Court of Appeals of Texas, Twelfth District, Tyler
from the County Court at Law No. 2 of Gregg County, Texas
consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
T. Worthen Chief Justice.
case involves a dispute over a supply contract between Red
Ball Oxygen Company, Inc. and Southwest Railroad Car Parts
Company which led to litigation involving a suit on account,
tortious interference, and reciprocal breach of contract
claims. In six issues, Red Ball asserts the trial court
misconstrued the contract, Southwest, not Red Ball, breached
the contract, and therefore Red Ball, not Southwest, is
entitled to damages and attorney's fees. We affirm.
2005, Southwest agreed to a long-term contract with Red Ball
for the purchase of oxygen and propane. In January 2012,
David Toarmina, Southwest's vice president and general
counsel, questioned price increases instituted by Red Ball,
as well as certain other charges, and refused to pay a
portion of billed amounts. In February 2012, Toarmina
notified Red Ball that Southwest would be cancelling the
contract effective June 1, 2012, but asked Red Ball to submit
a proposal for supplying oxygen to Southwest after that date.
The parties were unable to resolve the disputes concerning
the 2005 contract or reach a new agreement. Southwest entered
into contracts with other suppliers, Air Products and Air
Liquide Industrial U.S., L.P., effective June 1, 2012.
Ball sued Southwest for suit on account and breach of
contract, and requested a declaration that Southwest
prematurely terminated the contract and that the contract was
valid until November 4, 2015. Red Ball also sued Air Liquide
for tortious interference with contract. Red Ball prayed for
actual damages against Southwest, damages against Southwest
and Air Liquide for lost profits and rentals, exemplary
damages against Air Liquide, attorney's fees, and a
declaration that the contract was enforceable through
November 4, 2015.
and Air Liquide asserted numerous affirmative defenses to Red
Ball's causes of action, and Southwest alleged
counterclaims for breach of contract, declaratory relief, and
violations of the Texas Deceptive Trade Practices Act (DTPA).
After a trial before the court, the court rendered judgment
that Red Ball prevailed in part on its suit on sworn account
and that Red Ball take nothing on its suit for tortious
interference against Air Liquide. The court also held that
Southwest repudiated the agreement in good faith and the
agreement terminated effective June 1, 2012, and that
Southwest should prevail on its breach of contract claim, but
take nothing on its DTPA claim. The court awarded damages and
attorney's fees to Southwest.
Increases and Fees
first issue, Red Ball contends that the trial court erred in
interpreting the contract. It argues that the contract
provided for price increases during the contract's term
and did not limit those increases to increases in Red
Ball's costs of bulk oxygen as found by the trial court.
It argues that the pricing language provided that Red Ball
was entitled to raise its prices for its products as its
"operational and product costs" increased.
second issue, Red Ball asserts that the trial court erred in
ruling that Red Ball breached the contract by raising prices
when the evidence establishes that the parties intended
"cost increases" to include all costs, not just
product costs. Red Ball argues that, even if the contract is
ambiguous, the only evidence in this case supports Red
Ball's interpretation. It relies on the testimony of its
senior vice president of business development, Jarrod Lipsey,
that the term "costs" included the everyday cost of
doing business. It further relies on the testimony of Ralph
Thomas, Red Ball's vice president of finance, who
testified that "cost increases" means increases in
the cost of goods sold and overhead costs combined together.
Therefore, the argument continues, there is no evidence that
Red Ball breached the contract by raising its prices by more
than the direct amount charged by Red Ball's supplier.
third issue, Red Ball contends the trial court erred in
ruling that Red Ball was not entitled to charge hazardous
material fees, fuel surcharges, and delivery fees because the
contract allows those charges. Red Ball asserts that the
evidence conclusively establishes that it did not breach the
contract by charging for those items. Red Ball argues that
the contract "specifically discusses Surcharges and the
effect of changes in those over the term of the
Contract." Therefore, the trial court's finding that
the contract does not provide for Red Ball to invoice
Southwest for surcharges makes the language regarding those
charges surplusage, violating a cannon of interpretation. It
argues that the contract specifies that Red Ball was to
provide liquid oxygen to Southwest at Red Ball's
facility, and Southwest was then responsible for shipping
costs after that point. Thus, Red Ball was entitled to bill
Southwest delivery and fuel charges under the term
"F.O.B. Seller's location." Further, the
parties operated under the contract for more than six years
with Red Ball passing on those charges to Southwest without
complaint from Southwest. Accordingly, Red Ball argues that
"all competent evidence establishes that the only viable
interpretation [of the contract] is that the parties intended
that the Contract allow for Red Ball to bill Southwest for
the surcharges and to increase those charges from time to
time." Thus, the trial court's finding to the
contrary "is in contradiction of the plain language of
the Contract and the evidence and should be reversed."
appeal of a judgment rendered after a bench trial, the trial
court's findings of fact have the same weight as a
jury's verdict, and we review the legal and factual
sufficiency of the evidence used to support them just as we
would review a jury's findings. In re Doe, 19
S.W.3d 249, 253 (Tex. 2000). A party who challenges the legal
sufficiency of the evidence to support an issue upon which it
did not have the burden of proof at trial must demonstrate on
appeal that there is no evidence to support the adverse
finding. Exxon Corp. v. Emerald Oil & Gas Co.,
L.C., 348 S.W.3d 194, 215 (Tex. 2011). When reviewing a
no evidence issue, we determine whether the evidence at trial
would enable reasonable and fair minded people to reach the
verdict under review. City of Keller v. Wilson, 168
S.W.3d 802, 827 (Tex. 2005). In making this determination, we
must credit favorable evidence if a reasonable finder of fact
could and disregard contrary evidence unless a reasonable
finder of fact could not. Id. If there is any
evidence of probative force to support the finding, i.e.,
more than a scintilla, we will overrule the issue.
Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d
328, 334 (Tex. 1998).
review the trial court's legal conclusions concerning an
unambiguous contract de novo. MCI Telecomm. Corp. v. Tex.
Utils. Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999). We
will uphold them if the judgment can be sustained on any
legal theory supported by the evidence. Brown v.
Brown, 236 S.W.3d 343, 348 (Tex. App.-Houston [1st
Dist.] 2007, no pet.). The trial court's conclusions of
law are not subject to challenge for lack of factual
sufficiency, but we may review the legal conclusions drawn
from the facts to determine their correctness. Id.
construction of an unambiguous contract is a question of law
for the court, which we may consider under a de novo standard
of review. Tawes v. Barnes, 340 S.W.3d 419, 425
(Tex. 2011). Our primary concern is to ascertain the true
intent of the parties as expressed in the instrument.
Wood Care Ctrs., Inc. v. Evangel Temple Assembly of God
of Wichita Falls, Tex., 307 S.W.3d 816, 820 (Tex.
App.-Fort Worth 2010, pet. denied). When discerning the
contracting parties' intent, courts must examine the
entire agreement and give effect to each provision so that
none is rendered meaningless. Id. An unambiguous
contract's meaning and intent is determined from the four
corners of the document without the aid of extrinsic
evidence. Mikob Props., Inc. v. Joachim, 468 S.W.3d
587, 595 (Tex. App.-Dallas 2015, pet. denied). We give
contract terms their plain, ordinary, and generally accepted
meanings unless the contract itself shows them to be used in
a technical or different sense. Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). We construe
contracts from a utilitarian standpoint bearing in mind the
particular business activity sought to be served and will
avoid a construction which is unreasonable, inequitable, and
oppressive when possible. Frost Nat'l Bank v. L &
F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (per