In a holding that should surprise almost no one, the Texas Supreme Court ruled Friday that a jury charge – like any contract – means what it says it means.
The ruling, in effect, restores a $3 million judgment – plus more than $900,000 in interest and attorney fees – against Great Western Drilling of Fort Worth in a contract dispute with Pathfinder Oil & Gas.
In 2004, Great Western offered Pathfinder a 25% participation in the development of some specific mineral leases. The simple letter of agreement required Pathfinder to check a box and return the letter within 48 hours, after which the companies would work out the specifics.
After the two companies sparred over some aspects of the proposal, Great Western faxed another letter rescinding the original offer. Pathfinder, however, returned a signed draft participation agreement along with a check.
Great Western sued for a declaration that the Letter of Agreement returned by Pathfinder was unenforceable. The day before trial the two sides agreed to limit jury deliberations to five basic issues: 1. Whether the letter of agreement was enforceable; 2. Whether Pathfinder breached the contract; 3. Whether Great Western breached the contract; 4. If both breached the contract, who breached it first? 5. If Great Western was in breach, was it entitled to any of several specific defenses?
As part of the pre-trial agreement, Pathfinder had elected specific performance as its remedy. So, when a Midland jury found in favor of Pathfinder, the court awarded the company $3.05 million, plus $729,000 in pre-trial interest and another $200,000 in interest.
But Great Western appealed, arguing that by choosing the “specific performance” remedy that the jury would have needed to decide whether Pathfinder had been “ready, willing and able to perform the essence of its obligations” had the contract gone forward as originally planned – an element that is essential to a specific performance remedy.
The 11th Court of Appeals in Eastland agreed and rendered a take-nothing judgment.
In Friday’s opinion for the court, Justice Eva Guzman said that the pre-trial agreement – like any other contract – spelled out specific issues for the jury. By spelling out those specific issues, she wrote, other issues are waived. To require that the jury determine an issue outside the original pre-trial agreement, she wrote, would render the specific performance remedy “a Trojan Horse.”
The case was reversed and remanded to the appeals court to consider other issues the Supreme Court found no reason to review.
David Keltner of Kelly, Hart & Hallman represented Pathfinder at oral argument. Charles “Skip” Watson of Greenberg Traurig represented Great Western.
The case is No. 18-0186 Pathfinder Oil & Gas, Inc. and Cathlind Energy LLC v. Great Western Drilling Ltd.