AFFIRMED and Opinion Filed January 30, 2024 

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In The 

### Court of Appeals Fifth District of Texas at Dallas No. 05-22-01314-CV REX PERFORMANCE PRODUCT S, LLC, Appellant V. SULZER CHEMTECH USA, INC., Appellee On Appeal from the 134th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-17-05538 MEMORANDUM OPINION Before Justices Partida-Kipne ss, Reichek, and Breedlove Opinion by Justice Reichek Rex Performance Products, LLC appeals th e trial court’s judgment awarding Sulzer Chemtech USA, Inc. damages and atto rney’s fees for Rex’s failure to pay for goods it accepted pursuant to a purchase cont ract. In two issues, Rex contends the trial court erred in granting Sulzer’s moti on for directed verdict, and abused its discretion in determining the amount of attorney’s fees Sulzer was entitled to recover. We affirm th e trial court’s judgment.–2– Background Rex is a foam production company. Sulzer sells foam manufacturing equipment. In July 2015, Rex contracted with Sulzer to purchase a foam extrusion unit (“FEU”) for $1,180,000 payable in fo ur installments. Rex also purchased technical assistance for an additional $29,000. The “Design Basis” portion of the pur chase contract specified the FEU’s maximum output was 600 kilograms per hour . The contract’s “Performance Guarantee” included the following disclaimer: BUYER acknowledges that that SELLER does not give any PERFORMANCE GUARANTEE beyond the MECHANICAL GUARANTEE described in the para graph 8.1. SELLER will design the requested EQUIPMENT to the be st of its knowledge and know-how in order to meet the design basis de scribed in paragra ph 3, but SELLER shall not be liable for not ma tching any product or process perf ormance. Paragraph 8.1, entitled “Mechan ical Warranty,” stated SELLER warrants that the [FEU ] will be of the kind and quality as described in the QUOTATION a nd will be free of defects in workmanship and material. Excl uded from SELLER’s warranty and liability for defects are all deficienci es which cannot be proved to have their origin in bad material, faulty design of the [FEU], e.g. deficiencies resulting from normal wear and tear, improper maintenan ce, failure to observe the operating instructions, or deficiencies resulting from other reasons beyond SELLER’s control. SELLER explicitly excludes any warranty for erosion, corrosion, and cavitation, except in case BUYER proves within 3 years from the deliv ery date of the [FEU] that the damage is caused by negligence in the choice of material of construction by SELLER . . . .–3– The purchase contract also containe d two different sections addressing limitations of liability. Under the first s ection, the limitations on liability included the following: SELLER’s liability for a ny damages relating to the EQUIPMENT delivered, intellectual property indemnity, or arising from SELLER’s performance under th e CONTRACT . . . shall be limited to 25% of the purchase orde r price. Under no circumstances shall Seller be liable for re-call costs. . . . In no event shall SELLER be liable to BUYER for any indirect, punitive, special, incidental, or consequential damages in connection with the CONTRACT, including but not limited to, loss of profits or interruption of production, loss or opportunity or business. The second section, entitled “Overall Limitation of Liability,” stated,
NOTHWITHSTANDING ANYTH ING TO THE CONTRARY IN THIS CONTRACT, INCLUDING ALL DOCUMENTS MAKING PART THEREOF AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, IN NO EVENT SHALL SELLER BE LIABLE TO THE BUYER FOR LOSS OF PROFIT OR REVENUE LOSS OF USE INTERRUPTION OF PRODUCTION, COST OF CAPITAL, COST OF PURCHASE D OR REPLACEMENT POWER AND ANY AND ALL COSTS RELA TING TO DELAY, OR FOR INDIRECT, PUNITIVE, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR CLAIMS BY THE BUYER’S CUSTOMERS FOR SUCH DAMAGE S, IN CONNECTION WITH THIS CONTRACT, WHETHER SU CH LIABILITY IS BASED ON CONTRACT, TORT (INCLUDING NE GLIGENCE), STATUTE, OR ANY OTHER BASIS OF LEGAL LIABILITY. THE REMEDIES OF BUYE R SET FORTH HEREIN ARE EXCLUSIVE AND SELLER’S LIAB ILITY WITH RESPECT TO ANY CONTRACT, INDEMN ITY, TORT (INCLUDING NEGLIGENCE), UNDER ANY WA RRANTY, STRICT LIABILITY, OR OTHERWISE SHALL NOT EXCEED 100% OF THE CONTRACT PRICE UNLESS CLAIMS ARISE FROM GROSS NEGLIGENCE OR WILFUL M ISCONDUCT OF THE SELLER.–4– Delivery of the FEU was estimated to be “approximately 24 weeks” after receipt of the first installmen t payment. Due to a delay in billing, the parties agreed the delivery time period would begin on July 13, 2015. A Sulzer employee testified the FEU was delivered twenty-two weeks later, on December 17. The FEU was tested by Rex under Sulze r’s supervision. The contract specified that if the results of the perfo rmance test did not meet the performance guarantee requirements, Sulzer would perfo rm the necessary corrections. This process would be repeated “up to three (3) more times, until all the defects and deficiencies which are the causes of the insufficient performance are corrected and the results of the performance test meet the guarantee requirements.” If the FEU still failed to reach the performance parame ters after four performance tests, Rex could reject the FEU and receive liquida ted damages. Rex signed an acceptance form for the FEU on May 26, 2016. The Mechanical Warranty period for th e FEU extended for twelve months from the date of the successful performance test, or eight months from the date of delivery. If during that time period Rex di scovered the FEU was de fective or not in conformity with the terms of the contract, it was to notify Sulzer and Sulzer was required to remedy the defe cts “without undue delay.” All corrections would be done at Sulzer’s cost, including transport e xpenses and services of specialists sent by Sulzer to carry out repairs.–5– At the time Rex accepted the FEU, it had paid approximately sixty percent of the amount owed under the co ntract. A week and a ha lf after accepting the FEU, Rex sent an email to Sulzer stating “[t]he Line continues to ru n well and make nice foam. This is a very nice ma chine!” The email went on to discuss some issues with the FEU such as modem connectivity. On July 22, 2016, Rex sent a letter to Sulzer concerning payment of the remaining amount due under the contract. Th e letter stated “the cash situation at [Rex] is very tight at the moment.” Rex proposed a plan for payments to be made over the following six months. The letter co mmented that the “plant is currently running satisfactorily, and the equipment fro m Sulzer is running well.” Rex also stated it intended to expand in the future and was “quite satisfied with the Sulzer machinery and associated extrusion technol ogy and confident it will enable us to produce the products that we need to for our planned market expansion.” On August 30, Sulzer notified Rex that its payments were past due. Rex responded on Septembe r 19 stating, We sincerely appreciate your patience and understanding during this process. Recently, we’ve be come aware of additional defects within the new extrusion machine. These came to light during the latter part of August and have continued through Sulzer Chemtech’s on-site visit earlier this month. Once we have a firm idea of the magnitude these additional defects will have on our business, we will be in touch with you regarding a solution to the outstanding balance. Rex made no further payments to Sulzer.–6– Sulzer brought this suit in May 2017 a sserting a claim against Rex for breach of contract. Sulzer sought to recover the full balance of $596,38 6.84 plus attorney’s fees and prejudgment interest. Rex filed an answer asserting numerous affirmative defenses, as well as counterclaims for breach of contract, breach of express warranty, breach of implied warranty of merchantability , breach of implied warranty of fitness for a particular purpose, and fraudulent and/ or negligent misrepresentation. Rex alleged the FEU was “woefu lly underperforming” and could not safely produce the six hundred kilograms of foam per hour specified in the contract. Rex sought to recover actual, economic , and exemplary damages in add ition to attorney’s fees and costs of suit. Sulzer moved for a partial summary judgment on Rex’s claims for consequential damages arguing Rex had waived its right to recover such damages in the purchase contract. The tr ial court agreed and granted a partial judgment that Rex “take nothing on any claim of lost profits, including reduction-in-sales-price damages to the extent such claims ar e based upon consequen tial damages and not direct damages.” The case was tried before a jury in A ugust 2022. After Sulzer rested its case, Rex moved for a directed verdict on the ground that th e purchase contract was illusory because there was no mutual oblig ation. Rex argued the wording of the guarantees did not obligate Sulzer to provi de Rex with a properly functioning FEU. The trial court denied the motion.–7– Sulzer made its own motion for a direct ed verdict after Rex rested its case. Following a hearing, the trial court directed a verdict in favor of Sulzer on all issues except the amount of damages Sulzer was en titled to recover. The court’s charge contained only a single question asking, What sum of money, if any, if pa id now in cash by Rex, would fairly and reasonably compensate Sulzer for their damages, if any, that resulted from Rex’s failure to comply with the contract? The jury was instructed that, contract means the one or more agreements whereby Sulzer was to provide SULZER PE FOAM EXTRU SION UNIT for a capacity of 600 kg/h for use in Rex’s business operations. The jury determined Sulzer was entitled to the full amount of damages it requested. The trial court’s final judgment aw arded Sulzer $596,386.84 in accordance with the jury’s verdict. The court additionally awarded Sulzer $372,803.49 in attorney’s fees. The judgement stated the court weighed th e relevant factors in light of the evidence offered and determined the fees charged and time spent by Sulzer’s counsel were reasonable and necessary. The court further found that segregation of the fees was neither necessary nor warranted given the parties’ procedural postures and the nature of Rex’s defenses and co unterclaims. Rex brought this appeal. Analysis In its first issue, Rex contends the trial court erred in denying its motion for directed verdict and granting a directed verdict in favor of Sulzer because the purchase contract was illusory and unconsci onable. A contract is illusory if the–8– promisor retains the option of disc ontinuing performance without notice. Rogers v. Alexander , 244 S.W.3d 370, 382 (Tex. App.—Dallas 2007, pet. de nied). A contract may also be illusory if a party is not entitled to recove r damages under any circumstances. See Innovate Tech. Sols., L.P. v. Youngsoft, Inc. , 418 S.W.3d 148, 152 (Tex. App.—Dallas 2013, no pet.). Neither circumst ance is presented here. The purchase contract required Sulzer to deliver to Rex a FEU meeting the mechanical specifications set forth in th e contract that was free of defects in workmanship and material. 1 If Sulzer failed to deliver a conforming product, Rex could decline to accept the FEU and rec over damages. If def ects were discovered after Rex accepted the FEU, Su lzer was required to repair the unit at its own cost. Nothing in the contract allowed Sulzer to unilaterally decline to perform these obligations. Rex asserts the contract was illusory because it disclaimed any performance guarantee beyond the mechanical warranty. According to Rex, the disclaimer meant “Sulzer had no obligation other than to deliver anything it deemed a PE Foam Extrusion Unit” and could ha ve delivered a “bag of rocks” without incurring any liability. Rex’s interpretation of the perfo rmance guarantee ignores the language of the mechanical warranty which required Sul zer to deliver a FEU meeting the design specifications outlined in the contract. The disclaimer within the performance

1 Rex does not appeal the trial court’s directed verdic t in favor of Sulzer on Rex’s claims for breach of contract and breach of express and implied warranties.–9– guarantee does not render this requirement illusory. Parties are free to make disclaimers a part of the basis of the bargain to the extent allowed by law. See Welwood v. Cypress Creek Ests., Inc , 205 S.W.3d 722, 727 (Tex. App.—Dallas 2006, no pet.). Rex does not contend the pe rformance disclaimer was inconspicuous. Nor does it argue the disclaimer was impermissible under state law. In support of its contention that th e contract was unconscionable, Rex again relies on the performance guarantee disclaim er along with the contract’s limitations on liability. In general, th e term “unconscionabi lity” describes a contract that is unfair because of its overall one-sidedness or the gross one-sidedness of its terms. Arthur’s Garage, Inc. v. Racal-Chubb Sec. Sys., Inc. , 997 S.W.2d 803, 815 (Tex. App.—Dallas 1999, no pet.). A determination of uncons cionability usually requires a showing that the contract is both pro cedurally and substant ively unconscionable when made. BDO Seidman, LLP v. J.A. Green Dev. Corp. , 327 S.W.3d 852, 858 (Tex. App.—Dallas 2010, no pet.). Wh ether a contract is procedurally unconscionable focuses on the facts surrounding the bargaining process. Arthur’s Garage , 997 S.W.2 at 815. Substantive unc onscionability is concerned with the fairness of the agreement itself. Id

. Texas courts do not ordinarily inquire into the relative fairne ss of a contract’s

terms. Venture Cotton Co-op v. Freeman , 435 S.W.3d 222, 228 (Tex. 2014). “A contract or contract provision is not invari ably substantively unconscionable simply because it is foolish for one party and very advantageous to the other. Instead, a–10– term is substantively unreasonabl e where the inequity of the term is so extreme as to shock the conscience.” Besteman v. Pitcock , 272 S.W.3d 777, 789 (Tex. App.— Texarkana 2008, no pet.) (quoting Anaheim Indus. v. GMC, No. 01-06-00440-CV, 2007 WL 4554213, at *9 (Tex. App.—Houston [1st Dist.] Dec. 20, 2007, pet. denied). Because of this state’s strong policy favoring the freedom to contract, there is a high threshold to prove unconscionability. Id

. None of the factors that might weigh in favor of unconscionability are present in this case. Rex concedes in its brief th at the purchase contract was the result of an arms-length transaction and it makes no assertions that the parties did not have equal bargaining power. Rex argues instead that it believed the contract promised the FEU would consistently produce at its maximu m capacity of six hundred kilograms of foam per hour. This assumption is belied by the performance guarantee disclaimer. The fact that Rex subjectively believed th e contract promised something it did not does not render the contr act unconscionable. See El Paso Field Servs., L.P. v. MasTec N. Am., Inc. , 389 S.W.3d 802, 811–12 (T ex. 2012) (court’s role is to enforce contract’s allocation of risk and parties are obligated to protect themselves by reading what they sign). Rex further contends the contract is unconscionable because it “eliminates every available avenue of da mages” that Rex could recover from Sulzer for breach of contract. This argument is, again, be lied by the contract’s language which permits several forms of recovery if Sulzer fails to deliver a FEU meeting the contract’s–11– design specifications. The only form of da mages that is foreclosed by the contract is consequential damages. Contractual lim itations on the recovery of consequential damages are not only not unconsciona ble, they are not unusual. See, e.g., Cherokee Cnty. Cogeneration Partners, L. P. v. Dynegy Mktg. and Trade , 305 S.W.3d 309, 314 (Tex. App.—Houston [14th Dist.] 2009, no pet.). Based on the foregoing, we conclude th e purchase contract was not illusory or unconscionable. We resolve Rex’s first issue against it. In its second issue, Rex contends the trial court abused its discretion in awarding Sulzer unreasonable and unrecovera ble attorney’s fees . Rex argues the fees awarded were unreasonable because th e billing records submitted into evidence showed Sulzer’s attorneys spent time on wh at Rex characterizes as “delay tactics” and unnecessary matters such as resisting discovery. We accord considerable deference to a trial court’s findings regarding whether prevailing counsel’s claimed hours are excessive, redunda nt, or unreasonable. El Apple I, Ltd. V. Olivas , 370 S.W.3d 757, 763–64 (Tex. 2012). “The trial court possesses a superior understanding of the case and the factual matte rs involved” and is in the best position to determine from the context of the case whether a party’s filings are groundless or brought merely for the purpose of delay. See id. at 764. After reviewing the record, we conclude the trial court did not abuse its discretion in concluding all the work performed by Sulzer’s counsel was reasonable and necessary.–12– Rex additionally contends the tria l court improperly awarded Sulzer attorney’s fees for work performed in connection with defending against Rex’s counterclaims. But such fees are recoverable when, as in this case, the prevailing party in a breach of contract case wa s required to defeat the opposing party’s counterclaims to recover fully on its own claim. Bullet Trap, L.L.C. v. Waterproof Positive, LLC , No. 05-18-00529-CV, 2019 WL 3543579, at *7–8 (Tex. App.— Dallas Aug. 5, 2019, pe t. denied) (mem. op.). The facts and legal theories supporting both Sulzer’s contract claim and Rex’s counterclaims were heavily, if not completely, intertwined. The trial court did not err, therefore, in concluding Sulzer was entitled to recover all of its attorney’s fees. We resolve Rex’s second issue against it. We affirm the trial court’s judgment.

221314F.P05 /Amanda L. Reichek / AMANDA L. REICHEK JUSTICE–13– 

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Court of Appeals Fifth District of Texas at Dallas JUDGMENT

REX PERFORMANCE PRODUCTS LLC, Appellant

No. 05-22-01314-CV V. SULZER CHEMTECH USA, INC., Appellee On Appeal from the 134th Judicial District Court, Dallas County, Texas Trial Court Cause No. DC-17-05538. Opinion delivered by Justice Reichek. Justices Partida-Kipness and Breedlove participating.

In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED

. It is ORDERED that appellee SULZER CHEM TECH USA, INC. recover its costs of this appeal from appella nt REX PERFORMANCE PRODUCTS LLC.
Judgment entered January 30, 2024