MPG Petroleum, Inc. v. Crosstex CCNG Marketing, Ltd., Crosstex Energy Services, LP., and Crosstex Energy Services, GP, LLC--Appeal from 343rd District Court of San Patricio County

NUMBER 13-05-609-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG

MPG PETROLEUM, INC. Appellant,

 

v.

 

CROSSTEX CCNG MARKETING, LTD.,

CROSSTEX ENERGY SERVICES, L.P., AND

CROSSTEX ENERGY SERVICES, GP, LLC, Appellees.

On appeal from the 343rd District Court
of San Patricio County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Ya ez and Castillo
Memorandum Opinion by Chief Justice Valdez

Appellant, MPG Petroleum, Inc. ("MPG"), sued Appellees, Crosstex CCNG Marketing, Ltd., Crosstex Energy Services, L.P., and Crosstex Energy Services, G.P., L.L.C. (collectively "Crosstex"), for breach of contract, fraud, and negligent misrepresentation. The trial court granted a combined traditional and no-evidence motion for summary judgment in favor of Crosstex on the breach of contract claim, and a no-evidence motion for summary judgment in favor of Crosstex on fraud and negligent misrepresentation claims. In two issues, MPG contends the trial court erred in: (1) granting Crosstex's traditional and no-evidence motion for summary judgment on the breach of contract claim; and (2) granting Crosstex's no-evidence summary judgment on the remaining claims. For the reasons that follow, we affirm the trial court's judgment.

I. FACTUAL AND PROCEDURAL HISTORY

Crosstex is the owner and operator of a natural gas pipeline that crosses MPG's leasehold. MPG and Crosstex entered negotiations whereby Crosstex would buy 100% of the natural gas produced by MPG's well. MPG and Crosstex signed a "letter agreement" dated March 12, 2003, stating that MPG would build a flow line from its well to Crosstex's Gregory Gathering System. MPG later decided that the flowline would be too expensive to do this. As a result, Crosstex and MPG developed a new plan whereby the natural gas would be delivered directly to Crosstex's newly-acquired Ingleside-to-Refugio eight-inch pipeline that crossed MPG's leasehold. MPG and Crosstex memorialized the new plan in a second letter agreement, dated April 10, 2003.

The April 10, 2003 letter agreement stated that MPG would commit 100% of its natural gas output from the well. MPG would construct flow lines to deliver the gas from the well to the "agreed upon points of interconnection ('Points of Delivery') between the

facilities of MPG and Crosstex." (1) MPG would also be financially responsible for the purchase and installation of the required fittings, valves, and measuring equipment at a cost of $12,500. The agreement also outlined the term, price, and gas quality specification.

After the April 10, 2003 letter agreement, MPG and Crosstex continued to negotiate the measuring equipment's location and the flow line's specifications. The negotiations included a field meeting in mid-May 2003, whereby the parties met to discuss the exact location of the measuring equipment. Negotiations continued into September 2003 to identify the measuring equipment's location. The parties were not able to agree on a location. The formal contract mentioned in the letter agreement was never signed.

On April 6, 2004, approximately seven months after negotiations ceased, MPG filed suit. The trial court granted a hybrid traditional and no-evidence summary judgment on the breach of contract claim, and a no-evidence summary judgment on the fraud and negligent misrepresentation claims on June 21, 2005. II. STANDARD OF REVIEW

A. Traditional Summary Judgment Standard of Review

The function of a summary judgment is to eliminate patently unmeritorious claims and defenses, not to deprive litigants of the right to a jury trial. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 n. 5 (Tex. 1979). We review de novo a trial court's order granting a traditional motion for summary judgment. Joe v. Two Thirty-Nine Joint Venture, 145 S.W.3d 150, 156 (Tex. 2004). The traditional summary judgment movant has the burden of showing that no genuine issue of material fact exists, and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). As defendant, Crosstex is entitled to summary judgment if it conclusively negated an essential element of MPG's breach of contract cause of action. S.W. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). Crosstex bears the burden of proof and all doubts about the existence of a genuine issue of material fact are resolved against it. See Nixon, 690 S.W.2d at 548-49. All evidence and any reasonable inferences must be viewed in the light most favorable to MPG. Id.

B. No-Evidence Summary Judgment Standard of Review

A no-evidence motion for summary judgment is equivalent to a pretrial directed verdict, and this court applies the same legal sufficiency standard of review. Ortega v. City Nat'l Bank, 97 S.W.3d 765, 772 (Tex. App.-Corpus Christi 2003, no pet.) (op. on reh'g). In an appeal of a no-evidence summary judgment, this Court reviews the evidence in the light most favorable to the nonmovant, disregarding all contrary evidence and inferences. Merrill Dow Pharms., Inc. v. Harner, 953 S.W.2d 706, 711 (Tex. 1997). We review a no-evidence summary judgment de novo. Id. If the nonmovant produces evidence that raises a genuine issue of material fact, summary judgment is improper. Tex. R. Civ. P. 166a(i). All that is required of the nonmovant is to produce a scintilla of probative evidence to raise a genuine issue of material fact. Ortega, 97 S.W.3d at 772. There is less than a scintilla of evidence when the evidence is "so weak as to do no more than create a mere surmise or suspicion" of a fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). There is more than a scintilla of evidence when the evidence allows reasonable and fair-minded people to differ in their conclusions. Id. The burden of producing evidence is entirely on the non-movant; the movant has no burden to attach any evidence to the motion. Tex. R. Civ. P. 166a(i).

No-evidence points will be sustained when: (a) there is a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a scintilla; or (d) the evidence conclusively establishes the opposite of a vital fact. King Ranch, 118 S.W.3d at 751. When the trial court does not specify the basis upon which it granted summary judgment, the appellate court must affirm if any one of the movant's theories has merit. Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).

III. DISCUSSION

A. Breach of Contract Claim

In its first cause of action, MPG alleges that Crosstex breached the April 10, 2003 letter agreement. Crosstex moved for a hybrid traditional and no-evidence summary judgment against MPG's breach of contract claim on the following grounds: (1) there was no meeting of the minds as to the point of delivery (points of interconnection), an essential element of the contract; (2) there was a lack of consideration; and (3) MPG was not injured by the alleged breach. Crosstex's motion was not clearly segregated into traditional and no-evidence summary judgment grounds. MPG, however, did not lodge an exception to any ambiguity in the motion. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342-43 (Tex. 1993). The trial court granted summary judgment, but did not specify whether its grant pertained to the traditional motion, the no-evidence motion, or both. We must, therefore, analyze the no-evidence summary judgment first, followed by the traditional summary judgment. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004).

In general, a contract is legally binding only if its terms are sufficiently definite to enable a court to understand the parties' obligations. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). The Restatement asserts that contract terms are reasonably certain "if they provide a basis for determining the existence of a breach and for giving an appropriate remedy." Restatement (Second) of Contracts 33(2) (1981). Of the several elements required for a legally binding contract, two important elements are that the parties (1) have a meeting of the minds and (2) communicate consent to the terms of the agreement. Smith v. Renz, 840 S.W.2d 702, 704 (Tex. App.-Corpus Christi 1992, writ denied).

Whether an agreement fails for indefiniteness is a question of law to be determined by the court. See T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). A binding contract may be formed if the parties agree on the material terms, even if they leave other provisions for later negotiation. Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 556 (Tex. 1972) (citing 1 Corbin on Contracts (1963) 87-91). Where a contract leaves essential terms open for future negotiation and adjustment, there is no binding contract that can be enforced. See T.O. Stanley Boot, 847 S.W.2d at 221; Engelman Irrigation Dist. v. Shields Bros., 960 S.W.2d 343, 352 (Tex. App.-Corpus Christi 1997, pet. denied). Texas courts favor validating transactions rather than voiding them, but courts may not create a contract where none exists and they generally may not add, alter, or eliminate essential terms. Oakrock Exploration Co v. Killam, 87 S.W.3d 685, 690 (Tex. App.-San Antonio 2002, pet. denied).

A letter agreement may be binding even though it refers to the drafting of a future, more formal agreement. See Foreca, S.A. v. GRD Dev. Co., Inc., 758 S.W.2d 744, 746 (Tex. 1988). But an agreement to make a future contract is enforceable only if it is "specific as to all essential terms, and no terms of the proposed agreement may be left to future negotiations." Fort Worth Indep. Sch. Dist., 22 S.W.3d at 846 (quoting Foster v. Wagner, 343 S.W.2d 914, 920-21 (Tex. App.-El Paso 1961, writ ref'd n.r.e.)). It is well settled law that an agreement that leaves material matters open for future adjustment and agreement that never occur, is not binding upon the parties and merely constitutes an agreement to agree. Id.

The April 10, 2003 letter agreement left the delivery point open for future negotiation. The letter agreement states the point of delivery to be "at the agreed upon points of interconnection (Points of Delivery) between the facilities of MPG and Crosstex." Crosstex contends in its summary judgment motion that point-of-delivery is an essential term in a gas purchase agreement. MPG does not dispute this point, but contends that the letter agreement sufficiently described the point of delivery. We disagree.

The letter agreement, by its very terms, left the point of delivery up to future negotiation. The letter agreement was not specific as to all essential terms because it left the point of delivery to future negotiations. See Fort Worth Indep. Sch. Dist., 22 S.W.3d at 846. Reviewing the evidence in the light most favorable to MPG, we find that the April 10, 2003 letter agreement was an unenforceable agreement to agree. The trial court properly granted no-evidence summary judgment. Because resolution of this issue on no-evidence grounds is dispositive, we need not address the traditional summary judgment grounds. See Ridgway, 135 S.W.3d 598 at 600; Tex. R. App. P. 47.1. We overrule MPG's first issue. B. Fraud and Negligent Misrepresentation Claims

As a preliminary matter, MPG complains on appeal that because there was not adequate time for discovery, the trial court should have denied Crosstex's no-evidence summary judgment. When a party contends that it has not had adequate opportunity for discovery before a summary judgment hearing, it must file either an affidavit explaining the need for further discovery or a verified motion for continuance. Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 647 (Tex. 1996). MPG did neither, and any complaint on this issue is waived. Tex. R. App. P. 33.1(a)(1); Tenneco Inc., 925 S.W.2d at 647.

1. Fraud

In its suit, MPG alleged that Crosstex engaged in common law fraud. To recover for common law fraud, MPG must prove that: (1) Crosstex made a material representation; (2) the representation was false; (3) the representation was made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion; (4) Crosstex made the representation with the intention that it should be acted on by MPG; (5) MPG acted in reliance on the misrepresentation; and (6) MPG thereby suffered injury. See Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 211 n. 45 (Tex. 2002); Ernst & Young v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001); T.O. Stanley Boot, 847 S.W.2d at 222. A promise of future performance constitutes an actionable misrepresentation if the promise was made with no intention of performing at the time it was made. See Schindler v. Austwell Farmers Coop., 841 S.W.2d 853, 854 (Tex. 1992). While intent is determined at the time the party makes the representation, it may also be inferred from the party's subsequent acts after the representation is made. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986). But the mere failure to perform a contract is not evidence of fraud. See Schindler, 841 S.W.2d at 854.

In its no-evidence motion for summary judgment, Crosstex contended that MPG produced no evidence for any of the requisite elements. Specifically, Crosstex sought to show that MPG failed to produce evidence that (1) Crosstex made a false representation knowingly, or recklessly without any knowledge of the truth; (2) MPG justifiably relied on Crosstex's representations; and (3) MPG suffered damages. To defeat the motion, MPG was required to produce a scintilla of probative evidence as to each element to raise a genuine issue of material fact. See Ortega, 97 S.W.3d at 772.

To establish the requisite elements of fraud, MPG referenced the attached affidavit of Margaret P. Graham, MPG's owner and president. Graham stated:

Defendants' representations concerning the location on Plaintiff's Brammer leasehold where the connection to its pipeline would be made were either false at the time they were made, or Defendants concealed that they had no intention of establishing a connection on this leasehold acreage. I would not have signed [the April 13, 2003 letter] [sic] if I had known Defendants had no intention of providing a connection to their pipeline on this acreage; were going to immediately begin looking for an off-site location for a point of connection; and were going to deny that any agreement for a connection point on the Brammer #3 lease acreage was ever reached.

 

A summary judgment may be based on the uncontroverted testimonial evidence of an interested witness if the evidence is clear, positive, direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted. Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 (Tex. 1997). Affidavits must set forth facts and cannot be conclusory. Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996). "Subjective beliefs" are not susceptible to being readily controverted, and are, therefore, not competent summary judgment evidence. Tex. Div.-Tranter, Inc. v. Corrozza, 876 S.W.2d 312, 314 (Tex. 1994).

Viewing MPG's summary judgment evidence in the light most favorable to MPG, we conclude that MPG failed to produce competent summary judgment evidence to raise a genuine issue of material fact regarding the requisite element that Crosstex made a false representation knowingly, or recklessly without any knowledge of the truth. The trial court properly granted summary judgment on MPG's fraud claim.

2. Negligent Misrepresentation

In its third cause of action, MPG alleged that Crosstex negligently misrepresented certain information in its dealings with MPG. To recover for negligent misrepresentation, MPG must prove that: (1) Crosstex made a representation in the course of its business, or in a transaction in which it has a pecuniary interest; (2) Crosstex supplied "false information" for the guidance of others; (3) Crosstex did not exercise reasonable care or competence in obtaining or communicating the information; and (4) MPG suffered pecuniary loss by justifiably relying on the representation. Fed. Land Bank Ass'n v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991). The sort of "false information" contemplated in a negligent misrepresentation case is a statement of existing fact, not a promise of future conduct. Key v. Pierce, 8 S.W.3d 704, 709 (Tex. App.-Fort Worth 1999, pet. denied); Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex. App.-Houston [14th Dist.] 1999, pet. denied). Crosstex asserted in its no-evidence summary judgment motion that MPG produced no evidence that Crosstex made a false statement, or that MPG justifiably relied on any representation Crosstex made.

In its response to the no-evidence summary judgment motion, MPG referenced the attached affidavit of Margaret P. Graham. In her affidavit, Graham identifies as "false information" told by Crosstex to her that it would connect to the pipeline on her leasehold and place the sales meter at the pipeline. MPG's response also references the deposition of Scott Brown, a Crosstex employee. Brown states in his deposition that the April 10, 2003 letter agreement contemplated the meter being placed right next to the pipeline. Graham also states in her affidavit that Crosstex's representations were "either false at the time they were made, or [Crosstex] concealed that they had no intention of establishing a connection on the leasehold acreage."

Despite Graham's subjective belief that she was given false information, this type of promise of future conduct is not the type of "false information" contemplated by the tort of negligent misrepresentation. See Key, 8 S.W.3d at 709. Such statements are not statements of existing fact, and are not actionable in negligent misrepresentation. Id. at 709. Reviewing this evidence regarding MPG's negligent misrepresentation claim in the light most favorable to MPG, we conclude that MPG's summary judgment evidence failed to raise a genuine issue of material fact as to the "false information" element of their claim. The trial court properly granted Crosstex's no-evidence summary judgment on this motion.

We overrule MPG's second issue.

IV. CONCLUSION

The trial court properly granted Crosstex's no-evidence summary judgment motions. We affirm the trial court's judgment.

ROGELIO VALDEZ

Chief Justice

 

Concurring and Dissenting Memorandum Opinion

by Justice Errlinda Castillo.

Memorandum Opinion delivered and

filed this the 5th day of October, 2006.

1. Quote taken from the April 10, 2003 letter agreement. The location of this point, or these points, of interconnection is at the center of the dispute. Crosstex alleges that the interconnection point is a material or essential element of the agreement, and the interconnection point was left up to future negotiation. According to Crosstex, there was, therefore, no "meeting of the minds," and thus no contract.