Opinion ID: 21694
Heading Depth: 3
Heading Rank: 3

Heading: Chevron’s Motion to Reopen

Text: The Railroads contend that the district court erred when it granted Chevron’s motion to reopen the record to present additional evidence on damages. Specifically, the Railroads contend that Chevron improperly offered the testimony of an expert on damages months after the case was submitted to the court for determination. The Railroads also contend that Chevron could have presented the testimony at trial, but chose not to do so. The Railroads argue that Chevron wanted to “wait and see” how the court would interpret the contract before deci ding whether to call the additional witness. Thus, the Railroads maintain that the district court improperly permitted Chevron to get a “second bite at the apple” on the damages issue. A court’s decision to reopen a case “will not be disturbed in the absence of a showing that it has worked an injustice.” Garcia v. Woman’s Hospital of Texas, 97 F.3d 810, 814 (5th Cir. 1996). The factors the trial court should consider are: (1) the importance and probative value of the additional evidence; (2) the reason’s for the moving party’s failure to introduce the evidence at trial; and (3) the possibility of prejudice to the non-moving party. Id. Our review of the district court’s hearing regarding its order to reopen the case reveals that the trial court carefully considered the request before it and expressly limited the additional evidence to damages. The bench trial below involved a voluminous document intensive record, complex issues, and multiple claims for millions of dollars in damages presented by multiple parties. Under these circumstances, we cannot conclude that the trial court’s ruling to allow additional evidence on damages amounted to an abuse of discretion. Furthermore, the hearing transcript reveals that the 21 district court permitted both parties additional time for discovery, and placed parameters on the direct and cross examination of the additional witness. Thus, the district court’s efforts to limit the scope of inquiry, to provide additional time for discovery, and to place parameters on the additional proceeding minimized any apparent prejudice incurred by the Railroads. As such, the Railroads do not establish that the district court’s ruling to reopen “worked an injustice.” See Garcia, 97 F.3d at 814. D. Contract Interpretation and Damages Calculations Chevron argues that the district court’s narrow contract interpretation unfairly limited its damages. The Railroads maintain that the district court’s damages calculations did not comply with Rule 52. 1. District Court’s Interpretation of the Contract Contract interpretation is a question of law which we review de novo. Fina, Inc. v. Arco, 200 F.3d 266, 268 (5th Cir. 2000). Chevron’s challenge to the district court’s interpretation of the shipping contract involves two major points of contention: (1) the proper meaning of “same or related origins and same or related destinations,” and (2) the “merger doctrine.” We address each in turn.
Section 20 of Contract 6018 provides: During the term of this Contract, Carriers shall provide Chevron with net rail contract rates that are equal or lower than net rates of competitors of Chevron with respect to the movement of same commodities [] from same or related origins to same or related destinations as included in addendums to this contract. In the event Chevron has reason to believe that a competitor has a lower net rate or minimum weight, then Chevron will notify carriers in writing and 22 request carriers to certify in writing that Chevron has the equivalent lower contract net rate. (emphasis added). As the district court stated below: “This term (same or related origins to same or related destinations) is significant in that it determines which of the thousands of shipments of plastic resins on the Railroads’ lines each year were to be compared to shipments by Chevron for the purpose of determining if Chevron received equivalent or lower net rates as provided in Section 20.” Thus, Chevron’s damages were contingent on the court’s interpretation of this provision. The more liberal the interpretation, the higher the recovery. Conversely, the more conservative or restrictive the interpretation, the lower the recovery for Chevron. The district court construed “related origins” and “related destinations” to mean points that are rail stations described in tariffs and that are related in the groups described in the National Rate Basis Tariff (the “NRBT”). For example, “origin A” and all points that take the same rates as “origin A” are “related origins.” Thus, “origin B” and all points that take the same rates as “origin B” are “related origins” that constitute another set of “related origins” different from “origin A.” In reaching this conclusion, the district court relied on expert testimony proffered by the Railroads. The district court also reviewed industry treatises and published Interstate Commerce Commission rulings interpreting similar terms. Chevron apparently argues that the same or related origins and destination language should be interpreted based on geography. Specifically, Chevron appears to argue that shipments of plastic resins in the “Gulf coast” region should be the geographic base to compare the rates that the Railroads charged Chevron’s competitors. Furthermore, Chevron asserts that if the parties intended 23 for the NRBT to govern the standards to determine same or related origins and destination, the parties would have expressly referred to the NRBT in the agreement. When interpreting an agreement, courts strive to give effect to the parties’ intent. Borders v. KRLB, Inc., 727 S.W.2d 357, 359 (Tex. App. – Amarillo 1987, writ ref’d n.r.e.). The parties intent is gleaned from the entire agreement, and thus Texas law requires us to “peruse the complete document to understand, harmonize, and effectuate all its provisions.” Questa Energy Corp. v. Vantage Point Energy, Inc., 887 S.W.2d 217, 221 (Tex. App.-- Amarillo 1994, writ denied). Our de novo review supports the district court’s conclusion. First, the term “same or related origins to same or related destination” does not on its face use geography as the mediating principle to determine which groups of origins or destinations are to be used to identify Section 20 violations. Furthermore, Chevron does not identify any provision or language in the agreement that states origins or destinations in the Gulf coast region shall exclusively be used to identify Section 20 violations. However, Section 24 of the Contract 6018 provides that: Shipments made under the provision of this Agreement are subject to AAR (American Association of Railroads) rules and other accepted practices within the industry as the same may be amended from time to time. Services and other matters not specifically addressed in this Agreement shall continue to be governed by and paid for under the rules, regulations, tariffs, and statutes as described above which would apply if the transportation service were provided under tariffs. (emphasis and parenthetical added). Thus, Section 24 expressly defers to industry standards and customs, and rules and regulations. The district court heard testimony from Chevron witnesses Rusty Radloff (“Radloff”) and Clifford Sayre (“Sayre”). Radloff was the principal contract negotiator for the Railroads. Sayre, who was called as an expert witness by the Railroads, was a former 24 transportation consultant and former vice president of DuPont’s materials, logistics and services, with responsibility for its transportation division. At the time of trial, Sayre had approximately 40 years in the plastics industry. Essentially, both Sayre and Radloff testified that the same or related origin and destination language had a specialized meaning in the industry. Sayre testified that the language as understood in the industry refers to rail stations described in tariffs and that are related in groups described in the NRBT. Radloff testified that “same or related origins” refers to groupings of various stations in published tariffs that take the same rate basis. Furthermore, as stated above, ICC rulings support the district court’s interpretation. See Hoerner Waldorf Corp. v. Union Pacific RR Co., 358 ICC 1, 10 (1977)(“the practice of grouping points of origin or destination and applying the same rate to all points with the group is a longstanding characteristic of the rate structure of the country.”); Docket 28300, Class Rate Investigation, 262 I.C.C. 447 (1945)(“Points other than key points in areas of the respective territories accorded key rates are embraced in congruous key points so as to compose logical and natural groupings”). The district court’s conclusion is also consistent with treatises co vering the subject matter. See Transportation and Logistic Dictionary, (1989)(“A number of points , the rates from which are made the same as or with relation to rates from other points in the same group”); Harry Bruce, Distribution and Transpiration Handbook, (1971)(“A group of points, the rates to which are made the same as or with relation to rates to other points in the group”). Although Chevron argues that the district court erred by relying on Radloff’s and Sayre’s testimony and the treatises, we have recognized that a trial court’s reliance on individuals experienced in a particular field for the purposes of obtaining explanation of the technical meaning of terms used in the industry is “prudent.” See Phillips Oil Co. v. O.C., Corp., 812 F.2d 265, 281 (5th Cir. 1987). 25 “In construing a specific contractual term, we must give consideration to the meaning attributed to that term in the industry.” Personal Preference Video, Inc. v. HBO, 986 F.2d 110, 114 (5th Cir. 1993). Additionally, we reject Chevron’s challenge to Sayre’s testimony under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589-90, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), because Sayre’s credentials adduced at trial establish that he was qualified to render expert testimony. We will not upset a district court decision to rely on expert testimony absent a showing of abuse of discretion. See Moore v. Ashland Chemical Inc., 151 F.3d 269, 274 (5th Cir.1998) (en banc) (citing General Electric Co. v. Joiner, 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997)). Chevron does not show that the district court abused its discretion. Therefore, based on our review of the agreement and the pertinent portions of the record, we agree with the district court’s interpretation of “same or related origins to same or related destinations.”6
Chevron claims that the district court improperly applied the merger doctrine and ruled that the favored nations clause in Section 20 of Contract 6018 was not applicable to any of the Connecting Carrier Contracts or shipments. Thus, under the district court’s ruling, shipments made under the Connecting Carrier Contracts could not be used to identify Section 20 violations. This had the effect of limiting the amount of damages Chevron could claim. Contract 6018 provided that: 6 Chevron asserts other claims regarding impeachment, parole evidence, and credibility. However, a review of these claims shows that the court’s rulings did not implicate a substantial right. See Fed.R.Evid. 103(a)(error may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the party is affected). 26 Chevron and Carriers are in the process of negotiating through rates (Base Rates) and until such through rates are agreed upon and are included in the Agreement or other Agreements to which Chevron and Carriers are party (with or without additional carrier), the published tariff rates will apply, less refund allowances shown in the attached addendums. Some of the through rates included “interline shipments.” Interline shipments involved shipments to destinations that were not covered under the Railroads’ lines. As such, connecting carriers were used to transport products from the Railroads lines to destinations on the connecting carriers’ lines. Consequently, separate shipping agreements with the individual connecting carriers were negotiated to provide connecting services. Thus, the question before us is whether Section 20 of Contract 6018 applied to the separate and subsequent Connecting Carrier contracts. The district court applied the merger doctrine and ruled that the subsequent Connecting Carrier contracts did not incorporate Section 20 of the Contract 6018. The “merger doctrine” is an analogue of the parol evidence rule. Merger refers to the absorption of one contract into another subsequent contract and is largely a matter of the intention of the parties. See Pittman v. Lightfoot,, 937 S.W.2d 496, 529 (Tex. App. – San Antonio 1996, no writ): Leon Ltd. v. Albuquerque Commons Partnership, 862 S.W.2d 693, 701 (Tex. App. –El Paso, 1993, no writ). Before one contract is merged into another, the subsequent contract must: (1) be between the same parties as the first; (2) embrace the same subject matter; and (3) must have been so intended by the parties. See Albuquerque, 862 S.W.2d at 700; Smith v. Smith, 794 S.W.2d 823, 827 (Tex. App. –Dallas 1990, no writ). Regarding the first element, both Contract 6018 and Connecting Carrier Contracts were essentially between the same parties because Contract 6018 contemplated that the connecting carriers 27 would become a part of Contract 6018. Although the Connecting Carriers were additional parties, this does not impact our analysis because the merger doctrine is not sought to be applied to t e h Connecting Carriers. As to the second factor, both contracts involve through rates for shipments between the Railroads and other Carriers. Finally, the terms of Contract 6018 contemplate subsequent contracts with Connecting Carriers. As such, because the subsequent contracts with the Connecting Carriers that covered through rates did not provide for Section 20 violations, Section 20 does not apply to the Connecting Carriers Contract. 2. Federal Rule of Civil Procedure 52 The Railroads argue that the district court erred under Rule 52 when it made its damages calculations. Specifically, the Railroad argues that the district court improperly relied on the damages calculations provided by Chevron’s expert Thomas D. Crowley (“Crowley”) because his calculations exceeded the scope of the district court’s preliminary findings of fact and conclusions of law. Furthermore, the Railroads maintain that the district court failed to comply with Rule 52 by failing to state with the requisite specificity the grounds for its damages award. Under Rule 52, “[f]indings of fact, whether based on oral or documentary evidence , shall not be set aside unless clearly erroneous.” Furthermore, “[w]here the court’s finding is based on its decision to credit the testimony of one witness over that of another, that finding, if not internally inconsistent, can virtually never be clear error.” Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 575, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985). The district court awarded principal damages of $9,951,642.00 to Chevron for the Railroads’ Section 20 violations. The district court in reaching its damages calculations pursuant to its preliminary findings of fact and conclusions of law concluded that Chevron’s calculations are more 28 consistent with the evidence. Crowley was Chevron’s chief witness regarding damages calculations. As such, the district court necessarily chose to credit Crowley’s calculations over the Railroads’ calculations. The Railroads mainly contend that Crowley’s calculations were erroneous because they were based on multiple NRBT groups as opposed to one grouping. Additionally, the Railroads argue that Crowley applied the wrong NRBT group origins. In reviewing this issue, we are mindful that clear error is a highly deferential standard. Our review of the district court’s preliminary finding does not evidence a prohibition against the methodology that Crowley used to arrive at his calculations. Furthermore, Contract 6018 does not proscribe a specific method to calculate overcharges incurred vis a vis Section 20 violations. As such, the Railroads fail to show that the district court committed clear error when it relied on Crowley’s calculations to render its damages award. Moreover, in light of the district court’s extensive 53-page Findings of Fact and Conclusions of Law, we reject the Railroads’ contention that the district court fail ed to state the basis for its judgment with the requisite specificity. Even if a trial judge fails to make a specific finding on a particular fact, the reviewing court may assume that the court impliedly made a finding consistent with its general holding so long as the implied finding is supported by the evidence. In re Texas Mortgage Service Corp., 761 F.2d 1068, 1075 n. 12 (5th Cir.1985); Gilbert v. Sterrett, 509 F.2d 1389, 1393 (5th Cir.), cert. denied, 423 U.S. 951, 96 S.Ct. 373, 46 L.Ed.2d 288 (1975). As such, we will not disturb the district court’s damages award. E. Prejudgment Interest 29 The Railroads contend that the district court erred when it denied their request for prejudgment interest for the $282,959.00 that Chevron stipulated in a settlement agreement that it owed the Railroads for erroneous overcharge payments. Prejudgment interest is compensation allowed by law as additional damages for lost use of the money due as damages during the lapse of time between the accrual of the claim and the date of judgment. See Johnson & Higgins of Tex. Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998). Under Texas law, there are two legal sources for an award of prejudgment interest: (1) general principle of equity, and (2) an enabling statute. See id.; Canvar v. Quality Control Parking, Inc., 969 S.W.2d 549, 552 (Tex. 1985); Phillips Petroleum Co. v. Stahl Petroleum Co., 569 S.W. 2d 480, 483-85 (Tex. 1978). We review a district court’s denial of prejudgment interest for abuse of discretion. See Ensly v. Cody Resources, Inc., 171 F.3d 315, 321 n.14 (5th Cir. 1999); see also Purcell Constr. v. Welch, 17 S.W.3d 398, 402 (Tex. App.-- Houston [1st Dist.] 2000)(“[w]e review a challenge to a trial court’s award of pre-judgment interest using an abuse of discretion standard, giving limited deference to the court’s application of the law to the facts”). The Railroads do not point to an enabling statute. Thus, the only ground available to the Railroads for prejudgment interest must be found in equity. The Railroads merely make a conclusory claim that they are entitled to prejudgment interest. They do not assert that the district court abused its discretion, nor do they put forth reasons or grounds that woul d warrant the district court to exercise its equit able powers to award prejudgment interest. Under these circumstances, the Railroads do not show that the district court’s denial of their request for prejudgment interest amounted to an abuse of discretion. F. Attorneys’ fees 30 Chevron claims that the district court erred when it denied its request for reasonable attorneys fees. The district court reasoned that because “both parties [] prevailed and failed on certain legal and factual issues” an award of “attorneys’ fees and costs to either side would not be equitable or just.” “The award of attorneys’ fees is governed by the law of the state whose substantive law is applied to the underlying claims.” Exxon, Corp v. Burglin, 4 F.3d 1294, 1301 (5th Cir. 1993)(citing Kucel v. Walter E. Heller & Co., 813 F.2d 67, 73 (5th Cir. 1987)). Under Texas law, when a prevailing party in a breach of contract suit seeks attorneys’ fees, an award of reasonable fees is mandatory under Tex. Civ. Prac. & Rem .Code Ann. § 38.001(8). See World Help v. Leisure Lifestyles, 997 S.W.2d 662, 683 (Tex. App.–Fort Worth, 1998); Atlantic Richfield Co. v. Long Trusts, 860 S.W.2d 439, 449 (Tex. App.–Texarkana 1993, writ denied). Thus, to obtain an award of attorneys’ fees under section 38.001, a party must meet two requirements: (1) it must prevail on a cause of action for which attorneys’ fees are recoverable, and (2) it must recover damages. See Green Intern. Inc. v. Solis, 951 S.W.2d 384, 389 (Tex.1997); Kenneth Leventhal & Co. v. Reeves, 978 S.W.2d 253, 257 (Tex.App.--Houston [14th Dist.] 1998, no pet.). When a claim under section 38.001 is successful, a trial court has the discretion to determine the proper amount of attorneys’ fees. Additionally, when a claim is successful, and reasonable fees are proven, a trial court has no discretion to deny the fees. See World Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 683 (Tex.App.-- Fort Worth 1998, pet. denied); Cortland Line Co., Inc. v. Israel, 874 S.W.2d 178, 184 (Tex.App.--Houston [14th Dist.] 1994, writ denied). 31 In the instant case, Chevron prevailed on its contractual claim based on the Railroads’ breach of Sect ion 20. Furthermore, the district court awarded damages based on the Railroads’ breach. The record also evidences Chevron’s presentment of a claim for attorney’s fees to the district court. The fact that Chevron may not have prevailed on all of its legal and factual claims does not act as a per se bar to attorneys’ fees because Chevron prevailed and received damages on its contract claim. The district court did not find that Chevron’s request was unreasonable. As such, the district court abused its discretion by denying Chevron’s request for attorneys’ fees. Therefore, we remand to the district court with instructions to apply the factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir., 1974).7