Court Opinion

ID: 2986924
Source: CourtListenerOpinion
Date Created: 2015-09-23 00:41:45.821809+00
Date Added: 2024-06-11T12:26:29.829927
License: Public Domain

Affirmed as Modified in Part and Reversed and Remanded in Part, and Opinion
and Concurring Opinion filed May 9, 2013.

                                  In The

                  Fourteenth Court of Appeals

                           NO. 14-11-00791-CV

              MAN INDUSTRIES (INDIA), LTD., Appellant
                                    V.

      MIDCONTINENT EXPRESS PIPELINE, LLC, PRIME PIPE
  INTERNATIONAL, INC., AND THE BANK OF TOKYO-MITSUBISHI
                     UFJ, LTD., Appellees

                           NO. 14-11-00892-CV

      MIDCONTINENT EXPRESS PIPELINE, LLC, Cross-Appellant
                                    V.

MAN INDUSTRIES (INDIA), LTD., PRIME PIPE INTERNATIONAL, INC.,
 AND THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., Cross-Appellees

                 On Appeal from the 133rd District Court
                          Harris County, Texas
                    Trial Court Cause No. 2008-56539
                  CONCURRING OPINION

      I respectfully concur in the judgment. I write separately to address the
majority’s handling of omitted findings in disposing of the cross-appeal.
      In its cross-appeal, Midcontinent Express Pipeline, LLC asserts that Man
Industries (India), Ltd. acted in bad faith in seeking and obtaining the April 2008
modification to Midcontinent’s purchase order with Man. Though the trial court
enforced this modification, the trial court made no finding as to whether Man acted
in good faith. Midcontinent has sufficiently raised the issue of whether a finding
of good faith should be supplied by presumption under Texas Rule of Civil
Procedure 299, which governs omitted findings in bench trials. The majority
supplies this finding by presumption without addressing whether the evidence
supports such a finding regarding the subjective component of the definition of
good faith and without addressing whether the evidence is factually sufficient to
support such a finding regarding the objective component of this definition. In
proceeding in this fashion, the majority contravenes the governing rule and
procedure. As explained below, the proper course would be to determine whether
the evidence is legally and factually sufficient to support a finding of good faith as
to both the objective and subjective components. Because the evidence is legally
and factually sufficient to support such a finding, and because the other
requirements of Rule 299 are satisfied, it is appropriate to supply such a finding by
presumption.

   Good Faith in Seeking Modification under the Uniform Commercial Code

      In March 2008, Man told Midcontinent for the first time that Man would run
out of steel before completing production. Man then sought, negotiated, and
obtained a modification to Midcontinent’s purchase order with Man. The trial

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court enforced this modification agreement but did not address in its findings of
fact whether Man complied with its obligation under the Uniform Commercial
Code to act in good faith in seeking and obtaining this modification.1 In its cross-
appeal, Midcontinent asserts that the trial court erred by enforcing this
modification because Man acted in bad faith in seeking and obtaining the
modification.      Midcontinent’s argument raises the issue of whether this court
should supply by presumption under Rule 299 a finding that Man acted with
honesty in fact and observed reasonable commercial standards of fair dealing in
seeking and obtaining the modification (the ―Finding‖).2

                       Omitted Findings Supplied by Presumption

       On appeal, a finding of fact omitted from the trial court’s findings of fact
will be supplied by presumption in support of the judgment as to an element of a
ground of recovery if three conditions are met: (1) an element of the ground of
recovery was included in the findings of fact; (2) a finding of fact as to the element
was not properly requested; and (3) the evidence is legally and factually sufficient
to support a finding of fact as to the element.3 In its findings of fact, the trial court
found that Midcontinent agreed in the April 2008 modification to pay Man an
additional $4.4 million and that Midcontinent breached this agreement.                         The

1
  See Tex. Bus. & Com. Code Ann. § 1.201(b)(20) (West 2013) (defining ―good faith‖ in this
context as ―honesty in fact and the observance of reasonable commercial standards of fair
dealing‖); id. § 1.304 (West 2013) (stating that ―[e]very contract or duty within this title imposes
an obligation of good faith in its performance and enforcement‖).
2
  See Tex. R. Civ. P. 299 (stating that ―[t]he judgment may not be supported upon appeal by a
presumed finding upon any ground of recovery or defense, no element of which has been
included in the findings of fact; but when one or more elements thereof have been found by the
trial court, omitted unrequested elements, when supported by evidence, will be supplied by
presumption in support of the judgment‖).
3
See id.; Foley v. Capital One Bank, N.A., 383 S.W.3d 644, 648 (Tex. App.—Houston [14th
Dist.] 2012, no pet.); Vickery v. Comm’n for Lawyer Discipline, 5 S.W.3d 241, 253, 258 (Tex.
App.—Houston [14th Dist.] 1999, pet. denied).

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Finding was not properly requested. Thus, the first and second conditions are met.
          Considering the evidence in the light most favorable to the Finding,
indulging every reasonable inference that would support the Finding, crediting
favorable evidence if a reasonable factfinder could, and disregarding contrary
evidence unless a reasonable factfinder could not, the trial evidence would enable
reasonable and fair-minded people to find that Man acted with honesty in fact and
observed reasonable commercial standards of fair dealing in seeking and obtaining
the modification.4 Examining the entire record, considering and weighing all the
evidence, including the evidence in favor of, and contrary to, the Finding, the
Finding is not so contrary to the overwhelming weight of the evidence as to be
clearly wrong and unjust.5 The evidence is legally and factually sufficient to
support the Finding, and thus the third condition is met.                  Because all three
conditions are satisfied, this court may supply the Finding by presumption in
support of the trial court’s judgment and reject Midcontinent’s assertion that Man
acted in bad faith in seeking and obtaining the modification.6

                              Proper Procedure under Rule 299

          The majority supplies the Finding by presumption without addressing
whether the record contains legally and factually sufficient evidence to support the
subjective component of the Finding and without addressing whether the record
contains factually sufficient evidence to support the objective component of the
Finding.7 Instead, this court should analyze and determine whether the evidence is

4
 See City of Keller v. Wilson, 168 S.W.3d 802, 823, 827 (Tex. 2005); Bank of Tex. v. VR Elec.,
Inc., 276 S.W.3d 671, 679–80 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) (determining
the evidence was legally sufficient to support a finding of good faith, as defined in Texas
Business and Commerce Code section 1.201(b)(20)).
5
    See Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406–07 (Tex. 1998).
6
    See Foley, 383 S.W.3d at 648; Vickery, 5 S.W.3d at 253, 258.
7
    See ante at pp. 33–38.
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legally and factually sufficient to support both the objective and the subjective
components before supplying the Finding by presumption.8 This important step
ensures full and fair review, and it is required by the rules of procedure.

                                              /s/       Kem Thompson Frost
                                                        Justice

Panel consists of Justices Frost, Christopher, and Jamison.                    (Christopher, J.,
majority).

8
    See Tex. R. Civ. P. 299; Foley, 383 S.W.3d at 648; Vickery, 5 S.W.3d at 253, 258.

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