In Highland Capital Management v. Bank of America, the Fifth Circuit reversed a Rule 12 dismissal of a claim for breach of an oral contract.  No. 11-11139 (Oct. 2, 2012).  The Court noted the practical difficulty of applying the legal test for intent to be bound by an oral contract, largely developed on summary judgment records, in the pleading context.  The Court acknowledged that after the phone call in which the plaintiff alleged the contract formed, email called their deal “subject to” further amendment.  The plaintiff, however, alleged sufficient facts about whether all material terms were agreed on in the call, the industry custom for the type of transaction, and the nature of the further discussions to state a plausible contract claim.  The Court affirmed the dismissal of a promissory estoppel claim for failure to adequately plead reliance.

In Cambridge Integrated Services Group v. Concentra Integrated Services, after reminding that a district court located in a state does not get deference in making an Erie guess about that state’s law, the Fifth Circuit examined the effect of a release obtained by an indemnitor for potential claims against its indemnitee.  No. 11-31032 (Sept. 26, 2012).  The Court found that the release precisely matched the terms of the indemnitor’s obligations to the indemnitee, and thus extinguished its duty to indemnify against such claims in ongoing litigation.  As to the duty to defend, however, the Court found summary judgment improper as issues about the claims “remained to be clarified through litigation.”  Id. at 10.

The plaintiff in Coe v. Chesapeake Exploration won a $20 million judgment for breach of a contract to buy rights in the Haynesville Shale formation, against the background of a a “plummet[]” in the price of natural gas.  No. 11-41003 (Sept. 12, 2012).  The Fifth Circuit affirmed.  After review of other analogous energy cases, the Court found that  the parties’ writing had a sufficient “nucleus of description” of the property to satisfy the Statute of Frauds, even though some review of public records was required to fully identify the property from that “nucleus.”  Id. at 11-12.  The Court also found that the parties had reached an enforceable agreement and that Plaintiff had tendered performance, finding an “adjustment clause” specifying a per-acre price particularly relevant on the tender issue.  Id. at 16, 17-18.

Vanderbilt Mortgage v. Flores, arising from a collection suit about the financing for a mobile home, involved a substantial recovery on counterclaims for wrongful debt collection and filing of a fraudulent lien.  692 F.3d 357 (5th Cir. 2012).  The Fifth Circuit affirmed in part and reversed in part, finding: (1) the release of the debtors unambiguously reached only the lien and not the underlying debt (thereby mooting some counterclaims); (2) property owners in the position of these debtors did not have an ongoing duty, for limitations purposes, to check deed records; (3) Tex. Civ. Prac. & Rem Code chapter 12, about fraudulent liens, does not require actual damages before penalties may be awarded; (4) Chapter 12 does not violate the Excessive Fines Clause; and (5) personal jurisdiction over one defendant was appropriate, particularly given the confusion in its own records about its activities.

City of New Orleans v. BellSouth Telecommunications presented a long-simmering dispute, stretching back to an 1879 ordinance, about BellSouth’s use of public rights-of-way in New Orleans.  Nos. 11-30607 and 11-31058 (July 31, 2012).  The district court awarded $1.5 million in unjust enrichment related to BellSouth’s use after 2006.  The Fifth Circuit reversed, finding that the parties’ complicated relationship gave BellSouth a “‘justification in . . . contract’ for any enrichment it may be enjoying . . . ,” which defeated an unjust enrichment claim under Louisiana law.   Id. at 21, 25 (citing SMP Sales Management v. Fleet Credit Corp., 960 F.2d 557, 560 (5th Cir. 1992)).

Chevron sued Aker Maritime and Oceaneering International in connection with bolt failures on an offshore drilling rig.  Chevron USA v. Aker Maritime Inc., No. 11-30369 (July 31, 2012).  Chevron recovered a significant damage award against both defendants, and Aker sought indemnity from Oceaneering.  Id. at 4.  To recover under the indemnity provision, Aker had to establish that it was an agent of Chevron with respect to Oceaneering’s work.  The Court concluded that Aker was an agent with respect to the specific activity of procurement, which it found “extends beyond Aker’s mere ordering and includes the receipt of the bolts.”  Id. at 8.

“What follows is the tale of competing mineral leases on the Louisiana property of Lee and Patsy Stockman during the Haynesville Shale leasing frenzy.”  Petrohawk Properties v. Chesapeake Louisiana at 1, No. 11-30576 (as rev’d Aug. 2012).  The Fifth Circuit affirmed a finding that one of the dueling leases was procured by fraudulent misrepresentations as to the legal effect of a lease extension, rejecting several challenges to whether such a representation was actionable under Louisiana law, as well as an argument that the fraud had been “confirmed [ratified].”  The Court also rejected a counterclaim for tortious interference with contract, noting that Louisiana has a limited view of that tort and requires a “narrow, individualized duty” between plaintiff and tortfeasor.  Id. at 20-24 (citing 9 to 5 Fashions v. Spurney, 538 So.2d 228 (1989)).

In Westlake Petrochemicals v. United Polychem, the plaintiff obtained judgment for $6.3 million under the UCC for breach of a contract to supply ethylene.  No. 10-20634 (July 24, 2012).  The Fifth Circuit affirmed on liability, finding that evidence about the need for credit approval did not disprove contract formation, defeat the Statute of Frauds, or establish a condition precedent.  Id. at 9-13.  The Court reversed and remanded on damages, finding that the plaintiff was analogous to a “jobber” and thus could recover lost profits but not the contract-market price differential.  Id. at 17 (citing Nobs Chemical v. Koppers Co., 616 F.2d 212 (5th Cir. 1980)).  The Court also reversed as to an individual’s guaranty of the damages, finding a conflict between the termination provision of the guaranty and the plaintiff’s argument about when liability accrued, which created an ambiguity that made the guaranty unenforceable under Texas law.  Id. at 20-21.

In Dameware Development LLC v. American General Life Ins. Co., the plaintiff complained that the defendant insurance company did not deliver a plan with certain tax benefits.  No. 11-20218 (July 19, 2012).  The plaintiff contended that their contract was entered into based on a mistake about whether such a plan would be delivered (“error,” under the applicable Louisiana law), and the Court disagreed, characterizing the situation as a “mistaken prediction” that would not allow the contract to be voided.  Id. at 9.  As to the contract itself, the Court found particularly persuasive a disclaimer that said the insurance company would “operate[] solely in the capacity of a product provider . . . .”  Id. at 10.

In an insurance coverage case that is also a careful review of basic contract interpretation principles, the Court determined that a decedent was “legally intoxicated” and thus fell within a policy exclusion.  Likens v. Hartford Life, No. 11-20653 (July 19, 2012).  Recognizing that some authority  requires a “legal intoxication” exclusion to involve a criminal act, the Court disagreed with those cases, reviewing comparable terms elsewhere in Texas law, as well as a line of admiralty authority.

In Greenwood 950 LLC v. Chesapeake Louisiana LP, the Court found an ambiguity in a Louisiana mineral lease, seeing two reasonable ways to harmonize clauses about obligations to “repair all surface damages” and “pay . . . all damages.”  No. 11-30436 (June 12, 2012) at 5-7 (emphasis added).  On the threshold Erie issue, the Court reminded: “[W]e look first and foremost ‘to the final decisions of Louisiana’s highest court’ rather than this Court’s prior applications of Louisiana law.”  Op. at 4 n.11 (quoting Holt v. State Farm, 627 F.3d 188, 191 (5th Cir. 2010)).

The unpublished case of Stanwood Boom Works LLC v. BP Exploration & Production Inc., in the context of affirming summary judgment for the defendant in a contract case, gives a thorough summary of “black letter” Texas law about contract formation, as well as the related situation of negotiations that are too tentative to create promissory estoppel.  No. 11-20511 (April 25, 2012).

The parties in Ballard v. Devon Energy disputed when a provision in an oil field joint operating agreement, about the effect of “surrendering” certain leases, would apply.  No. 10-20497 (April 19, 2012)  The Court affirmed the denial of leave to amend the plaintiff’s contract claims to add a fiduciary duty count, based on a lengthy delay in raising the issue.  Op. at 6.  The Court then, applying Montana law, concluded that while the parties had both advanced “facially plausible” readings of the provision in isolation, the defendant’s reading was more persuasive in the overall context of the entire development project.  Id. at 12-15.  The Court affirmed summary judgment for the defendant, although it criticized the trial court for considering “extrinsic evidence” before attempting to construe the document on its face.  Id. at 9-10.

Sawyer v. DuPont presented employee claims of fraudulent inducement to leave jobs with DuPont for new positions at a wholly-owned subsidiary.  No. 11-40454 (April 20, 2012).   The Court began by reminding of the deference for intermediate appellate opinions in making an “Erie guess” about state law — here, the “at will” employment doctrine in Texas and its prohibition of fraudulent inducement claims about employment relationships.  Op. at  5.  Based on intermediate court authority, the Court concluded that a CBA that was terminable on notice did not change the employees’ at-will status, which thus barred their claims.  Op. at 9.  The Court also found that oral representations to another group of employees were not sufficiently definite to change their at-will status, citing Montgomery County Hospital District v. Brown, 965 SW.2d 501 (Tex. 1998).  Op. at 10.  Summary judgment for DuPont was affirmed.

The dispute in Preston Exploration v. GSF, LLC was whether a contract to sell certain oil and gas leases satisfied the Texas Statute of Frauds (“SOF”).  (No. 10-20599, Feb. 1, 2012)  Acknowledging that the parties’ documents envisioned future title work, the Court reversed the district court’s conclusion that this remaining work barred the contracts’ enforcement under the SOF, stating: “Such analysis reflects the conflating of two distinct principles — whether parties come to a meeting of the minds as to the subject matter of a contract with whether a writing’s legal description is sufficient to meet the statute of frauds.”  Op. at 7.

In Amco Energy v. Capco Exploration (No. 11-20264, Jan. 30, 2012), the Court addressed two fundamental business tort issues.  The first involved a professional negligence claim about the evaluation of certain oil properties — the majority found that the professional’s contract did not extend to the matters complained of and thus created no professional duty, while the dissent “cannot fathom how one can conclude that there was no contract” for those matters.  Op. at 8, 10, 23.   The second found a contractual disclaimer of reliance that defeated a fraud claim, continuing the recent development of law on that issue in Italian Cowboy Partners, Ltd. v. Prudential Ins. Co., 341 S.W.3d 323, 333 (Tex. 2011) and LHC Nashua Partnership Ltd. v. PDNED Sagamore Nashua LLC, 659 F.3d 450, 460 (5th Cir. 2011).  Op. at 17.

The Fifth Circuit addressed the doctrine of mistake under Louisiana law in Fruge v. Amerisure, 663 F.3d 743 (2011).  After reminding that choice-of-law issues are waived unless presented to the district court, the Court considered reformation of an insurance policy under general contract principles.  The Court began by noting that Louisiana law allows reformation in the case of mutual mistake, and consideration of extrinsic evidence to prove such a mistake, even if the policy language is unambiguous.  It reviewed different post-accident reformation scenarios, noting that a Louisiana statute generally precludes a post-accident reformation to rescind coverage, and concluded that a reformation claim based on mutual mistake was cognizable in the post-accident setting presented in this case.  The Court reversed and remanded, noting that the extrinsic evidence could potentially prove that no mistake occurred.

Buffalo Marine v. United States, an arcane Chevron case about cleanup expenses for an oil spill, reminds in discussion of a specific statutory defense under the Oil Pollution Act that: “While some contractual relationships are themselves contracts, other contractual relationships merely relate to contracts.  The fact that no contract exists between two parties does not preclude the parties from having a ‘contractual’ relationship.”  Op. at 7-8.  This reminder may provide useful insight in litigation about insurance coverage and contract interpretation cases that involve the term “contractual relationship.”