Court Opinion

ID: 6316100
Source: CourtListenerOpinion
Date Created: 2022-02-21 09:12:24.357152+00
Date Added: 2024-06-11T09:01:42.231825
License: Public Domain

In the
                  Court of Appeals
          Second Appellate District of Texas
                   at Fort Worth
                ___________________________
                     No. 02-21-00258-CV
                ___________________________

               PROTON PRC, LTD., Appellant

                               V.

ET & AS INVESTMENTS, INC., AYOUB SHOKRAVI, AND ELLIE TAJ,
                        Appellees

             On Appeal from the 348th District Court
                     Tarrant County, Texas
                 Trial Court No. 348-307664-19

             Before Kerr, Birdwell, and Womack, JJ.
            Memorandum Opinion by Justice Birdwell
                           MEMORANDUM OPINION

      A fuel-supply company appeals a summary judgment in favor of one of its

customers. At the heart of this appeal is a dispute over whether their contract required

the customer to purchase a minimum of 70,000 gallons of fuel per month. We hold

that the contract did not set a minimum purchase quota, and we affirm the summary

judgment to that effect.

                                 I.     BACKGROUND

      In 2015, Appellee ET & AS Investments, Inc. agreed to buy a gas station from

Big Score Investors, LLC. As part of the transaction, ET & AS also agreed to execute

a fuel-supply contract with Appellant Proton PRC, Ltd.

      In 2016, ET & AS fulfilled that requirement when it signed a fuel-supply contract

with Proton (the Contract). The Contract obligated ET & AS to buy fuel exclusively

from Proton for a period of 180 months.

      ET & AS operated the gas station for three years. There was evidence that during

that time, ET & AS sold between roughly 42,000 and 65,000 gallons of fuel per month,

with all the fuel provided by Proton. Proton accepted payment for these quantities

without objection, and it never asserted that these quantities did not meet the minimum

requirements of the Contract.

      ET & AS agreed to sell the gas station in 2019, and per the terms of the Contract,

the sale terminated the Contract. Proton filed this lawsuit shortly thereafter.

                                            2
      The case initially involved several claims, but through summary disposition, the

suit was winnowed down to just one cause of action that is relevant to this appeal:

Proton’s claim that ET & AS and its principals Ellie Taj and Ayoub Shokravi breached

the Contract. Proton asserted that the Contract required ET & AS to buy a minimum

of 70,000 gallons of fuel from Proton per month. According to Proton, ET & AS

breached this requirement both by failing to meet this quota in the past and by

terminating the Contract, ensuring the quota would not be met in the future.

      ET & AS and its principals moved for partial summary judgment on Proton’s

contract claim, arguing that the Contract did not obligate ET & AS to purchase 70,000

gallons per month. Proton also moved for summary judgment, arguing that the

Contract did set a minimum quota and that a survival clause ensured that the quota

endured the termination of the Contract.

      The trial court denied Proton’s motion and granted ET & AS’s motion. The

court set out the following findings in its order for partial summary judgment: “(1) the

Motor Fuel Supply Contract did not require ET & AS Investments, Inc. to purchase

70,000 gallons of gasoline per month; (2) the Motor Fuel Supply Contract terminated

upon the sale of the Hall Johnson Property; and (3) ET & AS Investments, Inc. is not

liable to Proton PRC, Ltd. for future damages after May 23, 2019, which is the closing

date for the sale of the Hall Johnson Property.” The trial court then rendered a final

judgment that, in pertinent part, disposed of Proton’s claims and awarded ET & AS

                                           3
attorney’s fees. Proton requested further findings of fact and conclusions of law, but

the trial court declined to render any. Proton appeals.

                        II.    SUMMARY JUDGMENT STANDARD

      “We review summary judgments de novo.” BPX Operating Co. v. Strickhausen, 629

S.W.3d 189, 195 (Tex. 2021). In doing so, we take as true all evidence favorable to the

nonmovant and indulge every reasonable inference and resolve any doubts in the

nonmovant’s favor. Id. at 196. “Summary judgment is proper when no genuine issues

of material fact exist and the movant is entitled to judgment as a matter of law.” Id.

“When the parties file competing summary judgment motions and the trial court grants

one and denies the other, we consider the summary judgment evidence presented by

both sides, determine all questions presented, and if the trial court erred, render the

judgment the trial court should have rendered.” Id. (cleaned up). A defendant may

obtain summary judgment by conclusively negating at least one element of the plaintiff’s

claim. Murphy Expl. & Prod. Co.–USA v. Adams, 560 S.W.3d 105, 108 (Tex. 2018).

                        III.   THE BRIEFING WAS ADEQUATE

      As an initial matter, ET & AS argues that Proton’s arguments are inadequately

briefed. We disagree.

      Briefs must be liberally, but reasonably, construed so that the right to appeal is

not lost by waiver. Lion Copolymer Holdings, LLC v. Lion Polymers, LLC, 614 S.W.3d 729,

732 (Tex. 2020). Courts should hesitate to resolve cases based on procedural defects

and instead endeavor to resolve cases on the merits. Id. “The Texas Rules of Appellate

                                           4
Procedure require that a brief ‘contain a clear and concise argument for the contentions

made, with appropriate citations to authorities and to the record.’” In re P.S., 505

S.W.3d 106, 111 (Tex. App.—Fort Worth 2016, no pet.) (quoting Tex. R. App. P.

38.1(i)).

        While deeply flawed, 1 Proton’s brief fulfills these basic requirements. The brief

included a table of contents, an index of authorities, and proper statements of the case

and the facts. See Tex. R. App. P. 38.1. It referred to specific portions of the summary

judgment record to support the factual assertions made. The brief set out arguments,

and it cited some authority in support of those arguments, including multiple cases and

some secondary sources. We conclude that Proton adequately briefed its arguments.

  IV.       FINDINGS AND CONCLUSION HAVE NO PLACE IN SUMMARY JUDGMENT
                                  PRACTICE

        Proton first argues that the trial court erred by refusing to render further findings

of fact and conclusions of law. We disagree.

        Findings of fact and conclusions of law have no place in a summary judgment

proceeding. See Smith v. Huston, 251 S.W.3d 808, 821 (Tex. App.—Fort Worth 2008,

pet. denied). The trial court should not make, and the appellate court cannot consider,

findings of fact and conclusions of law in connection with a summary judgment. Schmitz

v. Denton Cnty. Cowboy Church, 550 S.W.3d 342, 352 (Tex. App.—Fort Worth 2018, pet.

        For instance, it is difficult to discern what, exactly, Proton’s appellate issues are
        1

because Proton has simply recited the trial court’s findings against Proton as its assigned
issues.

                                              5
denied) (mem. op. on reh’g). The failure to make findings and conclusions is not error,

and, if made, they are correctly disregarded by the appellate court. Smith, 251 S.W.3d

at 821.

        The trial court did not err by declining to render further findings of fact and

conclusions of law.

   V.      THE CONTRACT DID NOT OBLIGATE ET & AS TO PURCHASE 70,000
                      GALLONS OF FUEL PER MONTH

        Proton next challenges the trial court’s determination that the Contract did not

require ET & AS to purchase at least 70,000 gallons of fuel from Proton per month.

Proton asserts that this determination is unsustainable because the plain language of the

Contract sets a minimum quota for ET & AS’s monthly purchases of fuel.

        The interpretation of an unambiguous contract is a question of law for the court.

Farmers Grp., Inc. v. Geter, 620 S.W.3d 702, 709 (Tex. 2021). Generally, we give terms

their plain, ordinary, and generally accepted meaning unless the instrument shows that

the parties used them in a technical or different sense. Id. “When construing a contract,

the court’s primary concern is to give effect to the written expression of the parties’

intent.” Sundown Energy LP v. HJSA No. 3, LP, 622 S.W.3d 884, 888 (Tex. 2021).

“Words must be construed in the context in which they are used, but courts cannot

interpret a contract to ignore clearly defined terms.” Id. (cleaned up). We avoid

construing contracts in a way that renders contract language meaningless. Id.

                                            6
      A contract for the sale of movable goods is governed by Article 2 of the Uniform

Commercial Code (UCC), as codified in Chapter 2 of the Texas Business and

Commerce Code. Jonibach Mgmt. Tr. v. Wartburg Enters., Inc., 136 F. Supp. 3d 792, 809

(S.D. Tex. 2015). A contract for the sale of oil or natural gas is a contract for the sale

of goods under the UCC. Aquila Sw. Pipeline, Inc. v. Harmony Expl., Inc., 48 S.W.3d 225,

234 (Tex. App.—San Antonio 2001, pet. denied); Howell Crude Oil Co. v. Tana Oil & Gas

Corp., 860 S.W.2d 634, 637 (Tex. App.—Corpus Christi–Edinburg 1993, no writ). The

elements of a breach of contract claim are (1) the existence of a valid contract,

(2) performance or tendered performance by the plaintiff, (3) breach of the contract by

the defendant, and (4) resulting damages to the plaintiff. Old Am. Ins. Co. v. Lincoln

Factoring, LLC, 571 S.W.3d 271, 282 (Tex. App.—Fort Worth 2018, no pet.); Rice v.

Metro. Life Ins. Co., 324 S.W.3d 660, 666 (Tex. App.—Fort Worth 2010, no pet.).

      According to Proton, the Contract obligates ET & AS to purchase a minimum

monthly quota of fuel, and the Contract does so chiefly through its definition of the

term “Quantities,” which reads as follows:

      We agree that this definition refers to a “Minimum” of “70,000 gallons” and the

timeframe of a “Month.” But there is nothing in this definition that clarifies whom this

minimum obligation is meant to fall upon, the purchaser or the supplier. In the absence

                                             7
of any such clarification, this definition could just as easily be read as a term that, if it

required anything it all, required Proton to supply a minimum quantity of gasoline each

month.

       The surrounding context and the way that this defined term is deployed in the

Contract confirm that this latter interpretation is the only reasonable one. See Sundown

Energy, 622 S.W.3d at 888. Within the Contract, the defined term “Quantities” is

generally not used in operative provisions that create an obligation for ET & AS to

purchase fuel, as might have suited Proton’s interpretation. Rather, the term is generally

used in provisions that deal with and limit Proton’s obligation to supply fuel to ET &

AS. The defined term “Quantities” is first used in the Contract’s operative language in

a provision titled “Deliveries.” 2 The thrust of this provision is to specify and limit

       2
         The provision reads as follows:

       Subject to the terms, provisions, and conditions hereof, Motor Fuel
       Products shall be delivered by Seller to Buyer at the Premises in the
       quantities ordered by Buyer. Seller shall not be required to make single
       deliveries of motor fuel in quantities of less than full transport loads unless
       a smaller minimum quantity is specified in Paragraph 1, (g). Seller may
       make deliveries to the Premises on any day of the week and at any time of
       the day or night and shall have the right to schedule deliveries at specific
       intervals. Buyer agrees to receive deliveries of Motor Fuel Products and
       to assist Seller’s agent or employee in unloading same, if needed. Any
       excess unloading time caused by Buyer’s failure to assist Seller’s agent or
       employee shall be charged to and paid by Buyer on demand by Seller at
       the customary hourly rate charged by Seller. No claim by Buyer on
       account of shortage or quality of Motor Fuel Products shall be allowed
       unless Seller is first given notice by Buyer in strict accordance with
       Paragraph 14. [Emphasis added.]

                                             8
Proton’s obligation to deliver fuel, not to establish ET & AS’s obligation to purchase

it. The term “Quantities” is next used under the heading “Determination of Quantity

and Quality.”3 This provision is designed to set limits on Proton’s exposure to disputes

over the amount of fuel that it supplied. It does not deal with disputes over the amount

that ET & AS has purchased, as would have supported Proton’s proposed

interpretation. The term “Quantities” is also used in a provision titled “Excess

Quantities,” 4 but that provision is designed to limit Proton’s obligation to supply

greater-than-usual amounts of fuel, not to ensure that ET & AS is purchasing a

minimum amount. The way that the parties put this defined term to work in the

operative portions of the Contract—as a term that relates to Proton’s obligation to

      3
       The provision reads as follows:

      The quantity and quality of Motor Fuel Products sold hereunder shall be
      for all purposes conclusively deemed to be the quantity and quality set forth
      in Seller’s document of delivery unless within two (2) days of the date of
      delivery Buyer delivers to Seller written notice of any claimed shortage in
      quantity or claimed deviation in quality. [Emphasis added.]
      4
       The provision reads as follows:

      In the event Seller should actually deliver to Buyer and Buyer should
      actually accept and receive during the Contract Term hereof quantities of
      Motor Fuel Products in excess of the maximum quantities herein provided,
      Buyer agrees to pay for said Motor Fuel Products at the prices and in the
      method herein provided. It is expressly understood that any purchase of
      excess quantities shall not obligate Seller to provide such excess quantities to
      Buyer on a continuing basis. Buyer waives any rights to additional
      quantities as may arise by course of dealing, operation of law or otherwise
      from the purchase of such excess quantities. [Emphasis added.]

                                             9
supply fuel rather than ET & AS’s obligation to buy it—strongly suggests that the term

“Quantities” was not intended to effect a minimum purchase obligation.

       The only time that “Quantities” is positioned in a context that deals with ET &

AS’s obligation to purchase fuel is in a provision that has the defined term as its title.

The provision reads as follows:

       5.     Quantities:
       (a) Subject to the terms, provisions, and conditions hereof, during the
       Contract Term, Seller agrees to sell and deliver to Buyer all Motor Fuel
       Products sold at or from the Premises, and Buyer agrees to purchase from,
       receive and pay Seller for all Motor Fuel Products sold at or from the
       Premises. Buyer further agrees to use all reasonable efforts to maximize
       the sale of Motor Fuel Products at the Premises during the Contract Term.
The defined term “Quantities” is absent from the operative terms of this provision; it

appears solely as the provision’s title.

       The question presented is this: does the title of this provision, by itself, override

the absence of the defined term from the operative language of the provision and

arguably create a defined minimum for purchases? That is, does the title create an

overlay that so shades the meaning of the operative language that follows, such that it

obligates ET & AS to purchase 70,000 gallons per month? We think the only reasonable

interpretation is that it does not.

       To be sure, “the title, like every other portion of a contract, may be looked to in

determining its meaning . . . because headings and titles provide context and can inform

the meaning of the sections they label.” RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d

                                            10
113, 121 (Tex. 2015) (cleaned up). “Nevertheless, although courts may consider the

title of a contract provision or section to interpret a contract, the greater weight must

be given to the operative contractual clauses of the agreement.” Id. (cleaned up). “Thus,

titles and headings are not determinative . . . .” Id.

       Rather, “the plain meaning of the agreement’s operative language” is “the most

important consideration in interpreting any contract.” Endeavor Energy Res., L.P. v.

Energen Res. Corp., 615 S.W.3d 144, 149 (Tex. 2020) (cleaned up). Operative language is

language “that gives effect to the transaction involved,” Edwards v. Doe, 331 F. App’x

563, 572 n.15 (10th Cir. 2009) (quoting Operative, Black’s Law Dictionary (7th ed. 1999)),

and operative words are those “words that actually effect the transaction.” Operative

Words, Black’s Law Dictionary (11th ed. 2019).

       Strikingly absent from the operative language of this provision is anything that

would obligate ET & AS to purchase “Quantities” of fuel, and thus arguably obligate

ET & AS to purchase the defined minimum of 70,000 gallons of gasoline per month.

Instead, as we read it, the operative language of this provision simply requires ET & AS

to purchase all of the fuel for the gas station from Proton, and it reciprocally requires

Proton to supply all of the fuel that ET & AS sold at the gas station—whatever the

amount. Indeed, the requirement that ET & AS “use all reasonable efforts to maximize

the sale” of Proton fuel products strongly suggests the absence of a minimum purchase

quota, which would arguably obviate the need for maximization efforts. The heading

                                             11
of the provision simply does not create a minimum purchase obligation that is

unmoored from these operative terms.

       When one federal court was faced with an analogous situation, in which the

heading of a provision contained a defined term, but nothing in the provision’s

operative language showed that the defined term was meant to embody the parties’

intent in effecting the transaction, the court took a path similar to the one we follow

today. See Gee v. Delta Speir Plantation LLC, No. 9:18-CV-02755-DCN, 2020 WL

4674150, at *5 (D.S.C. June 11, 2020). In Gee, a contract included a clause that entitled

the plaintiff–consultants to a portion of certain tax savings:

       b. Profits from Tax Savings. Company or its principal may realize certain
       tax savings as a result of the donation of 100 acres of Delta Bluffs to
       Savannah College of Art and Design. Consultants shall be entitled to
       twenty-percent (20%) of such savings, once the risk of a federal or state
       tax audit has expired, which is expected to occur in October 2016.
Id. The defendant agreed that under this clause, the plaintiffs were entitled to 20% of

the tax savings in question. Id. However, the defendant noted that the clause’s title was

“Profits from Tax Savings,” and “Profits” was a defined term in the contract. Id. The

defendant argued that the use of this defined term in the title had the effect of importing

into the clause the meaning of the defined term: that costs should be deducted from

the plaintiffs’ cut of the tax savings. Id.

       The district court disagreed. Id. It concluded that because the defined term

“Profits” did not appear in the tax savings clause outside of the heading, the amount

owed to plaintiffs was 20% of the tax savings without any prior deductions. Id. “North

                                              12
Carolina courts are quite clear that ‘headings do not supplant actual contract language

and are not to be read to the exclusion of the provisions they precede.’” Id. (quoting

Can. Am. Ass’n of Prof’l Baseball, Ltd. v. Ottawa Rapidz, 711 S.E.2d 834, 838 (N.C. Ct.

App. 2011)). A party “is not entitled to read only the heading and ignore the operative

language of the provision itself.” Id.

       We are confident that Texas’s rules of construction must lead to the same

conclusion as in Gee: the use of the defined term “Quantities” in the heading does not

override the complete absence of that term in the operative language that follows. Cf.

Enter. Leasing Co. of Hous. v. Barrios, 156 S.W.3d 547, 549–50 (Tex. 2004). Nothing about

the operative language of this provision would obligate ET & AS to purchase a

minimum amount of fuel per month, and those operative terms take primacy in our

reading of the Contract. See Endeavor Energy, 615 S.W.3d at 149.

       That reading is reinforced by the parties’ course of performance during the short

lifespan of the Contract. When, as in this case, a contract is governed by the UCC, the

terms of the contract may be explained or supplemented, without regard to the question

of ambiguity, by course of performance, course of dealing, or usage of trade. New

Bremen Corp. v. Columbia Gas Transmission Corp., 913 F. Supp. 985, 990–91 (S.D. Tex.

1995), aff’d, 108 F.3d 332 (5th Cir. 1997); see Tex. Bus. & Com. Code Ann. § 2.202(1);

Anadarko Petro. Corp. v. Williams Alaska Petro., Inc., 737 F.3d 966, 970 (5th Cir. 2013) (op.

on reh’g). “We construe the express terms of an agreement, where reasonable, to be

consistent with the applicable course of performance.” Anadarko Petro., 737 F.3d at 971

                                             13
(citing Tex. Bus. & Com. Code Ann. §§ 1.303(e), 2.202). “‘[C]ourse of performance’

refers to a sequence of conduct between the parties to a particular transaction that takes

place during the performance of the contract at issue, meaning that a course of

performance occurs after contract formation.” Driveline Retail Merch., Inc. v. PepsiCo, Inc.,

No. 4:17-CV-00423, 2018 WL 2298386, at *5 (E.D. Tex. May 21, 2018) (mem. op.)

(cleaned up); see Tex. Bus. & Com. Code Ann. § 1.303(a). “[W]here an agreement

involves repeated occasions for performance by either party with knowledge of the

nature of the performance and opportunity for objection to it by the other, any course

of performance accepted or acquiesced in without objection is given great weight in the

interpretation of the agreement.” Driveline Retail, 2018 WL 2298386, at *6 (quoting

Restatement (Second) of Contracts § 202(4) (1981)). “The parties to an agreement

know best what they meant, and their action under it is often the strongest evidence of

their meaning.” Id. (quoting Restatement (Second) of Contracts § 202 cmt. g (1981)).

       There was evidence that while the Contract was in force, ET & AS never

purchased 70,000 gallons of fuel in a given month. ET & AS’s monthly purchases

ranged from just over 42,000 gallons to just over 64,000 gallons, but never as much as

70,000. Proton fulfilled this sequence of orders each month for three years without

objection. This course of performance confirms that there is only one reasonable

interpretation of the Contract, and it is not Proton’s. See Anadarko Petro., 737 F.3d at

971 (relying on course of performance to confirm the most reasonable reading of a

contract for summary judgment purposes).

                                             14
       This course of performance implicates another reason to reject Proton’s

proposed interpretation: it is at odds with the commercial needs that underlaid the

Contract. “We construe contracts from a utilitarian standpoint bearing in mind the

particular business activity sought to be served[] and avoiding unreasonable

constructions when possible and proper.” N. Shore Energy, L.L.C. v. Harkins, 501

S.W.3d 598, 602 (Tex. 2016) (cleaned up). It would serve legitimate business ends for

the Contract to guarantee a minimum supply of fuel so that ET & AS, at its option,

could purchase fuel at rates that its tanks and the market could bear. But it would make

little sense for the Contract to mandate minimum purchases in excess of what ET &

AS was able to sell or, worse yet, to store.

       As a matter of law, then, the Contract does not require ET & AS to purchase a

minimum quantity of fuel each month. The trial court therefore properly granted

summary judgment on Proton’s breach of contract claim, which is premised on the

notion that the Contract required a minimum purchase amount. 5 See Murphy Expl., 560

S.W.3d at 108.

 VI.       THE TRIAL COURT PROPERLY EXERCISED JURISDICTION OVER TAJ AND
                                 SHOKRAVI

       Lastly, Proton argues that the trial court lacked personal jurisdiction over Taj and

Shokravi, such that it could not bind them to a final judgment. Proton observes that

       Because there was no minimum obligation for purchases, we need not consider
       5

Proton’s arguments concerning whether such an obligation survived the Contract’s
termination.

                                               15
Taj and Shokravi were not personally served and did not make an appearance in the

early stages of the case. According to Proton, this failure to appear should preclude the

trial court from rendering judgment in Taj and Shokravi’s favor.

      ET & AS responds that Taj and Shokravi made a general appearance when they

filed a motion for summary judgment on the merits, which should clear any hurdles

with respect to personal jurisdiction. We agree with ET & AS.

      The purpose of citation is to give the court proper jurisdiction over the parties

and to provide notice to the defendant that he has been sued, and by whom and for

what, so that due process will be served and he will have an opportunity to appear and

defend the action. Bello v. Tarrant Cnty., No. 02-09-00462-CV, 2010 WL 5019517, at *2

(Tex. App.—Fort Worth Dec. 9, 2010, pet. denied) (mem. op.). Defects in service may

be waived through a general appearance. Baker v. Monsanto Co., 111 S.W.3d 158, 161

(Tex. 2003); Seals v. Upper Trinity Reg’l Water Dist., 145 S.W.3d 291, 296 (Tex. App.—

Fort Worth 2004, pet. dism’d). A party enters a general appearance when it (1) invokes

the judgment of the court on any question other than the court’s jurisdiction,

(2) recognizes by its acts that a suit is properly pending, or (3) seeks affirmative action

from the court. Exito Elecs. Co. v. Trejo, 142 S.W.3d 302, 304 (Tex. 2004). “Under this

principle, the ultimate test for a general appearance is whether a party requests

affirmative relief inconsistent with an assertion that the trial court lacks jurisdiction.”

Graves v. DJO, LLC, 636 S.W.3d 321, 326 (Tex. App.—Fort Worth 2021, pet. filed) (op.

                                            16
on reh’g) (cleaned up); Arnold v. Price, 365 S.W.3d 455, 459 (Tex. App.—Fort Worth

2011, no pet.).

       A party makes a general appearance when it moves for summary judgment and

the motion is not subject to a special appearance. See Bello, 2010 WL 5019517, at *3.

Taj and Shokravi filed just such a motion and thereby made a general appearance.

Hence, any deficiencies in service or personal jurisdiction were waived because they

submitted themselves to the trial court’s jurisdiction. See id.

                                  VII. CONCLUSION

       We affirm the summary judgment.

                                                        /s/ Wade Birdwell
                                                        Wade Birdwell
                                                        Justice

Delivered: February 17, 2022

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