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TST Impreso, Inc. v. Asia Pulp & Paper Trading (USA), Inc.

Court of Appeals of Texas, Fifth District, Dallas

January 30, 2014

TST IMPRESO, INC., Appellant
v.
ASIA PULP & PAPER TRADING (USA), INC. N/K/A OVERVEENGENERAAL TRADING (USA), INC., Appellee

On Appeal from the 116th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-11-00890

Before Justices Moseley, FitzGerald, and Fillmore

MEMORANDUM OPINION

JIM MOSELEY JUSTICE

TST Impreso, Inc. sued Asia Pulp & Paper Trading (USA), Inc., n/k/a Overveen Generaal Trading (USA), Inc.[1] for a declaratory judgment regarding the interpretation of a settlement agreement between the parties. Overveen counterclaimed against TST for breach of the settlement agreement and sought liquidated damages under its terms. The trial court ruled in favor of Overveen, granting its no-evidence and traditional motion for summary judgment as to TST's declaratory judgment claim and its traditional motion for summary judgment on its counterclaim. TST appeals; in three issues it argues the trial court erred in rendering judgment because the settlement agreement is ambiguous and genuine issues of material fact exist regarding TST's declaratory judgment claim and Overveen's counterclaim.

The background of the case and the evidence adduced at trial are well known to the parties; thus, we do not recite them here in detail. Because all dispositive issues are settled in law, we issue this memorandum opinion. Tex.R.App.P. 47.2(a), 47.4. We affirm the trial court's judgment.

Background

TST and Overveen were parties to a lawsuit pending in state court in Dallas county, described and defined in the settlement agreement as "The Litigation." In settlement of The Litigation, TST agreed to make a series of payments to Overveen and to the law firm of Arnold & Porter, LLP.[2] If any payments were not timely paid, the unpaid entity was required to give TST written notice of breach and TST had fifteen days after receipt of the notice to cure the breach by making the required payment in full. Under the settlement agreement, the payments were due sixty days, 120 days, and one year after the agreement's complete execution, which was accomplished on July 2, 2009.

TST did not make the first scheduled payment to Overveen (although it did make payments to Arnold & Porter). Overveen sent written notice of default to TST on January 13, 2011 and demanded TST cure the default within fifteen days. On January 27, 2011, TST responded by filing this lawsuit.

At issue is the italicized portion of the following provision in the settlement agreement:
Except for payments not timely made under this Agreement resulting from the assertion by a party other than Arnold & Porter LLP of a security interest in the proceeds of the Litigation, if TST does not cure the breach in payment within fifteen (15) days after receipt of written notice, TST shall be in default of this Agreement ("Default"), and [Overveen] shall be entitled to liquidated damages in the amount of Five Hundred Thousand Dollars ($500, 000.00).

TST contended it was served with notices of judgments obtained by third parties against Asia Pulp & Paper Co., Ltd. (APP), an entity related to but separate from Overveen, and that these judgments triggered the italicized provision quoted above. TST characterized its declaratory judgment claim as requesting a declaration "that TST's action in suspending payments based on asserted security interests (specifically money judgments against [Overveen's] affiliates and assigns, and APP/APP entities), was authorized by the Settlement Agreement, and that [Overveen] is thus precluded from recovering liquidated damages."[3]

Overveen counterclaimed for breach of the settlement agreement and asked for liquidated damages. Overveen later moved for summary judgment on its counterclaim and on TST's declaratory judgment claim. Overveen argued that TST's requested declarations were not supported by the language of the settlement agreement; the judgments TST was relying upon were against an entity other than Overveen; and the judgments were not security interests in the proceeds of The Litigation. It presented summary judgment evidence that TST did not timely make the payments due under the settlement agreement, it sent written notice of default to TST, and TST did not cure the default within fifteen days by making the required payment in full. None of this evidence was disputed.

In response, TST asserted it was excused from making the scheduled payments to Overveen because it received notice of three different judgments rendered against APP: a New York federal court judgment in favor of Export-Import Bank of the United States;[4] a New York state court judgment in favor of U.S. Bank;[5] and an Illinois federal court judgment in favor of JP Morgan Chase Bank.[6] TST argued the settlement agreement did not define the term "security interest" and that the judgments against APP were "security interests" within the meaning of the settlement agreement. It also contended there was a fact issue about whether APP was a party to the settlement agreement, whether Overveen and APP were really the same entity, and whether the judgments against APP triggered the exception to its payment obligation under the settlement agreement. As a result, TST asserted there was at least an issue of fact as to whether its failure to make the scheduled payments to Overveen was excused.

The trial court granted Overveen's motion for summary judgment, without specifying the grounds for its ruling. The final judgment dismissed TST's declaratory judgment claim and awarded Overveen damages and liquidated damages under the ...


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