NO. 01-15-00621-CV
In the FIRST COURT OF APPEALS at Houston

______________________________________________

SUPPLY PRO, INC. and HARMON K FINE, Appellants,

v. ECOSORB INTERNATIONAL, INC., d/b/a BIOCEL TECHNOLOGIES,

Appellee

______________________________________________ Appealed from the 11th District Court of Harris County, Texas

______________________________________________

BRIEF OF APPELLANTS

______________________________________________ Richard H. Edelman Texas Bar. No. 06413200 rhe@edelmanoffice.com B ARLOW J ONES L.L.P. 17225 El Camino Real, Suite 400 Houston, Texas 77058 Telephone: (281) 488-8440 Facsimile: (281) 488-6832 William F. Harmeyer Texas Bar No. 09019000 wharmeyer@harmeyerlaw.com W ILLIAM F. H ARMEYER & A SSOCIATES , P.C. 7322 Southwest Freeway, Suite 475 Houston, Texas 77074 Telephone: (713) 270-5552 Facsimile: (713) 270-7128
ATTORNEYS FOR APPELLANTS
ORAL ARGUMENT REQUESTED ACCEPTED 01-15-00621-CV FIRST COURT OF APPEALS

HOUSTON, TEXAS 11/25/2015 5:39:46 PM CHRISTOPHER PRINE

CLERKIDE NTI TY OF PARTIE S AND COUNSEL

APPELLANTS: Supp ly Pro, I nc. an d Ha rmon K. Fin e

Rich ar d H. Ede lman Tex as Bar. No . 06 41 32 00 rh e@ ed el m an of

fic e.co m B A R L O W J O N E S L.L.P. 17 22 5 El Cam in o R eal , Sui te 40 0 Hou st on , Texa s 7 70 58 Tele ph on e: (28 1) 48 8- 84 40 Facs im il e: (28 1) 48 8- 68 32 Wi ll ia m F. Harmeye r Tex as Bar No . 09 01 90 00 wha rm ey er@ ha rm ey erl aw.co m W I L L I A M F. H A R M E Y E R & A S S O C I A T E S , P.C. 73 22 So ut hwe st Free way , Sui te 47 5 Hou st on , Texa s 7 70 74 Tele ph on e: (71 3) 27 0- 55 52 Facs im il e: (71 3) 27 0- 71 28

APPELLEE: Eco so rb I nter na tio na l, I nc. d/ b/ a Bi oc el Tech no lo gi es

T. Ea rnes t Freeman Tex as Bar No . 07 43 16 00
ern es t@ th efre em an la wfir m .co m Step hen G . Scho ll Tex as Bar No . 17 80 13 50 st ev e@ th efre em an la wfir m .co m T H E F R E E M A N L A W F I R M , P.C. 17 70 St. J am es Pla ce, Su it e 1 20 Hou st on , Texa s 7 70 56 Tele ph on e: (71 3) 97 3- 10 00 Facs im il e: (71 3) 97 3- 10 04 Jo na tha n S. Sto ge r Tex as Bar No . 00 79 75 04 jst og er@ st og erl aw.co m J O N A T H A N S T O G E R L A W 23 01 Mo rs e St reet Hou st on , Texa s 7 70 19 Tele ph on e: (71 3) 52 2- 28 48 Facs im il e: (71 3) 52 2- 11 20

iiTABLE OF CONTENT S

IDENTITY OF PARTIES AND COUNSEL

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
INDEX OF AUT HORITIES.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
STATEMENT OF TH E CASE.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ISSUES PR ESENTED.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF FACTS.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMM ARY OF THE ARGUMENT.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARGUMENT.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
I. St an da rd s o f Rev ie w.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 A. Den ia l o f m ot io n fo r JNOV o r to di sr eg ard jury fin di ng s.
. . . . . . . . 13 B. Leg al Su ffi ci en cy
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 C. Dam ag es
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 D. Co nt ract Co ns tru ct io n.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
II. The ev id en ce is le ga ll y in su ffi ci en t to s u p p o r t th e jury’ s li ab il it y fin di ng s o n t he cla wba ck pro vi si on
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 A. The pr op os ed ta ke or pa y te rm was no t pa rt of th e pa rti es ’ or ig in al ag reem en ts on th e Ju ly pur ch as e o rd ers
. . . . . . . . . . . . . . . . . . . . . . . 17 B. Bec au se th e pr op os ed ta ke or pa y te rm was no t pa rt of th e or ig in al ag reem en ts on th e Ju ly pu rch as e or de rs , an d Fi ne di d no t ag ree to it in th e Aug us t 16 em ai l, th e cl awb ack pr ov is i o n w a s no t im pl ie dl y pa rt o f th e p art ie s’ work ou t ag reem en t.

. . . . . . . . . . . . . . 19
III. In th e al te rn at iv e, if th e pr op os ed ta ke or pa y te r m was pa rt of th e pa rti es ’ or ig in al ag reem en ts on th e Ju ly pu rch as e or de r s , t h e n th e ev id en ce rai se d a m at eri al fact qu es ti on on whe th er th e ta ke or pa y te rm was in du ced by frau d; an d th e tri al co ur t rev ers ib ly erre d by refu si ng to su bm it ap pe ll an ts ’ req ue st ed ch arg e que sti ons on fr au du le nt in du cem en t or eq ui ta bl e es to pp el

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

iiiA. The tak e o r pa y ter m was fr au du le nt ly ind uc ed

. . . . . . . . . . . . . . . . . 23 B. The frau du le nt in du cem en t was n o t ab so lv ed or m oo te d by th e wor ko ut ag reem en t.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 C. Erro r an d h arm
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
IV. The ev id en ce is l e g al ly in su ffi ci en t to pr ov e th e da m ag es fo un d in ch arg e q ue st io n 7 (b -d ) (as well as q ue st io ns 6(b -c), 1 0, an d 1 1)

. . . . . . . . . 34 A. St or ag e ch arg es
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 B. Cl awb ack pro vi si on
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 C. Tak e o r pa y

da m ag es on th e p ur ch as e o rd ers
. . . . . . . . . . . . . . . . . . . 38
V. The ev id en ce is le ga ll y an d fact ua ll y in su ffi ci en t to su pp or t th e award s of pu ni ti ve da m ag es
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 A. Pu ni ti ve da m ag e li m it s.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 B. The ev id en ce is le ga ll y in su ffi ci en t to pr ov e th at Su pp l y Pro
co m m it te d fr au d i nd ep en de nt ly from Fin e.
. . . . . . . . . . . . . . . . . . . . 41 C. The ev id en ce is le ga ll y in su ffi ci en t to su pp or t se pa rat e award s of pu ni ti ve da m ag es ag ai ns t Fi ne an d Su pp ly Pro be cau se th ere is no ev id en ce o f in de pe nd en t fr au d b y Su pp ly Pro.

. . . . . . . . . . . . . . . . . 42 D. The co m

bi ne d $ 1

. 8 m il li on pu ni ti ve da m ag e award is ex ces si ve un de r th e Tex as an d F ed eral Sta nd ard s.
. . . . . . . . . . . . . . . . . . . . . . 43
VI. The tri al co ur t erre d by no t in co r p o r a t in g Bi oc el ’s rem it ti tu r on pr ejud gm en t i nt eres t i nt o t he Ju dg m en t.

. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
PRAYER.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
W ORD COUNT CERTIFICATION.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
CERTIFI CATE OF SERVICE.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
APPENDIX.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

ivINDEX O F AUTHORI TI ES
Cas es Am. Mfrs . Mut . Ins . Co. v. S ch ae fe r , 12 4 S .W .3d 15 4 (Te x. 2 00 3)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 , 23

Bun to n v . Bent le

y , 15 3 S .W .3d 50 (Tex . 20 04 )..

. . . . . . . . . . . . . . . . . . . . . . . 40 , 41

Bur ba ge v. Bur ba ge , 44 7 S .W .3d 24 9 (Te x. 2 01 4)

. . . . . . . . . . . . . . . . . . . . . . . 15
Ch amb er s v. Eq ui ty Ban k , SSB, 3 19 S.W .3d 89 2 (Tex . App .–Tex ark an a 2 01 0, n o p et .).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Ci ty of Kel le r v. Wils on , 16 8 S .W .3d 80 2 (Te x. 2 00 5)

. . . . . . . . . . . . . 15 , 16 , 21 , 23
Co lu mbi a Ri o Gr an de Heal th ca re , L.P. v. Hawl ey , 28 4 S .W .3d 85 1 (Te x. 2 00 9)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 , 33 , 34
Dal la s Ry. & Ter min al

Co . v. Gos se tt , 15 6 Tex . 25 2, 2 94 S.W .2d 37 7 (1 95 6)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ERI Con su lt in g En g’ rs , Inc . v. Swi nn ea , 31 8 S .W .3d 86 7 (Te x. 2 01 0)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

For d Mo to r C

o. v. Ca st il lo , 44 4 S .W .3d 61 6 (Te x. 2 01 4)

. . . . . . . . . . . . . 15 , 29 , 30

For tu ne Pro d. Co . v. Con oc o, In c. , 52 S.W .3d 67 1 (Te x. 2 00 0)

. . . . . . . . . . . 31 , 32
Gra ha m Cen t. S ta ti on , Inc . v. Pena , 44 2 S .W .3d 26 1 (Te x. 2 01 4)

. . . . . . . . . . . 14
Gue va ra v. Ferr er , 24 7 S .W .3d 66 2 (Te x. 2 00 7)

. . . . . . . . . . . . . . . . . . . . . . . . . . 15

Hos s v. Al ar di n , 33 8 S .W .3d 63 5 (Te x. Ap p.– Dall as 20 11 , no pe t.).

. . . . . . . . . . 20

Hou st on Expl or at io n C

o. v. Well in gt on Und er wr it in g Ag en ci es , Ltd

. , 35 2 S .W .3d 46 2 (Te x. 2 01 1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 , 22

vIta li an Co wb oy Par tn er s, Lt d. v. Pr ud en ti al

Ins . Co. o f Am. , 34 1 S .W .3d 32 3 (Te x. 2 01 1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Ka ch in a Pi

pe li ne Co ., Inc . v. Lil li s , No. 1 3- 05 95 6, 20 15 W L 58 89 10 9 (Te x. Oct . 9, 2 01 5)

. . . . . . . . . . . . . . . . . . . . . . . . 16 , 17 , 22 , 23
LHC Na sh ua Par tn er

sh ip , L.L.C. v. PDNED Sa ga mor e Na sh ua , L.L.C. , 65 9 F 3d 45 0 (5 Cir . 20 11 ).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 th

Li nd le y v. McKn ig ht , 34 9 S .W .3d 11 3 (Tex . App .–F or t Wort h 2 01 1, n o p et .).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Mal on e v. Ki sa be th Co ., Inc

. 72 6 S .W .2d 18 8 (Tex . App .–F or t Wort h 1 98 7, wri t re f’d n.r .e.).

. . . . . . . . . . . . . . . . . . . . . . . . . . 35

Man on v. So li s , 14 2 S .W .3d 38 0 (Tex . App .–Ho us to n [1 4 Dis t.] 20 04 , pet . den ie d)

.. . . . . . . . . . . . . . . . . . . . . . . 14 th

Na t’l Pro p. Ho ld in gs , L.P. v. W

es te rg re n , 45 3 S .W .3d 41 9 (Te x. 2 01 5)

. . . . . . . . 24
Owen s- Co rn in g Fi be rg la s C or p. v. Ma lo ne , 97 2 S .W .2d 35 (Tex . 19 98 ).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 , 41 , 43
Pla in s Exp lo ra ti on & Pro d. Co . v. Tor ch Ener gy Advi so rs Inc

. , No. 1 3- 05 97 , 20 15 W L 36 53 33 0 (Te x. J un e 1 2, 2 01 5)

. . . . . . . . . . . . . . . . . . . . . 16

Rit ch ie v. Rup e , 44 3 S .W .3d 85 6 (Te x. 2 01 4)

. . . . . . . . . . . . . . . . . . . . . . . . . . 16 , 23
Se . Pip e Li ne Co ., Inc . v. Tic ha cek , 99 7 S .W .2d 16 6 (Te x. 1 99 9)

. . . . . . . . . . . . . 14

Ten ne co Inc . v. Ent er . Pro ds . Co ., 92 5 S .W .2d 64 0 (Te x. 1 99 6)

. . . . . . . . . . . 16 , 23

Ti ll er v. McLu re , 12 1 S .W .3d 70 9 (Te x. 2 00 3)

.. . . . . . . . . . . . . . . . . . . . . . . . . . . 14

To ny Gul lo Mot or

s I, L.P. v. Ch ap a , 21 2 S .W .3d 29 9 (Te x. 2 00 6)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 , 41 , 44

viTr av el er

s In s. Co . v. W

il so n , 28 S.W .3d 42 (Tex . App .—Tex ark an a 2 00 0, n o p et .).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Sta tute s
Tex . Bus . & Co m . Cod e Ann . § 2 .20 1 (West 20 09 ).

. . . . . . . . . . . . . . . . . . . . . . . 18
Tex . Bus . & Co m . Cod e Ann . § 2 .20 7 (West 20 09 ).

. . . . . . . . . . . . . . . . . . . . 18 , 19
Tex . Bus . & Co m . Cod e Ann . § 2 .71 0 (West 20 09 ).

. . . . . . . . . . . . . . . . . . . . . . . 34
Tex . Civ . Prac. & Rem . Cod e Ann . § 4 1.0 06 (W es t 2 01 4)

. . . . . . . . . . . . . . . . . . . 39
Tex . Civ . Prac. & Rem . Cod e Ann . § 4 1.0 08 (W es t 2 01 4)

. . . . . . . . . . . . . . . . . . . 40
Tex . Civ . Prac. & Rem . Cod e Ann . § 4 1.0 11 (W es t 2 01 4)

. . . . . . . . . . . . . . . . . . . 40

Rule s
Tex . R. App . P. 9.4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Tex . R. App . P. 44 .1.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tex . R. Civ . P. 27 8.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Tex . R. Civ . P. 30 1.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

viiSTATE MENT OF TH E CASE

Thi s d is pu te aro se fro m sa le s of K-So rb , a tre at ed cel lu lo se fib er p ro du ct , by

Eco so rb In te rn at io na l, In c., d/ b/ a Bi oc el Tech no lo gi es (“ Bi oc el ”) to Su pp ly Pro , In c. (“ Su pp ly Pro ”). The tri al co ur t en te red jud gm en t (th e “ Ju dg m en t,” 4 C 24 54 -5 6) on

a jury v e r d i c t (4 C 19 31 -5 6) , award in g Bi oc el act ua l da m ag es fo r frau d, pu ni ti ve
da m ag es , an d pr ejud gm en t in te res t to ta li ng ov er $2 .7 m il li on ag ai ns t Su pp ly Pro an d
it s o wne r an d P res id en t, Harm on Fin e. 1

IS SUES PRESE NTED
1. Bec au se t h e p r o po se d ta ke or pa y te rm was no t pa rt of th e pa rti es ’
or ig in al ag reem en ts un de r th e Ju ly 13 an d 29 pu rch as e or de rs as a m at te r of la w, th e pr op os ed “ cl awb ack pr ov is io n” fo r th e ta ke or pa y te rm was no t im pl ie dl y pa rt o f th e p art ie s’ work ou t agre em en t, and th e ev id en ce is le ga ll y in su ffi ci en t t o su pp or t th e jury’ s li ab il it y fin di ng s rel at in g to th e cl awb ack pro vi si on
. 2. In th e al te rn at iv e, if th e pr op os ed ta ke or p a y te rm was pa rt of th e pa rti es ’ or ig in al ag reem en ts on th e Ju ly 13 an d 29 pu rch as e or de rs , th en th e ev id en ce rai se d a m at eri al fact qu es ti on whe th er th e ta ke or pa y te rm was in du ced by frau d, an d t h e t r ia l co ur t erre d by refu si ng to su bm it ap p e l l a nt s’ req ue st ed ch arg e qu es ti on s on frau du le nt in du cem en t or eq ui ta bl e es to pp el

.

The following rec ord abbre viations will be used: Clerk’s Record, “__ C __”; Supplemental 1 Clerk’s Record, “__ SC __”; Reporter ’s Re cord, “__ R __”; Plaintiff’s Ex hibits, “P __”; Def endant’ s Ex hibits, “D __.” I t appea rs that the portion of the repor ter’s rec ord from 5 R 86, line 13, to 5 R 1 5 2 , l i n e 22, is the same as 5 R 152, line 23, to 5 R 218, line 18. There fore , no citations have be en made to the latter portion of the repor ter’s r ecor d.
13. Th e ev id en ce is le ga ll y in su ffi ci en t to su pp or t th e da m ag e award s fo r st or ag e ch arg es , th e cl awb ack pro vi si on , and th e ta ke or p ay ter m
. 4. The ev id en ce is le ga ll y an d fact ua ll y in su ffi ci en t to su pp or t th e award s of pu ni ti ve da m ag es
. 5. The tri al co ur t erre d by no t in co rp or at in g Bi oc el ’s r e mi t it tu r on pr ejud gm en t i nt eres t i nt o t he Ju dg m en t.

STATE MENT OF FACTS
As rel ev an t to th e is su es pr es en te d in th is ap pe al , Su pp ly Pro m an uf act ur ed an d

so ld fo rty pe rcen t of th e ab so rb en t flo at in g bo om th at was us ed to co nt ai n an d cl ean up th e oi l sp il l (th e “ sp il l” ) th at res ul te d fro m th e Bri ti sh Pet ro le um (“ BP”) Deep wate r
Hor iz on rig ex pl os io n, whi ch oc cu rred in A p r i l of 20 10

. 2 C 12 80 (¶9 ); P 79 (0 05 0 ¶1 ); 4 R 10 3- 10 4. Fi ne is th e Pres id en t an d own er of Su pp ly Pro

. 2 C 12 80 ; 4 R 14 ; 2

8 R 39

. Su pp ly Pro se ll s it s bo om th ro u g h d i s t r i b ut or s rat he r th an en d us ers
. 4 R
20 5- 06

. Su pp ly Pro ’s di st rib ut or fo r se ll in g bo om to BP was Paci fic Env iro nm en ta l (“ PE”). 2 C 12 80 (¶9 ). Jo hn Su m m ers was th e co ns ul ta nt at PE who in tro du ced BP

to Su pp ly Pro an d se rv ed as th e in te rm ed ia ry be twee n th em
. 4 R 13 0- 31 , 14 5; 5 R
23 9. In or de r fo r bo om to pe rfo rm it s fu nc ti on , t he m at eri al in si de th e b oo m m us t
flo at , ab so rb oi l, an d no t ab so rb w a t e r
. 5 R 23 1. His to ric al ly, th e fil le r m at eri al

Parenthe tical ref

ere nces following exhibi t numbers are to the last 4 digits of the bates-sta mp 2 number of the pag e within the exhibi t. The pag es of some exhibi ts are not in bates-numbe r order

. 2in si de th e bo o m th at pe rfo rm s th is fu nc ti on ha s be en sc rap po lypro pylen e

(“ po l ys c r a p” ). 4 R 22 1- 22

. Howev er, fo ll owi ng th e sp il l, th ere was no t en ou gh

po lyscrap to pr od uc e th e am ou nt of bo om ne ed ed fo r th e sp i l l , a n d no n- sc rap
po lypro pylen e was to o ex pe ns iv e to us e in bo om
. 4 R 10 6- 07 , 14 3; 5 R 23 1- 32 ; 7 R
10

. Bi oc el , an d it s pa ren t co m pa ny, In te rn at io na l Cel lu lo se Co rp or at io n (“ ICC” ),

man uf act ur e an d se ll cel lu lo se fib er pr od uc ts m ad e fro m recycled pa p e r a n d
card bo ard

. 3 R 50 , 8 8- 89

. St ev e Kem pe is th e own er of ICC, whi ch man u f a c t u r es
th e go od s th at Bi oc el se ll s. 5 R 9, 12 -1 3. One of Bi oc el ’s p r o d u c t s i s K-So rb , a
cel lu lo se fib er pr od uc t th at ha s be en ch em ic al ly tre at ed to m ak e it hydro ph ob ic (wat er
rep el le nt ). 2 C 12 79 -8 0; 5 R 13 -1 4; 7 R 25

. Befo re th e sp il l, Bi o c e l h a d n o t so ld

m uc h K-Sor

b. 3 R 90 -9 2; P 12 5. Dur in g th e sp il l, Bio cel was be in g con ta ct ed by a
lo t o f pe op le ab ou t u si ng it s p ro du ct s t o m ak e b oo m . 3 R 6 9- 70 ; 5 R5 7.
On May 13 , 20 10 , Larry Sv ob od a, Bi oc el ’s V i c e P r e si de nt fo r sa le s an d

m ark et in g an d it s on ly sa le sp ers on (3 R 50 , 88 -8 9) , em ai le d Sco tt Mi tc he ll , th e sa le s

m an ag er fo r Su pp ly Pro (4 R 20 4) , t ha t K-So rb ha d th e at tri bu te s ne ed ed fo r us e in
bo om an d th at th e fin es t bo om m an uf act ur ers were us in g Bi oc el ’s hydro ph ob ic fib er

as a fil le r in bo om
. P 3; 7 R 10

. Sv ob od a al so le t Mi tc he ll kn o w t h a t t h e s up pl y
ch ai n was fin it e an d S up pl y Pro be tt er g et in no w if t he y want ed it . 7 R 1 0.

3Su pp ly Pro ha d pre vi ou sl y bo ug ht Bi oc el pr od uc ts fo r res al e (3 R 51- 53 ; 7 R

8) an d be ga n bu y in g K-So rb fo r us e in m ak in g it s bo om
. 3 R 51 -5 6; 4 R 14 -1 5, 17 ;
7 R 8. On Ju ne 29 , Mi tc he ll em ai le d Sv ob od a th at Su pp ly Pro was ex pe ct in g to sh ip

te n tru ck lo ad s of bo om pe r da y by m id -J ul y an d wou ld th us ne ed to bu y 16 8,4 80

po un ds of K-So rb pe r da y by th en
. P 18

. A tru ck lo ad of K-So rb is 1,0 56 ba gs , each weig hi ng 30 po un ds , an d th us 31 ,68 0 po un d s
. P 1 3 ; 3 R 74

. At $1 3.8 0 pe r ba g, a

tru ck lo ad co st s $ 14 ,57 2.8 0. P 1 31 (1 18 5)

. On Ju ly 11 , Sv ob od a em ai le d Fi ne an d Mi tc he ll (th e “ Ju ly 11 e m ai l” ) th at
Bi oc el ha d “ m an y

ne w cus to m ers th at are bo ok in g m or e th an th ei r ne ed s,” an d t ha t

“ du e to th e ex tre m e pr od uc ti on de m an ds crea te d by th e oi l co nt ai nm en t cri si s in th e
G ul f of Mex ic o, al l or de rs fo r ou r hydro ph ob ic m at eri al s” wou ld be su bjec t to th e
fo ll owi ng “ sp eci al te rm s” : (1 ) or de rs wou ld be “ no n- can cel la bl e, ‘tak e or pa y ;’” (2 ) 3

or de rs wou ld req ui re a m in im um 14 da y lea d ti m e; an d (3 ) or de rs wou ld be fo r fu ll

tru ck lo ad s. P 23 -2 4. Bec au se pu rch as e or de rs (“ POs” ) co ul d ge ne ral ly be can cel le d

un le ss th ere were te rm s pr oh ib it in g it (5 R 51 , 63 ), th e pr op os ed ta ke or pa y te rm was

a m at eri al ch an ge in Bio cel ’s ter m s. 6 R 45

.

Be cause “take or pay ” is another way of say ing non-ca ncellable (5 R 59), this term will 3 simply

be re fer red to a s the proposed “ take or pay term.”
4O n J ul y 13 , S up pl y Pro su bm it te d bl an ke t PO no . 4 17 24 (th e “ Ju ly 1 3 P O ” ) 4

to Bi oc el fo r 31 ,68 0 ba gs (3 0 tru ck lo ad s) of K-So rb

. P 26

. On Ju ly 16 , Bi oc el 5
is su ed it s or de r ack no wled gm en t (th e “ Ju ly 1 6 OA”) fo r th e Ju ly 1 3 PO. P 30 ; 5 R
62

. Thi s OA co nt ai ne d th e sp eci al te rm s se t fo rth in th e Ju ly 11 em ai l, in cl ud in g th e
pr op os ed ta ke or p ay

ter m . P 30 . The fi rs t 2 5 tru ck lo ad s ord ered in th e Ju ly 13 PO

were s hi pp ed an d i nv oi ced fro m Ju ly 19 t o 3 0. P 3 1.
On Ju ly 15 , th e BP well le ak was cap pe d (4 R 15 2, 19 0; 5 R 23 9) , bu t th e

m as si ve sp il l clea n- up was ex pe ct ed to co nt in ue an d req ui re bo om un ti l Nov em be r.
4 R 29 -3 1, 35 , 15 5; 5 R 23 7, 24 4- 45 , 28 4. Howev er, on Ju ly 23 -2 5, Trop ic al St or m
Bo nn ie un ex pe ct ed ly di sp er s e d t he rem ai ni ng oi l, al th ou gh th is wou ld no t be
de te rm in ed for sev eral da y s. 4 R 15 7- 58 , 19 0; 5 R 4 3- 44

. On Ju ly 27 , BP in st ru ct ed Su pp ly Pro to red uc e it s pr o d uc ti on fro m te n

tru ck lo ad s of bo om pe r da y to th ree un ti l Aug us t 17 , bu t cau ti on ed th at ci rcu m st an ces

co ul d c ha ng e q ui ck ly as th e o il m ov ed or reach ed la nd area s. P 3 4( 00 06 ); 5 R 28 4,
34 0- 41

. On Ju ly 29 , Su pp ly Pro su bm it te d PO no
. 41 77 8 (th e “ Ju ly 29 PO”) to Bi oc el
fo r 29 ,56 8 ba gs (2 8 tru ck lo ad s) of K-So rb

. P 37 ; 5 R 68 -6 9. Thi s wou ld be ne ed ed

A blanket purcha se order is a purcha se order for multipl e shipments of materia l in which the 4 seller invoice s for e ach shipment a s it is released. 3 R 157.
This PO ref

lects a unit cost of $14,572.80, which applies to a truckload, rathe r t han a bag

. 5 Thus, the total price on the PO, $461,666,304.00 is thus the incorre ct product of multipl y ing the cost for

a truc kload by

the number of

bag s order ed.
5to su pp ly t he th ree t ru ck lo ad pe r da y sh ip pi ng sc he du le un ti l Aug us t 17

. 5 R 29 6; 6

7 R 36

. On Ju ly 29 , Bi oc el is su ed it s OA (th e “ Ju ly 29 OA”) fo r Su pp ly Pro ’s Ju ly 29
PO. P 38 ; 5 R 71 -7 2. Thi s OA ag ai n refl ect ed th e sp eci al te rm s, in cl ud in g th e
pr op os ed ta ke or pa y te rm
. P 38 ; 5 R 72. Su pp ly Pro di d no t rep ly to th e Ju ly 16 or
29 OAs o r ot he rwis e res po nd co nc ern in g a ny of Bi oc el ’s pro po se d s pe ci al ter m s.
On Fri da y , Ju ly 30 , BP ad vi se d Su pp ly Pro th at co nd it io n s ha d ch an ge d
dr as ti cal ly an d in st ru ct ed Su pp ly Pro to st op al l bo om pr od uc ti on un ti l fu rth er no ti ce
be cau se BP l ack ed sp ace to st or e m or e m at eri al , b ut ack no wled ge d th at pr od uc ti on

co ul d res um e at a la te r ti m e. P 34 (0 01 6) ; 5 R 24 2- 43 , 24 6. BP al so sa id it m ig ht ta ke

se ve ral week s to ev al ua te th ei r lo ng te rm pl an
. P 34 (0 01 6)

. Su m m ers to ok th is to

m ean t h a t BP was ov ers to ck ed wit h bo om , an d th at th is was an in te rru pt io n, aft er
whi ch pr od uc ti on wou ld res um e, rat he r t h a n a c an cel la ti on
. 5 R 24 4- 45 , 24 7.
Howev er, by th e fo ll owi ng W ed ne sd ay , Aug us t 4, 20 10 , Su m m ers an d Su pp ly Pro
h a d c o nc lu de d th at th is was no t m erel y an in te rru pt io n an d se nt Bi oc el no ti ces th at
it was can cel li ng th e rem ai nd er of it s Ju ly 13 PO an d al l of it s Ju ly 29 PO. P 25 , 36

. On W ed ne sd ay , Aug us t 11 , Kem pe an d Fi ne m et fo r lu nc h to di sc us s a po ss ib le

A truckload of fiber makes about 1.5 truckloads of boom. 7 R 43. There fore , 28 truckloads 6 of fiber would make about 42 truckloads of boom. At three truckload s of boom being shipped per da

y , this P O would supply

boom shipments for about 14 day s. 6wor ko ut of th e can cel le d or de rs
. 5 R 76 ; 6 R 30

. By th en , Su pp ly Pro ha d pa id fo r th e

25 tru ck lo ad s th at ha d be en de li ve red on th e Ju ly 13 PO (ro ug hl y $3 64 ,32 0) , as well

as fo r al l of th e K

- So rb th at ha d be en de li ve red an d in vo ic ed un de r it s pr ev io us
p u r c h as e or de rs
. P 12 7( 09 67 -6 8) (ref le ct in g pa y

m en ts fo r 41 72 4 REL. 1- 25 an d a

zero un pa id ba la nc e o n i ss ue d i nv oi ces as o f Aug us t 1 1)

. 7

O n F r id ay , Aug us t 13 , Kem pe se nt Fi ne an em ai l (th e “Au g u s t 1 3 e mai l ” ) ,
pr op os in g writ te n term s fo r wha t th ey ha d di sc us se d on Aug us t 11

. P 46 (1 38 7- 88 );

5 R 81 -8 2, 87 , 94

. Thi s em ai l r e f l e ct ed th at , of th e 34 ,86 8 rem ai ni ng un de li ve red
ba gs of K-So rb th at Su pp ly Pro ha d or de red in th e Ju ly POs, Bi oc el th en ha d in st oc k
69 12 ba gs of fin is he d K-So rb pl us raw m at eri al s to pr od uc e an a d di ti on al 11 ,61 6
ba gs
. P 46 (1 38 7) ; 5 R 84 , 87 , 91

. As rel ev an t to th e rel ie f award ed in th e Ju dg m en t,
th e Aug us t 1 3 e m ai l p ro po se d t ha t:
A. If Su pp ly Pro w as no t co m pe ns at ed by PE fo r te rm in at in g i t s bo om de li ve rie s, t he n:
1. Su pp ly Pro an d Bi oc el wou ld co nt in ue tryin g to se ll th e rem ai ni ng 69 12 ba gs of K-So rb un ti l Feb ru ary 1, 20 11 , aft er whi ch Su pp ly Pro wou ld be in vo ic ed for an y rem ai ni ng in ve nt or y
. 2. Su bjec t to it s ve nd or ’s ap pr ov al , Bi oc el wou ld ret ur n th e un us ed

Acc ording to Bioc el’s rec ords, Supply Pro paid Bioc el near ly $900,000 from J anuar y of 2010 7 to March of

2011. P 127.
7raw m at eri al it ha d in st oc k fo r 11 ,61 6 ba gs if Su pp ly Pro wou ld 8 pa y a $ 1 2 , 7 5 0 res to ck in g fee (o th erwi se , th os e ba gs wou ld be pr od uc ed an d i nv oi ced to Su pp ly Pro). 5 R 96

. 3. Bi oc el wou ld waiv e th e pu rch as e req ui rem en t fo r th e rem ai ni ng 16 ,32 0 b ag s (fo r whi ch Bi oc el di d no t y et ha ve raw m at eri al s i n in ve nt or y (5 R 88 )).

B. Alt ern at iv el y , if Su pp ly Pro w as la te r co m pe ns at ed by PE fo r te rm in at in g it s bo om de li ve rie s, Su pp ly Pro wou ld so no ti fy Bi oc el an d
co m pe ns at e Bi oc el in th e sa m e pr op o r t i o n a s Su pp ly Pro was co m pe ns at ed le ss th e res to ck in g fee (in it em A2 ab ov e) , i f pa id by Su pp ly Pro (t hi s p ro vi si on was refe rred to by K em pe as t he “ cl awb ack pr ov is io n” (5 R

10 1) ).
P 4 6 (1 38 7- 88 ).
On M on da y , Aug us t 16 , Fi ne rep li ed by em ai l (th e “ Aug us t 16 em ai l” ) to
Kem pe ’s Aug us t 1 3 e m ai l:

I au th or iz e y ou to ret ur n th e ch em ic al to y ou r m an uf act ur er an d ch arg e m e th e $ 12 ,75 0 fo r ret ur n. . . .
Su pp ly Pro acce pt s th e of fer of y ou r as si st an ce in se ll in g th e rem ai ni ng 69 12 ba gs wit hi n a 6 m on th pe rio d. Su pp ly Pro w il l pu rch as e th e ba la nc e u ns ol d a t t ha t t im e. . . .
P 46 (0 94 6)

. Alt ho ug h th e Aug us t 16 em ai l sa id no th in g ab ou t an y of th e ot he r
pr ov is io ns of th e Aug us t 13 em ai l (P 46 (0 94 6) ; 6 R 34 ), Kem pe em ai le d ba ck wit hi n

te n m in ut es th at th e ret ur n pr oc es s was un de rway
. P 46 (0 94 6)

. On Aug us t 27 ,

The raw materia ls to be returne d for the restocking fee wer e the chemica ls used to make the 8 fiber in K-Sorb hy drophobic. P 46(0946); 4 R 78-79. Bioc el’s rema ining inventory of fiber for those ba g s may

have be en used in I CC’s other opera tions over time. 6 R 42.
8Kem

pe em ai le d Fi ne th at th e raw m at eri al ret ur n ha d be en co m pl et ed

. P 51 ; 5 R 10 4.
Su pp ly Pro pa id Bi oc el th e res t o c k i n g fee (5 R 10 5) , bu t th e pa rti es ne ve r

co m m un ic at e d a b o u t t he po rti on s of th e Aug us t 13 em ai l to whi ch th e Aug us t 16

em ai l h ad no t re sp on de d.
On Sep te m

be r 3, fo ll owi ng ne go ti at io ns be twee n BP an d PE, an d th en be twee n
th e own ers of PE (5 R 24 7- 52 ), PE se nt Su pp ly Pro a wire tra ns fer fo r $1 ,59 2,4 48 .00

. P 55 , 12 8; 4 R

18 5- 86 . This rep res en te d fu ll pa y m en t fo r PE’s can cel le d ord ers fo r
58 tru ck lo ad s of bo om fro m Su pp ly Pro (th e “ can cel la ti on fee” ). P 50 ; 4 R 21 5; 5 R
26 8.
On Decem

be r 1, Fi ne ad vi se d Kem

pe th at Su pp ly Pro st il l ha d 21 tru ck lo ad s
of bo om in it s war eh ou se an d $ 1.7 m il li on of feed st oc k th at wou ld pro ba bl y ne ve r 9
be us ed

. P 58 ; 4 R 22 6- 27

. Su pp ly Pro was ne ve r ab le to se ll m uc h of th is rem ai ni ng
fib er bo om (7 R 20 ); no ne of th e rem ai ni ng 69 12 ba gs of K-So rb he ld by Bi oc el were

ev er so ld ; an d Su pp ly Pro di d no t pa y fo r th em
. 2 C 12 82 (¶1 5- 16 ). Nor di d Su pp ly

Pro di sc lo se to Bi oc el th at it ha d be en pa id fo r it s te rm in at ed bo om de li ve rie s or pa y
Bi oc el an y

po rti on of i ts can cel la ti on fee.
Bi oc el fil ed su it ag ai ns t Su pp ly Pro i n 2 01 2, an d th e cas e was tri ed to a jury.

In res po ns e to th e th irt een ch arg e q ue st io ns , th e jury fou nd th at :

BP had r eturne d 13 truckloads of unused boom to Supply

Pro. 5 R 275-76. 9
91. The pa rti es ag reed th at th e cl awb ack pr ov is io n pro po se d in th e Aug us t 13 em ai l wo ul d b e p art of t he “ wor ko ut ag reem en t.” 1 0

2. Su pp ly Pro fai le d t o c om pl y wit h t he work ou t ag reem en t.
3. Bi oc el an d Fi ne ag reed th at Fi ne wou ld pe rs on al ly gu aran ty th e wor ko ut ag reem en t.
4. Fi ne fai le d t o c om

pl y wit h t he pe rs on al gu aran ty.
5. Su pp ly Pro an d F in e eac h c om m it te d fr au d a ga in st Bio cel

. 1 1

6. The da m ag es res ul ti ng fro m th e fai lu re t o c om

pl y were:

a. The pr ic e of th e 69 12 ba le s on Feb ru ary 1, 20 11 th at Bi oc el was un ab le to res el l at a reas on ab le pri ce: $9 5,3 85 .60

. b. Co m

m erci al ly reaso na bl e an d n eces sa ry ch arg es for th e cu st od y an d c are o f th e g oo ds st or ed by Bio cel : $ 30 3,8 15 .65

.

c. Bi oc el ’s pr op or ti on at e sh are of co m pe ns at io n rece iv ed by Su pp ly Pro fro m it s di st rib ut or fo r th e te rm in at io n of th e bo om de li ve rie s: $3 85 ,51 7.0 0.
7. The da m ag es fro m th e fra ud were:

a. The pr ic e of th e 69 12 ba le s on Feb ru ary 1, 20 11 th at Bi oc el was un ab le to res el l at a reas on ab le pri ce: $9 5,3 85 .60 [sa m e as 6a .]

.

The trial court denied appellants’ reque st to define the “wor k o ut ag ree ment” as consisting 1 0 of the Aug ust 13 and 16 emails. 8 R 7-8.
As it was submitt ed in the char g e, Bioc el’s fra ud claim was based on the alleg ations that Fine 1 1 and Supply Pro had fra udulent ly induced the workout ag ree ment by : (1) enter ing into it without intending to perf orm; and (2) misrepre senting t h at i t was in a preca rious financ ial position due to the sudden evapor ation of its marke t for boom and that it had no expectation of re ceiving compensa tion for the ca ncellation of its boom sales. 2 C 1283-84.
10b. Co m m erci al ly reas on ab le an d n eces sa ry ch arg es for th e cu st od y an d care of th e go od s st or ed by Bi oc el : $3 03 ,81 5.6 5 [s am e as 6b ].

c. Bi oc el ’s pr op or ti on at e sh are of co m pe ns at io n rece iv ed by Su pp ly Pro fro m it s di st rib ut or fo r th e te rm in at io n of th e bo om de li ve rie s: $3 85 ,51 7.0 0 [s am e as 6c ].
d. The un pa id am ou nt s du e un de r t h e J ul y POs: $4 80 ,90 2.6 0 [th e su m of t he am ou nt s awa rd ed in 7a an d 7 b].
8. By cl ear an d co nv in ci ng ev id en ce, th e ha r m t o Bi oc el res ul te d fro m frau d o f eac h, Su pp ly Pro an d F in e.
9. A reas on ab le fee fo r th e n eces sa ry ser vi ces of B io cel ’s att or ne y was:

a. Fo r pr ep arat io n a nd tri al : $ 63 7,4 55

. b. Fo r ap pe al to th e Co ur t o f App eal s: $4 2,5 00

. c. Fo r ap pe al to th e Su pr em e Co ur t o f Tex as : $ 32 ,50 0.
10

. Bi oc el ’s pr op or ti on at e sh ar e of co m pe ns at io n rece iv ed by Su pp ly Pro fro m Su pp ly Pro ’s di st rib ut or fo r th e te rm in at io n of th e bo om de li ve rie s: $3 85 ,51 7.0 0 [s am e as 6c an d 7 c]. 1 2

11

. The un pa id am ou n ts du e un de r th e Ju ly 13 an d Ju ly 29 POs: $4 80 ,90 2.6 0. [s am e as 7d .]
12

. The ex em

pl ary da m ag es th at sh ou ld be as se ss ed ag ai ns t Su pp ly Pro fo r th e co nd uc t fo un d i n q ue st io n 8 a: $8 00 ,00 0.0 0.
13

. The ex em

pl ary da m ag es th at sh ou ld be as se ss ed ag ai ns t Fi ne fo r th e co nd uc t fo un d i n q ue st io n 8 b: $1 ,00 0,0 00 .00

. 4 C 19 31 -5 6.

This amount approximates the amount d u e fo r t h e 27,956 bag s that wer e order ed but not 1 2 produce d, without reduction for the re stocking fee

. 11On Apr il , 21 , 20 15 , pu rs ua nt to Bi oc el ’s el ect io n, t h e t ria l co ur t en te red

Ju dg m en t on th e frau d an d ex em pl ary da m ag e f

i n d i n g s ( rat he r th an th e co nt ract
fin di ng s)

. 4 C 24 54 -5 6. App el la nt s fil ed ti m el y po st -jud gm en t m ot io ns , as se rti ng al l
of th e su ffi ci en cy of th e ev id en ce ch al le ng es pr es en te d in th is ap pe al

. 4 C 24 57 -8 1.
The tri al co ur t de ni ed ap pe ll an ts ’ po st -jud gm en t m ot io ns on Ju ne 2 9 , 20 15 (4 C
25 10 ); bu t di d no t ru le on , or m od ify th e Ju dg m en t to refl ect , th e rem it ti tu r th at Bi oc el
fil ed on Ju ne 29 , 21 05 to co rrec t t he award of p reju dg m en t i nt eres t. 4 C 25 11 -1 2.

SUMMARY OF THE ARGUME NT

In th is ap pe al , S up pl y Pro d o e s n o t ch al le ng e it s li ab il it y to pa y fo r th e 69 12

un de li ve red ba gs of K-So rb th at ha d be en pr od uc ed whe n i t c an cel le d th e POs.
Su pp ly Pro do es , ho wev er, ch al le ng e it s li ab il it y fo r th e st or ag e ch arg es fo r th os e
ba gs as well as th e li ab il it y th at was ba se d on Bi oc el ’s pr op os ed ta ke or pa y te rm an d

pr op os ed cl awb ack pr ov is io n, rel at in g to th e rem ai ni ng ba gs th at h a d be en or de red
in th e Ju ly POs bu t n ev er p ro du ced

. As di sc us se d in th e fo ll owi ng se ct io ns , th e pr op os ed ta ke or pa y te rm was no t

pa rt of th e pa rti es ’ or ig in al ag reem en ts on th e Ju ly POs; th e pr op os ed “ cl awb ack

pr ov is io n” pe rta in in g to th e pr op os ed ta ke or pa y te rm was no t ex pr es sl y or im pl ie dl y
pa rt of th e pa rti es ’ wor ko ut ag reem en t; a n d t h e ev id en ce is th eref or e le ga ll y
in su f f i ci en t to su pp or t th e jury’ s li ab il it y an d da m ag e fin di ng s rel at in g to th e

12cl awb ack pro vi si on . Alte rn at iv el y , if t he pro po se d t ak e or pa y ter m was p art of t he

pa rti es ’ or ig in al ag reem en ts on th e Ju ly POs, th en th e ev id en ce rai se d a fact is su e
whe th er th at te rm was in du ced by frau d. The wor ko ut ag ree men t w a s no t a

rat ifi cat io n o f th e o rig in al ag reem en ts th at co ul d a bs ol ve th is frau d b ecau se Su pp ly

Pro di d no t kn ow of th e frau d whe n it en te red in to th e wor ko ut ag reem en t. The refo re,
th e tri al co ur t rev ers ib ly erre d by refu si ng to su bm it ap pe ll an ts ’ pr op os ed ch arg e
qu es ti on s o n fr au du le nt in du cem en t o r eq ui ta bl e es to pp el

. The ev id en ce is al so le ga ll y in su ffi ci en t to su pp or t t he award of d am ag es fo r

st or ag e ch arg es be cau se th ere is no ev id en ce th at th e rem ai ni ng 69 12 ba gs of K-So rb
sh ou ld ha ve be en st or ed at al l; an d th ere is no ev id en ce of a co m m erci al ly reas on ab le

st or ag e rat e. The ev id en ce is al so le ga ll y in su ffi ci en t to su pp or t th e jury’ s
in de pe nd en t fin di ng of frau d ag ai ns t Su pp ly Pro an d, in tu rn , it s se pa rat e award of

pu ni ti ve da m ag es ag ai ns t Su pp ly Pro be cau se th ere was no al le ga ti on or ev id en ce th at
th e al le ge d frau du le nt co nd uc t was co m m it te d by an y on e at Su pp ly Pro be si de s Fi ne
. The to ta l $ 1.8 m il li on pu ni ti ve da m ag e award was a ls o e xc es si ve
. ARGUMENT

I. Sta nda rds of Re vi ew
A. Deni al of moti on for JNO V or t o d is reg ar d jury fin di ng s.
A tri al co ur t m ay gr an t a jud gm e n t n o twi th st an di ng th e ve rd ic t (“ JNOV”) if

13th ere i s n o e vi de nc e to su pp or t on e or m or e of th e jury fin di ng s on is su es ne ces sa ry

to li ab il it y
. Ti ll er v. McLu re , 12 1 S.W .3d 70 9, 71 3 (Tex. 20 03 ); se e Tex

. R. Ci v. P.
30 1. The de ni al o f a moti on fo r JNOV is th us rev ie wed un de r a le ga l su ffi ci en cy

st an da rd

. Man on v. So li s , 1 4 2 S

. W .3d 38 0, 38 7 (Tex

. App .–Ho us to n [1 4 Dis t.] th

20 04 , pet . den ie d)

. A ju ry ’s a ns wer m ay be di sr eg ard ed if it ha s no su pp or t in th e e v i d e nc e or is
im m at eri al

. Tex

. R. Ci v. P. 30 1; Se

. Pip e Li ne Co ., In c. v. Ti ch ac ek , 99 7 S.W .2d 16 6,
17 2 (Tex

. 19 99 ). A qu es ti on is im m at eri al whe n it sh ou ld no t ha ve be en su bm it te d,
cal ls fo r a fin di ng be y on d th e pr ov in ce of the jury, su ch as a qu es ti on of law, o r ha s
be en ren de red im m at eri al by oth er fi nd in gs
. Se . Pip el in e, 99 7 S .W .2d at 1 72

. B. Leg al Suffi ci ency . To ch al le ng e th e le ga l s uf fic ie nc y of ev id en ce su pp or ti ng an ad ve rs e fi nd in g

on an is su e fo r whi ch th e ch al le ng in g pa rty di d no t ha ve th e bu rd en of pr oo f, th e pa rty

m us t sh ow th at no ev id en ce su pp or ts th e ad ve rs e fin di ng
. Gra ha m Cen t. St at io n, In c.

v

. Pe na , 44 2 S.W .3d 26 1, 26 3 (Tex

. 20 14 ). A no ev id en ce (le ga l su ffi ci en cy )
ch al le ng e wil l be su st ai ne d whe n th e reco rd co nf irms ei th er: (1 ) a co m

pl et e ab se nc e
of a vi ta l fact ; (2 ) th e co ur t is ba rred by ru le s of la w or ev id en ce fro m gi vi ng weig ht

to th e on ly ev id en ce of

fere d to pr ov e a vi ta l fact ; (3 ) th e ev id en ce of fere d to pr ov e a
vi ta l fact is no m or e th an a sc in ti ll a; or (4 ) th e ev id en ce co nc lu si ve ly es ta bl is he s th e

14o p p o s i t e of th e vi ta l fact

. For d Mot or Co

. v. Ca st il lo , 44 4 S.W .3d 61 6, 62 0 (Te x
.

20 14 ). Mo re th an a sc in ti ll a ex is ts whe re th e ev id en ce wou ld en ab le reas on ab le an d
fai r-m in de d pe op le to reac h di ffer en t co nc lu si on s. Bur ba ge v. Bur ba ge , 44 7 S.W .3d
24 9, 2 59 (Tex . 20 14 ).

In a le ga l su ffi ci en cy rev ie w, th e ev id en ce is vi ewed in th e li gh t m os t fav or ab le

to th e jud gm en t, cred it in g fav or ab le ev id en ce an d in fere nc es if reas on ab le juro rs

co ul d, an d di sr eg ard in g co nt rary ev id e n ce an d in fere nc es un le ss reas on ab le juro rs

co ul d no t. Id .; For d Mot or C o

. , 44 4 S.W .3d at 62 0. Howev er, ev id en ce can no t be

ta ke n ou t of co nt ex t in a way th at m ak es it se em to su pp or t a ve rd ic t whe n it do es no t.
Ci ty of Kel le r v. W

il so n , 16 8 S.W .3d 80 2, 81 2 (Tex

. 20 05 ). W he re no ob jecti on ha s
be en m ad e to th e jury ch arg e, th e le ga l su ffi ci en cy of th e ev id en ce is m eas ur ed by th e
ch arg e su bm it te d t o t he jury. Bur ba ge , 44 7 S .W .3d at 2 60

. C. Damag es . Unc ert ai nt y as to th e fact ve rs us th e am ou nt of le ga l da m ag es is fat al to

reco ve ry
. Se e ERI Co ns ul ti ng Eng ’r s, In c. v. Sw in ne a , 31 8 S.W .3d 86 7, 87 7- 78 (Tex

. 20 10 ). Howev er, whe re ev id en ce is le ga l l y i n su ffi ci en t to pr ov e th e am ou nt of
da mag e a w a r d ed , bu t le ga ll y su ffi ci en t to pr ov e th at so m e am ou nt of da m ag e was

su ffer ed , th e cas e sh ou ld be rem an de d fo r rem it ti tu r or ret ria l. Id .; Gue va ra v. Ferr er , 24 7 S .W .3d 66 2, 6 70 (Tex . 20 07 ).

15D. Con tra ct Co ns truc tio n.

A writ te n co nt ract m

us t be co ns t ru ed to gi ve effe ct to th e pa rti es ’ in te nt

ex pr es se d in th e te xt , as un de rs to od i n l i g h t of th e fact s an d ci rcu m st an ces

su rro un di ng th e co nt ract ’s ex ecu ti on , bu t su bjec t to th e pa ro l ev id en ce ru le

. Hou st on Exp lo ra ti on Co

. v. W

el li ng to n Und er wr it in g Age nc ie s, Lt d. , 35 2 S.W .3 d 4 6 2, 46 9 (Tex

. 20 11 ). The co ns tru ct io n of an un am bi gu ou s co nt ract is a qu es ti on of la w th at
is rev ie wed de no vo
. Ka ch in a Pip el in e C o

. , I n c . v . L il li s , No . 1 3- 05 95 6, 20 15 W L
5 8 8 91 09 , at *2 (Tex

. Oct. 9, 20 15 ). In co ns tru in g a co nt ract , co ur ts e x a mi n e t h e

en ti re co nt ract an d gi ve effe ct to each pr ov is io n so th at no ne is ren de red m ean in gl es s.
Id . at * 3.

In co ns tru in g a co nt ract , a co ur t do es no t co ns id er on ly th e pa rts fav or in g on e
pa rty and di sr eg ard th e rem ai nd er as th at wou ld ren de r th e la tt er m ean in gl es s. Ci ty of Kel le r v. W

il so n , 16 8 S.W .3d at 8 1 1

. N o r m ay co ur ts rewri te co nt ract s or in se rt

te rm s t ha t t he pa rti es co ul d h av e b arg ai ne d fo r bu t d id no t. 1 3

I f a co nt ract can be gi ve n a de fin it e le ga l m ean in g, th en it is no t am bi gu ou s.
Ka ch in a , 20 15 W L 58 89 10 9, at *3

. Co nv ers el y , a co nt ract is am bi gu ou s on ly if it is

su bjec t to two or m or e reas on ab le in te r p r e t a t io ns
. Pla in s Exp lo ra ti on & Pro d. Co

.

Ritchie v. Rupe , 443 S.W .3d 856, 891 (Tex. 2014); Am. Mfrs. Mut. Ins. Co. v. Schaefe r , 124 1 3 S.W .3d 154, 162 (Tex. 2003); Tenneco Inc. v. Enter. Prods. Co ., 925 S.W .2d 640, 646 (Tex. 1996).
16v. To rc h Ene rg y Adv is or s In c. , No. 13 -0 59 7, 20 15 W L 36 53 33 0, at *7 (Tex

. Ju ne 12 , 20 15 ). W hi le ev id en ce of ci rcu m st an ces can be us ed to in fo rm th e co nt ract te xt an d

ren de r it cap ab le of on e m ean in g, ex tri ns ic ev id en ce can on ly be c on si de red to
in te rp ret an am

bi gu ou s writ in g, no t to crea te an am bi g u i t y. Ka ch in a, 20 15 W L
58 89 10 9, at *3

. W he re an ag reem e n t i s am bi gu ou s, th e pa rti es ’ in te nt is a fact qu es ti on
. Ka ch in a , 20 15 W L 58 89 10 9, at *2

. W he th er a co nt ract is am bi gu ou s i s a le ga l

qu es ti on for th e co ur t. Id

. II
. The ev id ence is le ga ll y in su ffi ci ent to su ppo rt the jury ’s li ab il ity fin di ng s on the cl aw ba ck

pro vi si on . A. The pro po se d ta k e or pa y term w as no t pa rt of the pa rti es ’ or ig in al ag reements on the J ul y p urch as e o rder s. 1 4

I t is un di sp ut ed in th is cas e th at Bi oc el an d Su pp ly Pro are “ m erch an ts ” a n d
th at th e or ig in al sa le s of K-So rb were su bjec t to Ch ap te r 2 of th e Tex as Bu si ne ss an d
Co m m erce Co de (th e “ TBCC” ). Sect io n 2 .20 7( a) an d (b ) of th e TBCC pro vi de : (a) A de fin it e an d se as on ab le ex pr es si on of acce pt an ce or a w r i t te n co nf irmatio n whi ch is se nt wit hi n a reas on ab l e ti m e op erat es as an acce pt an ce even th ou gh it st at es te rms ad di ti on al to or di

ff er en t fr om th os e of fe re d o r a gr eed up on , un le ss acce pt an ce is ex pr es sl y m ad e co nd it io na l o n a ss en t t o t he ad di ti on al or d iff eren t t erm s.

No char g e question was reque sted or submitt ed on this issue, and n o n e was war rante d 1 4 beca

use, as discussed in this section, this wa s an issue of contra ct construc tion and, thus, a question of law f

or the c ourt. See Kac hina Pipeline Co., Inc. , 2015 WL 5889109, at *2.

17(b ) Th e ad di ti on al te rms ar e to be co ns tr ue d a s p ro po sa ls fo r a dd it io n to th e co nt ra ct

. Be t w e e n merch an ts su ch te rm s be co m e pa rt of th e co nt ract un le ss : (1 ) th e of fer ex pr es sl y li m it s acce pt an ce to th e te rm s of th e of fer; (2 ) th ey ma te ri al ly al te r i t ; o r (3 ) no ti fic at io n of ob

jecti on to th em ha s al read y be en gi ve n or is gi ve n wi th in a reas on ab le ti m e aft er n ot ic e o f th em is rece iv ed

. Tex

. Bu s. & Co m
. Co de Ann

. § 2.2 07 (a), (b ) (West 20 09 ) (em ph as is ad de d) ; se e id

.

cm t. 3 (s ta ti ng th at ad di ti on al te rm s th at m at eri al ly al te r a co nt ract are n ot in cl ud ed

un le ss ex pr es sl y

ag reed to ). 1 5

In th is cas e, th e Ju ly 11 em ai l (P 23 ), pu rp or ti ng to im po se th e pr op os ed ta ke

or pa y te rm , was no t an of fer or an acce pt an ce of an y of fer, an d th ere is no ev id en ce
th at Su pp ly Pro ev er ag reed (o r ev en res po nd ed ) to th at em ai l. The refo re, th e Ju ly 11

em ai l d id no t cr eat e a co nt ract an d was no t o th erwi se bi nd in g o n S up pl y Pro

. Su pp ly Pro ’s Ju ly POs were of fers to bu y K-So rb an d di d no t in cl ud e a ta ke or
p a y te rm
. P 26 , 37

. Und er se ct io n 2.2 07 (a), Bi oc el ’s Ju ly 16 an d 29 OAs w e r e

ex pr es si on s of acce pt an ce of th e POs ev en th ou gh th ey co nt ai ne d ad di ti on al te rm s to

I n contra st to the for ego i n g p ro visions of section 2.207, the TBCC Statute of Fr auds is 1 5 satisfied betwee n merc hants if, among other things, a sufficie nt written confirma tion is
rec eived by a party unless written notice of objection to its contents is g iven within ten day s afte r i t is rec eived. Tex. Bus. & C om. Code Ann. § 2.201(b) (West 2009). Howeve r, t he only eff ect of such a confirma tion “is to take awa y from the party wh o fa i ls to answe r the defe nse o f t h e Statute of Fr auds

. . . .” Id. cmt 3. I t thus does not establish terms of the contra ct or overr ide the eff ect of section 2.207 in doing so. See id. Be cause Supply Pro does not contend in t h i s ap p eal that the ag ree ments under the POs (or the workout ag ree ment)
wer e unenf

orce able unde r the Statute of F rauds, TB CC section 2.201 does not apply

. 18th os e se t fo rth in th e POs, in c l u d i n g t h e pr op os ed ta ke or pa y te rm
. P. 30 , 38

.

Pu rs ua nt to sec ti on 2.2 07 (b ), th is ad di ti on al ter m was t o b e co ns tru ed as a pr op os al
fo r an ad di ti on to th e co nt ract

. Bec au se th e pr op os ed ta ke or pa y te rm was a m at eri al
al te rat io n to th e POs (as well as to Bi oc el ’s own te rm s an d co nd it io ns (6 R 45 )), it di d

no t be co m e pa rt of th e ag reem en ts fo r t he pu rch as e of K-So rb un de r th e POs as a

m at te r of law. Se e TBCC § 2.2 07 (b )(2 ).

B. Bec au se the pro po se d ta k e or pa y term w as no t pa rt of the or ig in al ag reements on the Jul y purch as e o rder s, a nd Fin e di d no t ag ree to it in the Aug us t 16 email , the cl aw ba ck pro vi si on w as no t impli edl y pa rt o f the p ar tie s’ w or k ou t ag reement.
The so le pu rp os e of th e cl awb ack pr ov is io n i n th e Aug us t 13 em ai l was to

c o mp e ns at e Bi oc el fo r wha t Kem pe co ns id ered to be Su pp ly Pro ’s ta ke or p a y
ob li g a t i o n fo r th e ba gs of K-So rb th at were or de red bu t no t pr od uc ed

. 5 R 10 1.
Howev er, be cau se th e pr op os ed ta ke or pa y t e r m was no t pa rt of th e pa rti es ’

ag reem en ts on th e Ju ly POs, as di sc us se d in th e pr eced in g se ct io n, Su pp ly Pro ha d no

ta ke or pa y ob li ga ti on fo r whi ch to co m pe ns at e Bi oc el in th e wor ko ut ag reem en t. In
th at Su pp ly Pro ha d no t a k e o r pa y ob li ga ti on , an d Fi ne ’s Aug us t 16 em ai l di d no t

ag ree to th e c l a w b a c k pr ov is io n (P4 6( 09 46 ); 6 R 34 ), th ere is no reas on ab le
in te rp ret at io n of th e Aug us t 16 em ai l by whi ch it co ul d ei th er b e co ns tru ed as

am bi gu ou s with reg ard to th e cl awb ack pr ov is io n, or as so m eh ow hav in g im pl ie dl y

19ag reed to it

.

Alt ho ug h Kem

pe te st ifi ed th at Fi ne ha d or al ly ag ree d du rin g th e Aug us t 11
lu nc h to th e te rm s th at wou ld la te r be pr op os ed in th e A u g u s t 13 em ai l (6 R 48 -4 9,
94 ), he di d no t sa y wha t st at em e n t s F i n e ha d m ad e th at Kem pe in te rp ret ed as
si gn ifyin g su ch ag reem en t. Bec au se Kem pe was no t co m

pe te nt to te st ify ab ou t Fi ne ’ s

su bjec ti ve in te nt , hi s te st im on y th at Fi ne ha d or al ly ag reed to th e m at te rs th at wou ld
b e p r op os ed in th e Aug us t 13 em ai l was sp ecu la ti ve , co nc lu so ry , an d th eref o r e n o

ev id en ce. 1 6

In ad di ti on , th e fact th at Kem pe se nt th e Aug us t 13 em ai l sh ows th at , de sp it e
wha te ve r ha d be en di sc us se d on Aug us t 11 , Kem pe st il l fel t a ne ed to red uc e hi s

un de rs ta nd in g of th e ag reem en t to writ in g an d t o s e c u r e Fi ne ’s as se nt to th at

un de rs ta nd in g. He th us st at ed in th e Aug us t 13 e mai l , “ Kin dl y co nf irm y ou r

acce pt an ce of th e ab ov e. I al so ne ed to he ar fro m y ou sp eci fi c a l l y reg ard in g th e

S ee , e. g ., Dallas Ry. & Terminal Co. v. Gossett , 156 Tex. 252, 294 S.W .2d 377, 3 8 0 -8 1 1 6 (1956) (“the naked and unsupported opinion or conclusion of a witness does not c onstitut e evidenc e of probative forc e and will not support a jury finding even when admitted without objection.”) ; Lindley v. McKnight , 349 S.W .3d 113, 12 9-30 (Tex

. App.–For t Worth 2011,
no pet.) (holding that the aff iant’s statement that she knew that Daws was rely ing on s t at ements made by McKnig ht was conclusory and thus no evidenc e beca use it did not disclose t h e facts underly ing that knowledg e ); Hoss v. Alardin , 338 S.W .3d 635, 644-45 (Tex. App.–Dallas 2011, no pet.) (holding that Alardin’s testimony that he and Hoss had ag ree d to be par

tners wa s conclusory

and thus no evidenc e of a n expression of intent to be partne rs); Travelers Ins. Co. v. W ilson , 28 S.W .3d 42, 48 (Tex. App.—Texarkana 2000, no pet.) (“ A conc lusory

statement, whe ther by

a lay or expert witness, is not evidence .”).
20di sp os it io n o f th e u nc on ve rte d ra w m at eri al .” P 46 (1 38 8)

.

Howev er, rat he r th an co nf irm an acce pt an ce of th e en ti re Aug us t 13 em ai l, Fi ne

na rro wly sp eci fie d in th e Aug us t 16 em ai l pr eci se ly whi ch as pe ct s of th e Aug us t 13

em ai l h e was ag reei ng to :
I au th or iz e y ou to ret ur n th e ch em ic al to y ou r m an uf act ur er an d ch arg e m e th e $ 12 ,75 0 fo r ret ur n. . . .
Su pp ly Pro acce pt s th e of fer of y ou r as si st an ce in se ll in g th e rem ai ni ng 69 12 ba le s [wit hi n] a 6 m on th pe rio d. S u p p l y Pro wil l pu rch as e th e ba la nc e u ns ol d a t t ha t t im e.
P 46 (0 94 6)

. Obv io us ly, ha d Fi ne in te nd ed to a g r e e t o t h e en ti re Aug us t 13 em ai l,

t he re wou ld ha ve be en no reas on fo r hi m to res po nd in su ch a sp eci fic , ex ac t , a n d
li m it ed m an ne r. By no t ag reei ng or res po nd in g to an y ot he r te rm s in th e Aug us t 13 1 7

em ai l, Fi ne was c le arl y

de cl in in g t o a ccep t t he m
. In th is reg ard , Kem

pe ’s in te rp ret at io ns of th e Aug us t 16 em ail is pa ro l ev id en ce

an d th us co ul d no t crea te an am bi gu it y as to it s m ean in g. Se e Ka ch in a , 20 1 5 W L
58 89 10 9, at *6 (“ A pa rty’ s in te r p ret at io n of an ag reem en t is pa ro l ev id en ce an d

I n his de position that was rea d to the jury , Fine answe red, “y es,” when asked, “And so,
. . . 1 7 y ou acc epted essentially the terms of the work-out deal as contained in the Aug ust 13 email; t h is that fair?” 4 R 77. Howeve r, in tha t the immediately prec eding and following questions (4 R 76-77) wer e focuse d exclusively on the two p ro v i s i o n s of the Aug ust 13 email with which Fine’s August 16 email h a d agr eed, his aff irmative answer to the broader question, taken in context, can only b e re ad t o refer to his ag ree ment to those two provisions of the Au gu s t 13 email. See City of Keller , 168 S.W .3d at 812 (noting that, in revie wing leg al sufficie ncy , evidenc e cannot be taken out of context in a way that makes it seem to support a ver dict when it does not).
21can no t be us ed t o c r e a t e am bi gu it y or sh ow m ot iv e.”). The sa m e is tru e reg ard in g
Fi ne ’s cro ss -ex am in at io n te st im on y ab ou t th e co nt en t and le ga l effect of th e ta ke or
pa y ter m in th e OAs: Q: Oka y
. W el l, th at ’s no t a ris k m y cl ie nt wan te d - - as su m ed in th e pa p e r w o r k , was it ? He di dn ’t sa y th at “ You pa y m e as lo ng as y ou ge t pa id fro m BP.” He s ai d “ ta ke or pa y .” Tha t was y ’all’s de al , and th at ’s th e d eal y ou acce pt ed , is n’t i t M r. Fin e? A: Yes

. 4 R 70

. The Aug us t 13 an d 16 em ai ls crea te d a n un am bi gu ou s, in te gr at ed ag reem en t
th at su pe rs ed ed an y pr io r or al ag reeme n t ; a n d an y ev id en ce co nc ern in g an or al

ag r e e men t t h a t was reac he d at th e Aug us t 11 lu nc h is al so ba rred by th e pa ro l

ev id en ce ru le

. Se e Hou st on Exp lo ra ti on Co

. , 35 2 S.W .3d at 46 9 (“ The pa ro l ev id en ce

ru le s whe n pa rti es ha ve a va li d, in te gr at ed writ te n ag reem en t, an d p r e cl ud es

en fo rcem en t o f pr io r or co nt em po ran eo us ag reem en ts .”). 1 8
Si m il arl y , be cau se th e two em ai ls can be gi ve n a de fin it e le ga l m ean in g ba se d

on th e pl ai n m ean in g of th e la ng ua ge us ed , th ey m us t be co ns tru ed as a m at te r of la w.
Ka ch in a , 20 15 W L 58 89 10 9, at *2 -3

. In te rp ret in g Fi ne ’s Aug us t 16 em ai l as ei th er

As with the Supply

Pro’s contentions on the ag ree ments cre ated by the J uly POs and OAs, 1 8 this ch al l en ge is based solely on contra ct construction, not application of the Statute of Fr auds. That i s, Supply Pro doesn’t contend that any of t he agr eeme nts are unenfor cea ble for lack of a sufficie nt writing , but only that the trial court incorre ctly construed the writing s that formed the parties’ ag ree ments.
22be in g am

bi gu ou s or as so m eh ow im pl ie dl y acce pt in g te rm s of th e Aug us t 13 em ai l

to whi ch it m ad e no refe ren ce, no t on ly ren de red th e co nt en t of th e Aug us t 16 em ai l

m ean in gl es s, it im

pr op erl y rewro te th e wor ko ut ag reem en t t o i ns ert ter m s th at th e 1 9

pa rti es co ul d h av e b arg ai ne d fo r bu t d id no t. 2 0

Bec au se the ev id en ce is th eref or e le ga ll y in su ffi ci en t to sh ow th at th e cl awb ack

pr ov is io n was pa rt of th e wor ko ut ag reem en t, it is al so le ga ll y in su ffi ci en t to su pp or t
th e jury’ s fin di ng s th at th e cl awb ack pr ov is io n was in du ced by frau d (o r br each ed ). 2 1

II I. In the al tern at iv e, if the pro po se d ta k e or pa y term w as pa rt of the pa rti es ’ or ig in al ag reements on the Ju ly purc ha se or ders , then the ev id ence ra is ed
a m at eri al fa ct ques tio n on w heth er the ta k e or pa y term w as in duce d by fra ud; an d the tri al co urt rev ers ib ly erre d by refu si ng to su bmit ap pel la nts ’ requ es ted cha rg e ques tio ns on fra udul ent in du c e m ent or equi ta bl e es to ppel
. A. The t ak e o r pa y te rm w as fra udul entl y i nduc ed.

See Kachina, 2015 WL 5889109, at *3 (noting that in construing a contra ct, courts examine 1 9 the entire contra ct and g ive ef fec t to each pr ovision so that none is re ndere d meaning less); City of Keller , 168 S.W .3d at 811 (instructing that in construing a contra ct, a court does not consider only the parts favor ing one party and disreg ard the rema inder as that would rende r the latter me aning less).
Ritchie , 443 S.W .3d at 891; Am. Mfrs. Mut. Ins. Co. , 124 S.W .3d at 162; Tenneco Inc. , 925 2 0 S.W .2d at 646. Although the J udg ment is based on the finding s perta ining to Bioc el’s fra ud claims, sever al 2 1 of appellants’ challeng es to the fra ud findings ap p l y eq ually to the finding s on Bioc el’s contra ct claims. Howeve r, bec ause the finding s on Bioc el’s contra ct claims are not pa rt of the J udg ment, any challeng es direc ted exclusively to those finding s would thus not proper ly be bef ore the court. Neve rtheless, appellants do not conce de thos e findings or wa ive their challeng es to those finding s in the event of a rema nd.
23A t ria l co ur t is req ui red to su bm it th e qu es ti on s, in st ru ct io ns , and de fin it io ns

in th e jury ch arg e th at are rais ed by th e pl ead in gs an d th e ev id en ce. Tex

. R. Ci v. P.
27 8. W he re a qu es ti on , in st ru ct io n, or de fin it io n req ue st ed by a pa rty is su pp or te d by
th e pl ead in gs an d ev id en ce, accu rat el y st at es th e ap p l ic ab le la w, an d wou ld ha ve

as si st ed th e jury, a tri al co ur t ab us es it s di sc ret io n by fai li ng to su bm it it

. Se e
Co lu mbi a Rio Gra nd e Hea lt hc ar e, L.P. v. Haw le y , 28 4 S.W .3d 85 1, 86 2 (Tex

. 20 09 ).
A co nt ract is su bjec t to av oi da nc e on th e gr ou nd of frau du le nt in du c e men t

. Ita li an Co wb oy Par tn er

s, Lt d

. v

. Pru de nt ia l In s. Co

. of Am. , 34 1 S.W .3d 32 3, 33 1 (Tex

. 20 11 ). The el em en ts of frau du le nt in du cem en t are: (1 ) a m at eri al rep res en ta ti on

was m ad e; (2 ) th e rep res en ta ti on was fal se an d eit he r kn own to be fal se whe n m ad e

or m ad e wit ho ut kn owl ed ge of it s tru th ; (3 ) th e rep res en ta ti on was in te nd ed to be an d

was rel ie d up on by th e in

jure d pa rty; an d (4 ) th e co m pl ai ne d of in

jury was cau se d by
th e rel ia nc e. Se e Na t’l Pro p. Hol di ng

s , L.P. v. W

es te rg re n , 45 3 S.W .3d 41 9, 42 3 (Tex

. 20 15 ). In th is co nt ex t, “ m at eri al ” m ean s th at a reas on ab le pe rs on wou ld at ta ch
im po rta nc e to , an d wou ld be in du ced to act up on , th e in fo rm at io n in de te rm in in g hi s
ch oi ce of act io n in th e tra ns act io n in qu es ti on
. Ita li an Co wb oy Par tn er s , 34 1 S.W .3d

at 33 7.

In th is cas e, Su pp ly Pro sp eci fic al ly pl ed frau du le nt in du cem en t of th e ta ke or
pa y te rm a n d e q u i t a bl e es to pp el as affi rm at iv e de fen se s. 2 C 18 23

. The fo ll owi ng

24ev id en ce su pp or te d th is de fen se
. Sv ob od a to ld Mi tc he ll earl y in th ei r di sc us si on s th at

“ th e su p p l y c h a i n i s f

i n it e. If I wan te d to ge t in , I be tt er ge t in no w.” 7 R 10

. Si m il arl y , th e Ju ly 11 em ai l rep res en te d t h a t t h e pr op os ed ta ke or pa y te rm was

ne ces si ta te d by “ ex tre m e pr od uc ti on de m an ds ” crea te d by th e sp il l. P 23

. It fu rth er

st at ed th at th e em ai l was bei ng se nt to “ al l of” Bio cel ’s Hy dr ph ob ic cu st om ers ; t ha t

cu st om ers wit h th e la st m in ut e or de rs were th e m os t de m an di ng ; th at m an y cu st om ers

were bo ok in g m or e th an th ei r n e e d s ; a nd th at Sv ob od a ha d cu st om ers who wan te d

two or th ree tra il ers of pr od uc t at th ei r lo cat io n. P 23

. The em ai l t h e n as ke d,

“ [p ]leas e wor k wit h us [s ic ] we wil l co nt in ue to fil l al l or de r s
. I t a ls o co uc he d th e
pr op os ed ta ke or pa y te rm wit hi n req ui rem en ts th at or de rs req ui red a m in im um 14 da y
le ad ti m e, an d t ha t o rd ers wou ld be for ful l t ru ck lo ad s. P 2 3.

In Ju ly, Sv ob od a was co nt in ui ng to te ll Su pp ly Pr o t h a t B i oc el ha d ov ers eas

an d e as t co as t cu st om ers for th e fi be r, th at it was “ fir st co m e, fir st se rv ed ,” an d th at
if Su pp ly Pro wan te d to ge t th e pr od uc t, it ne ed ed to pu t in a pu rch as e or de r. 7 R 14

- 15

. The Ju ly 13 PO rep eat ed th at th e pr op os ed ta ke or pa y te rm was be in g in st it ut ed
be cau se of “ th e ex tre m e p ro du ct io n d em an ds ” fro m th e sp il l. P 3 0.
As la te as a lu nc h on Ju ly 2 9, sh or tl y be fo re Su pp ly Pro se nt th e Ju ly 2 9 PO,
Sv ob od a to ld Mi tc he ll th at he was ge tt in g call s all th e ti m e fo r fi be r to m ak e bo om ,

an d th at Su pp ly Pro ne ed ed to ge t a pl ace in li ne
. 7 R 23 -2 4. He si m il arl y to ld Ph il li p

25Baro n, Su pp ly Pro ’s op erat io ns m an ag er (4 R 21 9) , at th at lu nc h th at Bi oc el ne ed ed

to ge t Su pp ly Pro ti ed do wn rig ht away be cau se Bi oc el ha d ot he r cu st om ers for th e
fib er, and Su pp ly Pro ne ed ed to co m m it to gi vi ng Bi oc el or de rs so Bi oc el co ul d get
Su pp ly Pro in th e m an uf

act ur in g lo op
. 6 R 76

. The Ju ly 29 OA th en ag ai n rep eat ed
th e “ ex tre m e pr od uc ti on de m an ds ” jus ti fic at io n fo r th e pr o p o s e d ta ke or pa y te rm
. P 3 8.
Howev er, de sp it e th e nu m be r of pe op le who ha d be en co nt ac ti ng Bi oc el du rin g
th e sp il l ab ou t fib er fo r bo om (3 R 6 9

- 7 0, 11 0; 5 R 57 ), it tu rn ed ou t th at Bi oc el ’s

ac tu al de m an d fro m cu st om ers ot he r th an Su pp ly Pro was far fro m ex tre m e. Bes id es
Su pp ly Pro , th e bi gg es t bo om m an uf act ur ers at th at ti m e were New Pi g, SPC Brad y , Sp il l Tec h, an d Uni te d Abs or be nt s. 7 R 10

. Of th e cu st om ers to who m Bio cel ha d

act ua ll y so ld fib er fo r bo om be si de s Su pp ly Pro , Sv ob od a co ul d on ly na m e New Pi g, Sp il l Tech (wh ic h was go in g to m ak e bo om wit h it , bu t di dn ’t), an un na m ed co m pa ny
in So ut h C aro li na , and an in di vi du al na m ed Lann ie . 3 R 9 2- 94

. Alt ho ug h Sv ob od a ha d rep res en te d in J u l y of 20 10 th at Bi oc el ha d su pp li ed hydro ph ob ic fib er to fiv e m ajor bo om m an uf act ur ers (P 85 (1 13 6) ), Sv ob od a ad m it te d

a t t r i a l th at he ha d on ly ta lk ed to fiv e m ajor m an uf

act ur ers
. 3 R 93 -9 5. Si m il arl y,
al th ou gh th e Ju ly 11 em ai l pu rp or te d to b e se nt to al l of Bi oc el ’s hydro ph ob ic

cu st om ers , Sv ob od a co ul dn ’t na m e a si ng le ot he r cu st om er to who m it ha d be en se nt

.

263 R

06 -1 09 . Nor co ul d h e n am e a s in gl e cu st om er b es id es Su pp ly Pro to who m th e
sp eci al ter m s h ad be en sen t o n B io cel ’s OAs. 3 R 1 08

. W he n as ke d w h o was crea ti ng th e ex tre m e pr od uc ti on de m an d refe ren ced in

t h e Ju ly 11 em ai l, Sv ob od a co ul d on ly an swe r, “ [e]ver y bo dy,” an d co ul d no t na me

an y ot he r cu st om ers
. 3 R 11 0. He ad m it te d th at New Pi g ha d ha d a pr ob le m wit h th e
bo om th ey m ad e fro m Bi oc el ’s fib er an d qu it bu y in g in Ju ne
. 3 R 11 0- 11

. Sv ob od a
th en ad m it te d th at Bi oc el ’s sa le s fo r J u n e a n d Ju ly were m os tl y to Su pp ly Pro an d
th at , i n fact , S up pl y Pro was th e ex tre m e pr od uc ti on de m an d refe rred to in t h e Ju ly
11 em ai l. 3 R 11 0- 11

. The rep res en ta ti on in th e Ju ly 11 em ai l and Ju ly 16 an d 29 OAs tha t Bio cel ’s

pr od uc ti on de m an ds wou ld req ui re a m in im um 14 da y le ad ti m e on or de rs al so pr ov ed
bo gu s. P 2 3, 30 , 38

. By Ju ly 27 , th e pu rp or te d m in im um 14 da y le ad ti m e aft er the

J u l y 13 PO, Bi oc el ha d al read y sh ip pe d, an d in vo ic ed Su pp ly Pro fo r, 16 of t h e

tru ck lo ad s or de red in th e Ju ly 13 PO. P 31 , 12 7. The re i s no ev id en ce th at or de rs
fro m an y of B io cel ’s ot he r cu st om ers ’ ha d b een tu rn ed away or p ut be hi nd th os e o f
Su pp ly Pro

. The no n- ex is te nc e of th e pu rp or te d ne ed fo r a 14 da y le ad ti m e on or de rs

t hu s fu rth er de m on st rat ed th e la ck of an y ex tre m e pr od uc ti on de m an d fro m ot he r

cu st om ers
. Howev er, i t had n’t been Sv ob od a’s id ea to sen d th e Ju ly 11 e m ai l o r to try to

27im

po se th e pr op os ed ta ke or pa y t e r m. In th e la te ni ne te en -s ev en ti es , Kem pe ha d

wor ke d fo r an in su la ti on co m pa ny who se bu si ne ss wen t th ro ug h a bo om pe rio d, th en

cras he d. 5 R 54 -5 5. Man y cel lu lo se co m pa ni es wen t ou t of bu si ne ss th en an d ot he rs

were cau gh t wit h wareh ou se s fu ll of hi gh co st pa pe r whe n th e pr ic e dr op pe d 75 %.

5 R 55

. Eve n th ou gh th ere was no sh or ta ge of Bi oc el ’s raw m at eri al s (6 R 44 ), Kem pe
be li ev ed th e sp il l was crea ti ng a si m il ar de m an d bu bb le , an d he was n’t wil li ng to ta ke
th e ris k of an ab ru pt can cel la ti on of pu rch as e or de rs
. 6 R 42 -4 4. Alt ho u g h Bi oc el
ha d ne ve r tri ed to im

po se a ta ke or pa y te rm be fo re (6 R 44 -4 5) , Kem pe vi ewed th is

as th e way to sh ift th e ris k of can cel la ti on to Su pp ly Pro

. 5 R 53 ; 6 R 42

. Howev er,

rat he r th an ta ke a ch an ce tha t Sup pl y Pro wou ld no t agre e to acce pt in g th is ris k if it
kn ew th e tru th ab ou t Bi oc el ’s act ua l de m an d fro m ot he r cu st om ers , Kem pe in st ru ct ed
Sv ob od a to se nd th e Ju ly 11 em ai l (5 R 57 ), crea ti ng th e fal se im pr es si on th at Bi oc el

was ex pe rie nc in g m or e pr od uc ti on de m an d th an it co ul d su pp ly, an d, th us , if Su pp ly

Pro di d no t go al on g wit h th e pr op os ed ta ke o r p a y t e rm , th e pr od uc t wou ld al l be

qu ic kl y s o l d t o S u p pl y Pro ’s co m pe ti to rs
. P 23

. Bi oc el co nt in ue d to pr om ot e th is
il lu si on wit h i t s O A s an d Sv ob od a’s rem ark s to Mi tc he ll an d Baro n ab ou t Bi oc el ’s
he av y de m an d un ti l th e ve ry da y Su pp ly Pro is su ed it s la st PO. 6 R 76 ; 7 R 14 -1 5,
23 -2 4.

28An an al og ou s si tu at io n occ ur red in For d Mot or Co

. , whe re Ford en te red in to

a se tt le m en t ag reem en t whi le th e jury was de l i b e r a t i ng in th e tri al of a ro ll ov er
acci de nt

. S e e 44 4 S.W .3d at 61 8- 20

. Fo rd ’s se tt le m en t de ci si on was st ro ng ly
in flu en ced by a no te fro m th e jury as ki ng , “ [w]hat is th e m ax im um am ou nt th at can
be award ed ? ” Fo rd la te r le arn ed th at th e pl ai nt iff s’ at to rn ey ha d con sp ire d with th e jury fo rem an to se nd th at no te (an d ag ai ns t th e req ue st s of th e ot he r juro rs th at sh e no t
do so ). Id

. at 61 8- 19

. W he n Fo rd refu se d to pa y th e se tt le m en t am ou nt , th e pl ai nt iff

su ed Fo rd to en fo rce th e se tt le m en t, an d Fo rd as se rte d frau du le nt in d u c em en t as a
de fen se
. Id . at 6 19

. Alt ho ug h th e jury no te ha d m erel y as ke d a qu es ti on , th e Tex as Su pr em e Co ur t
he ld th at it ne ve rth el es s m et th e req ui rem en t fo r a fal se st at em en t of fact be cau se

un tru e st at em en ts of f

act were cl earl y

im pl ie d b y th e q ue st io n:
A jury no te , as ki ng ab ou t th e m ax im um am ou nt of da m ag es , im pl ie s th at th e jury is de li be rat in g da m ag e s an d th at it in te nd s to award th e m ax im um am ou nt

. It al so impl ie s th at th e no te is fro m th e jury
co ll ect iv el y
. The ev id en ce in di cat es th at ne it he r impl ic at io n was tru e. Acco rd in g to th e te st im on y of se ve ral juro rs , t he ju r y w a s no t act ua ll y de li be rat in g da m ag es at th e ti m e of Co rte z's no te , an d se ve ral ju r o rs sp eci fic al ly to ld Co rte z no t to se nd a no te ab ou t d am ag es . Beca us e th e no te im pl ie s m at eri al st at em en ts th at were fal se , we co nc lu de th at so m e ev id en ce ex is ts of t he fir st ele m en t o f frau du le nt in du cem en t.
Id . at 6 21

. Bas ed on th e fact s sh owi ng th e co ll us io n be twee n th e pl ai nt iff s’ at to rn ey an d

29th e jury fo rem an , th e Co ur t fo un d th at th e ev id en ce was su ffi ci en t to es ta bl is h th at th e

no te was se nt at th e di rect io n of th e pl ai nt iff s wit h k no wled ge th at it was fal se an d
wit h th e in te nt th at Fo rd rel y u p o n i t. Id

. at 62 1- 23

. Lik ewis e, be cau se th e no te
im pl ie d th at th e jury was de li be rat in g da m ag es an d in te nd ed to award th e m ax im um

am ou nt , an d Fo rd ha d no kn owl ed ge th at th es e im pl ic at io ns were fal se , th e ev id en ce

was le ga ll y su ffi ci en t to sh ow th at Fo rd jus ti fia bl y rel i e d o n th e im pl ic at io ns in

en te rin g i nt o t he set tl em en t. Id . at 6 23

. In th is cas e, if th e Co ur t co nc lu de s th at th e pr op os ed ta ke or pa y te rm was pa rt
of th e or ig in al a g r e e men ts on th e Ju ly POs , t he n it can reas on ab ly b e in ferr ed fro m
th e di rect ev id en ce ou tl in ed ab ov e th at Bi oc el de li be rat el y m is rep res en te d th e le ve l
of it s act ua l de m an d in or de r to in du ce Su pp ly Pro to acce pt th e pr op os ed ta ke or pa y

te rm , whi le co nc eal in g t ha t i t was m erel y att em pt in g to un il at eral ly s hi ft th e ris k o f

a can cel la ti on to Su pp ly Pro

. Bec au se Bi oc el ’s st at em en ts , em ai ls , an d OAs crea te d
th e fal se im

pr es si on th at Bi oc el co u l d n o t k e ep pa ce wit h it s de m an d an d wou ld
th eref or e b e ab le to sel l i ts fib er t o o th er cu st om ers if Sup pl y Pro di d no t accep t th e
pr op os ed ta ke or pa y te rm , an d Su pp ly Pro di d no t kn ow th es e st at em en ts were fal se , th e ev id en ce was su ffi ci en t t o s ho w th at Su pp ly Pro jus ti fia bl y rel ie d o n t he se fal se

st at em en ts an d im

pl ic at io ns
. Bec au se Su pp ly Pro wou ld ha ve ha d no reas on to acce pt
th e p ro po se d ta ke or pa y te rm s if it ha d kn own th e tru th , an d wou ld no t ha ve do ne

30so , th e ev id en ce was al so su ffi ci e nt to sh ow act ua l rel ia nc e. Fi na ll y , be cau se th e 2 2

pr op os ed ta ke or pa y te rm was a m at eri al al te rat io n of th e te rm s be twee n th e pa rti es (6 R 45 ), an d th us su bjec te d Su pp ly Pro to li ab il it y fo r can cel la ti on th at it wou ld no t
ha ve ot he rwis e ha d, th e ev id en ce was su ffi ci en t to sh ow th at Su pp ly Pro was in jure d by re lying on th e fal se st at em en ts an d im pl ic at io ns
. The refo re, th e ev id en ce rai se d

a m at eri al fact qu es ti on on whet he r th e ta ke or p ay ter m was fr au du le nt ly ind uc ed

. B. The fra u dul ent in duce m ent w as no t ab so lv ed or m oo ted by the
w or k ou t ag reement.
In res po ns e to ap pe ll an ts ’ po si ti on th at th e frau du le nt in du cem en t of t he tak e

or pa y te rm sh ou ld ha ve be en su bm it te d to th e jury, Bi o cel ha s arg ue d, wit ho ut
ci ta ti on of a ut ho rit y , th at whe n th e pa rti es en te red in to th e wor ko ut ag reem en t, an y
pr eex is ti ng in eq ui ta bl e co nd uc t b ecame irrel ev an t. 4 C 24 87 (¶1 1) , 24 94 (¶3 2)

. The re can be ci rcu m st an ces in whi ch a pa rty who was frau du le nt ly in du ced to

en te r in to a co nt ract m ay rat ify t h e c o n t r a c t in su ch a m an ne r th at hi s rem ed ie s fo r
frau d are fo recl os ed

. Se e For tu ne Pro d. Co

. v. Co no c o , I n c. , 52 S.W .3d 67 1, 67 6 ( Te x
. 20 00 ). Su ch a rat ifi cat io n can oc cu r whe re th e de frau de d pa rty, a f t e r h e
be co m es aware of th e frau d, en t e r s i nt o a ne w o r am en de d ag reem en t by wh ic h th e

I n a Fe bruar

y of 2011, Fine emailed Kempe, among other things, that “[i] f L arr y [S voboda] 2 2 had been et h i ca l ab o u t

. . . what y ou wer e selling to others during the spill, I never would have g iven y ou a [PO] .” P 62(0914).
31rig ht s of th e p a r t i es are ad jus te d. Se e, e.g ., Ch amb er s v. Equ it y Ban k , SSB, 31 9
S.W .3d 89 2, 9 01 (Tex . App .–Tex ark an a 2 01 0, n o p et .).

Howev er, on e se ek in g to es ta bl is h su ch a rat ifi cat io n ha s th e bu rd en to pr ov e
th e de frau de d pa rty’ s kn owl ed ge of th e frau d an d th ei r vo lu nt ary, in te nt io na l ch oi ce

to rat ify th e ag reem en t in li gh t of th at kn owl ed ge
. LHC Na sh ua Par tn er sh ip , L.L.C.

v. PDNED Sa ga mor e Na s h u a , L

. L.C. , 65 9 F3 d 45 0, 46 1 (5 Ci r. 20 11 ). The ke y th

qu es ti on is whet he r th e de frau de d par ty ha d kn owl ed ge of th e frau du le nt act s at the
ti m e of th e al le ge d rat ifi cat io n. Id

. Thi s is be cau se it is on ly aft er th e de frau de d pa rty
ha s le arn ed of th e frau d th at hi s pe rfo rm an ce is no lo ng er be in g in du ced by th e frau d.
Se e For tu ne Pro d. Co ., 52 S.W .3d at 68 0. Abs en t a rat ifi cat io n, th ere is no au th or it y
th at an am en dm en t to , or no va ti on of , an ag reem en t in du ced by frau d fo recl os es th e
de frau de d p art y ’s rem ed ie s fo r th e fra ud or o th erwi se m ak es th e fra ud irr el ev an t.
In th is cas e, th ere is no ev id en ce th at Fi ne or Su pp ly Pro kn ew th at Bi oc el ’s

rep res en ta ti on s co nc ern in g it s ex tre m e de m an d ha d be en fal se by th e ti m e Su pp ly Pro

en te red in to th e wor ko ut ag reem en t. Bec au se th e wor ko ut ag reem en t was th eref or e

no t a rat ifi cat io n of th e or ig in al ag reem en ts on th e Ju ly POs fo r th is pu rp os e, Su pp ly

Pro di d no t rel in qu is h it s rem ed ie s fo r th e frau du le nt in du cem en t by en te rin g in to th e

wor ko ut ag reem en t.

32C. Err or an d ha rm.

In ad di ti on to be in g su pp or te d by th e pl ead in gs an d ev id en ce ou tl in ed ab ov e,
ch arg e qu es ti on s on frau du le nt in du cem en t an d on eq ui ta bl e es to pp el were su bm it te d
b y Su pp ly Pro an d refu se d by th e tri al co ur t. 4 C 19 58 , 19 61

. The se qu es ti on s

tr ac ke d the la

ngua ge of Pa

tte rn Jury Ch arg e qu es ti on s 10 1.2 1- 10 1.2 5 an d 10 5.1 -1 05 .4

an d were th us accu rat e st at em en ts of th e ap pl ic ab le la w. The refo re, th e tri al co ur t
ab us ed it s d is cret io n i n re fu si ng to su bm it at l eas t o ne of t he se qu es ti on s.
A tri al co ur t’s erro r in refu si ng a ch arg e qu es ti on , in st ru ct io n, or defi ni ti on is
ha rm fu l an d, th us , rev ers ib le if th e erro r pr ob ab ly cau se d ren di ti on of an im pr op er jud gm en t, con si de rin g th e pl ead in gs , th e na tu re of th e cas e, th e ev id en ce pr es en te d,

an d t h e c h a r ge in it s en ti ret y
. Se e Tex

. R. App

. P. 44 .1(a ); Co lu mbi a Rio Gra nd e
Hea lt hc ar e , 28 4 S .W .3d at 8 62

. In th is cas e, Su pp ly Pro an d Fi ne were each he ld li ab le fo r frau d u l e n t l y
in du ci ng a cl awb ack pr ov is io n to whi ch th ey ne ve r ex pr es sl y ag reed an d whi ch aro se
fro m a ta ke or pa y te rm to whi ch th ey ei th er ne v er ex pr es sl y ag reed or were
frau du le nt ly in du ced to acce pt

. The y were no t al lo wed to su bm it a qu es ti on on , or
arg ue , th ei r frau du le nt in du cem en t / eq ui ta bl e es to pp el de fen se
. The fact s gi vi ng ris e

to th is de fen se pr eced ed al l fact s up on whi ch ap pe ll an ts ’ li ab il it y was ba se d an d, if
fo un d by th e jury, wou ld ha ve el im in at ed ro ug hl y ha lf of th e act ua l da m ag es award ed

33as well as a si gn ifi can t p or ti on of t he pu ni ti ve da m ag es
.

The tri al co ur t twi ce cau ti on ed Bi oc el du rin g th e ch arg e co nf eren ce ab ou t th e
ap pe ll at e ris k of no t su bm it ti ng th es e q ue st io ns , and Bio cel twi ce refu se d to su bm it
th em
. 8 R 6- 8. The se were th e on ly qu es ti on s ap pe ll an ts su b mi t t e d o n a ny
affi rm at iv e de fen se , an d no ot he r qu es ti on , in st ru ct io n , o r de fin it io n se t fo rth an y
de fen si ve th eo ry
. The se qu es ti on s wou ld ha ve no t on ly a s s i s t e d t h e jury, bu t were

es se nt ia l t o e na bl e th e jury to m ak e th e n eces sa ry fin di ng s o n a co nt es te d i ss ue th at

was cri ti cal fo r a va li d de te rm in at io n of ap pe ll an ts ’ li ab il it y an d d a mag e s
. S ee
Co lu mbi a Rio Gr an de Heal th ca re , 28 4 S.W .3d at 85 1. Und er the se ci rcu m st an ces , th e rec or d c le arl y

refl ect s t ha t t he refu sa l to su bm it ei th er o f th es e ch arg e q ue st io ns
pr ob ab ly caus ed ren di ti on of a n i m pr op er jud gm en t.
IV. The evi denc e is le ga ll y in su ffi ci ent to pro ve the da m ag es fo und in cha rg e ques tio n 7 (b-d ) (a s w el l a s qu es tio ns 6(b -c), 1 0, a nd 1 1)
. A. Sto ra ge cha rg es . In an swe r to ch arg e qu es ti on 7( b) (an d 6( b) ), th e jury fo un d th at th e

c o mm erci al ly reas on ab le an d ne ces sa ry ch arg es fo r cu st od y an d care of th e g o o d s

st or ed by Bi oc el was $3 03 ,81 5.6 5. 4 C 19 40

. Eve n in th e in co rrec t f o r m th at th is
el em en t was su bm it te d, th ere is no ev id en ce th at th e K-So rb sh o u l d h av e be en 2 3

The trial court ref

used to include the word, “incur red,” in this element of d am age , as it is 2 3 stated in the applicable TBCC provision. See Tex. Bus. & Com. Code Ann. § 2.710 (West
34st or ed at al l or th at th e rat e Bi oc el ch arg ed fo r st or ag e was co m m erci al ly reas on ab le

. On Decem

be r 1, 20 10 , Kem

pe em ai le d Fi ne to rem in d hi m th at an y of th e 69 12
ba gs of K-So rb th at rem ai ne d un so ld by Feb ru ary 1, 20 11 , wou ld be in vo ic ed an d
sh ip pe d to Su pp ly Pro

. P 5 8 ( 0 8 0 5 ). W it hi n an ho ur , F in e em ai le d th at Su pp ly Pro
ha d $1 .7 m il li on of feed st oc k th at ha d no t been co nv ert ed in to fin is he d pro du ct an d

wou ld pr ob ab ly ne ve r be us ed , as well as 21 tru ck lo ad s o f f i n i s h e d bo om
. P
58 (0 80 5)

. On Feb ru ary 1, Kem pe in vo ic ed Su pp ly Pro $9 5,3 85 .60 fo r th e 69 12 ba gs

an d st at ed th at an y of th is mat e r i a l t ha t was no t de li ve red wou ld accr ue st or ag e
ch arg e s of $0 .15 pe r ba g in Mar ch , $0 .20 pe r ba g in Apr il , an d $1 .00 pe r ba g
th erea fte r. P 60 , 61

. Bi oc el co nt in ue d to st or e th e ba gs un ti l th e ti m e of tri al , an d it s

st or ag e ch arg es to ta le d th e $3 03 ,81 5.6 5 award ed by th e jury, an d th us m or e th an th ree
ti m es th e to ta l s al es pri ce o f th e m at eri al be in g s to red . 5 R 1 50

. The ev id en ce is le ga ll y in su ffi ci en t to sh ow th at Bi oc el sh ou ld ha ve st or ed th e

mat e r i a l a t al l or th us th at an y st or ag e ch arg e was ne ces sa ry
. Befo re an d aft er th e
sp il l, th ere was no m ark et fo r bo om m ad e wit h hydro ph ob ic fib er su ch as K-So rb

. 3

2009) (“I ncidental damag es to an ag g rieve d seller incl u d e an y commerc ially rea sonable char g es
. . . incurred in

. . . car e and custody of the g oods af t er t h e b u y er ’s brea ch

. . . .” (empha sis added) ); Malone v. Kisabeth Co., Inc. 726 S.W .2d 188, 191-92 (Tex. App.–For t Worth 1987, writ ref

’d n.r.e.) (re versing and rende ring a take- nothing judgme nt on char g es to store chair s on appellee ’s premises wher e there was no evidenc e that any loss was suffe red from having to pay to have other chair s stored elsewhe re; no loss from being fore closed from storing other chair s on its premises due to these chair s occupy ing the space ; and no evidenc e of any other e x pense be ing inc urre d from kee ping the chair s on the premises)

. 35R 11 2- 13 ; P 12 5. Afte r th e sp il l, th ere was al so no real is ti c pr o s p e c t th at de m an d

wou ld res um e fo r K-So rb be cau se : (1 ) th ere was an ex ces s of bo om in th e m ark et (7 R 19) ; (2) th ere was a pr e-ex is ti ng pr efer en ce for po lyscrap bo om (4 R 221 -2 2) ; (3)
bo om m ad e wit h fib er was m or e ex pe ns iv e th an th at m ad e wit h po lyscrap (3 R 12 1;
4 R 14 7) ; (4 ) so m e of th e bo om m an uf act ur ed by New P i g w i th Bi oc el fib er ha d
fai le d (3 R 56 , 95 -9 6, 99 -1 00 ; 5 R 35 ); an d, th us , (5 ) hydro ph ob ic fib er fil l ha d be en
id en ti fie d as a pr od uc t th at di dn ’t wor k as well as po lyscrap an d ha d a ba d rep ut at io n
in th e m ark et pl ace. 7 R 19

. Bas ed on Fi ne ’s Decem

be r 1 em ai l, Kem

pe was aware th a t S up pl y Pro was
in un da te d wit h bo th fib er an d fib er bo om an d, th us , ha d m in im al ch an ce of us in g an y
of th e 69 12 ba gs
. P 58 (0 80 5)

. Th e f i n i s h ed K-So rb fib er co ul d al so no t be tu rn ed
in to an y o t h e r t y

pe of pr od uc t or us ed in an y ot he r pr od uc t li ne s (5 R 56 ), bu t was
in ci ne rab le . 5 R 4 0.
Kem pe ack no wled ge d th at he was un de r no ob li ga ti on to st or e th e 69 12 ba gs
of K-So rb (P 84 (0 88 4) ), an d th at Fi ne ha d no t as ke d hi m to do so
. 6 R 46 -4 7. Und er
th es e ci rcu m st an ces , be cau se th ere was no reas on ab le ex pe ct at io n th at th e pr od uc t

co ul d ev er act ua ll y be so ld , us ed , or de li ve red to Su pp ly Pro , it was w h o ll y

un ne ces sa ry an d un reas on ab le fo r Bi oc el to st or e it , an d th e K-So rb sh ou ld ha ve
in st ead ei th er be en di sc ard ed or in ci ne rat ed

. The re is , th us , no ev id en ce th at th e 69 12

36ba gs sh ou ld ha ve be en st or ed at a ll or t ha t an y st or ag e co st was n eces sa ry
. Eve n if it ha d be en reas on ab le or ne ces sa ry t o st or e th e m at eri al at al l, th e

ev id en ce is le ga ll y in su ffi ci en t to su pp or t th e am ou nt a w a r d e d

. Bi oc el st or ed th e

m at eri al on it s own pr em is es (5 R 12 9) , bu t th ere is no ev id en ce th at Bi oc el in cu rred

a n y o u t

- o f

- p oc ke t co st to do so
. Nor was th ere an y ev id en ce of th e co st th at an y 2 4
th ird -p art y

st or ag e faci li ty wou ld ha ve ch arg ed to st or e th e K-So rb

. In ad di ti on , no
fo un da ti on was la id th at Kem pe ha d an y kn owl ed ge of pr ev ai li ng st or ag e rat es , an d
he di d n ot tes ti fy

whet he r he be li ev ed hi s rat es were reas on ab le , l et alo ne an y ba si s
th eref or
. It is li ke wis e u nf

at ho m ab le ho w it co ul d ha ve be en co m m erci al ly

reas on ab le fo r Bi oc el ’s m on th ly st or ag e rat e to in c reas e fiv e-fo ld (fro m $0 .20 to $1 .00 ) fro m on e m on th to th e ne xt

. P 60

. Und er th es e ci rcu m st an ces , th e jury ha d no

va li d ba si s up on whi ch to de te rm in e whe th er Bi oc el ’s st or ag e rat e was ev en rem ot el y
wit hi n t he ran ge of wh at was c om m erci al ly reaso na bl e.
Mo reo ve r, ev en if th ere ha d be en ev id en ce of co m m erci al ly rea s o n a b l e rat es
fo r st or ag e, it wou ld ha ve be en co m m erci al ly un reas on ab le to accr ue st or ag e ch arg es
th at were m or e th an th ree ti m es th e pu rch as e pr ic e of th e go od s bei ng st or ed

. Afte r

Although Kempe testified that the s torag e fee was to compensa te Biocel for the b u rd en of 2 4 having to handle, store, and maintain the materia l (5 R 150), there is no evidenc e that Bioc el actua lly did any

thing to handle or maintain the materia l, let alone of the co s t o f doing so. There was also no evidenc e that Bioc el lost any sales or incurre d any extra cost from storing the mater ial in are as whe re othe r g oods might have otherwise be en produc ed or store d.
37it be cam e ap pa ren t t ha t t he K-So rb co ul d n ot be us ed or r es ol d, an d was ess en ti al ly

wor th le ss , Bi oc el sh ou ld ha ve m it ig at ed it s da m ag es by di sp os in g of or de st ro y in g th e

m at eri al , rat he r th an ru nn in g up st or ag e ch arg es fo r ov er th ree y ears th erea fte r. 2 5
The refo re, th e ev id en ce was le ga ll y in su ffi ci en t to su pp or t th e award of st or ag e
ch arg es
. B. Cla w ba ck

pro vi si on . In an swe r to qu es ti on 7c (as w e l l a s 6 c an d 10 ), th e jury fo un d th at Bi oc el ’s
da m ag es pe rta in in g to th e cl awb ack pr ov is io n were $3 85 ,51 7.0 0. 4 C 19 40

. A s
di sc us se d in se ct io n II ab ov e, th e cl awb ack pr ov is io n was no t ex pr es sl y or im pl ie dl y
pa rt of th e wor ko ut ag reem en t. Th e r efo re, it co ul d no t ha ve be en frau du le nt ly
in du ced (o r br each ed ), an d th e ev id en ce is le ga ll y in su ff i c i e n t t o su pp or t th e jury’ s

an swe rs award in g re co ve ry for th is ele m en t o f da m ag e.
C. Ta k e o r pa y d amag es on the pu rcha se or ders
. I n an swe r to qu es ti on 7d (an d qu es ti on 11 ), th e jury fo un d th at th e u n p a i d

am ou nt s un de r th e Ju ly 13 an d Ju ly 29 POs was $4 80 ,90 2.6 0. 4 C 19 40 , 19 44

. Thi s
rep res en ts th e am ou nt th at wou ld ha ve be en du e fo r al l 34 ,84 8 ba g s t h a t rem ai ne d

At most, Bioc el’s dama ges in this reg ard should not have exceede d the rea sonable cost to 2 5 incinera te or discard the 6912 bag s of K-Sorb. Howeve r, beca use Bioc el n ei t h er o ffered evidenc e of those costs nor submitt ed a damag e measure that would have included them, it waived tha t element of da mag e. Te x . R. Civ. P . 279.

38u n d el iv ered whe n Su pp ly Pro can cel le d th e POs (an d was th e su m of th e da m ag es

award ed in qu es ti on s 7 a an d 7 c). 5 R 14 9.
Thi s am ou nt w a s no t reco ve rab le fo r Bi oc el ’s frau d cl ai m be cau se Bi oc el
al le ge d frau d on ly wit h reg ard to th e wor ko ut ag reem en t, no t th e un de rlyin g POs, an d
th ere i s n o e vi de nc e o f an y frau d b y Su pp ly Pro co nc ern in g t he POs. 2 6

In ad di ti on , be cau se th e 34 ,84 8 ba gs in cl ud ed th e 69 12 ba gs (P 46 (1 38 7) ) fo r
whi ch da m ag es were fou nd in qu es ti on 7a (an d 6 a), an d d am ag es for th e rem ai ni ng
27 ,93 6 un de li ve red ba gs were award ed in qu es ti on 7c (4 C 19 40 ), th is am ou nt wou ld
ha ve be en a do ub le reco ve ry of th os e am ou nt s. The re was th us no ba si s up on whi ch
th e un pa id am ou nt s un de r th e POs co ul d ha ve pr op erl y be en award ed fo r frau d, an d

qu es ti on 7d (an d 1 1) sh ou ld be di sr eg ard ed as i m m at eri al

. V. The ev id ence is le ga ll y an d fa ctua ll y in su ffi ci ent to su ppo rt the aw ar ds of puni tiv e da m ag es . A. Puni tiv e da m ag e li m its
. In an y act io n in whi ch th ere are two or m or e de fen da nt s, an award of

ex em pl ary da m ag es m

us t b e sp eci fic as t o e ach de fen da nt . Tex . C iv . P rac. & Rem

.

Be cause the workout ag ree ment was a novation of the ag ree ments for the J uly POs (and those 2 6 ag ree ments wer e unambig uous): (1) the char g e corr ectly included no questions on the terms of the POs or whether they wer e brea ched; and (2) the amounts unpaid under the POs w ere corr ectly not submitt ed as an element of damag e in question 6, conce rning damag es from brea ch of the workout ag ree ment. Questions 10 and 11 wer e not pr edica ted on any finding of liability

. 39Co de Ann

. § 41 .00 6 ( We st 20 14 ). As rel ev an t to th is cas e, ex em pl ary da m ag es
award ed ag ai ns t a de fen da nt m ay no t ex ceed th e gr eat er of : (1 ) two ti m es th e am ou nt
of eco no m ic da m ag es ; or (2 ) $2 00 ,00 0. Tex

. Ci v. Prac

. & Rem

. Co de Ann

. § 41 .00 8 (West 20 14 ). In de te rm in in g th e am ou nt of ex em pl ary da m ag es , th e tri er of fact sh al l

co ns id er ev id en ce, if an y , rel at in g to : (1 ) th e na tu re of th e wro ng ; (2 ) th e ch arac te r of
th e co nd uc t in vo lv ed ; (3 ) th e de gr ee of cu lp ab il it y of th e wro ng do er; (4 ) th e si tu at io n

a n d s en si bi li ti es of th e pa rti es co nc ern ed ; (5 ) th e ex te nt to whi ch su ch c o n d u c t
of fen ds a pu bl ic se ns e of jus ti ce an d pr op rie ty; an d (6 ) th e ne t wor th of th e de fen da nt

. Tex . Civ . Prac. & Rem . Cod e Ann . § 4 1.0 11 (W es t 2 01 4)

. In ad dit ion , the Due Pro ces s Cl au se of th e Fo ur te en th Am en dm en t pr oh ib it s th e
i m po si ti on of gr os sl y ex ces si ve or arb it rary pu ni sh m en ts on a to rtf eas or
. S e e

ge ne ra ll y To ny Gul lo Mot or

s I, L.P. v. Ch ap a , 21 2 S.W .3d 29 9, 30 5- 08 (Tex

. 20 06 );

Bun to n v. Ben tl ey , 15 3 S.W .3d 50 , 53 -5 4 (Tex

. 20 04 ); Owen s- Co rn in g Fib er gl as
Co rp

. v. Mal on e , 97 2 S.W .2d 35 , 48 -5 4 (Tex

. 19 98 ). Co ur ts m us t co ns id er m

ul ti pl e
pu ni ti ve da m ag e award s fo r th e sa m e co nd uc t to be ag ai ns t a pa rty’ s su bs ta nt iv e du e
pr oc es s rig ht s. Owen s- Co rn in g Fib er gl as Co rp

. , 97 2 S.W .2d at 48

. Und er th e Due
Pro ces s st an da rd , th e rel ev an t fact or s fo r de te rm in in g whe th er pu ni ti ve da m ag es are

ex ce ss iv e are: (1 ) th e de gr ee of rep reh en si bi li ty of th e de fen da nt ’s m is co nd uc t; (2 )
th e di sp ari ty be twee n th e a c t u a l o r po te nt ia l ha rm su ffer ed by th e pl ai nt iff an d th e

40pu ni ti ve da m ag e s award ed ; an d (3 ) th e rel at iv e si ze of ci vi l pe na lt ie s im po se d in

co m pa rab le cas es
. Se e To ny Gul lo Mot or s , 21 2 S.W .3d at 30 8; Bun to n , 15 3 S.W .3d

at 53

. Eve n if an as se ss m en t of pu ni ti ve d a mag e s i s no t de em ed ex ces si ve un de r
go ve rn in g st at e la w, it m a y v i o la te a pa rty’ s su bs ta nt iv e du e pr oc es s rig ht to

pr ot ect io n fro m gr os sl y ex ces si ve pu ni ti ve da m ag e award s. Owen s- Co rn in g
Fib er gl as Co rp

. , 97 2 S .W .2d at 4 5.

B. The ev id ence is le ga ll y in su f fic ie nt to pro ve tha t Supp ly Pro co m m itt ed fr au d in depe nden tly fro m Fine.

In an swe r to ch arg e qu es ti on s 5 an d 8, th e jury fo un d th at Su pp ly Pro an d Fi ne

ea ch co m m it te d frau d an d th at th e ha rm to Bi oc el res ul te d fro m th e ha rm of each

. 4
C 19 38 , 19 41

. In th is reg ard , Bi oc el ’s frau d cl ai m was ba se d on th e al le ga ti on s th at
Su pp ly Pro had frau du le nt ly in du ced th e wor ko ut ag reem en t b y : (1 ) en te rin g i nt o i t
wit ho ut i n t e n d i n g to pe rfo rm ; an d (2 ) m is rep res en ti ng th at it was in a pr ecar io us
fin an ci al po si ti on du e to th e su dd en ev ap or at io n of it s m ark et fo r bo om an d th at it ha d

no ex pe ct at io n of rece iv in g co m pe ns at io n fo r th e can cel la ti on of it s bo om sa le s. 2 C
12 83 -8 4. Howev er, al l of th e co nd uc t th at Bi oc el rel ie s up on to su pp or t th es e
al le ga ti on s was co m

m it te d so le ly by Fi ne , an d th ere w a s no al le ga ti on or ev id en ce
th at an y on e be si de s Fi ne co m m it te d or pa rti ci pa te d in an y frau du le n t co nd uc t on
Su pp ly Pro ’s be ha lf. The refo re, th ere is no ev id en ce to su pp or t th e jury’ s fin di ng th at

41Su pp ly Pro se pa rat el y co m m it te d frau d, i.e. , ap art fro m th at co m m it te d by Fi ne ; or fo r

an y fin di ng of h arm

res ul ti ng fro m

su ch frau d b y

Su pp ly Pro.
C. The ev id ence i s l eg al ly in su ffi ci ent to su ppo rt se pa ra te aw ar ds of puni tiv e da m ag es ag ai ns t Fine an d Supp ly Pro be ca us e the re is no ev id ence of i ndep ende nt fra ud by Suppl y Pro
. In an swe r to ch arg e q ue st io ns 12 an d 1 3, t he jury fo un d S up pl y Pro an d F in e
each se pa rat el y li ab le fo r frau d an d award ed pu ni ti ve da m ag es ag ai ns t each of th em (4 C 19 54 -5 5) ev en th ou gh , as di sc us se d in th e pr eced in g se ct io n, th e sa m e co nd uc t by Fin e was th e al le ge d b as is for bo th , and th ere was no all eg at io n o r ev id en ce t ha t

an y on e be si de s Fi ne co m

m it te d or pa rti ci pa te d in an y su ch co nd uc t. In ad di ti on , Fi ne
is th e so le sh areh ol de r of Su pp ly Pro (4 R 14 ; 8 R 39 ), an d th e co m bi ne d $1 .8 m il li on

a ward of pu ni ti ve da m ag es was ne arl y 2.3 ti m es gr eat er th an th e act ua l da m ag e s
award ed an d, th us , gr eat er th an th e m ax im um am ou nt th at co ul d ha ve be en award ed

ag ai ns t a s in gl e d efen da nt un de r CPR C s ect io n 4 1.0 08

. By req ui rin g a sp eci fic award of exe m pl ary da m ag es ag ai ns t ea ch de fen da nt ,
pr oh ib it in g joi nt an d se ve ral li ab il it y am on g de fen da nt s, an d pr ov id in g a sp eci fic li st
of th e fact or s th at m

us t be co ns id ered as to each de fen da nt , Ch ap te r 41 of th e CPRC
refl e c t s a cl ear po li cy an d in te nt th at ex em pl ary da m ag es be im

po se d ag ai ns t a
de fen da nt on ly fo r th at de fen da nt ’s own co nd uc t an d on ly ba se d on ap pl ic at io n of th e
rel ev an t fa ct or s t o t ha t d efen da nt ’s par ti cu la r co nd uc t.

42In th is cas e, an y wro ng fu l con du ct was co m m it te d so le ly by Fi ne
. The re was

no on e el se at Su pp ly Pro who fai le d to su pe rv is e hi m or co m m it te d an y ot he r act or

om is si on th at was frau du le nt or wou ld ot he rwis e warra nt im po si ti o n o f p un it iv e
da m ag es
. Und er th es e ci rcu m st an ces , th e award of pu ni ti ve da m ag es ag ai ns t Su pp ly Pro

as well as Fi ne am ou nt s to a m ul ti pl e award of pu ni ti ve da m ag es fo r th e sa m e co nd uc t by a si ng le pe rs on
. Se e Owen s- Co r n i n g Fib er gl as Co rp

. , 97 2 S.W .2d at 48

. Mo reo ve r be cau se Fi ne is th e s o l e sh areh ol de r of Su pp ly Pro , th e pu ni ti ve da m ag e
award ag ai ns t Su pp ly Pro r e su lt s in ei th er a m ul ti pl e award of pu ni ti ve da m ag es
ag ai ns t th e sa m e de fen da nt or a pe na lt y m erel y fo r Fi ne ’s bu si ne ss be in g in co rp or at ed

rat he r th an un in co r p o r a te d. Rat he r th an op erat in g to li m it li ab il it y , th e co rp or at e

en ti ty is i ns te ad ser vi ng as a m ech an is m for arb it rari ly m

ul ti pl y in g l ia bi li ty. Und er

su ch ci rcu m st an ces , an y pu ni ti ve da m ag es sh ou ld ha ve ei th er be en award ed ag ai ns t
Fi ne fo r hi s in di vi du al co nd uc t o r ag ai ns t Su pp ly Pro fo r Fi ne ’s c on du ct on Su pp ly

Pro ’s beh al f, bu t n ot bo th . There fo re, t he tri al co ur t erred by en te rin g judg m en t fo r
pu ni ti ve da m ag es ag ai ns t b ot h d efen da nt s.
D. The co m bi ned $1 .8 m il li on puni tiv e da m ag e aw ar d is ex ces si ve unde r the Tex as an d Feder al Sta nda rds
. W it h reg ard to th e am ou nt of th e award s, th e al le ge d frau d in th is cas e di d no t

43cau se ph y si cal ha rm , th reat en he al th or sa fet y , or cau se or th reat en fin an ci al ru in

. Se e

To ny Gul lo Mot or

s , 21 2 S.W .3d at 30 8. In st ead , ne arl y 90 % of th e frau d da m ag es
award ed in th is cas e was for eit he r: ( 1) go od s B io cel ne ve r pr od uc ed an d for whi ch
i t i n c u r red no co st (an d fo r whi ch th e un de rlyin g ta ke or pa y ba si s was ei th er no t

ag reed to by Su pp ly Pro or was frau du le nt ly in du ced ); or ( 2) Bi oc el ’s un ne ces sa ry

an d ex ces si ve ch arg es to st or e wor th le ss go od s. Und er th es e ci rcu m st an ces , an award
of ex em pl ary da m ag es to ta li ng $1 .8 m il li on , (as well as th e im po si ti on of pu ni ti ve
da mag e s a g a i n st bo th Fi ne an d Su pp ly Pro ba se d so le ly on Fi ne ’s co nd uc t) is

ex ces si ve un de r bo th th e Tex as an d F ed eral Sta nd ard s.
VI. The tri al c o u r t erre d by no t in co rpo ra tin g Bi oc el ’s remitti tur on prej udg m ent i nter es t in to the J udg m ent.
The pe rio d fro m Apr il 27 , 20 12 (wh en th e la wsu it was fil ed ) to Apr il 21 , 20 15 (th e da te th e Ju dg m en t was si gn ed ) was si x da y s le ss th an th ree y ears (1 08 9 da y s) , or
2.9 84 y ears
. Preju dg m en t in te res t, accr ui ng on th e act ua l da m ag es of $7 83 ,42 1.0 5

at 5% fo r 2.9 84 y ears , wou ld co m e to $1 16 ,88 6.4 2, rat he r th an th e $1 18 ,26 6.6 4
award ed in th e Ju dg m en t. On Ju ne 29 , 20 15 , Bi oc el fil ed a rem it ti tu r to co rrec t th is

erro r. 4 C 25 11

. The tri al co ur t erre d by no t in co rp or a t i n g t h i s r e m it ti tu r in to th e
Ju dg m en t. The refo re, if th e am ou nt of th e Ju dg m en t is no t r e d u c e d ba se d on
ap pe ll an ts ’ ot he r is su es , a pp el la nt s as k th e Co ur t to m od ify t h e Ju dg m en t to refl ect

44th is lo wer am ou nt of p reju dg m en t i nt eres t.
PRAYER
Bas ed on th e fo reg oi ng , ap pe ll an ts req ue st th e Co ur t to : (1 ) r e v e rs e th e jud gm en t of th e tri al co ur t ex cep t fo r th e award of $9 5,3 85 .60 (th at Su pp ly fai le d to

pa y fo r th e 69 12 m an uf

act ur ed ba gs of K-So rb ); (2 ) ren de r a ta ke -n ot hi ng jud gm en t

ag ai ns t Bi oc el ’s cl ai m s ba se d on th e cl awb ack pr ov is io n, th e ta ke or pa y te rm , st or ag e
of th e 69 12 ba gs of K-So rb , an d frau d an d pu ni ti ve da m ag es ag ai ns t Su pp ly Pro ; (3 )
di sr eg ard th e im m at eri al jury fin di ng s on qu es ti on s 7d an d 11 ; an d (4 ) r e man d th e

cas e fo r a n ew tr ia l o n a ny rem ai ni ng is su es
. Res pe ct fu ll y

su bm it te d,
/s / Rich ar d H. Ede lma n Ri ch ard H. Edel m an Tex as Bar. No . 06 41 32 00 rh e@ ed el m an of

fic e.co m B A R LO W J O N E S L.L.P. 17 22 5 El Cam in o R eal , Sui te 40 0 Hou st on , Texa s 7 70 58 Tele ph on e: (28 1) 48 8- 84 40 Facs im il e: (28 1) 48 8- 68 32
W il li am F. Harm ey er Tex as Bar No . 09 01 90 00 wha rm ey er@ ha rm ey erl aw.co m W ILLI A M F. H A R M E Y E R & A S S O C IA T E S , P.C. 73 22 So ut hwe st Free way , Sui te 47 5 Hou st on , Texa s 7 70 74 Tele ph on e: (71 3) 27 0- 55 52

45Facs im il e: (71 3) 27 0- 71 28
ATTO RNEYS FOR APPELLANTS

WO RD COUNT CERTI FICATI ON
The nu m be r of wor ds in th is Bri ef, as d e f i n e d i n Tex as Ru le of App el la te Pro ced ur e 9 .4(i )(1 ), is 11 ,35 0.
/s / Rich ar d H. Ede lma n Ri ch ard H. Edel m an

CERTI FICATE OF SERVI CE
Thi s Bri ef was eSer ve d on Nov ember 25 , 20 15 on th e fo ll owi ng co un se l fo r ap pe ll ee:
T. Earne st Free m an ern es t@ th efre em an la wfir m .co m St ep he n G. Sch ol l st ev e@ th efre em an la wfir m .co m Jo na th an S. Sto ge r jst og er@ st og erl aw.co m
s/ Rich ar d H. Ede lma n Ri ch ard H. Edel m an rh e@ ed el m an of

fic e.co m

46APPENDIX

ITEM Date Si gn ed or Fi le d Rec or d

Refe ren ce A. Fi na l J ud gm en t 04 /2 1/ 15 4 C 24 54 -5 6 B. Ch arg e o f th e Co ur t [ju ry ve rd ic t] 02 /1 2/ 15 4 C 19 31 -5 6 C. The Aug us t 1 3 a nd 16 em ai ls P 4 6

47

# A

# €3 q fl¬ oe CAUSE NO. 2012-24524
ECOSORB INTERNATIONAL, INC. § IN THE DISTRICT COURT dJbJa BIOCEL TECHNOLOGIES §

Plaintiff § § § OF HARRIS COUNTY. TEXAS v. § 

# ®WSK SUPPLY PRO, INC., and HARMON K. FINE, Individually

Defendants §
1 

### 1th JUDICIAL DISTRICT Time:



# - § §
FINAL JUDGMENT IXapuly On die 3rd day of February, 2015, came on to be heard the above-entitled and numbered

cause and ECOSORB INTERNATIONAL, INC. d/b/a BIOCEL TECHNOLOGIES, the Plaintiff, appeared in person and by attorney of record and answered ready for trial. SUPPLY PRO, INC., and HARMON K. FINE, Individually, the Defendant, appeared in person and by
their attorneys of record and announced ready for trial. A jury having been previously demanded,

a jury consisting of twelve (12) qualified jurors was duly empaneled and the case proceeded to trial.
At the conclusion of the evidence, the Court submitted the questions of feet in the case to
the jury. The Charge of the Court and the verdict of the jury arc incorporated for all purposes by
reference. Because it appears to the Court that the verdict of the jury was for the Plaintiff and against the Defendant, judgment should be rendered on the verdict in favor of the Plaintiff and against Defendant.

IT IS THEREFORE ORDERED, ADJUDGED and DECREED that Plaintiff, ECOSORB INTERNATIONAL, INC. d/b/a BIOCEL TECHNOLOGIES has judgment against Defendants,
SUPPLY PRO, INC., and HARMON K. FINE, for actual damages in the sum of $ said sum representing $ awarded by the jury, minus an 1 

# "SSKBSS

a»metweoHm*9<n«agreed credit in the amount of $1,297 20.
IT IS FURTHER ORDERED, -ADJUDGED and DECREED that Plaintiff, ECOSORB
INTERNATIONAL, INC. d/b/a BIOCEL TECHNOLOGIES has judgment against Defendant,
SUPPLY PRO, INC., for exemplary damages in the sum of $800,000.00.

IT IS FURTHER ORDERED, ADJUDGED and DECREED that Plaintiff, ECOSORB
INTERNATIONAL, INC. d/b/a BIOCEL TECHNOLOGIES lias judgment against Defendant,
HARMON K. FINE for exemplary damages in the sum of $1,000,000.00.

IT IS FURTHER ORDERED, ADJUDGED and DECREED that all taxable costs of
Court expended or incurred in the cause by Plaintiff, ECOSORB INTERNATIONAL, INC. d/b/a
BIOCEL TECHNOLOGIES are adjudged against Defendant, SUPPLY PRO, INC., and
HARMON K. FINE.

IT IS FURTHER 

### ORDERED. ADJUDGED and DECREDED that 

### Plaintiff ECOSORB
INTERNATIONAL, INC. d/b/a BIOCEL TECHNOLOGIES has judgment against Defendant,
SUPPLY PRO, INC., and HARMON K. FINE, for prejudgment interest in the amount of 

## I 

## tt> ylbto.kSf calculated at the rate of Five Percent (5%) percent from April 27, 2012 (the
date suit was filed) until the date preceding the entry of this Final Judgment.

IT IS FURTHER ORDERED, ADJUDGED and DECREED that the total amount of the judgment here rendered shall bear interest at the rate of (5%) percent compounded annually from
the date of this Final Judgment until paid.

IT IS FURTHER ORDERED, ADJUDGED and DECREED that all writs and processes
for the enforcement and collection of this judgment or the costs of court may issue as necessary.All other relief not expressly granted in this Final Judgment is DENIED. day of 

## APR/ 2 1 

## 2015



# _ , 2015. SIGNED this

JUDGE PRESIDING

3

# B

# w

to 

## S 

# § CAUSE NO. 2012-24524 

## i ECOSORB INTERNATIONAL. INC. d/bj’a BIOCEL TECHNOLOGIES 

## * IN THE DISTRICT COURT OF 

### i § 

## a £ § § HARRIS COUNIT, TEXAS vs. 3 

## ! § SUPPLY PRO, INC. and HARMON K. FINE. Individually § 

# * 11TM JUDICIAL DISTRICT §



## CHARGE OF 

## THE 

## COURT

MEMBERS OF THE JURY: After the dosing arguments, you will go to the jury room to decide the case, answer the questions that are attached, and reach a vcrdicL You may discuss the case with other jurors only when you are all together in the jury room.

Remember my previous instructions: Do not discuss the case with anyone else, either in person or by any other means. Do not do any independent investigation about the case or conduct any research. Do not look up any words in dictionaries or on the Internet Do not post informa¬ tion about the case on the Internet. Do not share any special knowledge or experiences with the other jurors. Do not use your phone or any other electronic device during your deliberations for any reason.

Any notes you have taken arc for your own personal use. You may take your notes back into the jury room and consult them during deliberations, but do not show or read your notes to your fellow jurors during your deliberations. Your notes arc not evidence. Each of you should rely on your independent recollection of the evidence and not be influenced by the fact that an¬ other juror has or has not taken notes.

You must leave your notes with the bailiff when you are not deliberating. After you com¬ plete your deliberations, the bailiff will collect your notes. When you are released from jury duty, the bailiff will promptly destroy your notes so that nobody can read what you wrote,


### INSTRUCTIONS
l


## . Do not let bias, prejudice, or sympathy play any part in your decision. 2. Base your answers only on the evidence admitted in court and on the law that is in these instructions and questions. Do not consider or discuss any evidence that was not admitted in the courtroom. 

# FILED Chris Danlol District Clerk 

## FEB 

## 12 

# __

l RECORDER’S MEMORANDUM TMsuYstmmenUSofpoorquaWy al the lime of imagine Tim*:. Ken Is By. y3. You arc to make up your own minds about the facts. You are the sole judges of the credibility of the witnesses and the weight to give their testimony. But on matters of law, you must follow all of my instructions.

4. If my instructions use a word in a way that is different from its ordinary meaning. use the meaning 1 give you, which will be n proper legal definition.

5. All the questions and answers are important. No one should say that any question or answer is not important

6. Answer “yes*' oc “no" to all questions unless you arc told otherwise A “yes'* an¬ swer must be based on a preponderance of the evidence unless you are told otherwise. Whenever a question requires an answer other than “yes" or “no," your answer must be based on a prepon¬ derance of the evidence unless you arc told otherwise.

The term "preponderance of the evidence" means the greater weight of credible evidence presented in this ease. If you do not find tliat a preponderance of the evidence supports a “yes" answer, then answer "no" A preponderance of the evidence is not measured by the number of witnesses or by the number of documents admitted in evidence. For a fact to be proved by a pre¬ ponderance of the evidence, you must find that the fact is more likely true than not true.

A fact may be established by direct evidence or by circumstantial evidcnccÿoFhbth. A fact is established by direct evidence when proved by documentary evidence or by witnesses who saw the act done oc heard the words spoken. A fact is established by circumstantial evidence when it may be fairly and reasonably inferred from other facts proved.

7. Do not decide who you think should win before you answer the questions and then just answer the questions to match your decision. Answer each question carefully without considering who will win. Do not discuss or consider the effect your answers will have.

8. Do not answer questions by drawing straws or by any method of chance. 9. Some questions might ask you for a dollar amount. Do not agree in ndvance to decide on a dollar amount by adding up each juror’s amount and then figuring the average.

10. Do not trade your answers. For example, do not say, “l will answer this question your way if you answer another question my way."

1 1 

## . Unless otherwise instructed The answers to the questions must be based on the decision of at least 10 of the 12 jurors. The same 10 jurors must agree on every answer. Do not agree to be bound by a vote of anything less than 10 jurors, even if it would be a majority.

12. In answering questions about damages, answer each question separately, Do not increase or reduce the amount in one answer because of your answer to any other question about damages. Do not speculate about what any party's ultimate recovery* may or may not be. Any recovery will be determined by the court when it applies the law to your answers at the lime of judgment. 

### j

As I have said before, if you do not tallow these instructions and definitions, you will be

guilty of juror misconduct, and I might have to order a new trial and start this process over again This wouid waste your time and the panics’ money, and would require the taxpayers of this

2county to pay for another trial. If a juror breaks any of these rules, tell that person to stop and re¬ port it to me immediately.

* * *

3QUESTION 

### 1

Did Biocel and Supply Pro agree that the following provisions would be part of the workout agreement?

“Should BP, Supply Pro’s distributors), or other third party compensate Supply Pro for terminating boom deliveries or should BP resume such deliver¬ ies from Supply Pro or Supply Pro’s distributors) and irrespective of the above: 1. If compensated, Biocel will be compensated by Supply Pro in the same proportion as Supply Pro is compensated, less the restocking fee of $12,750 outlined above if the raw material return option is elected by Supply Pro. 2. If deliveries are resumed, Biocel will resume deliveries in the same pro¬ portion as Supply Pro resumes deliveries. 3. Any combination of compensation or deliveries to Supply Pro will be also handled in the same proportion of compensation and deliveries to Biocel. 4. Other than the offset for the $12,750 restocking fee should Supply Pro elect that option, there will be no other offsets to compensation or quanti¬ ties delivered. 5. Supply Pro will notify Biocel in a timely manner in the event compensa¬ tion and, or deliveries are provided or resumed as outlined above.” In deciding whether the parties reached an agreement, you may consider what they said and did in light of the surrounding circumstances, including any earlier course of dealing. You may not consider the parties’ unexpressed thoughts or intentions.

Answer “Yes” or “No.” Answer:

* * *

4II

QUESTION 

### 2

Did Supply Pro fail to comply with the workout agreement with Biocel? In addition to the language of the agreement, the law imposes on a party to a contract a duty to perform the contract in good faith. In that connection, good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing.

Answer “Yes” or “No.” Answer:

* * *

1

5

### QUESTION 

### 3

Did Biocel and Harmon Fine agree that Harmon Fine would personally guaranty the workout agreement?

In deciding whether the parties reached an agreement, you may consider what they said and did in light of the surrounding circumstances, including any earlier course of dealing. You may not consider the parties’ unexpressed thoughts or intentions.

Answer “Yes” or “No.” Answer:

* * *

6If you answered “Yes” to Question 3 then answer the following question. Otherwise, do not an¬ swer the following question. 

### QUESTION 4

Did Harmon K. Fine fail to comply with the personal guaranty with Biocel? In addition to the language of the agreement, the law imposes on a party to a contract a duty to perform the contract in good faith. In that connection, good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing.

Answer “Yes” or “No.” Answer:

* * *

7QUESTION 

### 5

Did Supply Pro or Hannon Fine commit fraud against Biocel? Fraud occurs when



# — a. a party makes a material misrepresentation, and b. the misrepresentation is made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion, and c. the misrepresentation is made with the intention that it should be acted on by the other party, and d. the other party relies on the misrepresentation and thereby suffers injury.

“Misrepresentation” means: i. A false statement of fact, or ii. A promise of future performance made with an intent, at the time the promise was made, not to perform as promised, or iik-A statement of opinion based on a false'StatefflenTbF 

### fact. dr iv. A statement of opinion that the maker knows to be false, or v. An expression of opinion that is false, made by one claiming or implying to have special knowledge of the subject matter of the opinion. “Special knowledge” means knowledge or information superior to that possessed by the other party and to which the other party did not have equal access.

a. Supply Pro. Answer “Yes” or “No.”



# Mh. Answer: b. Harmon Fine. Answer “Yes” or “No.”



# Mi Answer:

* * *

8If you answered “Yes” to Questions 2 or 4 then answer the following' question. Otherwise, do not answer the following question. 

### QUESTION 

### 6

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Biocel for its damages, if any, that resulted from such failure to comply?

Do not add any amount for interest on damages, if any. Answer separately in dollars and cents for damages, if any. Consider the following elements of damages, if any, and none other:

a. The price of the 6912 bales on February 1, 2011, if Biocel was unable after rea¬ sonable effort to resell them at a reasonable price, or the circumstances reasonably indicated that such effort would be unavailing. Answer: S 

## 39ÿ, 

## leO
b. Commercially reasonable and necessary charges for custody and care of the goods stored by Biocel. Answer: $

c. Biocel’ s proportionate share of compensation received by Supply Pro from its dis¬ tributor for the termination of boom deliveries. Answer:$ 

## 3'S6 .5T*).QO

* * *

9If you answered “Yes” to Questions 5a or 5b then answer the following question. Otherwise, do not answer the following question. 

### QUESTION 

### 7

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Biocel for its damages, if any, that resulted from such fraud?

Do not add any amount for interest on damages, if any. Answer separately in dollars and cents for damages, if any. Consider the following elements of damages, if any, and none other:

a. The price of the 6912 bales on February 1, 201 1, if Biocel was unable after rea¬ sonable effort to resell them at a reasonable price, or the circumstances reasonably indicated that such effort would be unavailing. Answer: $ I b. Commercially reasonable and necessary charges for custody and care of the goods stored by Biocel. 

## 303

/ Answer: $

c. Biocel’s proportionate share of compensation received by Supply Pro from its dis¬ tributor for the termination of boom deliveries. Answer: $ 

## 3*% 6ÿ51*1. QQ d. The unpaid amounts due under the purchase orders dated July 13, 2010 and July 29, 2010, issued by Supply Pro to Biocel. 

## H-so qoa.fo Answer: $

* * *

10Answer the following question as to Supply Pro or Harmon Fine only if you unanimously an¬ swered “Yes" to Questions 5a or 5b as to that same entity or person. Otherwise, do not answer the following question as to that same entity or person. To answer "Yes" to the following question, your answer must be unanimous. You may answer "No” to the following question only upon a vote of ten or more jurors. Otherwise, you must not answer the following question. 

### QUESTION 

### 8

Do you find by clear and convincing evidence the harm to Biocel resulted from fraud? “Clear and convincing evidence" means the measure or degree of proof that produces a firm belief or conviction of the truth of the allegations sought to be established.

Fraud occurs when



# — a. a party makes a material misrepresentation, and b. the misrepresentation is made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion, and
c. the misrepresentation is made with the intention that it should be acted on by the other party, and d. the other party relies on the misrepresentation and thereby suffers injury. “Misrepresentation” means: i. A false statement of fact, or ii. A promise of future performance made with an intent, at the time the promise was made, not to perform as promised, or iii. A statement of opinion based on a false statement of fact, or iv. A statement of opinion that the maker knows to be false, or v. An expression of opinion that is false, made by one claiming or implying to have special knowledge of the subject matter of the opinion. "Special knowledge” means knowledge or information superior to that possessed by the other party and to which the other party did not have equal access.

a. Supply Pro. Answer “Yes” or “No.”



# lift Answer; b. Hannon Fine. Answer “Yes” or “No.” 

# Jf£L Answer-

•

IIIf you answered “Yes” to Questions 2 or 4, then answer the following question. Otherwise, do not answer the following question. 

### QUESTION 

### 9

What is a reasonable fee for the necessary services of Biocel’s attorney, stated in dollars and cents?

Factors to consider in determining a reasonable fee include



## — 1. The time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal services properly. 2. The fee customarily charged in the locality for similar legal services. 3. The amount involved and the results obtained. 4. The experience, reputation, and ability of the lawyer or lawyers performing the services. Answer with an amount for each of the following:

a. For preparation and trial. Answer: $ b. For an appeal to the Court of Appeals. Answer: $ 

# *43 j 

## 50O

c. For an appeal to the Supreme Court of Texas. Answer: $ 

# 3l,So

o

* * *

12

### QUESTION 

### 10

What sum of money, if any, would fairly and reasonably compensate Biocel for Biocel’s proportionate share of compensation received by Supply Pro from Supply Pro’s distributor for the termination of boom deliveries?

Answer: $

* * *

/ 13

### QUESTION 

### 11
What sum of money, if any, would fairly and reasonably compensate Biocel for the un¬ paid amounts due under the purchase orders dated July 13 and July 29, 2010, issued by Supply Pro to Biocel?

Answer: $ 

# 490,303. UP

* * *

14

### PRESIDING 

### JUROR

When you go into the jury room to answer the questions, the first thing you will need to do is choose a presiding juror.

It is the duty of the presiding juror to:
a. have the complete charge read aloud if it will be helpful to your deliberations; b. preside during your deliberations;
c. see that your deliberations are conducted in an orderly manner and in accordance with the instructions in this charge; d. write out and hand to the bailiff any communications concerning the case that you desire to have delivered to the judge;

e. vote on the questions; f. write your answers to the questions in the spaces provided; and g. certify to your verdict in the space provided for the presiding juror’s signature or to obtain the signatures of all the jurors who agree with the verdict if your verdict is less than unanimous. Do you understand the duties of the presiding juror? If you do not, please tell me now.

* * *

15

### INSTRUCTIONS FOR 

### SIGNING THE 

### VERDICT CERTIFICATE
Unless otherwise instructed, you may answer the questions on a vote of 10 jurors. The same 10 jurors must agree on every answer in the charge. This means you may not have one group of 10 jurors agree on one answer and a different group of 10 jurors agree on another an¬ swer. I.

2. If 10 jurors agree on every answer, those 10 jurors sign the verdict. If 1 1 jurors agree on every answer, those 11 jurors sign the verdict. If all 12 of you agree on every answer, you are unanimous and only the presiding juror signs the verdict.

3. All jurors should deliberate on every question. You may end up with all 12 of you agreeing on some answers, while only 10 or 11 of you agree on other answers. But when you sign the verdict, only those 10 who agree on every answer will sign the verdict.

4. There are some special .instructions before Questions 8 explaining how to answer that question. Please follow the instructions. If all 12 of you answer that question, you will need to complete a second verdict certificate for that question.

Do you understand these instructions? If you do not, please tell me now.



## * * *

JUDGE PRESIDING

16

## VERDICT CERTIFICATE
Check one:



# _ Our verdict is unanimous. All 12 of us have agreed to each and every answer. The presid¬ ing juror has signed the certificate for all 12 of us.

Signature of Presiding Juror Printed Name of Presiding Juror



# _ Our verdict is not unanimous. Eleven of us have agreed to each and every answer and have signed the certificate below. 

# __

Our verdict is not unanimous. Ten of us have agreed to each and every answer and have signed the certificate below. Signature of Juror Printed Name of Juror
1.
2.

3.

4.
5.

6.

7.
8.

9.
10.
11.

17If all 12 of you have answered “Yes” to Question 8, then you must sign this certificate also.


## ADDITIONAL 

## CERTIFICATE 

# / Our verdict is unanimous in answering Question 8. All 12 of us agreed to that answer. The presiding juror has signed the certificate for all 12 of us. 

# VJtcndtL
Signature of Presiding Juror Printed Name of Presiding Juror

(

184 9

END OF JURY CHARGE

\

19•*> • t 

# P'3 aoia'WSa*

H Cause No.



# £G0$o 

# R$ 

# ini'l \nc

H (iff § In the District Court of 

# I § § 3 § Harris County, TEXAS vs. § § R£, Defendant § 11th Judicial District 8 

# 6Uÿ|WM|)/\ 

# Y\ÿj



# )r\d*iV»cLdlH Question from the Jury During Deliberations 

# 1 : Question No. 

# P flic, 

### siM 

# ryÿ (i 

# ftfrp/joP OV.~ÿTK i t ZlMdlkihÿktlE T

Signed: Presiding Juror 

# C P£> 

### , 

# . Answer: 

### /

Signed this day of .,20 

# _

Mike D. Miller Judge Presiding 

# SSSSA FEBlU<!1

l»B» Tun®-.

afihe lime of imaging 'ooputy By.t

MEMBERS OF THE JURY:
With reference to your request for certain information you are directed to the evidence, both documentary and testimonial, which was admitted in this case. However, you are instructed that if the jurors disagree as to the statement of any witness, they may, upon applying to the Court, have read to them from the court reporter’s notes that part of the witness’ testimony on the particular point in dispute and no other. Therefore, if you have disagreed upon any point in the testimony, and you will so state to the Court in writing, and point out in writing the point upon which you have disagreed, then the Court will have the court reporter read back to you only the testimony on the point in dispute.

The court reporter will need sufficient time to examine the notes to locate all the testimony on the point concerning your inquiry; therefore, the Court will request that you be patient and allow sufficient time for this to be done, if you so request.

JUDGE MIKE MILLER/ '»

MEMBERS OF THE JURY:
In answer to your request to get a copy of Mr. Fine’s deposition, you are instructed that you have received all of the evidence admitted in this trial and are guided thereby. The printed deposition transcripts themselves are not admitted in evidence.

JUDGE MIKE MILLERi 

# p1!.

CAUSE NO. 2012-24524 n

ECOSORB INTERNATIONAL, INC.

d/b/a BIOCEL TECHNOLOGIES IN THE DISTRICT COURT OF § H CM § § § HARRIS COUNTY, TEXAS vs. il § p SUPPLY PRO, INC. and HARMON K.

FINE, Individually § 

### 11TH JUDICIAL DISTRICT §

MEMBERS OF THE JURY: In discharging your responsibility on this jury, you will observe all the instructions that have been previously given you.



## * * 

## *

JUDGE PRESIDING



# 1 

# 1#-**

M nlf{

You must unanimously agree on the amount of any award of exemplary damages. 

### QUESTION 

### 12

What sum of money, if any, if paid now in cash, should be assessed against Supply Pro and awarded to Biocel as exemplary damages, if any, for the conduct you found in answering Question 8a?

“Exemplary damages” means an amount that you may in your discretion award as a pen¬ alty or by way of punishment.

Factors- to consider in awarding exemplary damages, if any, are 

# — a. The nature of the wrong. b. The character of the conduct involved.
c. The degree of culpability of Supply Pro. d. The situation and sensibilities of the parties concerned
e. The extent to which such conduct offends a public sense of justice and propriety. f. The net worth of Supply Pro.

Answer in dollars and cents, if any. Answer: $

* * *

2t

You must unanimously agree on the amount of any award of exemplary damages. 

### QUESTION 

### 13

What sura of money, if any, if paid now in cash, should be assessed against Hannon Fine and awarded to Biocel as exemplary damages, if any for the conduct you found in answering Question 8b?

“Exemplary damages” means an amount that you may in your discretion award as a pen¬ alty or by way of punishment.

Factors to consider in awarding exemplary damages, if any, are 

# — a. The nature of the wrong. b. The character of the conduct involved.
c. The degree of culpability of Harmon Fine. d. The situation and sensibilities of the parties concerned.
e. The extent to which such conduct offends a public sense of justice and propriety. f. The net worth of Harmon Fine.

Answer in dollars and cents, if any. Answer: $ 

### )f 

## QOQÿQQQ

* * *

3

# - 4



## ADDITIONAL CERTIFICATE
We, the jury, have answered the above and foregoing questions as herein indicated, and herewith return same into court as our verdict.

I certify that the jury was unanimous in answering the following questions:

# ALLAnswer “All” or list questions:

PRESIDING JUROR

Printed Name of Presiding Juror

4

# CFROM STEVE KEMPE SENT FRIDAY AUGUST 13 2010 315 PM TO HKFINEPROSORBENTSCOM CC LARRY SVOBODA SUBJECT BP BOOMS

HARMON

ENJOYED OUR LUNCH MEETING WEDNESDAY AND THE OPPORTUNITY TO DISCUSS THE SITUATION REGARDING THE 1W BOOMS AM
CERTAIN WE CAN WORK TOGETHER TO CRAFT MUTUALLY AGREEABLE RESOLUTION

AS YOU ARE AWARE EFFECTIVE JULY 2010 WE INSTITUTED SPECIAL TERMS AND CONDITIONS ON ALL HYDROPHOBIC MATERIAL ORDERS THOSE TERMS AND CONDITIONS SPECIFIED THAT ORDERS WERE NON CANCELLABLE ONCE PLACED SUPPLY PROS NOTICE ON AUGUST 2010 TO STOP DELIVERIES OF THE REMAINING TRUCKLOADS ON YOUR P0 41724 AND ALL 28 TRUCKLOADS OF P0 41778 COMBINED REQUIREMENT OF 34848 BAGS CAME AS COMPLETE SHOCK TO US AS WE WERE ASSURED UP UNTIL THAT DATE THAT THE
DELIVERIES WERE ONLY ON HOLD PENDING REVISED SCHEDULING CONFIRMATION WE CURRENTLY HAVE 6912 BAGS OF MATERIAL AND
SPECIFIC INVENTORY FOR AN ADDITIONAL 11616 BAGS

BASED ON OUR DISCUSSIONS AND SOME SUBSEQUENT THINKING WE PROPOSE THE FOLLOWING

SHOULD 1W SUPPLY PROS DISTRIBUTORS OR OTHER THIRD PARTY NOT COMPENSATE SUPPLY PRO FOR TERMINATING BOOM DELIVERIES OR SHOULD BP NOT RESUME SUCH DELIVERIES FROM SUPPLY PRO OR SUPPLY PROS DISTRIBUTORS

TOGETHER AND INDEPENDENTLY SUPPLY PRO AND ECOSORB WILL CONTINUE THEIR EFFORTS TO SELL THE EXISTING ECOSORB
INVENTORY OF 6912 BAGS FOR PERIOD OF MONTHS ENDING FEBRUARY 12011 SUPPLY PRO WILL BE INVOICED FOR WHATEVER OF THIS INVENTORY REMAINS AT THE END OF THAT PERIOD OUR VENDOR HAS CONDITIONALLY AGREED TO ACCEPT RETURN OF THE UNUSED RAW MATERIAL SUBJECT TU THEIR ANALYSIS APPROVAL AND IF APPROVED TRANSPORTATION HANDLING AND RESTOCKING FEES THE TOTAL COST OF PROCESSING AND
RETURNING THIS UNUSED MATERIAL WILL BE 12750 IF WE ARE TO RETURN THE MATERIAL WE HAVE TO NOTIFY THEM BY WEDNESDAY AUGUST 18 TO START THEIR EVALUATION AND ACCEPTANCE PROCESS IF WE DO NOT RETURN THE MATERIAL AND IT

IS CAREFULLY MAINTAINED THERE IS SHELF LIFE OF MONTHS THE DECISION TO BE MADE IS WHETHER TO RETURN IT NOW OR
TO RETDIN IT IN THE HOPE OF UTILIZING AND SELLING THE ADDITIONAL 11616 BAGS OF KSORB HYDROPHOBIC TO BE MANUFACTURED PLEASE GIVE THIS YOUR IMMEDIATE ATTENTION AND ADVISE WHAT YOU PREFER AS TIME IS OF THE ESSENCE IN
GETTING THE RETURN PROCESS STARTED AND COMPLETED IF YOU ELECT FOR US NOT TO RETURN THIS MATERIAL ANY REMAINING ON HAND ON JANUARY 2011 WILL BE PROCESSED INTO FINISHED KSORB HYDROPHOBIC AND INVOICED TO SUPPLY PRO



# PT

XH1BIT 

# JI9AL BIOCEL 001387WE WILL WAIVE THE REMAINING PURCHASE REQUIREMENT OF A6320 BAGS 34848 LESS 6912 ON HAND AND LESS 11616 IN PROCESS

SHOULD BP SUPPLY PROS DISTRIBUTORS OR OTHER THIRD PARTY COMPENSATE SUPPLY PRO FOR TERMINATING BOOM DELIVERIES OR SHOULD BP RESUME SUCH DELIVERIES FROM SUPPLY PRO OR SUPPLY PROS DISTRIBUTORS AND IRRESPECTIVE OF THE ABOVE

IF COMPENSATED ECOSORB WILL BE COMPENSATED BY SUPPLY PRO IN THE SAME PROPORTION AS SUPPLY PRO IS COMPENSATED LESS THE RESTOCKING FEE OF 12750 OUTLINED ABOVE IF THE RAW MATERIAL RETURN OPTION IS ELECTED BY SUPPLY PRO

IF DELIVERIERS ARE RESUMED ECOSORB WIU RESUME DELIVERIES IN THE SAME PROPORTION AS SUPPLY PRO RESUMES DELIVERIES ANY COMBINATION OF COMPENSATION OR DELIVERIES TO SUPPLY PRO WILL BE ALSO HANDLED IN THE SAME PROPORTION OF COMPENSATION AND DELIVERIES TO ECOSORB OTHER THAN THE OFFSET FOR THE 12750 RESTOCKING FEE SHOULD SUPPLY PRO ELECT THAT OPTION THERE WILL BE NO OTHER OFFSETS TO COMPENSATION OR QUANTITIES DELIVERED SUPPLY PRO WILL NOTIFY ECOSORB IN TIMELY MANNER IN THE EVENT COMPENSATION AND OR DELIVERIES ARE PROVIDED OR RESUMED AS OUTLINED ABOVE
WE UNDERSTAND THE DIFFICULTIES THIS SITUATION HAS CREATED FOR BOTH OF US AND BELIEVE THIS IS REASONABLE SOLUTION AS UNDERSTAND IT SUPPLY PRO RELIED ON PURCHASE CONTRACTS AS THE BASIS FOR THEIR PURCHASE ORDERS TO US ACCORDINGLY YOU SHOULD EXPLORE WHATEVER RECOURSE YOU MAY HAVE BELIEVE IT IS HIGHLY LIKELY THAT BP WILL MAKE GOOD ON ITS BOOM COMMITMENTS WHICH MAY WELL RESOLVE THIS MATTER FOR US BOTH

KINDLY CONFIRM YOUR ACCEPTANCE OF THE ABOVE ALSO NEED TO HEAR FROM YOU SPECIFICALLY REGARDING THE DISPOSITION OF THE UNCONVERTED RAW MATERIAL

LARRY AND ARE REVIEWING SEVERAL STRATEGIES AS YOU AND DISCUSSED REGARDING ONGOING NATURAL FIBER BOOM SALES LARRY WILL CONTACT YOU AND SCOTT EARLY NEXT WEEK TO DISCUSS OUR IDEAS

BEST REGARDS STEVE

STEVEN KEMPE
PRESIDENT ECOSORB INTERNATIONAL 7134336701 OFFICE 7136104706 DIRECT 7134332900 FAX 7136104746 DIRECT FAX WWWECOSORBCOM

BIOCEL 001388STEVE KEMPE
FROM STEVE KEMPE SENT MONDAY AUGUST 16 2010 448 PM TO HKFINEPROSORBENTSCOM SUBJECT RE BP BOOMS

THE RETURN PROCESS IS UNDERWAY AS MENTIONED THEY WILL TEST 8ND APPROVE BEFORE CONSENTING DONT ANTICIPATE ANY PROBLEM AND THEY SEEM TO BE MORE THAN COOPERATIVE PROBABLY BE NEXT WEEK BEFORE THEY RET ME KNOW

STEVE

FROM HARMON FINE MAILTOHKFLNEPROSORBENTSCOM SENT MONDAY AUGUST 16 2010 441 PM TO STEVE KEMPE SUBJECT RE BOOMS

AUTHORIZE YOU TO RETURN THE CHEMICAL TO YOUR MANUFACTURER AND CHARGE ME THE 12J50 FOR RETURN THE GOODS SHOULD BE RETURNED IN SUCH CONDITION THAT THE MANUFACTURER WILL HAVE NO CAUSE NOT TO ACCEPT ITS RETURN

SUPPLY PRO ACCEPTS THE OFFER OF YOUR ASSISTANCE IN SELLING THE REMAINING 6912 BALES WITHING MONTH PERIOD SUPPLY PRO
WILL PURCHASE THE BALANCE UNSOLD AT THAT TIME IT WOULDBE VERY HELPFUL FOR BOTH OUR COMPANIES IF THE CUSTOMER FOR THE 50000 PZECES OF BOOM WOULD PLACE AN ORDER WITH SUPPLY PRO

BEST REGARDS HARMON FINE SUPPLY PRO INC 1231 HAHLA SI HOUSION TEXAS 77020

PHONE 7136729050 FAX 736747659 EMAIL HKLHTEPROSARBCNCSVOZU VISIT OUR WEB AT WWWPROSORBENCSEAM

BIOGEL 000946