1 ... S eeTe x. R. App . P. 47. 4. 

## COURT OFAPPEALS SECOND DISTRICTOF TEXAS FORT WORTH
NO. 2 - 0 7 - 2 6 0 - CV
CMS E NE R GYR E S OUR CE AP P E L L ANT M A N A G EM EN T C O M PA N Y A N D A PPELL EE F/ K/A C M S M ARKETI NG SE RVI CES AND T R ADI NG COMP ANY V . Q U I C KS I LVER R ESO U RC ES, I N C
. A PPELL EE AND AP P E L L ANT

----- ----- -- FR O M THE 236TH DI STRI CT CO URT O F TARRA NT CO UN TY

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### MEMORANDU M OPI NI ON 1

----- ----- -- I. I NTR ODUCTI ON Q ui cksi l verResou r ces, I nc. ( Q ui cksil v er ) sued C M S Ener gy R esour ce M ana gem entCom pa ny f / k/a CM S M ar ke t i ng Servi ce s and Tr adi ng Com pan y ( C M S) f orbr ea ch ofa l ong- t er m co nt r ac tf ort he sa l e o fna t ural gas, f or
r es ci ss i on, an d f orf r aud i n t he i nduc em ent of t hat con t r ac t . Fol l ow i ng a t w o-2 ... Forea seofr ef er enc e, w e u set he sa m e c har ac t eri zati onsast he

part i es ut i l i zed i n t hei rbr i ef s w hen di scussi ng t hei rpoi nt s and i ssues. 2 w e e ktr i a l , a j u ry d e l i b e rate d for fi v e d a y s a n d r e tu rn e d a v e rdict. B o th Q ui cksi l verand C M S m oved forj udg m enton t he verd i c t; ul t i m at el y, t he t r i al
c o u rt sign e d a j u d g m e n t fo r Q u i c k sil v e r a n d res c i n d e d th e l o n g -t e rm co n tr a c t, ef f ec t i ve f r om t he dat e o ft he j udg m ent . Bot h CM S and Q ui ck si l verha ve p e rf e c ted ap p e a l s from the tr i a l co u rt ’s j u d g m e n t. C M S r ai se s f our i ss ues . Fi r st , C M S c l ai m s t hat t her e i s l ega l l y i ns uf f i ci ent evi dence t o suppo rtt he j ur y’ s f i ndi ng t hati tf r audu l ent l y i ndu ced Q ui cksi l ver i nt o t he t r ans ac t i on. Secon d, C M S a r gue s t hat Q ui ck si l verdi d notobt ai n t he
nec es sa ry j ury f i ndi ngst o su pportr es ci ss i on oft he l ong- t er m co nt r ac t . Thi r d, C M S ar gues t hat , i n any even t , r esci ssi on of t he ent i r e cont r actw as i m pr oper
w hen the cont r actcont ai ned a sever abi l i t y cl ause. A nd f ourt h, C M S ar gues th a t t h e tr i a l c o u rterred b yreq u i ri n g C M S to p o st a b o n d to s e c u re th e co sts ofQ ui cksi l ver ’ s super sedeas bond. Q ui ck sil ver , as appel l ee, r ai ses a

“ c o n d i ti o n a l c ro s s -p o i n t,” 2arg u i n g th a t th e j u ry’s a w a rd o f ze ro d a m a g e s o n i ts f r aud ul enti nduc em entcl ai m i s aga i ns t t he gr ea tw ei ghtan d pr epo nde r anc e o f t he evi den ce . Q ui ck si l ver , as c r os s- app el l ant , r ai se s t w o i ss ues : f i r st , t hatt he t r i al co urter r ed by o nl y pr os pec t i vel y r es ci ndi ng t he cont r ac ti ns t ea d ofgr ant i ng3

r es ci ss i on a b i ni t i o, an d seco nd, t hatt he t r i alco urter r ed by d i sr ega r di ng t he j ury’ s aw ar d of$1 0 m i l l i on do l l ar s i n exem pl ary dam ages. Fort he r ea so nss etf ort h bel ow , w e s us t ai n CM S’ s f i r sti ss ue cha l l eng i ng t he l ega l s uf f i ci enc y oft he evi den ce t o s upportt he j ury’ s f i ndi ng off r aud ul ent i ndu cem ent . Because w e hol d t hatno evi den c e e x i sts t hatC M S m ade a def i ni t i ve pr om i set hati nduc ed Q ui ck si l veri nt o t he con t r ac t , w e r eve r set he t r i al co urt ’ s j udgm entan d r end erj udgm entt hatQ ui ck si l vert ak e n ot hi ng.

II . F ACTUA LAN DP ROCEDURALB AC KG ROUND O n M ar ch 26, 1999 , CM S and Q ui ck si l veren ga ged i n t el eph one
n e g o t i a t i o n st h a t c u l m i n a t e d i n a n a g r e e m e n tb e f o r e t h e p a rt i e sh u n g u p ; CM S
a n d Q ui cksi l veragr eed t hatQ ui cksi l verw oul d sel l C M S nat ur al gas ata f i xed pr i ceof$2. 47/ M M bt u f ort en ye ars. A s i s cus t om ary i n t he i ndus t ry, t he t el e p h o n e n e g o t i a t i o n sa n d , u l t i m a t e l y , t h e d e a l r e a c h e d i n t h e t e l e p h one
con ver sa t i on, w asr ec or ded . The r ec or ded M arc h 26, 1999 t el eph oneco nve r sa t i on be t w ee n t he part i es w as pl ayed f orthe j ur y m ul t i pl e ti m es. M ar c P aul ey, a C M S em pl oyee, i ni t i at ed t he M ar ch 26, 1999 t el eph oneco nve r sa t i on, spea ki ng w i t h M i keRyan, a Q ui ck si l verpr oduc tm ar ke t i ng m ana ger . Ev ent ual l y, Toby Dar den , Q ui cksi l ver ’ s C hai r m an oft he B o ar d, and G l enn D ar den, Q ui cksi l ver ’ s C hi ef Executi ve O f f i cer , j oi ned t he cal l vi a speakerphon e w i t h M i ke. A ndy C opp ol a,4

C M S’ s r egi ona l m ar ke t i ng m ana ger , an d Davi d Geyer , C M S’ s vi cepr es i den tof
r i skm ana gem entj oi ned t he ca l l vi a s pea ke rphon e w i t h M ar c Pa ul ey. U nbe kno w ns t t o t he Q ui ck si l ver em pl oye esw ho w er e p art i ci pat i ng i n t he phone
c o n v e rsa ti o n , C M S ’s D a v i d G e y e r w a s h a v i n g a c o n c u rr e n t co n v e rsa ti o n w i th Le e Lew i s, a C M S r i skm ana ger , w ho, i n t ur n, w ason t he phonew i t h s om eon e atJ. A r on & C o. , a N ew Yor k b ank ; t hi s t r i o w asdi sc us si ng a f i nan ci alhe dge
concer ni ng t he Q ui cksi l vergas. D ur i ng t he M ar ch 26, 199 9 r ec or ded t el eph one con ver sa t i on, C M S and Q ui cksi l verdi scussed a “upsi de shar i ng pr ovi si on. ” Th e C M S and Q ui cksi l ver part i es’ conver sat i on con cer ni ng t he “upsi de shar i ng pr ovi si on” w as as f ol l ow s: (R a d i o b ro a d c a s t.) M i keRyan: Thi s i s M i keRyan sp ea ki ng. M ar c Paul ey: M i ke, i t ’ s M ar c. M i ke Ry an: H ey, M ar c. M ar c Pa ul ey: I l os tyou . M i ke Ryan: Yeah, I w aski nd ofheari ng – i tw as de ad ai rt her e a nd I

though t m aybe w e got – m aybe w e al r eady s ai d w hat w e n e e d e d t o s a y . I d i d n ’ tk n o w. M ar c Paul ey: O h, I ’ m s or ry. I w asj us tt ryi ng to ge tthe t hr ee , f i ve, and

seven w hi l e I had you on t he l i ne. M i keRyan: Ri ght . O ka y. M a rc P a u l e y : O k a y . S o – o k a y . 2 .2 6 fo r th e th re e -y e a r. M i keRyan: O ka y. M a rc P a u l e y : 2 .3 1 fo r th e fi v e -y e a r, 2 .3 5 fo r th e s e v e n -y e a r. M i keRyan: O ka y. And very c l os e o n t he 2. 47 f ort en? M ar c Pa ul ey: I ’ m s or ry? M i k e Ry a n: And r e a l c l os e t o 2. 47? M ar c Paul ey: N o, w e’ r e t her e. I gotguys her e w i t h t hei rha ndsar ound m y

ne c ki fI d on ’ tc l os e t e n ye a r sa t2. 47.5

M i keRyan: O ka y. M ar c Paul ey: W e’ ve been w or ki ng on t hi s si nce 8 : 00 o’ cl ock. M i k e R y a n : L e t m e p u t yo u o n h o l d ri g h t no w an d tryto g e t t h a t. M ar c Pa ul ey: O ka y. (R a d i o c o n v e rs a ti o n .) M i ke Ry an: M ar c? M a rc P a u l e y : Y e s , sir. M i ke Ry an: I ’ ve got G l enn and To by D ar den w i t h us. M a rc P a u l e y : A l l ri g h t. U ni den t i f i ed S peaker : H ey, M ar c. H ey, M ar c. M ar c Paul ey: H i , guys. To by D ar den: W e’ r e goi ng ov ert hi s pr i ci ng f r om C onsum er s. M ar c Paul ey: H ey, G l enn an d Toby and M i ke , you guysw antt o ha ng on ?

I gota cou pl e ot herpeopl e i n t he r oom , t oo, w i t h m e. W hy don’ tI j us tputyou on t he sp ea ke rphon e? Guys, ar e y ou t her e? M i keRyan: Yeah, I ca n he aryou . To by D ar den: W e’ r e her e. M a rc P a u l e y : O k a y . I h a v e A n d yC o p p o l a an d D a v i d G e y e r i n h e re w i th

m e, t oo. Go ahea d. Toby Dar den : O ka y. M ar c a nd Davi d – A n d r e w C oppol a: Yeah, D avi d i s t he vi ce - pr es i den tofRi skM ana gem ent G r oup,

g u y s ; a n d h e ’s t h e o n e t h a t ’s k i n d o fb a c k -s t o p p in g t h is wh o l e t h i n g a n d ma k i n g s u r e t h a twe ’ r e g e t t i n g s o me ac cur at e p r i ci ng i nf or m at i on. T o b yD a rd e n : S u r e . W e l l , l e t m e j u s t g o o v e r w h e re w e th i n k w e s h o u ld

be, ok ay, an d w hy w e’ r e hav i ng so m e i ss ues ; butw e’ d l ove t o hearw hatyou hav e t o say ab out i t . Bu ti t– i tl ooks l i ke t heNYM EX s t r i p f ort e n ye a r sw a sa bo ut2. 39 t o 2. 40 w i th o u t ba sis. T h a t’ s w h a t ou r nu m b e rs a re c o m i n g i n at, guys; and w e’ r e checki ng t hem a l ot of pl aces. A nd so t hat m e a n s th a t yo u r ba sis i s o n th e o rde r o f 6 c e n ts o r – 4ce n ts i s w hatt he of f erw asye st er day . Dav i d Gey e r : ( i na ud i bl e ) 2. 39 t o 2. 40. M ar c Paul ey: W e’ r e j us tr el ayi ng yourf ee dba ckt o som ebo dy w ho’ s gett i ng

th e b i d fo r u s , to o .6

M i k e R y a n : Y e a h , th o s e a re b i d p ri c e s . T h o s e a re n ’t a s k s – th o s e a re n ’t

even i n t he r ange. Theyw er e on t he – I m ean, they w er e – t h e ywe r e t h e b i d , y o u k n o w. T o b y D a rde n : N o w , o n e thing I a l so w a n ted to th row i n to this m i xi s w i th

C o n su m e rs , w e h a v e a l i ttl e b e n e fi t – w e l l , a c tu a l l y , w i th any onew e h avea l i t t l e b ene f i ti n be i ng abl e t o de l i vert he gas t hr oug h B eaverC r eek d o w n d i r ect l y i nt o you rservi ce ar ea an d m ayb e b ui l d s om e a ddi t i ona l ca pac i t y on you r e x i s ti n g s y s te m . M ar c Paul ey: W el l , t hi s i s – w e’ r e t al ki ng a bouta C i t y G at e dea l an yw ay,

ri g h t? To by D ar den: R i ght. But anyon e el se goi ng t o C onsum er s i s goi ng t o pay

a d i m e t o go dow ns t r ea m , ar en’ tt hey ? M ar c Pa ul ey: I ’ m nots ur e I f ol l ow . To by D ar den: W el l , w e are i n the p roc e ss o f ac q u i ri n g t he D ow Beav er

C r eek l i ne. M a rc P a u l e y : R i g h t. T o b yD a rde n : Y o u ’r e aw a re o f t h a t? M ar c Pa ul ey: Yeah. Toby Dar den : A nd t her e’ s a t r ans port at i on c om pone ntt o ge tdow n t o t he

C o n su m e r area , i sn ’tthe re, on y o u r pa rt ? A n d r e w C o p p o la : T h e r e m a yb e . It ’s ju s tt o s a yt h i sis– y o u ’r e p r o b a b ly

pr opo si ng som et hi ng t hatm ay hel p on ouru t i l i t y bet t ert han i tw oul d he l p usi n t he m ar ke t i ng gr oup h er e, guy s, i n m ayb e w e d o n ’t– m a y b e w e d o n ’tu n d e rstan d tha t w e l l en o u g h to a p p re c i a te i t. To by D ar den: Y eah, okay. W el l , I can see t hat . I m ean, i t’ s p retty n ew ;

a n d it ’s h a rd to v a l u e . B u t i t d o e sn ’tc h a n g e th e fa c t t h a t w e se em t o besub stant i al l y be l ow w her e NY M EX pl usev en a re a s o n a b l e b a s i sfo r M i c h i g a n g a sw o u l d b e . M ar c Paul ey: W hatdo you t hi nk t he basi s com pon entough tt o be? Toby D ar den : W el l , I m ea n, w e’ r e j us t us i ng i f you us e a 2. 39 t o 2. 40 t eny e a rs t r i p f o rNY M E X. M a rc P a u l e y : R i g h t. To by D ar den: A nd a 1 0-t o 1 1- centbasi s. M a rc P a u l e y : W e w e re – so tha t’ s a . 4 9 v e rs u s . 4 7 . S o w e ’r e 2 c e n ts

a p a rt .7

Toby D ar den : . 49 t o . 50, but I di dn’ t sa y com e i n t he – t he r um or w asyou

c ou l dn ’ tg e tt he r e . You w e r e s t i l l a r ou nd 2. 44, 2. 45. M ar c P aul ey: Th e l astcal l I m ade t o M i ke, w hi ch w as pr obab l y t en m i nutes

a g o an d w e ’ve b e e n o n th e li n e s i n c e , w a s th a t w e ’d l i k e to c lo s e t h e t e n -y e a ra t2 .4 7 . W e ’v e b e e n w o r k i n g t h a ta ll m or ni ng. T o b yD a rde n : O k a y . W e l l , I ’m so rry . I g o t pa rto f i t. M ar c Pa ul ey: O ka y. M a rc P a u l e y : W e l l , w e ’res ti l l h e re . W e ’d l i k e to d o th e te n -y e a r. A n d r e w C o p p o l a : W e ’ren o t re a l l yp u ttin g a b i g c h u n ko n t h i s , g u y s ; a n d w e ’d

j ustl i ke you t o r eal i ze t hatw e’ r e t ryi ng t o getyo u a s cl ose as w e g o a l o n g and t ry t o back t o back t hi s t hi ng. I agr ee w it h y o u rn u m b e r s . I t h in kw e lo o k e d a ta p r e t t yw id e b a s is m a r k e tu p h e r e t h a tp r o b a b lyw a st r a d in g , in t h e la s tc o u p le o fd a y s , m a y b e 1 1 1⁄2 a t1 6 o n t h e p a p e rs id e , w h ic h w o u ld be equ i val entt o a 9 1⁄2 bi d – 9 1⁄2 , m ayb e 1 0 bi d, on t he p h y s ic a l in d e xisw h e r e itis . I s u s p e c tt h e in d e xisp r o b a b ly goi ng t o gett i ghterb u t– so I t hi nk w hatw e’ r e l ooki ng at he r e i s pr ob a bl y no t a ny – a ny m or e t ha n – or l ooki ng at m a k in g a n y m o r e t h a n a p e n n yo ra p e n n ya n d a h a lfo n t h is d e a l. To by D ar den: W oul dn’ tt hatm ake i tabout a 2. 48 pr i ce? A n d r e w Cop po l a : N o, 230 – w e l l , n ow t heM a r k e ti sm ov i ng , b utI g ue ss

con ce pt ual l y, ye ah. T o b yD a r d e n : W e ll, w h yd o n ’tw e m a k e it2 .4 8 a n d w e ’ll m a k e a d e a l? A n d r e w C o p p o la : L e tm e g e ta lo o ka titrig h th e r e b e c a u s e w e ’r e g o in g t o f ill

t hi s. Hang on. Toby Dar den : O ka y. U ni den t i f i ed S peaker : H ey, guys. A n d r e w C oppol a: H el l o. Hel l o. U ni den t i f i ed Speak er : Yeah. A n d r e w8

C o p p o l a : W i th th e r is kw e h a v e l a y i n g th i sth i n g o ff, th e s e g u y sa re

s i ttin g p re ttyti g h t o n .4 7 b e i n g a fa i r p ri c e h e re . M a rc P a u l e y : T h a t’sw h a t th e ya s k e d fo r. M ar c Paul ey: Just to re c a p , g u y s, th i s i s a n u m b e r t hatw e’ ve been

w or ki ng f oryou f ors eve r alda ys ; an d, you kn ow , w e’ ve r un th e s e g u y s in to th e g ro u n d fo r th e la s t fo u r h o u rs a t .4 7 . It wa sn o ta n u mb e r t h a t wec h o s e . I twa sa n u mb e rt h a twe w e r eq u o t e d b yM ik e , a n d I t h in kG le n n re it e r a t e d ita c o u p le ofda ysag o. T o b y D a r d e n : A n d f r o m t h e b e n e f it o f a n e w c o m e r in h e r e t ry in g t o h a g g le

t he( i na ud i bl e ) – G l e n n D a rde n : H o w ab o u t 2 .5 1 , c a n w e d o tha t? A n d r e w C opp ol a: Letm e say, agai n, guys, w e do – w e do w an t th i s to b e a

w i n- w i n a nd w e w antyou t o be happy w i t h i tan d w e w ant t o f eel com f ort abl e w i t h i t . C onsi der i ng t he busi ness t hat w e’ r e g o i n g t o d o i n t h e f u t u r e , I h o p e t h a ty o u u n d e r st and w e’ r e nott ryi ng t o t ake a bi g gou ge out oft hi s. T o b y D a rde n : I u n d e rstan d , g u y s. I t’ s n o t

– I m e a n , w e ’r e tal k i n g a b o u t a

p e n n y ; a n d I ’v e b e e n t h r o u g h t h e n u m b e r so n a p e n n yo n t h is s i z e d e a l . I t ’ sn otg oi ng t o m a k e u so rb r e a ku s . So – A n d r e w C oppol a: I gues s w e f ee l t he sa m e w ay. W e’ r e n otgoi ng t o t ak e a l ot

o f ri s ko n th i s , b u t i t’ss o m e t h in g th a t’sp i v o ta l a n d i t’s som et hi ng t hatw e’ d l i ke t o do becau se I t hi nk i tm akes se ns e f oral l ofusdow n t he roa d. And w e’ ve ki nd of c ro s s e d a l o t o f h u rd l e s h e re th i s m o rn i n g , a n d I’m g l a d w e ’re al l f i nal l y he r e t oge t her . I fw e’ r e t hi s cl os e, w e’ d l ovet o be a b l e to d o i t. Toby Dar den : W el l , l etm e a skyou t hi s: C an w e hav e i t del i ver abl e of ft he

Beav erC r eek syst em t o C onsum er s? A ndr ew C o p p o l a : I thinkw e ’l l – I th i n kw h a t w e n e e d is w e n e e d M M b tu s i n to

C onsum er s. To b y Da r d e n : O h, oka y . Bu t I m e a n , c a n w e h a v e – i t w o u l d h e l p us on

ourpi pel i ne si t uat i o n to have i tdel i ver abl e of ft hatBeaver C re e ks y s te m . A n d r e w C opp ol a: I fC onsum er s w i l l acceptt he gas –9

T o b yD a rd e n : T h e yw i l l . A n d r e w C o p p o l a : I d o n ’tw a n t t o d o an y th i n g tha t – tha t – To by D ar den: Y eah, onl y i ft hey w i l l accept t he gas. Let ’ s say condi t i onal

upo n accept i ng t he gas – M ar c Paul ey: A nd m aybe I shoul d add one m or e pi ece . I m e a n , i f M i ke

S hor e com es back orany b o d yo utoft he gr oup and says, “S ure, f or 2 1⁄2 pe r ce nt f ue l an d a ni ck el yo u can d o th a t,” obvi ous l y – T o b y D a rde n : T h a t’ s no t g o i n g to w o rk. Y e a h . W e ’r e j u st tal k i n g a b o u t a

netnum berher e. A n d r e w C opp ol a: A nd t hatnum ber– I t hi nk m y concer n i s as l ong as w e get

i t i n to the C o n s u m e rs – i f yo u g u y s c a n g i v e u s fl e x i b i l i ty dow n t he r oad an d t her e’ s m one y t o bes har ed, t hen w e’ d be hap py t o c om e b ac k t o yo u a nd s ay , “ G uys , ove rt hi s t eny e a r p e ri o d , th e s e l o g i s ti c sm a yc h a n g e .” T o b yD a rde n : Y e a h , th a t’ s ri g h t. A n d r e w C o p p o la : A n d w e ’d b e h a p p yto c o m e b a c kd o w n th e ro a d a n d s a y , “ If

w e ca n sa v e a n i c k e l s o m e w h e re, g u y s, w e ’l l sh a re th a t w i th y o u .” G l enn D ar den: I t hi nk t he bestt hi ng w e can do i s t al k t o M i ke. T o b yD a rde n : Y e a h . T h a t’ s pro b a b l y th e b e st w a yto a p p roa c h i t. N o w , to

gi ve you guysa l i t t l e b ac kgr ound on a not herco nt r ac tw e’ ve m ade , w e hav e t he abi l i t y on a pea ki ng ba si s t o do t hi ngs w i t h t he ga s. I don’ tkn ow i fM i ke ’ s t al ke d t o y’ al l ab out t hi s. M i k e R y a n : N o , I h a v e n ’t . Toby D ar den : But bas i ca l l y t her e m ay be so m e opport uni t i es f or bot h ofus

t o use t he suppl y on som e oft hese w i l d f l uct uat i ons i n pr i ce. A n d r e w C oppol a: O h, ab so l ut el y. And w e’ l l st and t her e – w i t h yours uppl y a nd

w e have peaki ng abi l i t y our sel ves w i t h th e b al anci ng at C o n s u me r s , a sy o u g u y sk n o w – U ni den t i f i ed S p e a k e r: Y o u b e t. A n d r e w C opp ol a: – I t hi nk t hatt her e’ s som e gr eatout si de opp ort uni t i es her e.10

To by D ar den: Y eah. Y ou gu ys gotm or e st r ength i n t he bal anci ng si de t han

w e d o. A n d r e w C o p p o l a : R i g h t. Toby Dar den : A nd w e m i ght be ab l e t o f i nd so m e m ar ke t s, you kno w , on

a s pi ki ng w ee k o rda y ora m ont h i n w i nt erm ont hsor , w ho kno w s, s um m erm ont hs , w ho k now s w hatha ppe ns , but m aybe t o ar bi t r age t he suppl y a l i t t l e bet t erpr i ce – A n d r e w C o p p o l a : N o q u e s ti o n . T o b yD a rde n : C a n w e w o rk o u t a 5 0 -5 0 sp l i t on tha t? A n d r e w C opp ol a: A bsol ut el y. A nd I can’ t– as t hose t hi ngs com e u p, w e can

tal kab o u t an yu p si d e tha t w e d e ri v e b yta k i n g this su p p l yto a h i ghe rpr i ce d m ar ke tt hatha s an ar bi t r agepl ay, ab so l ut el y. Toby Dar den : C an w e put so m e ki nd of ge ne r al i nten t l ang uag e or – you

know , I know h ow l aw yer s ar e. S o I know how t hatw or ks

– but so m e so rt of i ndi ca t i on t hat w e w i l l bot h w or k t ow ar ds t he bes tus e o ft he su ppl y? A n d r e w C opp ol a: A bsol ut el y. The on l y t hi ng w e can’ tgu a ran tee i s t hat

w h e n e v e ra n a r b it r a g e o p p o rt u n it yc o m e su p , t h a tt h iss u p p ly w i l l be dedi cat ed t o t hat ; and i t ’ s onl y because th a t ’ s w hat w e’ r e d oi ng w i t h a l otofourot hers uppl y. T o b yD a rd e n : R ig h t. I u n d e rs ta n d th a t, b u t i f w e m u tu a l l y fi n d a s p e c i f ic

dea l f ort hi s su ppl y – A n d r e w C oppol a: O h, ab so l ut el y. T o b yD a rde n : C a n w e sa yso m e th i n g l i k e tha t? A n d r e w C oppol a: Yeah. I fw e c hang e t hi s dea l , w het heri tbes hort - t er m or

w het heri teven be, you kno w , a l ong ert er m per i od oft i m e, s o m e w h e r e a lo n g t h e c o u r s e o ft h ist e n -y e a rp e r io d , w e w ill agr eet o s har e t hatw i t h yo u f ol ks, w het heri t– you kno w , w het heryou br i ng us t he i dea orw e br i ng yo u t he i dea. T o b y D a rd e n : T h a t’s w o n d e rfu l . W e l l , i f w e c a n ju s tk in d o fs a y t h a t’s

w hatourgoa l i s f orev erybod y, w e’ r e f i ne w i t h t hat ; an d w e’ l l w or k a sp l i t w i t h you on any deal w e com e acr oss, hop ef ul l y vi ce ver sa.11

A n d r e w C opp ol a: Fant ast i c. I thi nk t her e’ s a l oto foppo rt uni t i es as t hi s m ar ket

p l a c e ch a n g e s. W e m a yb e m o v i n g this g a s b a c ki n to W i sconsi n, guys. To by D ar den: Y eah, yeah, r i ght. Y ou know , and I t hi n ko ff th e B e a v er

C r eek s y ste m , b utt he t r ut h i s, w e gott o hoo k t he G r eat La ke s r i ghtt her e, t oo. A ndr ew C opp ol a: Y eah. A nd w e have pr esen ce overatD aw n on t he ot her

si de. W e have anotherof f i ce on t he C anadi an si de. T o b yD a rde n : O h , g rea t. A n d r e w C oppol a: W e c an do s om e a r b w or k a tD aw n. T o b yD a r d e n : W e ll, le t ’s ju s ts e e w h a tw e c a n d o , a n d t h a t ’s w o n d e r f u l. A n d r e w C oppol a: D o yo u – I kn ow I don’ tw antt o s hove t hi s bac k at you; but

I t hi nk M ar c m i ghtev en t al k t o M i keab outm ayb e d r aft i ng up a l ett er of i nt ent . Th e contr act i s goi ng t o t ake a l i t t l e w hi l e, I ’ m sur e. G l enn D ar den : I t hi nk w e o ughtt o c ert ai nl y s end a l ett erofco nf i r m at i on. A n d r e w C oppol a: That ’ s r i ght . A tl ea sta l ett erofconf i r m at i on subj ec tt o t he

rev i e w o f a co n tr a c t, b u t w e ’r e rea d yto g o . W e ’r e g o i n g to g o a h e a d a n d ta k e a p o s i ti o n h e re . G l e n n D a rd e n : D o y o u g u y sw a n t to d ra ft th a t l e tte r? A n d r e w C oppol a: W e c oul d. G l enn D ar den : W hy d on’ tyou s end usa l ett erofco nf i r m at i on? M ar c Paul ey: O kay. A l l r i ght. A re w e locki ng i n at2. 47 f ort en year s,

t hen ? T o b yD a rde n : T h a t’ s ri g h t. M ar c Paul ey: O kay. That’ s M M bt us. To by D ar den: Th at ’ s M M bt us, yes. A n d r e w C oppol a: O ka y. A n d r e w C o p p o l a : S o u n d s fa n tas ti c , g u y s. T h i s i s a g rea t start. G l enn D ar den : H ey, w e l ookf or w ar d t o t he r el at i ons hi p. A n d r e w3 ... G IS Bs t a n d sf o r“ G a sIn d u s t ryS t a n d a r d sB o a r d .” A G IS Bc o n t r a c tis

a f or m co nt r ac tt hatm ay be ut i l i z ed i n t he gasi ndus t ry. 12 C o p p o la : A b s o lu t e ly . W e ’ll g e tt h a tc o n f ir m a t io n f a x e d o u tt o y ’a ll t h is

aft er noon. A tQ ui c k s i l v e r ’ sr e q u e s t , CM S s e n ta M a r c h 2 9, 1 99 9 t r a n s a c t i on confi r m at i on t o Q ui cksi l ver , confi r m i ng t he t er m s of t he agr eem entt he part i es had r ea che d. The M ar ch 29, 1999 co nf i r m at i on l ett erm em or i al i z ed t he ups i de sh ar i ng pr ov i si on by pr ovi di ng un dert he t er m “ O t her ” t hat“ Q ui ck si l veran d C M S M S T ag r ee t hati fsubj ectgas sup pl y can be schedul ed/del i ver ed ( w het her on spot short - t er m orl ong t er m basi s) t o der i ve addi t i onal val ue, t hatt he part i es shal l shar e i n such addi t i onal rev e n u e o n a 50 %

- 50 % basi s. ” Q ui cksi l ver
s i gn e d a nd r e t ur ne d t het r a ns a c t i on c on f i r m a t i on , a nd i n M a r c h 2000, appr oxi m at el y a yearaft ert he deal w as st r uck on t he t el epho ne, t he parti es execut ed a fo r m al G I S B co nt r act 3a n d a n a d d e n d u m d o c u m e n t in g t h e ir agr ee m ent . The G I SB cont r ac ts etf ort h t he up si de sh ar i ng pr ovi si on i n t he exactsam e l angu age as t he confi r m at i on l et t erundert he “speci al condi t i ons” box. A s nat ur alga s pr i ce s r os e, a di sp ut e e r upt ed bet w ee n CM S and Q ui cksi l verconcer ni ng t he speci f i c “upsi de shar i ng pr ovi si on” t hatw as
n e g o tia ted i n the rec o rde d M a rch 2 6 , 1 9 9 9 tel e p h o n e co n v e rsa ti o n , se t f o rt h i n t het r a ns a c t i on c on f i r m a t i on , a nd u l t i m at el y, pl a c e d i nt o t hep a rt i e s ’ GI SB13

c o n tra c t. I n D e c e m b e r 1 9 9 9 , T h a d S h u m w a yo f Q u i c k s i l v e r c o n ta c te d M a rc P a u l ey ofC M S about t he upsi de shar i ng pr ovi si on i n t he part i es’ agr e e m e n t. M ar c a gr ee d t hatCM S had an obl i gat i on t o pe r f or m an d s ai d t hat he m i ghtha ve
m or e ti m e a ftert he f i r stoft he yeart o expl or e oppo rt uni t i es. Shu m w ay
con t i nue d t o m ak e i nq ui r i esofCM S abou ti t s perf or m anc e u nde rt he ups i de sh a ri n g p rov i sion . B u t C M S d i d n o t r e sp o n d . B ythe su m m e r of2 0 0 0 , b o th M a r c P a u le ya n d A n d yC o p p o la h a d le ftC M S ’s e m p lo y m e n t . E v e n t u a lly , in N o v e m b e r 2 0 0 0 , Q u i c k s i l v e r fi l e d s u i t. C M S and Q ui ck si l vers har pl y di sa gr ee d on t he m ea ni ng oft he ups i de shar i ng pr ovi si on. C M S t ook t he posi t i on t hatthe provi si on m eantthati fei t her C M S orQ ui ck si l ver bec am e aw ar e of opport uni t i est o i ncr ea set he val ue oft he
c o n tr a c t by changi ng t he del i ver y poi ntoft he gas ort he vol um e ofgas d e l i v e red an d the p a rt i e s d is c u s s e d this o p p o rt u n i ty a n d m u tu a l l yag ree d to chang e t he del i ver y poi ntorthe vo l um e o fg as t o capt ur e such a benef i t , t hen th e p a rt i e s w o u l d s p li t a n ych a n g e to th e d e a l tha t al l o w e d the p a rt i e s to
c a p tu re a b e n e fi t. Q u i c k sil v e r t o o kthe p o sit i o n tha t t h e p rov i sion w a s a “p rofi tsh ar i ng”pr ovi si on a nd r equ i r ed C M S t o pa y Q ui ck si l verf i ft y pe r ce ntofan y
a m o u n t o v e r $ 2 .4 7 th a t C M S s o l d th e g a sfo r.4 ... T h e t r ia l c o u rtp r e v io u s lyg r a n t e d s u m m a ryju d g m e n tf o rC M S ; t h is

courtr ever sed t he sum m ar y j udg m entas t o Q ui cksi l ver ’ s br each ofcont r act a n d fra u d u l e n t i n d u c e m e n t c l a i m s . See Quicksi lve r Res
. , I nc. v. CM S Mkt

g. S ervs. & Tradi

ng Co. , N o. 02- 03- 002 51- C V , 2005 W L 182951 , at*2 ( Tex. A pp. — FortW ort h 2005, pe t . deni ed) ( m em . op. ) . Q ui ck si l ver ’ s l i ve pl ea di ngs c h a r a c t e r iz e t h is c la im a s“ f r a u d in t h e in d u c e m e n t ,” a n d Q u ic k s ilv e rla b e lst h is c l a i m a s s u c h i n i t s a p p e l l a t e b r i e f , s t a t i n g , “ Th e j u ryf o u n d t h a tCM S f r audu l ent l y i ndu ced Q ui cksi l veri nt o a t en- yearC ontr actf ort he sal e ofnat ur al g a s .” 14 Q u ic k s ilv e r ’s b r e a c h o fc o n t r a c ta n d f r a u d in t h e in d u c e m e n tc la im s
a g a in s tC M S p r o c e e d e d t o t r ia l. 4 Th e t r i a l c o u rt ’ s c h a r g e a s k e d t h e j ur y ni ne q u e sti o n s. T h e j u ry fo u n d i n q u e sti o n n u m b e r 1 tha t C M S fai l e d to c o m p l yw i th t h e p a rt i e s ’ c o n t r a c tb u tf o u n d i n q u e s t i o n n u m b e r1 A t h a ta c ondi t i on pr ec ede ntt o CM S’ s obl i gat i on t o pe r f or m ha d f ai l ed t o oc cur . I n que st i on
num ber 2, t he j ury f ound z er o dam age s r es ul t ed f r om Q ui ck si l ver ’ s l os s of
u p side sh a ri n g rev e n u e i n the p a s t a n d futu re a s a res u l t of C M S ’s fai l u re to
c om pl y w i t h t h e a g r e e m e n t . I n q u e s t i o n n u m b e r3 , t h e j u ryf o u n d t h a tCM S f r audu l ent l y i n d u c e d Q ui cksi l veri nt o t he t r ansact i on, and i n quest i on nu m ber 4 , i t fo u n d ze ro d a m a g e si n th e p a s t a n d in t h e f u tu re re s u l te d fro m C M S ’s f r aud ul enti nduc em ent . I n que st i on nu m ber5, t he j ury f ound by c l ea ran d
con vi nci ng e vi den cet hatt he har m t o Q ui ck si l verr es ul t ed f r om f r aud ul ent in d u c e m e n t , a n d in q u e s t io n n u m b e r6 , t h e ju rya w a r d e d $ 1 0 m illio n d o lla r sin5 ... Q uest i on nu m ber7 asked w het her Q ui cksi l ver ent er ed t he contr actas

a r esul tofa uni l at er al m i st ake. Q uest i on nu m ber8 asked w het hert her e w as a m ee t i ng oft he m i ndsbe t w ee n t he part i esw hen t heyen t er ed i nt o t he c o n tr a c t. Q u e sti o n n u m b e r 9 as k e d w h e th e r Q u i c k sil v e r no ti fi e d C M S o f i ts i nt entt o r esci nd t he contr actw i t hi n a r easonabl e t i m e. A nd q u e sti on nu m ber 10 as ke d w hatt he t ot alam ountofr eve nueQ ui ck si l verw oul d haver ec ei ved f or th e g a s w o u l d h a v e b e e n i f t h e g a s h a d n o t b e e n co m m i tted to th e C o n tr a c t, m i nust he r eve nueQ ui ck si l verac t ual l y r ec ei ved . 15 e xe m pl a ry da m a ge s . Th e j ury di d no t a ns w e r qu e s t i on s 7, 8, 9, o r10 5 because t hose quest i ons w er e condi t i oned on a n sw e rs cont r ary t o t he j ur y’ s act ual
answ er s. T h e tria l co u rtsi g n e d a j u d g m e n t f o r Q u i c k sil v e r on the j u ry’s v e rdict. The j udgm ents t at est hatCM S f r aud ul ent l y i nduc ed Q ui ck si l veri nt o s i gni ng t he G I S B d at ed M ar ch 1 , 19 99 , and or der s t hatt he contr act“i s r ender ed v oi d as oft he da t e of t hi s Ju dg m e nt a nd i s he r e by r e s c i nd e d. ” Th e j ud gm e ntt axes
c os t s a ga i ns tCM S.

II I. L EGA LLYI NSUF FI CI E NTE VI DE NC EOFF RA UDUL E NTI NDUC E MENT I n i ts fi rst i ss u e , C M S c l a i m s t h a t th e re i s l e g a l l y i n su ffi c i e n t ev i d e n c e to
s up po rtt hej ury’ sf i nd i ng o ff r a ud ul e nti nd uc e m e nti n qu est i on num be r3. Q ues t i on nu m ber3 as ke d: D i d C M S c o m m i t fra u d a g a i n s t Q u i c k s i l v e r? Fr aud oc cur s w hen :
a. a p art y m ak esa m at er i alm i sr epr es ent at i on;16

b . th e m i sre p re se n tati o n i s m a d e w i th kn o w l e d g e o f i ts falsi ty orm ader ec kl es sl y w i t houtan y k now l edg e o ft he t r ut h a nd asa pos i t i ve as se rt i on;
c . t h e m is r e p r e s e n t a t io n ism a d e w it h t h e in t e n t io n t h a tit sh oul d beac t ed on byt he ot herpa rt y; an d d. t he ot herpa rt y r ea so nab l y r el i eson t he m i sr epr es ent at i on and t her ebys uf f er s i nj ury. “M i sr epr esent at i on” m eans:
a. a f al ses t at em entoff ac t ; or b. a pr om i se of f ut ur e perf or m anc e m ade w i t h an i nt ent , att he t i m e t he pr om i sei s m ade , nott o pe r f or m aspr om i se d. A n s w e r “ Y e s ” o r “ N o .” A N S W ER : Yes A . W hi ch Law A ppl i es Befor e w e begi n ourl egal suf f i ci ency r evi e w oft he evi dence, w e m ust det er m i ne w hi ch l aw appl i es her e. C M S cont ends t hatM i c h i g a n l aw def i nes t h e e le m e n t so fQ u ic k s ilv e r ’s f r a u d c la im b e c a u s e a c h o ic e -o f -la w p r o v is io n in t he G I S B co nt r actand i t s addendu m sel ect s M i chi gan l aw . C M S ar gues, how ever , t hatTexas l aw gover ns t he pr ocedu r e oft he case, “[ w ] hi l e M i chi gan
s u b s ta n ti v e l a w d e te rm i n e [s ] whatf ac t s Q ui ck si l verm us tpr ovet o est abl i sh t he el em ent s off r aud, Texas pr ocedu r e l aw gover ns h o w t h e f a c ts a re p ro v e d .” Q u ic k s ilv e ra r g u e st h a tT e x a sla w a p p l i e ss u b s t a n t iv e lya n d p r o c e d u r a lly17

be c a u s e ( 1) CM S d o e sn o tp o i n tt o M i c h i g a n l a w a sr e q u i r i n g a n yd i f f er ent
e l e m e ntoff r a ud ul e nti nd uc e m e ntnotot he r w i s e r e qu i r e d un de rTex a sl a w ; ( 2) C M S d oes n oti denti f y any w ay t hatthe app l i cat i on ofM i chi gan l aw w oul d l ead t o a di f f er ent r esul t t han t he appl i cat i on of Tex as l aw ; ( 3) t he c h o i c e -of- l aw p rov i sion i n the G I S Bap p l i e s, i f at all , o n l y“to g o v e rn th e C o n tr a c t, ” n o t t o ext r acontr act ual t ortcl a i m s; a n d ( 4) i n any even t , t he aw ar d ofpart i al
r es ci ss i on i s si m pl y a m att erofel ec t i on ofr em edi es , w hi ch i s gove r ned by T e x a s p r o c e d u r a l l a w. B e fo re u n d e rta k i n g a c h o i c e -o f-l a w a n a ly s is , w e l o o kto w h e th e r a
c o n f lic t o f l a w e x i s ts . Sonat Explorati on Co. v. Cudd

Pressure Control

, I nc. , 2 7 1 S .W .3 d 2 2 8 , 2 3 1 (T e x . 2 0 0 8 ); Fraud- Tech, I nc. v. Choicepoi

nt , I nc. , 102 S
. W . 3d 366, 377 & n. 32 ( Tex. A pp. — FortW ort h 2003, pe t . de ni ed) ( ci t i ng D uncan v. Cessn a A i rcraftCo. , 6 65 S. W . 2d 414, 419 ( Tex. 1984 ) ( det er m i ni ng t hat , be f or e u nde rt ak i ng c hoi ceof l aw ana l ys i s, t he cou rt “m us t f i r stde t er m i ne
w het hert her e i s a d i f f er enc e b et w ee n t he r ul esof Texa s and N ew M exi co on th i s i s s u e ” ), Young Ref
. Cor p. v. Pennzoi

l Co. , 46 S.W
. 3d 380, 385 ( Tex. A pp. — H ous t on [ 1stD i st . ] 2001 , pe t . de ni ed) ( f i ndi ng no ne ce ss i t y t o de ci de
w hi ch st at e’ s l aw app l i ed abs ent a con f l i ct of l aw on t he i ss uespr es ent ed) , an d St
. Paul S ur pl usLi nesI ns . Co. v. G eo Pi

pe Co. , 25 S. W . 3d 900, 903 n. 2 ( Tex. A p p .— H o u sto n [1 st D i st.] 2 0 0 0 , n o p e t. ) (op . o n reh ’g) ( “In the ab se n c e o f a18

t r ue con f l i ctof l aw , w e do notunde rt ak e c hoi ceofl aw an al ys i s. ”) ) . I fno confl i ctofl aw e x i st s on t he i ssues, w e need not deci de w hi ch st at e’ s l aw
a p p l i e s . Fraud- Tech, I nc. , 102 S
. W . 3d at377– 78 & n. 33 ( ci t i ng Yo ungRe f. Cor p. , 46 S. W . 3d at385 and S t. Pa ul Surp lusL i

n esIns . Co ., 25 S. W . 3d a t903
n .2 ). I n i ts b ri e f, C M S se ts o u t t h e elem e n ts th a t i t co n ten d s a re req u i red to
es t abl i sh f r aud r el at ed t o a n a greem entbe t w ee n t he part i es , i . e. , f r aud ul ent i ndu cem ent , und er M i chi gan l aw . Th e el em ent s of f r audu l enti ndu cem entunder M i c hi ga n l a w a r e e s s e nt i a l l y t hes a m e a st hee l e m e nt sr e qu i r e d un de rTe xas l a w . Co mp a reBel

leIsleGr

ill Co r p . v. Cityo f

D e tro it, 666 N. W . 2d 271, 280 ( M i ch. C t . A pp. 20 03 ) ( sett i ng f ort h el em ent s off r audu l enti ndu cem entunder M i ch i ga n l aw ) with I nreF i r s tMer itBa n k, N. A. , 52 S. W . 3d 749, 758 ( Tex. 20 01 ) ( or i g. pr oceedi ng) ( sett i ng f ort h el em ent s of f r audu l enti ndu cem entunder T e x a s l a w ). T h e tri a l c o u rt ’sc h a rg e i n th i sc a s e i n q u e s ti o n n u m b e r 3 subm i t t i ng f r aud r el at i ng t o an agr eem entbet w een t he part i es const i t ut es a pr opersubm i ssi on of f r audu l enti ndu cem entunderei t he r M i chi gan orTexas l a w . S ee Custom D ata So l utions, I

nc. v. Pref

er red Capital

, I nc. , 733 N. W . 2d 1 0 2 , 1 0 5 (M i c h . C t. A p p . 2 0 0 6 ); I nreF i r s tMer itBa n k, N. A. , 52 S. W .3 d at 758
. Conse que nt l y, be ca us e no con f l i ct of l aw exi st s on t he el em ent s off r aud
r el at i ng to an a gr ee m entbe t w ee n t he part i es — t hati s, t he el em ent s of19

fra u d u l e n t i n d u c e m e n t— w e n e e d n o t u n d e rta k e a c h o i c e -o f-l a w a n a l y s i s . W e appl y Tex as l aw t o t hi s i ssue. B. St andar d ofRev i ew W e w i l l su stai n a l eg al su f f i ci en cy ch al l en ge on l y w he n ( 1 ) t he re c o rd di scl oses a com pl et e absence ofevi dence of a vi t al f act , ( 2) t he courti s bar r ed by r ul es ofl aw oro fev i dence f r om g i vi ng w ei ght t o t he onl y evi dence off er ed to p ro v e a v i t al f ac t , ( 3 ) t he ev i de nc e o f f ered to p r ov e a v i t al f ac ti s no m ore th a n a m e re sc i n ti l l a , o r (4 ) th e ev i d e n c e es tab l i sh e s c o n c l u sive l ythe o p p o sit e
o f a v i ta l fa c t. Uni

royal G oodr

i ch Ti re Co. v. Marti

nez , 977 S. W . 2d 328, 334 (T e x . 1 9 9 8 ), cert. denied, 5 2 6 U .S . 1 0 4 0 (1 9 9 9 ); R o b e rt W . C a l v e rt, "No Evi den ce " and

"I ns uf f i ci ent Evi den ce " Poi

nts of Er ror, 38 T e x. L . Re v. 361, 3 6 2

– 6 3 ( 1 9 6 0 ). In d e term i n i n g w h e th e r th e re i s l e g a l l ysu ffi c i e n t ev i d e n c e to
s u p p o rtt h e f in d in g u n d e rre v ie w , w e m u s td e t e r m in e w h e t h e rt h e e v id e n c e is
su c h tha t a fac tfi n d e r c o u l d re a so n a b l yfo rm a fi rm b e l i e f or c o n v i c ti o n tha t i ts fi n d i n g w a stru e . D ia m o n d Sh a m ro ckRe f

. Co . v. Ha ll, 168 S. W . 3d 164, 170 (T e x . 2 0 0 5 ); S w. Bel l T el
. Co. v. Garza , 1 6 4S .W .3 d 6 0 7 , 6 2 7 (T e x . 2 0 0 4 ). W e m u s t re v i e w a l l th e e v i d e n c e i n th e l i g h t m o s t fa v o ra b l e to th e fi n d i n g . Ha ll, 1 6 8 S .W .3 d a t 1 7 0 ; Garza , 16 4 S
. W .3 d a t 6 27
. Thi s m eans t hatw e m ust
a s s u m e t h a tt h e f a c t f in d e rre s o lv e d a n yd is p u t e d f a c t sin f a v o ro fit sf in d in g if
a re a s o n a b l e f a c tfin d e r c o u l d h a v e d o n e s o . Ha ll, 1 6 8 S .W .3 d a t 1 7 0 ; Garza ,6 ... W e d i d not add r es s t hi s i ss ue i n t he part i es ’ pr i ors um m ary j udgm ent

app ea l be ca us e CM S di d nota sse rti tas a gr ound f ors um m ary j udgm enton Q u i c k s i l v e r’sfra u d u l e n t i n d u c e m e n t c l a i m . S ee Q uicksi lver Res. , I nc. , 2 0 0 5 WL 182 951 , at*2 ( exp l ai ni ng t hatCM S m ove d f ors um m ary j udgm enton Q ui cksi l ver ’ s f r audu l enti ndu cem entcl ai m onl y on t he gr oun d t hatC M S had c o n c l u s i v e l yn e g a te d th e re l i a n c e e l e m e n t o f th e to rt). 20 1 6 4 S .W .3 d a t 6 2 7 . W e m u s t a l s o d i s re g a rd a l l e v i d e n c e th a t a re a s o n a b le fa c tfin d e r c o u l d h a v e d i s b e l i e v e d . Ha ll, 1 6 8 S .W .3 d a t 1 7 0 ; Garza , 164 S .W .3 d a t6 2 7 . W e m u s tc o n s id e r , h o w e v e r , u n d is p u t e d e v id e n c e e v e n ifitis
c o n tra ryto th e fi n d i n g . City of Kel ler v. W i l son , 1 68 S. W . 3d 802, 817 ( Tex. 2 0 0 5 ); Ha ll, 1 6 8 S .W .3 d a t 1 7 0
. T h a t is , w e m u s t c o n s id e r e v id e n c e f a v o r a b le to th e fi n d i n g i f a re a s o n a b l e fa c tfin d e r c o u l d a n d d i s re g a rd e v i d e n c e c o n tra ry to th e fi n d i n g u n l e s sa re a s o n a b l e fa c tfin d e r c o u l d n o t. Cen t. Rea dyMix Con cre teCo. I

nc . v. I sl as , 2 2 8 S .W .3 d 6 4 9 , 6 5 1 (T e x . 2 0 0 7 ); City of Kel ler, 168 S. W . 3d at807, 8 2 7 . M or e t han a sc i nt i l l a o fev i den ceex i st s i ft he evi den ce f ur ni sh ess om e r ea so nab l e b as i s f ordi f f er i ng c onc l us i onsby
re a s o n a b l e m i n d sa b o u t th e e x i s te n c e o f a v i ta l f a c t. Ro c o r I n t’l , I n c . v. Na t’l Uni on F i re I ns . Co. of

Pittsb ur

g, PA , 7 7 S .W .3 d 2 5 3 , 2 6 2 (T e x . 2 0 0 2 ). C . The La w an d Ev i den ceConcer ni ng F r aud ul entI nduc em ent C M S co nt ends t hatn o evi dence exi st s t hati tm ade a def i ni t i ve pr om i se, t hati s, an ac t i ona bl e m i sr epr es ent at i on t o i nduc e Q ui ck si l veri nt o t he t r ans ac t i on. 6Q u ic k s ilv e rp o in t st o t w o c a t e g o r ie so fa lle g e d lya c t io n a b le21

m i sr epr esent at i ons m ade by CM S : ( 1) m i sr epr esent at i ons m ade i n t he M ar ch 26 t el eph oneco nve r sa t i on a nd ( 2) t he l ang uag e ofand i ncl us i on oft he ups i de
s h a ri n g p r o v i s i o n i n th e tra n s a c ti o n c o n fi rm a ti o n a n d th e G IS Bc o n tra c t. W e
w i l l di sc us s t he al l eged m i sr epr es ent at i onsi n t he M ar ch 26 t el eph one
c o n v e rsa ti o n fi rst. C oncer ni ng t he M ar ch 26 t el epho ne convers at i on, Q ui cksi l ver poi n ts to t hef ol l ow i ng a sa c t i on a bl e m i s r e pr e s e nt a t i on sm a deb y CM S:

• Thato pp ort uni t i esw oul d a r i sei n w hi ch t he gasco ul d be used t o t ake advantage ofw i l d f l uct uat i on i n pr i ce;

• Thatt he part i es w oul d w or k o uta 50/ 50 spl i ton u ps i de pr i ces;

• ThatCM S w oul d w or k t ow ar dst he bes tus e o ft he su ppl y. B u ta n e x a m in a t io n o ft h e M a r c h 2 6 t e le p h o n e c o n v e r s a t io n t r a n s c r ip tre v e a ls t hatt he w or ds“ w oul d a r i se ” and “ ups i de pr i ce s”w er e n otus ed by CM S. The part i es agr eed i n t he t el epho ne conv er sat i on t hat [I ]f yo u g uy s ca n g i ve us fl ex i bi l i t y d ow n the r oa d a nd t he r e ’s m o n e yto b e s h a re d , then[ C M S w o u l d ] b e h a p p yto c o m e b a c kto you an d say, “G uys, o verthi s t en- yearper i od, t hese logi sti cs m ay change .”

. . . . If w e [ C M S] ca n sa ve[ as opposed t o m ake] a ni ckel som ew her e, g u y s , we’

l l share t hatw i t h yo u.

. . . . [ By Q ui cksi l ver ’ s To by D ar den: ] Bu t , basi ca l l y , ther e m ay be [ not w o u l d b e ] som e oppo rtuniti es f orbot h ofust o us e t he su ppl y on som e oft hese w i l d f l uct uat i ons i n pr i ce.22 . . . . [B yC M S ’s A n d yC o p p o l a :] I th i n kth a t th e re a re s o m e g rea t outsi de opp ortuniti

es her e.

. . . . [W ]e[Q u i c k s i l v e r] m i ghtbeable to f

i nd s o mema r k e t s , y o u k n o w, o n a s p i k i n g w e e ko r d a yo r m o n th i n w i n te r m o n th so r, who kn o ws , su m m e r m o n th s , who knows what happens , b u t m a yb eto a r b itrag eth es upp lya l i t t l e bet t erpr i ce.

. . . . [B yC M S ’sA n d yC o p p o l a :] [A ]sth o s ethingsc o m eup, wec a nta lk abou tany up side that we der ive by taki

ng thi s supply to a hi

gher p ri c e d m a rke t th a t h a sana rb itrag ep l a y, abs ol ut el y.

. . . . [ ByQ ui cksi l ver ’ s Tob y D ar den: ] C an w e put som e ki nd ofgener al i n te n t l a n g u a g e . . . s o m e s o rt o f i n d i c a ti o n th a t w e w i l l b o th w o rk t ow ar dst he bes tus e o ft he su ppl y?

. . . . [B yC M S ’sA n d yC o p p o l a :] If we change thi

s deal, w het heri tbe sh ort - t er m orw het heri t eve n be , you kn ow , a l onge rt er m pe r i od o ft i m e . . . we [CMS ]wi l l agree t o shar e t hatw i t h you f ol ks [ at Q u i c k s i l v e r]. [ E m p h a s i sa d d e d .] Thus , t he f i r stt w o m i sr epr es ent at i onsQ ui ck si l veral l ege s C M S m adedur i ng t he M ar ch 26 t el eph oneco nve r sa t i on a r e n ots upport ed by t he r ec or d. C onc er ni ng t he t hi r d m i sr epres ent at i on Q ui ck si l vercl ai m s C M S m ade dur i ng t he M ar ch 26 t el eph oneco nve r sa t i on— t hat C M S w oul d w or k t ow ar ds t he bes tus e o ft he su ppl y— t he r ec or d r ef l ec t s t hatw hatQ ui ck si l ver ’ s Toby D ar den ac t ual l y r equ es t ed i s, “Can w e put so m e ki nd ofge ner ali nt entl ang uag e
or– you kno w , I kn ow h ow l aw yer s ar e. So I kn ow how t hatw or ks– but
so m e s ortofi ndi ca t i on that w e wi l l both wor

k towardsthe bes tus e o f the
s upp ly ?”[ Em pha si s add ed. ] C M S’ s A ndy C oppol a r es ponds , “Absol ut el y. The7 ... The M ar ch 26 tel ep ho ne con ver sa t i on r ef l ec t s qui t e a vol um e o f

i m m a te ri a l p e rs o n a l o p i n i o n a n d “ tra d e t a l k ” b e tw e e n t h e s e p a rti e s . T h e re c o rd r ef l ect s t hatbot h part i es ar e exper i enced i n t he gas i ndu st ry and posses s equal bar gai ni ng pow er . Bot h Q ui ck si l ver ’ s and C M S’ s r epr es ent at i vest al k a boutt he stren g th s th a t th e i r res p e c ti v e c o m p a n i e s bri n g to th e tab l e . T o b y D a rde n tou ts Q ui cksi l ver ’ s abi l i t i es because i t i s i n t he pr ocess of “acqui r i ng t he D ow Beaver C re e k l i n e ” a n d “ h a s a h o o k i n to th e G re a t L a k e s .” A n d y C o p p o la c o u n te rs w i th C M S ’s stren g th o n th e “b a l a n c i n g si d e ” b yv i rt u e o f C M S ’s u ti l i ty c o m p a n y . T h e c o n v e rs a ti o n i sfi l l e d w i th th i sty p e o f “ tra d e ta l k .” 23 onl y t hi ng w e can ’ tg uar ant ee i s t hatw henever an ar bi t r age opp ort uni t y com es up, t hat t hi s suppl y w i l l be dedi cat ed t o t hat ; and i t ’ s onl y because t hat ’ s w hat
w e’ r e doi ng w i t h a l otofourot hersuppl y. ” Thus, t o t he ext entC M S pr om i sed t o w or k t ow ar ds t he bestuse of t he suppl y, i t w as notan unqu al i f i ed pr om i se
o ff u t u r e p e r f o r m a n c e o ft h e t y p e s u f f ic ie n tt o c o n s t i t u t e a n a c t io n a b le
m i s re p re s e n ta ti o n . Se e, e . g. , Sti lesv. Mem ’

l Her m a nnHealthca reSys. , 213 S. W . 3d 521, 530 ( Tex . A pp. — H ous t on [ 1stD i st . ] 2007 , pe t . de ni ed) ( r ec ogni z i ng un qua l i f i ed pr om i set o pa y m edi ca l bi l l s i n e xch ang e f orr el ea seof neg l i gen ceca us e o f ac t i on su f f i ci ent t o con st i t ut e m i sr epr es ent at i on s upport i ng fra u d a c ti o n ). I nd e e d, t her e pr e s e nt a t i on sb y bo t h CM S an d Q ui c k s i l ve ri n t heM a r c h 26 pho ne conv er sat i on ar e aki n to “ t r ade t al k, ” w hi ch does not const i t ut e an
ac t i o n a b l e m i s r e p r e s e n t a t i o n a n d w i l l n o ts u p p o rta f r a u d u l e n ti n d u c e m ent
c l a i m. 7I n oneca seal l egi ng de ce pt i on i n i nduc i ng a co nt r ac t , t he Eas t l and C ourtofA ppe al s exp l ai ned ,24

Ther e i s ano t her ang l e f r om w hi ch t he t es t i m ony i n t hi s ca sem us tbe v i e w e d . O n th e w h o l e , w e c o n side r th e s tate m e n t o f f a c ts refl e c ts q u i te a vol um e ofi m m at er i al per sonal o p i n i on and t r ade- t al k bet w een t hese part i es, each one spar r i ng f oran ad vant age, an d consi der i ng t he m at t er f r o m h is o w n s t a n d p o i n t ; b u to n t h e w h o le w e t h in kitc o n c lu s iv e ly app ea r s t hatt he gene r alt eno rand st at em entoft hes e n ego t i at i onsdo n ot r i se , orr at herde sc end , t o t he l eve l ofac t i ona bl e f r aud, w arr ant i ng t he c a n c e l l a ti o n so u g h t. G uitar Trus tEs tate v. Boyd, 1 20 S. W . 2d 914 , 9 19 ( Tex. C i v. A pp. — Eas t l and 1 9 3 8 , n o w ri t); se e al so 37 A m . Jur . 2d F ra u d an d D e c eit§ 75 ( 2001) ( exp l ai ni ng t he gen er alr ul e t hatt r adet al k w i l l not be con st r ued asi m port i ng a
r epr es ent at i on up on w hi ch a char ge off r aud m ay be bas ed atl ea stw her e t he p a rti e s d e a l a t a rm ’sl e n g th ). Q ui ck si l verr el i eson Spol j ar i c v. Percival

To urs, I

nc. , 708 S. W . 2d 432, 434 –35 ( Tex. 1986 ) , f ort he pr opos i t i on t hata pr om i set o do an ac ti n t he f ut ur e w i t h t he i nt ent i on, de si gn, an d pur pos e o fde ce i vi ng a nd w i t h no i nt ent i on of per f or m i ng t he actm ay con sti t ut e act i onab l e f r aud. Q ui cksi l ver cl ai m s C M S m ade su ch a pr om i se her e. I n Sp o lja r ic , how eve r , t he j ury f ound th a t “U p c h u rch p rom i se d S p o lj a ri c th a t a b o n u s p l a n w o u l d b e i m p l e m e n ted to p ay S pol j ar i c a bon us f or i m pr ovem ent s t o Per ci val ’ s f i nanci al cond i t i on. ” Id . a t4 3 4 . H e r e , q u e s t io n n u m b e r 3 d id n o t a s kt h eju ryt o f in d , a n d t h e ju ryd id
n o t fi n d , a n ys p e c i fi c a l l yid e n ti fi e d p ro m i s e o r m i s re p re s e n ta ti o n b yC M S . W e have r evi ew ed t he r ecor d ext ensi vel y and w e canno t l ocat e , n o r does8 ... Q ui ck si l verpoi nt s t o t he f ac tt hatCM S w asne got i at i ng he dge s dur i ng

th e M a rch 2 6 tel e p h o n e co n v e rsa ti o n as ev i d e n c e o f C M S ’s i n ten t no t to perf or m i t s t el eph one con ver sa t i on pr om i se s t o Q ui ck si l ver . Be t hi s asi tm ay, w hat eve rCM S’ s i nt ent , i tdoe s nott r ans f or m CM S’ s t el eph oneco nve r sa t i on w o r d s in t o s o m e th i n g th e ya re n o t; fo r th e re a s o n sd i s c u s s e d a b o v e , C M S ’s t el eph oneco nve r sa t i on w or dsw er e m er e t r adet al k a nd a r e n otde f i ni t e e nough , s p e c if ic e n o u g h , o ru n c o n d it io n a l e n o u g h t o c o n s t it u t e a n a c t io n a b le m i sr epr es ent at i on. 25 Q ui ck si l verpoi ntt o, any spe ci f i c pr om i seorm i sr epr es ent at i on byCM S dur i ng t h e M a r c h 2 6 t e le p h o n e c o n v e r s a t io n t h a tisd e f in it e e n o u g h , t h a tiss p e c if ic
e n o u g h , th a t i s n o t co n d i ti o n a l , a n d tha t i s n o t m e re trad e tal kso as to
con st i t ut e a n a ct i ona bl e m i sr epr es ent at i on to supp orta cl ai m f orf r aud ul ent i n d u c e m e n t. 8 I n s u m m a ry , t h e a l l e g e d t e l e p h o n e c o n v e r s a t i o n p r o m i s e sm a d e b yCM S
ar e not hi ng m or e t han i f

- t hen pr om i se s t o cons i deroppo rt uni t i est o c han ge t he t er m s oft he contr actt o t ake advantage ofar bi t r age pl ays i n hi gh e rpr i ced
m ar ke t s, t o m ak e a 5 0/ 50 sp l i ti f“w e m i ghtbe abl e t o f i nd s om e m ar ke t s, you know , on a spi ki ng w eek or day or a m onth i n w i nt er m onths or , w ho kno w s,
s u m m e rm o n t h s , w h o k n o w sw h a th a p p e n s , b u tm a y b e t o a r b it r a g e t h e s u p p ly a l i t t l e b et t erpr i ce, ” and t hatt he part i es w oul d m ut ual l y w or k t ow ar ds t he best
use of t he suppl y. C M S ’ s i f

- t hen con di t i onal , i ndefi ni t e, specul at i ve pr om i ses and t r adet al k w i l l notsupporta f r aud ul enti nduc em entcl ai m unde rt he pr es ent9 ... I nt er est i ngl y, w e have not l ocat ed a Tex as f r audu l enti ndu cem entcase

w h e r e , a sin t h is c a s e , t h e s e lle rs u e st h e b u y e rf o rf r a u d u le n t lyin d u c in g h im in t o a c o n t r a c tt o s e ll.

10 ... W e r e c o g n i z e t h a ts o m e o ft h e s e c a s e si n v o l v e n e g l i g e nt m i sr epr es ent at i on c l ai m s, w hi ch m us tbepr edi ca t ed on am i sr epr es ent at i on of exi st i ng f act . But w e i ncl ude t hese cases t o show t hatC M S ’ s al l eged pr om i ses do no tqua l i f y a s an a cti ona bl e m i sr epr es ent at i on un derei t herde f i ni t i on of m i sr epr esent at i on con t ai ned i n t he t r i al court ’ s char ge. 26 f act s. 9T h e re p re s e n ta ti o n sw e re a t b e s t c o n d i ti o n a l . S ee, e. g. , Cr i swel l v. European Crossroad

s Shoppi

ng Ctr. , Ltd. , 7 9 2 S .W .2 d 9 4 5 , 9 4 5 (T e x . 1 9 9 0 ); Hohenber

g Bros . v. G eor

ge E. Gi

bbons& Co. , 537 S. W . 2d 1, 3 ( Te x. 1976 ) ( exp l ai ni ng t hat“ [ w ] hi l e no pa rt i cul arw or dsar e n ec es sa ry f ort he exi st enc e o f
a c ondi t i on, s uc h t er m s as‘ i f , ’ ‘ pr ovi ded t hat , ’ ‘ on c ondi t i on t hat , ’ ors om e
o th e r p h ra s e th a t c o n d i ti o n sp e rfo rm a n c e , u s u a l l yc o n n o te a n in te n t fo r a
c o n d i ti o n ra th e r th a n a p ro m i s e ” ); Fo rd v
. City S tate Ban k o f Pa l ac io s, 44 S
. W . 3d 12 1, 14 0 ( Tex . A pp. — C or pus C hr i st i 20 01 , no pet . ) ( r ecogn i zi ng sam e p ri n c i p l e ); see al

so BC Y W ater Supply Cor

p. v. Residenti

al I nv. , I nc. , 1 70 S. W . 3d 596, 603– 04 ( Tex. A pp. — Tyl er2005 , pe t . de ni ed) ( r ec ogni z i ng
s ta te m e n t “ a m o u n te d to n o m o re th a n a c o n d it io n a l p ro m i s e o f fu tu re p e rfo rm a n c e c o n ti n g e n t o n B C Y ’so w n e rs h i p o f th e p ro p e rty ” ); 10 A i r bor ne Frei ght Co. v. C
. R. Le e E nter. I nc . , 8 47 S
. W . 2d 2 89 , 2 98 ( Tex . A pp. — El Paso 1 9 9 2 , w r itd e n ie d ) ( h o ld in g v e r b a l s t a t e m e n tt h a t “ if y o u d o y o u rjo b , w e w ill
r et ai n y ou a s a d el i very c ont r ac t or ” w asa con di t i ona l pr om i se ) . The27

re p re s e n ta ti o n sw e re a t b e s t i n d e fi n i te a n d s p e c u l a ti v e . S ee, e. g. , Transp. I ns. Co. v. F

a i rclo th , 89 8 S
. W . 2d 26 9, 27 6 ( Tex . 19 95 ) ( r ecogn i zi ng t hat“an expr essi on of opi ni on abo utm onetary val ue i s nota r ep res e nt at i on of f act
w hi ch gi ves r i se to a n act i on f orf r aud”) . The r epr esent at i ons w er e atw or st
m e re tra d e ta l k . See, e. g. , Pru den ti a l Ins . C o . o f A m . v. Je ffers o nA ss o cs ., Ltd. , 896 S
. W . 2d 156, 163 ( Tex. 1995 ) ( hol di ng r epr es ent at i onst hatbui l di ng
w a s “super b, ” “s uperf i ne, ” and “one oft he f i nestl i t t l e pr opert i es i n t he C i ty
o f A u s ti n ” w e re n o t m i s re p re s e n ta ti o n st h a t w o u l d s u p p o rt a fra u d a c ti o n ); Pa ull
v. Capital

Res. Mgm t. , I

nc. , 9 8 7 S .W .2 d 2 1 4 , 2 1 8

– 1 9 (T e x . A p p .— A u s t in 199 9, pe t . den i ed) ( hol di ng st at em ent s t hatan i nve st m entw as“ l ow r i sk ” and
w o u l d “ p ro d u c e l a rg e re v e n u e s fo r a l o n g ti m e ” w e re m e re l yd e a l e rs ’ ta l k ); see al so Frost Nat ’

l Ban k v. Heaf

ner, 1 2 S. W . 3d 104 , 112– 14 ( Tex. A pp. — H ous t on [ 1stD i st . ] 1999 , pe t . de ni ed) ( hol di ng f ac t s pur port edl y c ons t i t ut i ng
m i sr epr esent at i on l acked pr obati ve f or ce suf f i ci entt o const i t ut e basi s ofl egal i n fe re n c e o f fra u d ). Th e r ecor d r ef l ect s t hatn o pr om i se by C M S exi st s i n t he r ecor ded M ar ch 26 t el eph oneco nve r sa t i on thatco ns t i t ut esa def i ni t i ve m i sr epr es ent at i on suf f i ci ent t o suppo rt Q ui cksi l ver ’ s f r audu l ent i ndu cem entcl ai m . A nd becau se
ever y per son i nvol ved i n t he t el epho ne conv er sat i on w ho t est i f i ed att r i al agr eed t hatt he “d ea l ” w asco m pl et ed w hen t he part i eshung up t he phone , no28

e v i d e n c e ex i sts o f a n ac ti o n a b l e m i sre p res e n tati o n tha t i n d u c e d Q u i c k sil v e r i n to t h e t r a n s a c t io n . T h a t is , c o n s id e r in g t h e e v id e n c e in t h e lig h t m o s tf a v o r a b le to th e v e rd i c t a n d i n d u l g i n g i n e v e ryre a s o n a b l e i n fe re n c e t h a t w o u l d s u p p o rt i t, th e p ro ffe re d e v i d e n c e o n th e m i s re p r e s e n ta ti o n e l e m e n t o f Q u i c k s i l v e r’s f r a u d u le n tin d u c e m e n tc la im d o e sn o tris e t o t h e le v e l t h a tw o u ld e n a b le
re a s o n a b l e a n d fa i r-m i n d e d p e o p l e to d i ffe rin t h e irc o n c l u s i o n s . See City of Kel ler, 168 S. W . 3d a t822. Th e e vi de nc e h e r e o n t hea l l e ged
m i sr epr esent at i ons m ade by C M S i n t he M ar ch 2 6 tel epho ne conv er sat i on, even vi ew ed i n t he l i ghtm os tf avo r abl e t o t he ver di ct , si m pl y do esnotf ur ni sh an y basi s f ordi f f er i ng con cl usi ons by r easonabl e m i nds abou tt he exi st ence ofan
a c ti o n a b l e m i s re p re s e n ta ti o n . S ee Ro cor I nt ’ l , I nc. , 7 7 S .W .3 d a t 2 6 2 ; K i ndred
v. Con/Chem , I

nc. , 6 5 0 S .W .2 d 6 1 , 6 2 (T e x . 1 9 8 3 ); se e al soFros tNat ’

l Bank , 12 S. W . 3d at112– 14. The ac t ualw ords an d phr as esus ed by CM S i n t he M a r c h 2 6 re c o r d e d t e le p h o n e c o n v e r s a t io n a r e s u bje c tt o b u to n e re a s o n a b le
con cl us i on; t heyar e a tm os tco ndi t i ona l , i nde f i ni t e, s pec ul at i ve pr om i se s or
m e re trad e tal kan d w i l l n o t su p p o rtan ac ti o n for fr a u d u l e n t i n d u c e m e n t. W e n extt ur n t o t he se con d c at ego ry ofm i sr epr es ent at i onsr el i ed upon by Q ui ck si l ver . Q ui ck si l vercl ai m s t hatCM S f r aud ul ent l y i nduc ed i ti nt o t he
c o n t r a c tb yv irt u e o f t h e p r o m is e s e t f o rt h in t h e “ u p s id e s h a r in g p r o v is io n ” in t he t r ansact i on confi r m at i on and t he G I S B co nt r act . W e agr ee w i t h Q ui cksi l ver11 ... Eve ry pe r so n w ho pa rt i ci pat ed i n t he M ar ch 26 t el eph one

c o n v e rs a ti o n a n d te s ti fi e d a t tri a l te s ti fi e d th a t th e p a rti e sh a d “ a d e a l ” b e fo re t hei rM ar ch 2 6 tel epho ne conv er sat i on con cl uded . Tob y D ar den t est i f i ed t hat C M S and Q ui cksi l ver“had a deal ” w hen t hey hun g up t he pho ne. M ar c Paul ey t es t i f i ed t hat C M S a nd Q ui ck si l ver “h ad a dea l ” w hen he hung up t he phoneon M ar ch 2 6. D avi d G eyert est i f i ed t hatC M S and Q ui cksi l ver“had a deal ” w hen t hey con cl uded t he M ar ch 2 6 t el epho ne convers at i on. M i ke R yan t est i f i ed t hat t he deal w as consum m at ed overt he t el epho ne. A ndy C opp ol a t e sti fi e d t hat w hen hehung up t he phoneon M ar ch 26, “ C M S had a dea l w i t h Q ui ck si l verf or t he sa l e o rpur cha seoft hi s gas . ” T hus , t hi s f ac tw asco ncl us i vel y e st abl i sh ed. 29 t hatt he “u ps i de sh ar i ng pr ovi si on”s etf ort h i n t he con f i r m at i on t r ans ac t i on a nd th e G I S Bco n tr a c t— th a t “ if subj ectgas suppl y can be schedul ed/del i ver ed ( w het heron a spotshort - t er m orl ong t er m basi s) t o der i ve a d d i ti o nal val ue, thatt hep a rt i e ss ha l l s ha r e i n s uc h a dd i t i on a l r e ve nue on a 50%

- 50% b a s is ,”

— le n d sit s e lfb e t t e rt o Q u ic k s ilv e r ’s c o n t e n t io n t h a tC M S f r a u d u le n t ly i ndu ced Q ui cksi l ver i nt o t he contr actby agr eei ng w i t h no i nt entt o per f or m t hat
ever y t i m e d ur i ng t het e n- ye a rc on t r a c tt ha tCM S s ol d ga si th a d pur chased f r om Q ui cksi l verf orm or e t han $ 2. 47 M M bt u i t w oul d gi ve f i ft y per centofsal es p ri c e o v e r $ 2 .4 7 to Q u i c k s i l v e r. [ E m p h a s i sa d d e d .] T esti m on y a tt r i al estab l i sh ed t ha ten t i t i es e ng ag ed i n the ga s i n d u s try cust om ar i l y r ecor d t el epho ne convers at i ons; the part i es di d so her e and agr ee th a t w h e n th e y c o n c l u d e d th e i r p h o n e c o n v e rs a ti o n , th e y “ h a d a d e a l .” 11 T h u s , a n yp rom i se b yC M S th a t w o u l d m a k e itre sp o n sibl e fo r i n d u c i n g Q u i c k sil v e r t o ent eri nt o t he contr actnecessar i l y m usthave occurred dur i ng t he r ecor ded12 ... W hi l e, i n l i ght oft he G I S B co nt r act ’ s m er gerpr ovi si on, par ol evi dence

w as notadm i ssi bl e t o var y t he t er m s of t he w r i t t en contr act , t he part i es’ ver bal neg ot i at i onst hatcu l m i nat ed i n a “ dea l ” ar e d et er m i na t i ve f ort he t ortof fra u d u l e n t i n d u c e m e n t. S e e, e .g ., Sp o lja r ic , 708 S. W . 2d at434 ( part y’ s i nt ent d e te rm i n e d a t ti m e p a rtym a d e re p re s e n ta ti o n ). 30 te l e p h o n e n e g o ti a ti o n s . See, e. g. , F o r m o saPla s tic sC o r

p . USA v. Presid

io Eng’ r s & Contrac tor

s, I nc . , 960 S. W . 2d 4 1, 4 8 ( Te x. 1998 ) ; 37 Am
. J ur . 2d F ra u d an d D e c eit§ 106 ( 200 1) ( r ec ogni z i ng t hatf ort ortoff r aud ul ent i ndu cem entp ert i nent poi nti n t i m e i s w hen m i sr epr esent at i on i s m ade and r el i ed
u p o n to i n d u c e c o n tra c t). 12Thati s, t he l an gu ageoft he ups i de sh ar i ng pr ovi si on as setf ort h i n t he t r a n sa c ti on con f i r m at i on and t he G I S B co nt r act
c o u ld n o th a v e in d u c e d Q u ic k s ilv e rin t o t h e c o n t r a c tb e c a u s e itw a sn o tin exi st enc e w hen t he part i es r ea che d a dea l and con cl ude d t hei rph one
c o n v e rs a ti o n . S ee Haase v. Gl azner, 62 S
. W . 3d 795, 797– 98 ( Te x. 2001 ) ( exp l ai ni ng t he di st i nct i on be t w ee n t he t ort off r aud an d t he t ortoff r aud ul ent i ndu cem entand noti ng t hatthe t orto ff r audu l enti ndu cem entpr esuppo ses t hat
m i s re p re s e n ta ti o n i n d u c e d p a rtyto e n te r a c o n tra c t). Q u ic k s ilv e rb r o u g h ta b r e a c h o f c o n t r a c tc la im a g a in s tC M S , s p e c if ic a lly
a s s e rti n g th a t C M S h a d b re a c h e d th e c o n tra c tu a l “ u p s i d e s h a ri n g p ro v i s i o n .” Th e j ur y f oun d t hata condi t i on pr ecedent t o C M S ’ s per f or m ance had no tyet
occ ur r ed, ap par ent l y i ndi ca t i ng t hatt he j ury a cc ept ed C M S’ s con st r ucti on of t he “u ps i de sh ar i ng pr ovi si on . ” W hi l e Q ui ck si l verpos se ss ed a b r ea ch of31

con t r ac tcl ai m ba se d on C M S’ s al l ege d f ai l ur e t o com pl y w i t h t he ups i de sh ar i ng pr ovi si on s etf ort h i n t he t r an sa ct i on c onf i r m at i on a nd t he G I SB cont r ac t , no f r aud ul enti nduc em entcl ai m ex i st s bas ed on t he l ang uag e oft he ups i de sh ar i ng pr ovi si on becau se t he part i es al r eady “had a d eal . ” S e ei d
. T h e f a c tt h a tC MS al l ege dl y l at er di d not com pl y w i t h t he ups i de sh ar i ng pr ovi si on i ti ncl ude d i n t he t r ans ac t i on c onf i r m at i on a nd t he i n G I SB cont r ac tm ay con st i t ut e a br ea ch of contr act , b u t i t di d not f r audu l ent l y i ndu ce Q ui cksi l veri nt o t he deal
con su m m at ed att he con cl us i on oft he M ar ch 26 t el eph oneco nve r sa t i on. W e sust ai n C M S ’ s f i r sti ssue. IV . S UPERSEDEASI SSUE I n i ts fo u rt h i ss u e , C M S co m p l a i n s t h a t t h e tr i a l co u rtab u se d i ts di sc r et i on by r equ i r i ng C M S, as t he j udgm ent deb t or , t o pos t a bo nd f or t he
cos t s ( bond pr em i um s) Q ui ck si l veri ncu r r ed obt ai ni ng a s upe r se dea s bond req u i red b ythe tr i a l co u rt . B e c a u se the tr i a l co u rtp o ss e ss e d d i sc reti o n to f as hi on t hi s t ypeofr ul i ng c onc er ni ng s ec ur i t y f ora j udgm entf ors om et hi ng ot her t han m oney or an i nt er est i n pr opert y, w e over r ul e C M S ’ s f ourt h i ssue. S eeT e x . R . A p p . P . 2 4 .1 (e ), 2 4 .2 (a )(3 ). V . C ONC L USI ON H a v i n g s u s ta i n e d C M S ’s fi rs t i s s u e a n d o v e rru l e d C M S ’sfo u rth i s s u e , w e
n e e d n o ta d d r e s s C M S ’so th e r i s s u e s . S eeTex. R. A pp. P. 47. 1 ( r equ i r i ng32

appel l at e courtt o addr ess onl y i ssues necess ary t o di sposi ti on) . W e l i kew i se
ne ed no tad dress Q ui ck si l ve r ’ s co nd i t i on al cross-p o i n t. See i d. B e c a u s e we h a v e h e ld th a t th e e v i d e n c e i sl e g a l l yi n s u fficie n t to s u p p o rt th e j u ry ’s f r audu l enti ndu cem entf i ndi ng, w e over r ul e t he t w o i ssues r ai sed by Q ui cksi l ver
a s c ro s s -a p p e l l a n t: fi rs t, th a t th e tri a l c o u rt e rre d b yo n l yp ro s p e c ti v e ly
r esci ndi ng t he contr acti nst ead ofg r ant i ng r esci ssi on ab i ni t i o, an d second, t hat t h e t r ia l c o u rte r r e d b yd is r e g a r d in g t h e ju ry ’s a w a r d o f$ 1 0 m illio n d o lla r sin
exem pl ary dam ages. W e r ever se t he t r i al court ’ s j udg m ent and r ender j udg m e n t t hat Q u i c k s i l v e r ta k e n o th i n g . S eeT e x . R . A p p . P . 4 3 .2 (c ).

SU E W A LKER J U S T I C E PA N EL: D A U PH I N O T, G A RD N ER, an d W A LKER, JJ. DEL I VERE D: J un e 25, 2009