and Clay also entered into an oral contract by which Clay agreed to transport a rig from Levelland, Texas to Rio Grande City, Texas. With respect to this oral contract, Musselman did not sign a personal guaranty.

In August of 1999, Clay sued the Companies and Musselman for breach of contract, breach of guaranty, quantum merit, fraud, and promissory estoppel. (1) After a bench trial, the trial court found that the Companies had breached the written contract and that Clay had not breached. The trial court ordered the Companies and Musselman to pay Clay $263,500 in damages and $8,835 in attorney's fees. On appeal, the Companies and Musselman argue that the trial court erred as a matter of law in finding (1) that the Companies had breached the written contract, (2) that the Companies and Musselman were not entitled to an offset against damages awarded to Clay, and (3) that Musselman was liable for the damages pursuant to his personal guaranty. Additionally, the Companies and Musselman argue that even if the trial court was correct in all other respects, it erred in calculating the amount of damages in the judgment.

Because the issues in this appeal involve the application of well-settled principals of law, we affirm the judgment in part and reverse it in part in this memorandum opinion under Texas Rule of Appellate Procedure 47.1. In their first issue, appellants argue that the trial court, as a matter of law, erred in ruling that the Companies breached the written contract. According to appellants, as a matter of law, Clay breached the contract by never moving any of the rigs in Mexico. We interpret this issue as a no-evidence point. When the trial court enters findings of fact, those findings are reviewed for legal sufficiency of the evidence, the same standard applied when reviewing evidence supporting jury findings. See Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996) (per curiam); M.D. Anderson v. City of Seven Points, 806 S.W.2d 791, 793 (Tex. 1991). Thus, we review the trial court's findings for legal sufficiency of the evidence and apply the usual standard of review. Bradford v. Vento, 48 S.W.3d 749, 754 (Tex. 2001).

The trial court found that Clay had not breached the contract, because Companies had never obtained the required permits allowing Clay to move its equipment into Mexico. And, by not obtaining the permits, the trial court found that the Companies had breached the contract. The contract provides that the Companies agree to pay all permit fees for entrance of the equipment into Mexico, but is silent about which party had the duty to obtain the necessary permits. At trial, there was testimony that the Companies' attorneys were actively attempting to secure the permits, even assuring Clay that the permits would be ready "any day." Appellants failed to object to this testimony. Relying on this evidence, the trial court found that the "continuing efforts" on the part of the Companies to secure the permits "sufficiently support the theory that [appellants] had the responsibility of securing the legal permits for [Clay]'s entry into Mexico with its equipment." There is, therefore, more than a scintilla of evidence to support the trial court's finding that the Companies breached the contract and that Clay did not.

Alternatively, appellants argue that even if the Companies had the duty to obtain the permits, that duty was excused under the doctrine of impossibility. The supreme court has approved the general doctrine of impossibility due to illegality. Centex Corp. v. Dalton, 840 S.W.2d 952, 954 (Tex.1992). Under this doctrine, a party's performance under a contract is excused by supervening circumstances which make performance impossible. Id. Here, there was testimony that the Companies had, in fact, been ultimately successful in their attempts to procure the permits. As such, there was more than a scintilla of evidence to support the trial court's finding that had the Companies "complied with their obligations and responsibilities, and had the permits been secured earlier, [the Companies] would have performed [their] duty." We overrule appellants' first issue.

In their second issue, appellants contend that they are entitled to an offset of any damages they owe Clay. According to appellants, because Clay failed to perform under the contract, they incurred damages. As discussed, the trial court had sufficient evidence to find that Clay did not breach the contract. Therefore, appellants are not entitled to an offset. This issue is overruled.

In their third issue, appellants argue that the trial court incorrectly calculated the amount of the judgment by awarding Clay a double recovery. Appellants request that we remand this case to the trial court for correction of these errors. Pursuant to the parties' oral agreement, the trial court awarded Clay $67,000 for transporting a rig. As for damages associated with the written contract, the contract provides that the Companies agree "to pay, in advance, the sum of Seventy-Five Thousand and No/100 Dollars ($75,000.00) per month to Clay for the use of the heavy hauling equipment and vacuum trucks." In the judgment, the trial court awarded Clay an "advance" of $75,000 pursuant to the contract. And, instead of awarding Clay $75,000 per month for the months of November, December, and January, the trial court found that the contractual amount was questionable. (2) According to the trial court,

These amounts were due for [appellants'] contractual obligation of transporting the drilling rigs, which was not performed; however, Clay performed work with its forklift. While it, the forklift, might have been on call 24 hours, the Court was not furnished with evidence of the time used by the forklift. The Court awards damages of $60.00 per hour for an 8 hour day based on the testimony of Beck concerning the forklift operations during the months of November and December, or being a total of $28,000.00.

Beck testified, and Carpenter verified, that they had 13-15 drivers & swampers waiting during all of this period of time and that it was costing him $6,000.00 per week. This expense was incurred from November 1 through January 14th and totals to $60,000.00, together with the additional expense of $2,700 for renting three houses for their housing.

I further find that Mr. Carpenter employed the services of a Rig Superintendent and had to pay him $30,000.00 to which [Clay] is entitled as damages.

First, appellants argue that the contract does not provide for an "advance." Instead, it provides that the Companies were to pay Clay in advance of each month. We agree. The contract unambiguously does not provide for "an advance," it provides that the Companies were to pay Clay before services were rendered each month. Appellants also argue that awarding Clay an advance of $75,000 plus its expenses was an improper double recovery. As we have held that the trial court should not have awarded Clay "an advance," we cannot determine whether these damages for expenses are a double recovery. We, therefore, sustain this issue and remand this case to the trial court for calculation of Clay's actual damages. Appellants have not, however, contested the amount of attorney's fees awarded to Clay. The part of the judgment awarding attorney's fees is, therefore affirmed.

In their final issue, appellants argue that the trial court's judgment improperly holds Musselman accountable. First, they argue that because the Companies did not breach the contract, Musselman has no obligation under his personal guaranty. As we have held that there was evidence to support the trial court's finding that the Companies breached the contract, we disagree. Musselman is liable under his personal guaranty for any damages the Companies owe Clay under the written contract. Second, appellants contend that the judgment improperly holds Musselman liable for damages related to the oral contract, for which there was no personal guaranty. Clay concedes this point. With respect to the oral contract, the issue is sustained.

We, therefore, affirm the judgment in part. However, because the trial court erroneously calculated Clay's damages, we reverse and remand to the trial court for recalculation of Clay's actual damages. Finally, we reverse and render that Clay take nothing from Musselman with respect to any damages under the oral agreement between the Companies and Clay.

Karen Angelini, Justice

1. Isthmus Custom House Brokers, Inc. also sued the Companies and Musselman. Its claims against them, however, were resolved before trial.

2. The parties entered into the written contract on October 1, 1998. Appellants did not obtain the necessary permits until January of 1999.