Court Opinion

ID: 4521706
Source: CourtListenerOpinion
Date Created: 2020-04-02 10:14:14.957451+00
Date Added: 2024-06-11T12:05:34.160337
License: Public Domain

AFFIRMED and Opinion Filed March 31, 2020

                                    S   In The
                             Court of Appeals
                      Fifth District of Texas at Dallas
                                No. 05-16-01518-CV

 CUDD PRESSURE CONTROL, INC. AND CUDD PUMPING SERVICES,
                       INC., Appellants
                              V.
  EXCO RESOURCES, INC. AND EXCO OPERATING COMPANY, LP,
                          Appellees

               On Appeal from the 116th Judicial District Court
                            Dallas County, Texas
                    Trial Court Cause No. DC-14-06427

                         MEMORANDUM OPINION
                    Before Justices Molberg, Carlyle, and Evans
                             Opinion by Justice Evans
      On appeal, appellants Cudd Pressure Control, Inc. and Cudd Pumping

Services, Inc. (“Cudd”) assert the trial court erred by: (1) refusing to consider parol

evidence to clarify alleged ambiguities in the Contractor Dedicated Crew Work

Order (“Work Order”); (2) ruling Cudd failed to plead the defense of offset to

appellees EXCO Resources, Inc.’s and EXCO Operating Company, LP’s (“EXCO”)

counterclaim; and (3) concluding Cudd’s failure to provide reconciliation reports
under article 6 of the Work Order is a condition precedent that bars Cudd’s defense

to EXCO’s counterclaim. We affirm.

                                        BACKGROUND

       A.       Factual Background
       EXCO is involved in the exploration and development of oil and gas reserves.

Cudd provides oil field services such as hydraulic fracture stimulations. In May

2010, EXCO and Cudd entered into a Master Service and Supply Agreement

(“Master Agreement”) for the provision of services.                      Pursuant to the Master

Agreement, Cudd agreed to supply EXCO with various services related to wells

operated by EXCO.

       In October 2011, EXCO and Cudd entered into the Work Order for hydraulic

fracture stimulation in east Texas and northern Louisiana. The Work Order contains

a provision which specifically incorporated the Master Agreement.1 At issue in this

case are three provisions of the Work Order—Articles 6, 18 and 19.

       Article 6 of the Work Order addresses billing, reconciliation reports and

invoices:

       Company will be billed on a per stage basis at the worksite. The ticket
       will reflect a flat “per stage” fixed cost charge based on the assumed
       fixed cost recovery threshold of one contractor crew performing at least
       two (2) stages (“Fracs”) in a 12 hour day, for an average of forty-four
       (44) Fracs per month in a twenty (20) day pumping month, and the
       1
          Article 1 of the Work Order provides: “The terms and conditions of the above referenced Master
Service and Supply Agreement shall remain in effect and shall be incorporated into and govern this [Work
Order].”

                                                 –2–
      applicable variable and line item costs. Contractor shall provide
      Company a monthly or quarterly reconciliation report, at Company’s
      option, clearly showing the difference between the total fixed costs
      billed during the period and the actual fixed costs due for the period.
      Any amount billed and paid by Company in excess of the actual fixed
      costs due will be credited to Company’s account. Company will be
      invoiced for any additional sums due Contractor as a result of any
      billing deficits that occurred during the period. All Contractor bills and
      invoices shall reference this Agreement and the site where the work is
      performed.

      Article 18 of the Work Order addresses pricing and provides as follows:

      Pricing shall be determined by combining a Fixed Service Charge with
      applicable Variable Charges for the services performed by Contractor,
      in accordance with the pricing tables in sections (a) and (b) below.
      Thereafter, the service charges, rates, or other remuneration shall be
      changed only upon mutual agreement by both parties.

The pricing table in section (a) of article 18 provides Cudd’s Fixed Service Charge

is $57,364.000 for a dedicated contractor crew performing 44 Fracs per month on a

12 hour basis.

      Article 19 of the Work Order, entitled “Price Adjustments,” describes the

procedures for obtaining adjustments to the pricing described in Article 18.

Specifically, Article 19 provides as follows:

      All fixed and variable prices herein shall be fixed for six (6) months.
      However, for the purpose of maintaining the benefit of the parties’
      bargain, Company and Contractor agree that after the expiration of the
      first six (6) months of this Agreement, Contractor’s fixed and/or
      variable pricing may be adjusted once every six months to reflect any
      increase or decrease in the market prices of sand, organic chemicals,
      diesel fuel, labor, the replacement and recertification costs of Frac
      irons, Fluid-Ends, and expendables.

      The party seeking the price adjustment shall provide thirty (30) days
      prior written notice of its intent to adjust price to the other party. Each
                                          –3–
      adjustment request shall include: the amount of the proposed
      adjustment; a written explanation of the need for the adjustment; and
      reasonable evidence of the percentage change in market price. Exhibit
      C provides an example of the method used to track changes in the
      replacement and recertification costs of Frac irons, Fluid-Ends and
      expendables.

      Price adjustments shall become effective no later than thirty (30) days
      after receipt by the non-requesting party of the price adjustment notice.
      Should the non-requesting party have reason to challenge the amount
      of an adjustment request, the nonrequesting party must notify the other
      party of the reason for its challenge including supporting evidence
      within fifteen (15) days after receipt of the adjustment notice, and the
      parties shall negotiate in good faith on the appropriate adjustment
      amount.

      Because the parties acknowledge that this agreement is intended to be
      cooperative in nature, but that fluctuations in price are inherent in the
      industry, the challenging party agrees to honor any adjustment request
      in full during the course of negotiations, and up to five (5) days
      thereafter. Negotiated price adjustments shall take effect on the fifth
      day after an agreement has been reached. Notwithstanding anything
      contained herein to the contrary, in no event shall Contractor be
      required to disclose any trade secrets or third party supplier pricing not
      directly billed to the account of company.

Important to our analysis later are the provisions requiring thirty days’ prior written

request for a price change containing evidence of market price and a fifteen day

opportunity to object and negotiate an agreed price increase.

      The two-year term of the Work Order expired on December 31, 2012, and

EXCO did not exercise its option to renew the agreement for an additional year. In

                                         –4–
February 2013 and without having provided any reconciliation reports, Cudd

invoiced EXCO for $6,734,240.88 for increased costs of fluid ends and frac irons.2

       B.      Procedural Background

       In June 2014, Cudd filed a lawsuit against EXCO alleging causes of action for

breach of contract, promissory estoppel, and mutual mistake and seeking

reimbursement the costs for fluid ends replacement. On September 3, 2015, EXCO

filed a traditional and no-evidence motion for summary judgment on Cudd’s claims.

Cudd filed a response which included the affidavit of Tim Mathews, the Service Line

Vice President for Cudd Energy Services. EXCO objected to certain paragraphs of

Mathews’s affidavit as being inadmissible under the parol evidence rule, irrelevant,

and self-serving. On September 21, 2015, the trial court granted EXCO’s motion as

to the promissory estoppel and mutual mistake claims and denied the motion as to

the breach of contract claim. The trial court also sustained EXCO’s objections to

Mathew’s affidavit and struck the evidence.

       In February 2016, Cudd filed an amended petition alleging it was entitled to

“payment of the replacement fluid-ends as a fixed cost, pursuant to Article 6” of the

Work Order. Cudd’s amended petition only contained a breach of contract claim.

EXCO then filed a second motion for summary judgment on Cudd’s breach of

   2
      Fluid ends are a component of the pumping equipment used in the hydraulic fracturing process. In
its Objections and Response to EXCO’s Second Motion for Summary Judgment, Cudd states that “[t]he
parties do not dispute that fluid-ends are fixed costs.”

                                                –5–
contract claim. Cudd filed a response which included the deposition testimony of

Mathews, Bob Weaver, and Marty Yohn as well as the affidavit of Steve Briggs.

EXCO objected to various statements in the affidavits or deposition testimony as

being inadmissible based on the parol evidence rule, relevancy, the statute of frauds,

speculation and hearsay.     The trial court sustained EXCO’s objections to the

challenged portions of Cudd’s summary judgment evidence and granted EXCO’s

second summary judgment motion.

      EXCO sought and obtained leave to file a counterclaim against Cudd for

breach of contract. In its counterclaim, EXCO alleged Cudd had overcharged EXCO

$136.00 per stage for fixed service charges. In May 2016, Cudd filed an answer

asserting numerous defenses, including the defense of offset.

      On September 19, 2016, the parties appeared at a pretrial conference. The

trial court and counsel held a lengthy conference off the record during which counsel

argued numerous matters on which the trial court ruled. At the conclusion, the trial

court summoned the court reporter, then on the record summarized every argument

previously made by each side and each of her rulings. After summarizing each

argument on a particular matter and her ruling, the trial court provided counsel the

opportunity to add anything to her summary and on a few matters they did;

otherwise, they affirmed the trial court’s summary of each argument and her rulings

                                         –6–
were accurate.3 The trial court noted the only remaining issue was EXCO’s breach

of contract claim against Cudd. EXCO argued Cudd failed to plead offset as an

affirmative defense to EXCO’s claim for reimbursement. The trial court concluded

“offset was not pled as a defense to [EXCO’s] claim for reimbursement of the

overcharge.” The trial court then ruled Cudd was not entitled to be paid above the

contractual amount of $57,364 per frac because no reconciliation reports were ever

provided to EXCO.          Accordingly, the trial court ruled in favor of EXCO on its

counterclaim and the parties agreed to present testimony on EXCO’s attorney’s fees

to the court. The trial court entered judgment which referenced its prior summary

judgment rulings and awarded EXCO damages, attorney’s fees, and interest.

                                           ANALYSIS

       A.      Standard of Review

       We review an order granting summary judgment de novo. Alexander v.

Wilmington Sav. Fund Soc’y, 555 S.W.3d 297, 299 (Tex. App.—Dallas 2018, no

pet.). However, we review a trial court’s decision to admit or exclude summary

judgment evidence under an abuse of discretion standard. Holloway v. Dekkers, 380
S.W.3d 315, 320 (Tex. App.—Dallas 2012, no pet.). We must uphold the trial

court’s ruling if the record shows any legitimate basis supporting that ruling. Id.

   3
      The appellate record is well-preserved by the trial court’s method and neither sides asserts the
contrary. See TEX. R. APP. P. 33.1.
                                                –7–
        B.      Summary Judgment Evidence

        In its first issue, Cudd argues there was an oral agreement in which the parties

agreed to treat fluid ends as a reimbursable expense rather than as part of the fixed

service charge in the Work Order. Cudd asserts the trial court improperly refused to

consider parol evidence that would have resolved the ambiguity of the Work Order

and established the parties’ oral agreement.4

                i)      Parol evidence

        The primary concern of a court in construing a written contract is to ascertain

the true intent of the parties as expressed in the instrument. Nat’l Union Fire Ins.

Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). If a

written contract is so worded that it can be given a definite or certain legal meaning,

then it is not ambiguous. Id. Further, a disagreement over the meaning of a contract

provision does not render the provision ambiguous. Nicol v. Gonzales, 127 S.W.3d
390, 394 (Tex. App.—Dallas 2004, no pet.). Parol evidence is not admissible for

the purpose of creating an ambiguity. CBI Indus., 907 S.W.2d at 520. If, however,

the language of a contract is subject to two or more reasonable interpretations, it is

ambiguous. Id. Whether a contract is ambiguous is a question of law for the court

    4
      EXCO asserted parol evidence, statute of frauds, relevance, hearsay and speculation objections in
response to the evidence submitted in support of Cudd’s response to EXCO’s second motion for summary
judgment. The trial court sustained all of EXCO’s objections without stating on which ground they were
granted. We note Cudd did not address EXCO’s relevance, hearsay or speculation objections in its briefing.
For this reason alone, the trial court’s ruling should be affirmed.
                                                  –8–
to decide by looking at the contract as a whole in light of the circumstances present

when the contract was entered. Id. Only where a contract is first determined to be

ambiguous may the courts consider the parties’ interpretation and admit extraneous

evidence to determine the true meaning of the contract. Id.

        Although Cudd did not plead or otherwise argue the Work Order was

ambiguous in the trial court below, it now argues on appeal the Work Order is

ambiguous because Article 19 does not state it is the sole or exclusive method to

recover the cost of fluid ends.5 In support of this assertion, Cudd cites to Sage Street

Associates v. Northdale Construction Co, 863 S.W.2d 438 (Tex. 1983). However,

the court in Sage Street only stated a “court may conclude that a contract is

ambiguous even in the absence of such a pleading by either party.” See Sage Street

Assocs., 863 S.W.2d at 445 (emphasis added); see also Crow-Billingsley Stover

Creek, Ltd. v. SLC McKinney Partners, L.P., No. 05-09-00962-CV, 2011 WL
3278520, at *8 (Tex. App.—Dallas Aug. 2, 2011, no pet.). Further, we distinguished

Sage Street as it involved an appeal after a jury trial in which ambiguity was not pled

but was tried by consent. Crow-Billingsley Stover Creek, Ltd., 2011 WL 3278520,

at *8. For that reason, this Court previously noted, “[w]e cannot agree Sage Street

    5
      The only mention of “ambiguity” by Cudd in the pleadings below is contained in its response to
EXCO’s second motion for summary judgment. In that pleading, Cudd argued that “the [Work Order] does
not provide the type of clarity with respect to price adjustments accounting for market changes addressed
in Article 19 versus the adjustments to the methodology of fluid-end costs addressed in Exhibit C.” This is
not the same argument that it presents on appeal.
                                                   –9–
Associates stands for the proposition that it is ‘not necessary’ to plead ambiguity at

the trial court level in order to raise that issue in this Court in a summary judgment

case.” Id. Similarly, this case was a summary judgment case and the issue of

ambiguity was not tried by consent.

      However, were we to proceed past any assumed pleading defects, we would

then examine whether the trial court acted within its discretion in excluding Cudd’s

parol evidence. As noted in their objection to Cudd’s evidence, EXCO asserted

Cudd’s deposition and affidavit evidence was offered to “alter the plain meaning of

the [Work Order]” or “contradict, vary or add terms to the terms” of the Work Order.

In this case, the terms of the Work Order are not ambiguous. Article 18 of the Work

Order provides pricing is composed of a fixed service charge and a variable charge

and determined in accordance with the tables set forth in article 18. Both parties

agree fluid ends are part of the fixed service charge. Article 18 then provides,

“service charges, rates, or other remuneration shall be changed only upon mutual

agreement by both parties.” Article 19 of the Work Order then provides all fixed

and variable prices are fixed for six months but after that time period either party

could adjust the pricing on either fixed or variable prices to “reflect any increase or

decrease in the market prices” of numerous items including fluid ends. The Work

Order then provided a very specific method for how the parties would address price

changes of fluid ends, the very subject matter at issue in this lawsuit—such as thirty

days’ prior written request for a price change containing evidence of market price
                                        –10–
and a fifteen day opportunity to object and negotiate an agreed price increase. An

unambiguous contract will be enforced as written, and parol evidence will not be

received for the purpose of creating an ambiguity or to give the contract a meaning

different from that which its language imports. See David J. Sacks, P.C. v. Haden,

266 S.W.3d 447, 450 (Tex. 2008). For this reason, we conclude the trial court acted

within its discretion to exclude parol evidence based on Cudd’s ambiguity argument.

             ii)    Statute of frauds

      The statute of frauds requires an agreement to be in writing if it cannot be

performed within one year from the date it was made. See TEX. BUS. & COM. CODE

ANN. § 26.01(b)(6). Not every oral modification to a contract within the statute of

frauds is barred. Am. Garment Props., Inc. v. CB Richard Ellis-El Paso, L.L.C., 155
S.W.3d 431, 437 (Tex. App.—El Paso 2009, no pet.). However, an oral modification

of a written contract is enforceable under the statute of frauds only if the

modification does not materially alter the obligations imposed by the underlying

agreement. Blackstone Med., Inc. v. Phoenix Surgicals, L.L.C., 470 S.W.3d 636,

647 (Tex. App.—Dallas 2015, no pet.).

      Here, Cudd argues the alleged oral agreement to reimburse the costs of fluid

ends separately rather than as an adjustment to the fixed service charge is not subject

to the statute of frauds because it “did not materially alter the obligations of the

contract.” In support of this argument, Cudd cites to Garcia v. Karam, 276 S.W.2d
255 (Tex. 1955), a case which involved a purchaser’s action for a seller’s alleged
                                        –11–
breach of a written contract for the sale of realty. However, as this Court has

previously noted, Garcia did not involve a contract with an initial term longer than

one year nor did it discuss application of the statute of frauds to such a contract.

Berryman’s South Fork, Inc. v. J. Baxter Brinkmann Int’l Corp., 418 S.W.3d 172,

194 (Tex. App.—Dallas 2013, pet. denied). In that case, we concluded as follows:

      Appellants cite no authority, and we have found none, to support the
      position that a modification not capable of being performed within one
      year falls outside the statute of frauds if it constitutes an “immaterial
      change” to the original contract. We cannot agree with appellants that
      the materiality of the modification in question has any bearing on the
      application of the statute of frauds in this case.
Id. at 194 (internal citations omitted).

      In this case, Cudd argues it paid for the replacement of fluid ends used on

fracturing operations it performed on behalf of EXCO throughout the contractual

term. At the end of the two-year term, Cudd submitted an invoice for the costs of

the fluid ends. As Cudd waited until the end of the two-year term of the Work Order

before submitting its invoice, the modification was not capable of being performed

outside of the statute of frauds and the materiality of the modification is irrelevant.
Id.

      However, even if we were to analyze the materiality of the modification, we

cannot agree such a change is immaterial. Articles 18 and 19, as described above,

contained specific pricing terms and tables explaining the charges and how to obtain

pricing adjustments. EXCO argues in its brief “the price adjustment provisions in

                                           –12–
the [Work Order] were heavily negotiated and critical to EXCO because EXCO was

required to charge expenses back to its working interest owners at the time the

expenses were concerned.” Thus, Cudd’s argument that the oral modification

“merely changed the timing of the payment” is inaccurate when the alleged

modification would affect what EXCO was able to charge back to its working

interest owners. Cudd does not cite to any cases where heavily negotiated terms

such as pricing and pricing adjustment are defined as immaterial. For these reasons,

we conclude the trial court acted within its discretion to exclude parol evidence based

on Cudd’s statute of frauds argument and we overrule Cudd’s first issue.6

        C.      Offset

        In its second issue, Cudd argues the trial court incorrectly ruled Cudd failed

to plead the defense of offset to EXCO’s counterclaim for breach of contract. Cudd

also objects the trial court also erred by denying it leave to amend, allowing a trial

amendment, or granting a continuance for discovery.

                i)      Additional facts

        On March 4, 2016, EXCO sought leave to file a counterclaim against Cudd.

In its breach of contract claim, EXCO asserted Cudd breached the Work Order by

overcharging EXCO $136 per stage for fixed service charges.

    6
      As we have affirmed the trial court’s decision on the basis of parol evidence as well as statute of
frauds, we need not address the remaining arguments asserted by EXCO.
                                                 –13–
      The trial court granted EXCO’s motion for leave on April 14, 2016, and the

order provided the counterclaim was deemed filed as of March 4, 2016.

      On May 4, 2016, Cudd filed an original answer to EXCO’s counterclaim and

asserted numerous defenses. On July 6, 2016, Cudd filed its First Amended Original

Answer to Counter-Plaintiffs’ Original Counterclaim. Paragraph 10 of the first

amended answer provides as follows:

      EXCO’s claims are barred, in whole or in part, because Cudd is entitled
      to offset for sums owed by EXCO for its failure to reimburse Cudd for
      costs for consumables and other reimbursable costs that EXCO agreed
      to pay.

      On September 19, 2016, the trial court held a pretrial conference and made

the following statements:

      THE COURT: During the course of our pretrial conference on the
      motion in limine, we started talking about this issue of whether or not
      offset had been pled as a defense to the claim that is currently before
      the Court by EXCO, that claim being, as I mentioned earlier, a claim
      for reimbursement for what EXCO describes as an overpayment to the
      tune of $66,184.

      The claim is predicated upon the theory -- and, Ms. McComas, I'll have
      you confirm this to make sure that I have it accurate for the record. But
      the claim for $67,184 is predicated upon the theory that Cudd
      overcharged EXCO $136 for 494 stages that were performed on or after
      March 4th, 2012.

      MS. MCCOMAS: That’s correct.

      THE COURT: All right. And so reimbursement then is being sought
      for that $136 times the 494 stages, to equal the 66 -- 67,184. Is that
      fair?

      MS. MCCOMAS: Correct.

                                       –14–
          THE COURT: The -- the contention that you made during the pretrial
          conference, Ms. McComas, that there is no pleading before the Court
          where offset has been pled as an affirmative defense to that claim, only
          as an affirmative defense to a prior claim that the Court has dispensed
          with in summary judgment. Fair?

          MS. MCCOMAS: Fair.

          THE COURT: Ms. Vulpitta, you then drew the Court’s attention to
          various provisions in your live pleading, we looked in particular at
          Paragraph 37 and we looked at Paragraph 10, and the Court indicated
          that the Court was not and is not persuaded that those – that Paragraph
          3 supports an offset defense as it relates to this specific claim that is
          before the Court today. Fair?8

          MS. VULPITTA: Fair.

          THE COURT: Okay. Having reached the conclusion that offset was not
          pled as a defense to Cudd’s claim for reimbursement of the overcharge
          of 67,184, the Court then had a discussion about the extent to which
          there would be an unfair surprise or prejudice in the Court allowing
          Cudd to go forward on that. And we had a discussion that included,
          Ms. McComas, that you all have not conducted discovery on any such
          defense because it was not pled . . . .

7
    Paragraph 3 of Cudd’s Answer states as follows:

          EXCO's claims are barred, in whole or in part, due to EXCO’s promise to pay increased
          stage costs as the result of negotiations between Cudd and EXCO; EXCO’s foreseeability
          that Cudd would rely on EXCO’s promise to pay higher stage costs during the negotiation
          of certain price adjustments and pricing changes under the terms of the DCWO; and Cudd’s
          substantial reliance upon EXCO’s promise to pay higher stage costs when it ultimately
          agreed to its detriment to certain price adjustments and pricing changes under the terms of
          the DCWO.

      8
    Cudd does not assert that the trial court erred by failing to consider paragraph 3 as a defense to
EXCO’s counterclaim.

                                                    –15–
               ii)     Analysis
       Cudd argues there is more than one interpretation of what fluid ends means,

although it previously characterized the term as a consumable or reimbursable cost.

For example, Cudd notes that the Work Order also identified the minimum

guaranteed fixed service charge as a “reimbursable cost.”9                       At the pretrial

conference, counsel for Cudd argued that “[i]t is Cudd’s position that those other

costs would have and does [sic] include the costs associated related to fixed costs

that’s in Article 18 that has the pricing table per stage.” Cudd appears to argue

EXCO owed Cudd additional charges for months that EXCO failed to meet the bare

minimum threshold of at least 30 fracs per month and as well as those months EXCO

should have paid a higher fixed cost per month or per quarter as stated in article

18(a)(iii) of the Work Order. To the extent the pleadings did not “properly address

the offset for the fixed costs,” Cudd argues the trial court erred by failing to allow

Cudd to replead, offer a trial amendment, or allow Cudd a continuance to conduct

discovery on or respond to EXCO’s claim of unfair surprise and prejudice.

       The trial court concluded the live pleading only contained an affirmative

defense to a prior claim it had disposed of on summary judgment, and did not contain

an affirmative defense of offset for the claim before it. We agree. The burden of

pleading offset and proving facts necessary to support it are on the party making the

   9
     Article 18 provides: “[EXCO] agrees to reimburse [Cudd] for fixed cost charges of $2,524,043 per
month for total Frac counts under 30 Fracs per month or 90 Fracs per quarter.”
                                               –16–
assertion. Brown v. Am. Transfer and Storage Co., 601 S.W.2d 931, 936 (Tex.

1980). Here, the argument asserted by Cudd in its pleadings is not the argument

asserted by Cudd at the pretrial conference. Cudd had the burden of establishing the

facts and failed to do so.

        In regard to Cudd’s assertion the trial court abused its discretion in denying

Cudd an opportunity to replead, offer a trial amendment, or allow Cudd a

continuance to conduct discovery, we note Cudd elected to raise this new argument

immediately before trial was scheduled to begin. Cudd did not provide EXCO with

fair notice of this affirmative defense. Absent a clear abuse of discretion, we will

not disturb the trial court’s rulings. 10 Under these circumstances, it was well within

the trial court’s discretion to deny Cudd’s request to amend, leave to file a trial

amendment, or allow a continuance. Accordingly, we overrule Cudd’s second issue.

        10
            See Hardin v. Hardin, 597 S.W.2d 347, 349 (Tex. 1980) (“The right of amendment under Rule
63 is subject to the opposing party’s right to show surprise, as determined in the exercise of the trial court’s
discretion. This showing may be based on the trial court’s conclusion that the amendment on its face is
calculated to surprise or that the amendment would reshape the cause of action, prejudicing the opposing
party and unnecessarily delaying the trial.”); Geis v. Colina Del Rio, LP, 362 S.W.3d 100, 116 (Tex. App.—
San Antonio 2011, pet. denied) (“A trial court has the discretion to refuse a trial amendment when the
amendment asserts a new cause of action or defense, and therefore, is prejudicial on its face, and the
opposing party objects to the amendment.”); BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789,
800 (Tex. 2002) (“This Court will not disturb a trial court’s order denying a motion for continuance unless
the trial court has committed a clear abuse of discretion.”).

                                                    –17–
      D.    Condition Precedent

      In its third issue, Cudd argues the trial court erred in concluding article 6 of

the Work Order is a condition precedent that bars Cudd’s defense to EXCO’s

counterclaim.

            i)     Additional facts

      At the September 19, 2016 pretrial conference, the trial court concluded Cudd

is not able to claim or offet additional amounts as a matter of law because no

reconciliation reports were ever provided, regardless of whether the affirmative

defense of offset had been adequately pled:

      THE COURT: [Y]ou believe that as a matter of law they are not able
      to raise the issues that they desire to raise in connection with the
      purported offset defense because of Paragraph 6 in the [Work Order],
      which is Plaintiff’s Exhibit 1A in the pretrial pleadings. Fair?

      MS. MCCOMAS: Correct.

      THE COURT: Okay. Your raising the issue in Paragraph or Article 6
      caused the Court then to have to examine whether or not as a legal
      matter Cudd is entitled to raise that issue of offset. So setting aside for
      a moment that there’s no pleading, then going on to this legal issue of
      whether or not they are entitled to claim this, that was the issue that the
      Court was presented with.

      And after analyzing the language in Paragraph 6 or Article 6, the Court
      concludes that Cudd is not entitled to be paid an amount above the
      $57,364 based on 44 fracs per month, the 44-frac-per-month default
      provision that’s set forward in the contract, because no reconciliation
      reports were ever provided. And as I understood it, to this day no
      reconciliation reports have been provided.

                                        –18–
      Is that fair in terms of what we talked about off the record, counsel?

      MS. MCCOMAS: Your Honor, and no invoices.

      THE COURT: And no invoices.

      So based upon that, the Court reached that conclusion. And -- and so
      where does that leave us? Well, it’s undisputed that we had 494 stages
      under the [Work Order] that were billed on or after March 4th, 2012.
      That’s not in dispute, correct, parties?

      MS. VULPITTA: Correct.

      MR. ANIGIAN: Correct.

      THE COURT: And it is further not in dispute that an amount of $136
      was billed in excess of 57,364 for each one of those stages.

      MR. ANIGIAN: Correct.

      MS. VULPITTA: Correct.

                                         ***

      THE COURT: All right. So it seems then that based on the Court’s
      ruling on the legal issue of the effect of Article 6 to the -- the matter
      that’s before the Court, that the only factual dispute for the jury is on
      the reasonableness and necessity of attorney’s fees on the claim that
      EXCO has before the Court.

                   ii)    Analysis
      The trial court concluded Cudd could not raise an offset defense as a matter

of law because no reconciliation reports were provided in accordance with article 6

of the Work Order. Essentially, the trial court concluded, even if offset had been

pleaded as Cudd argued it, Cudd’s failure to deliver a reconciliation report prevented

it from claiming additional alleged deficits owing by EXCO.

                                        –19–
         In response, Cudd argues EXCO had a duty to request the reconciliation

reports and article 6 does not provide any deadlines for producing these reports. We

disagree with this interpretation. Article 6 of the Work Order provides, “[Cudd]

shall provide [EXCO] a monthly or quarterly reconciliation report, at [EXCO’s]

option, clearly showing the difference between the total fixed costs billed during the

period and the actual fixed costs due for the period.” In this provision, the parties

agreed Cudd shall provide the reconciliation reports to EXCO. Further, while

EXCO had the option to request such reports either monthly or quarterly, Cudd was

required to provide such reports on at least a quarterly basis. Had the reconciliation

reports been provided to EXCO on a quarterly basis, then the Master Agreement

required EXCO to make payment within thirty days.11

         Finally, Cudd argues the trial court “inferred a condition precedent from an

absence of terms” and violated the canon of contract construction that a court may

not rewrite the parties’ contract. Cudd cites numerous cases in support of its

assertion that courts will not construe a contract provision as a condition precedent

   11
        Article III of the Master Agreement provides as follows:
         Unless otherwise agreed to in a separate written agreement between [Cudd] and [EXCO],
         within thirty (30) days after the receipt by [EXCO] of [Cudd’s] invoice, and as fully
         complying with all specifications and requirements of this Agreement and any work orders
         or purchase orders, [EXCO] shall pay [Cudd], as provided below, for (i) services performed
         or (ii) goods, equipment or facilities delivered.

                                                  –20–
unless compelled to do so by language that may be construed in no other way.12 We

disagree with Cudd’s conclusion that the trial court added a contract term or re-wrote

the language. To the contrary, the trial court applied the terms of article 6 as they

were written. At the pretrial conference, the trial court noted Cudd was not entitled

to be paid an amount above $57,364 based on 44 fracs per month because no

reconciliation reports had ever been provided. Further, the trial court noted, “[a]nd

as I understood it, to this day no reconciliation reports have been provided.” As of

the date of trial, Cudd had never provided a reconciliation report or invoiced EXCO

for any amounts it sought to claim in its offset defense. In this situation, the trial

court was not reading a term into the contract but logically applying the existing

contract terms—Cudd cannot offset hypothetical amounts never submitted against

the determined amount, $67,184, owed to EXCO.

        For these reasons, we conclude the trial court properly directed verdict in

favor of EXCO on its breach of contract claim and we overrule Cudd’s third issue.

                                       CONCLUSION

        For all the reasons stated above, we affirm the trial court’s judgment.

   12
      See Chambers v. Hunt Petroleum Corp., 320 S.W.3d 578 (Tex. App.—Tyler 2010, no pet); Arbor
Windsor Court, Ltd. v. Weekley Homes, LP, 463 S.W.3d 131 (Tex. App.—Houston [14th Dist.] 2015, pet.
denied); Criswell v. European Crossroads Shopping Center, Ltd., 792 S.W.2d 945 (Tex. 1990).
                                              –21–
                /David Evans/
                DAVID EVANS
                JUSTICE

161518F.P05

              –22–
                                    S
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                   JUDGMENT

CUDD PRESSURE CONTROL,                         On Appeal from the 116th Judicial
INC. AND CUDD PUMPING                          District Court, Dallas County, Texas
SERVICES, INC., Appellants                     Trial Court Cause No. DC-14-06427.
                                               Opinion delivered by Justice Evans.
No. 05-16-01518-CV           V.                Justices Molberg and Carlyle
                                               participating.
EXCO RESOURCES, INC. AND
EXCO OPERATING COMPANY,
LP, Appellees

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

    It is ORDERED that appellees EXCO RESOURCES, INC. AND EXCO
OPERATING COMPANY, LP recover their costs of this appeal from appellants
CUDD PRESSURE CONTROL, INC. AND CUDD PUMPING SERVICES, INC.

Judgment entered March 31, 2020.

                                        –23–
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