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Polaris Guidance Systems, LLC v. EOG Resources, Inc.

Court of Appeals of Texas, Fourteenth District

April 16, 2019


          On Appeal from the 189th District Court Harris County, Texas Trial Court Cause No. 2016-29381

          Panel consists of Justices Jewell, Zimmerer, and Spain



         This is a summary judgment case involving the construction of an unambiguous contract contained in multiple writings. Appellant, Polaris Guidance Systems, LLC, sued appellee, EOG Resources, Inc., alleging breach of contract and promissory estoppel causes of action. EOG Resources moved for summary judgment, which the trial court granted. Finding no error, we affirm.


         EOG Resources is in the business of "exploring for and producing oil, gas and other hydrocarbons in the onshore and offshore areas of the Continental United States." Polaris develops software, which it sells to companies such as EOG Resources. Polaris also provides maintenance and other services related to its software sales.

         In early 2014, Polaris and EOG Resources began negotiations regarding the possible licensing of Polaris software, the purchase of related goods, and the provision by Polaris of certain updating and maintenance services in connection with the software. EOG Resources was interested in the Polaris software to monitor its oil and gas wells. Polaris and EOG Resources initially signed a Master Service Agreement (MSA) on February 11, 2014. The MSA provided that it

shall control and govern all Services performed by [Polaris] for [EOG Resources] under subsequent oral or written work orders, purchase orders or other similar documents issued by or accepted by [EOG Resources] ('Work Order')." Any agreements or stipulations in any such Work Order or other instrument used by [Polaris] not in conformity with the terms and provisions of this Agreement, or that purport to add to the rights of [Polaris] or to restrict the rights of [EOG Resources], shall be null and void. No waiver, modification or amendment of any of the terms, provisions or conditions herein shall be effective unless said waiver, modification or amendment shall be in writing and signed by authorized representatives of [EOG Resources] and [Polaris]. . . . No representative of [EOG Resources] has authority to waive any of the terms, conditions or provisions hereof other than an officer with the rank of Vice President or higher, acting with express authority from the Board of Directors.

         The MSA defined "Services" as "software development and product sales of same and any ancillary functions related thereto." The MSA also provided that it

does not obligate [EOG Resources] to order Services from [Polaris], nor does it obligate [Polaris] to accept orders for Services from [EOG Resources], but it, together with the commercial specifications and technical parameters in any applicable Work Order, shall define the rights and obligations of [EOG Resources] and [Polaris] during the term thereof and will continue to govern such Services until they have been completed by [Polaris] and accepted by [EOG Resources]. Notwithstanding the foregoing, [EOG Resources] may terminate any Work Order at any time upon written notice, with or without cause, and no amount shall be owed except for Services properly performed prior to termination.

         Subsequently, EOG Resources and Polaris signed two additional documents. They initially signed the Polaris/EOG License Agreement, dated March 20, 2014, wherein Polaris granted EOG Resources a perpetual, non-transferable, license to certain specified Polaris software. That same day, Polaris signed a Polaris Quote, which EOG Resources signed on March 24, 2014. The Polaris Quote provided that "this transaction shall be governed by the Polaris License Agreement and the Master Service Agreement by and between Polaris Guidance Systems, LLC and EOG Resources, Inc." Pursuant to these agreements, at the costs specified therein, EOG Resources received a perpetual license to the specified Polaris software; purchased related equipment; retained Polaris's maintenance services on an annual basis; and agreed to pay an extra fee each year for the use of a backup copy of the software. EOG Resources paid Polaris more than $350, 000, including a lump sum payment of $150, 000 for the software license and the right to use the software in perpetuity.

         EOG Resources paid each Polaris invoice until 2016. In 2016, EOG Resources decided to change the system it employed to monitor its oil and gas wells. As a result, EOG Resources notified Polaris that it intended to reduce the services it obtained from Polaris. Polaris responded that EOG Resources was locked into a perpetual service arrangement and could never terminate the services and related annual payment obligations to Polaris.

         On May 5, 2016, Polaris's counsel wrote EOG Resources, again contending that EOG Resources was obligated to pay for Polaris's maintenance and update services forever. Polaris demanded accelerated payment in an amount purportedly based on performance of the contract for a period of ten years. On November 1, 2016, EOG Resources sent a letter notifying Polaris a second time that it was terminating Polaris's services. EOG Resources included with the letter a final payment for "services performed prior to termination," along with all equipment it had obtained from Polaris as part of their deal.

         Polaris eventually filed suit against EOG Resources alleging causes of action for breach of contract and promissory estoppel. Polaris also sought a temporary injunction. Polaris alleged that EOG Resources breached the license agreement when it chose to terminate. EOG Resources filed an answer and a counterclaim seeking a declaratory judgment that EOG Resources had the contractual right under the MSA to terminate Polaris's services. EOG Resources eventually filed a motion for summary judgment seeking a declaration regarding its right to terminate the license agreement pursuant to the MSA, as well as a ruling against Polaris on all of its claims against EOG Resources. The trial court granted EOG Resources' motion in its entirety. In addition to denying all of Polaris's claims against EOG Resources, the trial court declared "that EOG [Resources] has the right to terminate its agreement with Polaris ...

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