United States District Court, S.D. Texas
OPINION ON SUMMARY JUDGMENT
N. Hughes, United States District Judge
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.
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
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
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.
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.
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.
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.
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
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