It took a jury in Harris County about seven hours of deliberations over Thursday and Friday to determine Houston-based Kellogg Brown & Root owed nothing to a Mexican construction company that had been seeking more than $100 million in damages over losing a bid to build a refinery in southern Mexico.
The Mexican company, Constructora Hostotipaquillo, known informally as “Hosto,” told jurors in the trial that began April 25 that it lost more than $186 million in potential revenue because KBR breached its fiduciary duty to Hosto in several key ways, causing the companies not to be awarded a lucrative contract for one phase of construction of a vast government-owned refinery in Dos Bocas, Tabasco. The two companies joined forces to bid on work related to the refinery project. The Dos Bocas refinery was originally projected to cost more than $8 billion; due to overruns and construction delays, the final cost was more than $18 billion.
Butch Boyd of Houston, who represents Hosto, told jurors during closing arguments Thursday afternoon that KBR’s actions had been “with malice” and asked the panel to award additional damages for that conduct as they saw fit.
“The reason they didn’t get phase two [of the project] and the reason we didn’t is because they didn’t want to,” he said. “The biggest construction company in the world — they could have gotten this contract.”
“We were betrayed and abandoned by our partner,” Boyd said.
KBR’s lawyer, John Zavitsanos of AZA, confronted the optics of the situation — a smaller Mexican construction company going up against one of the largest engineering, procurement and construction companies in the world — head on during his closing arguments to the jury.
“Nobody cheers for Goliath,” he said. “No one cheers for the billion-dollar company. … Hollywood is not making movies where the big company is the victim. We all hate the Yankees, we all hate the Celtics … and that’s our concern. Because, on the evidence, man, this is a no-brainer.”
“But I’m a little concerned you’re going to say, ‘Well, we gotta give them something,’ but that’s not your instructions.”
KBR contended it owed no fiduciary duty to Hosto because the two companies never entered a formal partnership or joint venture to bid on contracts to construct the refinery. Rather, KBR told jurors, the companies were “associated” and not bound by the terms of a business partnership or joint venture agreement. The company contended Hosto lost out on the bid because it failed to perform well on an earlier phase of the project.
Deliberations began around 1 p.m. Thursday, and the jury returned its verdict around 2 p.m. Friday.
Harris County District Judge Donna Roth presided over the trial.
Boyd told The Lawbook on Friday shortly after the verdict was returned that it’s not clear what next steps in the case may be.
“While we disagree with the verdict we respect the jury’s decision,” he said. “We are evaluating our appellate options and no decision has been made regarding appeal at this time.”
In addition to Boyd, Hosto is represented by Michael J. Blanchard and Jillian Scherrer of the Butch Boyd Law Firm and Troy Chandler of Chandler McNulty.
In addition to Zavitsanos, KBR is represented by Cameron Byrd, Rey Flores, Daryl Moore and Justin Kenney of AZA.
The case is Constructora Hostotipaquillo, SA DE CV v. Kellogg Brown & Root, case number 2021-20545.