Appeal from the 190th District Court Harris County, Texas
Trial Court Cause No. 2014-71897
consists of Justices Wise, Jewell, and Poissant.
dispute arose between Equistar Chemicals, LP and ClydeUnion
DB, Limited after Equistar purchased some pumps from
ClydeUnion, and the pumps did not function well and became
damaged. Equistar sued ClydeUnion for breaches of warranties,
among other claims, and ClydeUnion sued Equistar for breach
of contract because Equistar did not pay the full price for
found that ClydeUnion breached an express warranty, and
Equistar breached the contract. But the jury awarded Equistar
only a fraction of the damages that Equistar had requested,
and the jury found that Equistar had not given ClydeUnion
"a reasonable opportunity to cure the breaches of
warranties." Based on the jury's findings, or
possibly the trial court's application of the
offer-of-settlement statute and rule concerning the recovery
of litigation costs, the trial court signed a judgment that
Equistar take nothing and ClydeUnion recover damages on its
breach of contract claim.
appeals, contending that the trial court erred by (1)
admitting, and rendering judgment on, unreliable and
conclusory expert testimony; (2) excluding evidence of a
letter written by ClydeUnion's attorney; (3) not
disregarding the jury's answer concerning the
"opportunity to cure" question; and (4) rendering a
judgment for ClydeUnion on its counterclaim after applying
the offer-of-settlement statute and rule.
overrule Equistar's first two issues and sustain the
latter two issues. Accordingly, we reverse the trial
court's judgment and render a judgment that both parties
had been using some pumps to help transport ethane from one
location to another, but the pumps were unreliable. So,
Equistar ordered two specially designed pumps from ClydeUnion
with the expectation that Equistar would be able to use the
pumps to transport an increased capacity of ethane. Equistar
anticipated that one pump would be operated at a time while
the second pump served as a spare.
ClydeUnion delivered the first pump, Equistar tried to
operate it in December 2012. Part of the pump failed, and it
had to be shut down. During the initial startup, the pump
displayed subsynchronous vibrations. "Subsynchronous
vibrations" means that there is a "whirl" in a
pump, and "something is beating itself up" inside
the pump. The pump was started again in early January 2013,
but it had to be shut down after a few hours because the
pump's bearings became too hot. The pump also displayed
started the pump again in late January but had to shut it
down the following day. Again, the pump had high temperatures
and subsynchronous vibrations. This time, the vibrations
reached 5.5 mils, which was above the allowable maximum
vibration of 1.67 mils according to the American Petroleum
Standards. ClydeUnion told Equistar that the pumps were
satisfactory and could be run with the vibrations. But the
vibrations remained a major concern for Equistar. Equistar
insisted on additional rotordynamic analysis, which
ClydeUnion said was unnecessary.
March 2013, Equistar hired a General Electric company, Bently
Nevada, to collect more detailed vibration data from the
pump. The data showed "a large amount of subsynchronous
vibration" as high as 5.6 mils with "steady state
values near 2.6 mils." At trial, ClydeUnion presented
evidence that Equistar did not provide the Bently Nevada data
to ClydeUnion until after litigation began.
continued to run the pump until the second ClydeUnion pump
arrived. The second pump was started in April and had a
failure with the oil cooler within about forty-five minutes.
The second pump also experienced subsynchronous vibrations as
high as 6.2 mils.
restarted the first pump again in April and ran it through
May or June. There were still issues, however, with high
temperatures and vibrations and seals leaking oil. The
vibration levels kept climbing, and Equistar and ClydeUnion
agreed to shut down the pumps when the vibrations reached 4
mils. A ClydeUnion engineer testified that they "all
felt massively disappointed at this point" and knew that
the pump "had to come out." ClydeUnion recommended
that the pump be taken out of service.
2013, Equistar sent the second pump to another company,
HydroTex, to be opened and evaluated. They discovered that
the second pump had a cracked shaft and other damage inside.
Based on this information, Equistar also shut down the first
pump and sent it for evaluation. The first pump's shaft
was also cracked. The pumps could not be safely operated with
began working on modifications to Equistar's old pumps
for more reliable ethane transportation. By November 2013,
Equistar was able to use the old pumps to transport an amount
of ethane equal to Equistar's expected capacity from the
ClydeUnion pumps. After Equistar's need to transport
significant quantities of ethane ceased in September 2014,
Equistar got a bid from HydroTex to repair and modify the two
ClydeUnion pumps with delivery to take place in eight to ten
sued ClydeUnion for breach of warranty, and ClydeUnion
countersued for breach of contract because Equistar failed to
pay the full price for the pumps. The jury found that
Equistar notified ClydeUnion of breaches of warranties within
a reasonable time after Equistar discovered or should have
discovered the breaches, but Equistar did not "give
ClydeUnion a reasonable opportunity to cure the breaches of
warranties." The jury awarded Equistar $391, 694 in
damages on the breach of warranty claim. The jury also found
that Equistar failed to comply with the agreement to pay the
full price for the pumps, and the jury awarded ClydeUnion
$150, 781.06 for the breach of contract claim. After
considering the parties' post-verdict motions, the trial
court rendered a judgment for ClydeUnion in the amount of
$150, 781.06. Equistar appeals.
first issue, Equistar contends that the trial court erred by
"admitting, and rendering judgment on, unreliable and
conclusory expert testimony that artificially limited the
magnitude of Equistar's lost profits." Equistar
complains about ClydeUnion's expert on damages, David
Townsend, basing his opinion about lost profits damages on
two assumptions: (1) the pumps should have been taken out of
service in March 2013; and (2) the pumps could have been
repaired in ten weeks. Based on these assumptions, Townsend
opined that Equistar's lost profits damages should have
been measured based on a shorter time period compared to the
time period used by Equistar's expert. Using the same
methodology for calculating damages as Equistar's expert,
Townsend opined that Equistar's lost profits damages for
the shorter time period were about $37, 500- must less than
Equistar's proposed damages of about $5.1 million. The
jury awarded Equistar an amount of lost profits damages
consistent with Townsend's opinion. And, consistent with
ClydeUnion's theory that the pumps could have been
repaired before Equistar modified its old pumps for more
reliable ethane transport, the jury did not award Equistar
any damages for the modifications.
admissible, an expert's opinion testimony must have a
reliable foundation. Ford Motor Co. v. Ledesma, 242
S.W.3d 32, 38 (Tex. 2007). We review a trial court's
ruling on the admissibility of evidence, including a ruling
on the reliability of expert testimony, for an abuse of
discretion. Gharda USA, Inc. v. Control Sols., Inc.,
464 S.W.3d 338, 347 (Tex. 2015). A trial court has extensive
discretion in evidentiary rulings, and we will uphold
decisions within the zone of reasonable disagreement.
Diamond Offshore Servs., Ltd. v. Williams, 542
S.W.3d 539, 545 (Tex. 2018).
testimony is not reliable if there is too great an analytical
gap between the data on which the expert relies and the
opinion offered. Gharda, 464 S.W.3d at 349.
"Whether an analytical gap exists is largely determined
by comparing the facts the expert relied on, the facts in the
record, and the expert's ultimate opinion."
Id. An analytical gap exists if the expert's
opinion is based on assumed facts that vary materially from
the facts in the record. Id.
if an expert's opinion is conclusory, the testimony is
incompetent and cannot support a judgment. See City of
San Antonio v. Pollock, 284 S.W.3d 809, 816 (Tex. 2009).
To be competent evidence, an expert's opinion must have a
demonstrable and reasoned basis on which to evaluate the
opinion. Rogers v. Zanetti, 518 S.W.3d 394, 405
(Tex. 2017). "When an expert's opinion is based on
assumed facts that vary materially from the actual,
undisputed facts, the opinion is without probative value and
cannot support a verdict or judgment." Id.
(quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d
497, 499 (Tex. 1995)).
contends that it objected to Townsend's proposed opinions
regarding when the pumps should have been taken out of
service and the amount of time it would take to make repairs.
In its reply brief, Equistar acknowledges that the trial
court ruled on Equistar's objection to the first opinion
(when the pumps should have been taken out of service) but,
as to the second opinion (the time it would take to make
repairs), the trial court instead "made a questionable
timeliness ruling." Indeed, the trial court ruled that
Equistar did not timely file its "motion to strike
certain opinions" of Townsend, but the trial court
indicated that the "previous stuff that I've ruled
on with him, I will let that stand." On appeal, Equistar
does not challenge the timeliness basis for the trial
court's ruling. Equistar contends that "the first
objection is preserved as both a reliability complaint and a
challenge to conclusory testimony," and the "second
objection is preserved as a challenge to conclusory
may complain on appeal that conclusory opinions are legally
insufficient evidence to support a judgment even if the party
did not object to the admission of the testimony.
Pollock, 284 S.W.3d at 816-17. But, to preserve a
complaint that an expert's testimony is unreliable, a
party must object to the testimony. Guadalupe-Blanco
River Auth. v. Kraft, 77 S.W.3d 805, 807 (Tex. 2002);
see also Tex. R. Evid. 103(a)(1). Generally, if an
appellant fails to challenge all possible grounds for a trial
court's ruling, we must accept the validity of the
unchallenged ground and affirm the adverse ruling. St.
John Missionary Baptist Church v. Flakes, 547 S.W.3d
311, 314 (Tex. App.-Dallas 2018, pet. pending); see,
e.g., Oliphant Fin. L.L.C. v. Hill, 310 S.W.3d
76, 77-78 (Tex. App.-El Paso 2010, pet. denied); Britton
v. Tex. Dep't of Crim. Justice, 95 S.W.3d 676,
680-81 (Tex. App.-Houston [1st Dist.] 2002, no pet.); cf,
e.g., Katy Springs & Mfg., Inc. v.
Favalora, 476 S.W.3d 579, 607 (Tex. App.-Houston [14th
Dist.] 2015, pet. denied) ("If a party does not
challenge all possible grounds for a trial court's ruling
that sustains an objection to evidence, then the party waives
any error for appellate review.").
Equistar does not challenge on appeal a ground for the trial
court's ruling to admit Townsend's opinion regarding
the time it would take to make repairs, we affirm the
admission of that portion of Townsend's
Reliability and Conclusory Challenge: When to Remove
trial court admitted testimony from one of ClydeUnion's
experts, Peter Thompson, that the Bently Nevada report
provided to Equistar in March 2013 showed that "the
pumps shouldn't run any further." Had Thompson seen
the Bently Nevada report in March 2013, he "would have
said that this pump now requires internal examination. In
other words, stop it." Thompson testified that had the
damage to the pump been discovered, the pump could have been
a damages expert, may use other experts' opinions or data
to formulate opinions based on his own expertise. See
Gharda, 464 S.W.3d at 352 (noting that experts may rely
on other experts' opinions and data so long as the other
experts' opinions and data is also reliable). To
formulate Townsend's damages opinion, Townsend could have
relied on Thompson's conclusion that the pumps should
have been stopped and examined in March 2013 immediately
following Equistar's receipt of the Bently Nevada report.
Equistar does not challenge Thompson's opinions based on
the Bently Nevada report, nor does Equistar challenge any
experts' reliance on the data in the Bently Nevada
report. Thus, the first assumption upon which Townsend
relied-that the pumps should have been stopped and examined
in March 2013-is not a fact that varies materially from the
facts in the record. Townsend's reliance on this
assumption when calculating lost profits damages does not
render his opinion on damages unreliable or conclusory.
also challenges Townsend's opinion because Townsend
broadly referred to "the pumps" rather than just
the first pump, since the second pump had not yet been
started or analyzed by March 2013. Equistar attempts to
undermine Townsend's opinion by pointing to evidence that
ClydeUnion encouraged Equistar to keep running the second
pump after March 2013.
lost profits damages opinion was based on Equistar's
inability to pump the expected capacity of ethane in April
and May 2013. From this record, it appears Townsend's
opinion about damages assumed that neither pump was
sufficient to pump the expected capacity of ethane in April
and May 2013. Townsend used the same underlying data and
methodology for calculating damages as did Equistar for the
months of April and May 2013. Thus, even if Townsend relied
on an erroneous assumption that both "pumps,"
rather than just the first pump, should have been removed in
March 2013, Townsend's ultimate opinion about the measure
of lost profits damages was not affected. If the second pump
had been fully operational in April and May 2013, Equistar
would have suffered no lost profits damages. Accordingly,
Townsend's purported reliance on an assumption that the
"pumps" would be out of service in April and May
2013 does not render his damages calculation unreliable or
Conclusory Challenge: Time for Repairs
based the second assumption upon which he relied-that the
pumps could have been repaired in ten weeks-on a bid HydroTex
gave to Equistar. Equistar contends that the ten-week
estimate for repairs renders Townsend's damages opinion
unreliable and conclusory because the HydroTex proposal was
for a "major modification" of the pumps and would
turn the pumps into different kinds of pumps that could pump
materials other than ethane. The HydroTex proposal would make
the pumps transport fewer gallons per minute. And, Equistar
contends that the HydroTex timetable necessarily did not
include any diagnostic analysis that took place before
Equistar requested the bid from HydroTex.
arguments, however, require a court to "evaluate the
underlying methodology, technique, or foundational data used
by the expert." See Pollock, 284 S.W.3d at 817.
These complaints are directed at the reliability of
Townsend's opinion, not whether it is conclusory on its
face. See id.
the record contains other evidence to support Townsend's
use of the HydroTex time frame. Another ClydeUnion expert,
Kenneth Fischer, testified that the problems with the pumps
could have been "quickly and effectively addressed"
by replacing the pumps' damaged shafts and utilizing a
different type of bushings (Graphalloy). Thompson similarly
testified that the fundamental repair to be made to the pumps
would be to change out the bushings for Graphalloy with
increased clearance and grooving. Two of the many items
HydroTex proposed to replace during its ten-week time frame
included new shafts and Graphalloy bushings. Thus, although
the HydroTex time frame of up to ten weeks included a
"remanufacture" of the ClydeUnion pumps, the
modifications included replacing the shafts and bushings
using the same material suggested by ClydeUnion's
experts. Townsend explained that the ten-week time frame was
a "conservative" estimate of the time necessary for
making repairs-specifically, replacing the shafts and
bushings with Graphalloy.
opinion about the amount of lost profits, based on an
estimated repair time of ten weeks, does not vary materially
from undisputed facts in the record. Townsend's ultimate
opinion is not "speculative or conclusory on its
face." See id.
first issue is overruled.
Exclusion of Evidence
second issue, Equistar contends that the trial court erred by
excluding "evidence that was essential to prove both (a)
that Equistar gave ClydeUnion an opportunity to cure, and (b)
the magnitude of Equistar's lost profits." We assume
without deciding that the trial court erred by excluding the
evidence. However, the alleged error was not harmful.
The Evidence and Procedural Background
complains about the trial court's exclusion of a letter
sent by ClydeUnion's attorney in October 2013 wherein
ClydeUnion offered to perform warranty work on the pumps. In
the letter, ClydeUnion wrote that in exchange for performing
the work, CyldeUnion would require Equistar to release
ClydeUnion from all damage ...