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Vallourec Drilling Products USA, Inc. v. B.J.'S Drill Stem Testing, Inc.

United States District Court, S.D. Texas

June 20, 2019

Vallourec Drilling Products USA, Inc., Plaintiff,
v.
B.J.'s Drill Stem Testing, Inc., Defendant.

          OPINION ON SUMMARY JUDGMENT

          Lynn N. Hughes, United States District Judge

         1. Introduction.

         Vallourec Drilling Products USA, Inc., sold drill pipe to B.J.'s Drill Stem Testing, Inc., in 2.014. Vallourec required BJ. to pay 30% of the purchase price - $384, 824.52 - as a deposit. B.J. paid the deposit and nothing more. Because B.J. breached the contract, it loses.

         2. Background.

         In May 2014, B.J. and Vallourec negotiated for the sale of pipe. Joey Keeping was B.J.'s purchasing agent. Keeping had acted as B.J.'s pipe purchasing agent four times before the May 2014 order, three of those orders were from Vallourec.

         Keeping ordered 620 joints of 4" drill pipe and 60 joints of 4" heavy-weight drill pipe for $1, 282, 748.40. The contract required B.J. to pay 30% of the purchase price as a nonrefundable deposit when the order was placed, another 30% payment within 60-days, and the remaining 40% within the next 90-days.

         Vallourec sent the invoice to B.J. on May 28, 2014. On May 30, 2014, B.J. paid Vallourec $384, 824.52. On June 61, Vallourec told B.J. that part of its order was ready for pickup. The next day, B.J. told Keeping to cancel the order. Keeping denies this. B.J. says that Keeping cancelled the order on June 9th.

         B.J. has not paid the $897, 923.88 balance, nor has it picked up the pipe. Vallourec has always possessed the pipe, and it has stored it, on B.J.'s behalf, at an outdoor storage yard. On August 31, 2016, Vallourec filed this lawsuit. On June 1, 2018, B.J. filed for bankruptcy in North Dakota. The bankruptcy court has lifted the automatic stay for this case.

         3- Agency.

         Keeping was B J.'s agent, and he had the authority to place the order. He had purchased pipe on B.J.'s behalf four times before, three times with Vallourec. When he made the fourth purchase, B J. had not revoked his agency. Corey Welter, one of two B.J. managers, admits that BJ. gave Keeping "authority to order from Vallourec a string of hard banded 4-inch drill pipe, including 60 joints of 4'inch heavyweight pipe."1 Sometime after May 2014, B.J. learned that Keeping was soliciting its clients for his own company and revoked his authority. BJ. needed to tell Vallourec that Keeping was no longer authorized to act on its behalf. It did not.

         Even if BJ. is correct that Keeping was not its agent when he negotiated the purchase order, B J. ratified his authority, and thus the contract, when it paid the deposit. BJ. cannot say that Keeping was not its agent and that he had no authority to place the order when it had (a) allowed him to do it three times before, (b) told him to cancel the order, and (c) did not tell Vallourec that Keeping's agency had been revoked or never existed.

         4. The Contract.

         The contract - a sales order acknowledgment - like the three other dealings between Vallourec and B J., incorporated Vallourec's terms and conditions into it. Vallourec's quote on the price, the order acknowledgment stating that Vallourec's terms and conditions apply, and a copy of the terms and conditions were sent to Vallourec with the order acknowledgment and invoice. Both the order acknowledgment and invoice are addressed to Drill Tech LLC, B.J.'s trade name. Keeping signed and returned the order acknowledgment to Vallourec.

         BJ. knew of the terms and conditions before placing the order. The offer said that the terms and conditions apply. The parties's three prior dealings incorporated the same terms and conditions in the same way they were incorporated here. Under the terms and conditions, an order cancellation must ...


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