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Port of Houston Authority Wins Six-Year Contractual Dispute

August 10, 2012 Natalie Posgate

© 2012 The Texas Lawbook.

By Natalie Posgate
Staff Writer for The Texas Lawbook

A six-year battle between the Port of Houston Authority and a construction company it hired to build a wharf at the Bayport Ship Channel is finally over.

The Texas Fourteenth Court of Appeals on Thursday awarded the Port and its Vinson & Elkins attorneys a complete victory in a long-lasting contractual dispute with Zachry Construction Corporation.

The state appeals court reversed a 2010 Harris County District Court judgment awarding Zachry $18.6 million in compensatory damages over allegations that the Port Authority failed to extend the construction deadline after the two parties made an agreement to extend the wharf.

Bayport Ship Channel

The court also awarded the Port Authority $10.6 million in lawyer fees.

In its 2006 lawsuit, Zachry also claimed the Port Authority rejected Zachry’s plans to build the wharf extension by freezing soil near the wharf’s supporting piles. Zachry claimed that the Port’s proposed method of excavating dirt underwater (a method the Port believed would not endanger the structural integrity of the wharf) was far more expensive than the original construction plan.

The court of appeals ruled that the damages awarded to Zachry were mostly for delay or hindrance. But the justices pointed to plain language in the contract, which stated, the company “shall receive no compensation for delay or hindrance of the work.”

Zachry had also sued to recover $2.36 million that the Port withheld to protect itself from losses caused by Zachry’s failure to meet contract deadlines. The court of appeals ruled that the Port was entitled to withhold a portion of that money under the contract because Zachry signed releases that relinquished its claim for payment of the withholding amount.

Both the court of appeals and the Harris County jury rejected another $600,000 damage that Zachry had separately claimed that the Port wrongly withheld for defective dredging.

V&E partner Marie Yeates led the Port Authority’s appeal. Other V&E lawyers who worked on the trial and appeal include Cathy Smith and Michael Heidler. V&E trial lawyer Bill Sims led the initial trial.

Yeates said that the V&E lawyers were thrilled with Thursday’s decision.

“The decision of the Court of Appeals today upholds the contractual terms agreed to by sophisticated contracting parties and allows the Port, a public entity, to protect the public’s funds with contract provisions that provide certainty as to the dollars that the Port will owe under the contract,” she said.

Yeates believes that today’s win was one of great value in the area of appellate practice.

“Having been the Port’s appellate counsel through a three-month trial… I am convinced that this case is a paradigm example of the importance of appellate counsel as a key member of a trial team in any complex case,” Yeates said.

Representing Zachry were Gibbs & Bruns lawyers Robin C. Gibbs, Jennifer Horan Greer, Sydney G. Ballesteros and Michael R. Absmeier, as well as Brandon T. Allen of Frizzell Black Doyle Allen & Oldham.

© 2012 The Texas Lawbook. Content of The Texas Lawbook is controlled and protected by specific licensing agreements with our subscribers and under federal copyright laws. Any distribution of this content without the consent of The Texas Lawbook is prohibited.

Natalie Posgate

Natalie Posgate covers pro bono work, public service and diversity within the Texas legal community.

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