BCL-Equipment Leasing, LLC v. Davis, Jr.
Filing
124
MEMORANDUM OPINION AND ORDER -. Signed by Judge William C. Bryson on 4/11/2016. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
BCL-EQUIPMENT LEASING, LLC,
Plaintiff,
v.
JIMMY L. (“BUBBA”) DAVIS, JR., et al.,
Defendants.
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Case No. 2:15-CV-195-WCB
MEMORANDUM OPINION AND ORDER
Before the Court is the motion of Defendant, Counter-Plaintiff, Third-Party Plaintiff, and
Counter-Defendant, Jimmy L. (“Bubba”) Davis, Jr., for Partial Summary Judgment Regarding
Breach of Contract Claim by Big Horn Drilling, Inc., Greg Castaneda, and Randy Valerde
(collectively “Big Horn”). Dkt. No. 106. For the reasons set forth below, the motion for
summary judgment is GRANTED IN PART and DENIED IN PART.
I.
Background
This suit concerns a series of business dealings involving an oil well drilling rig, known
as Rig 102, constructed by Mr. Davis. According to his allegations, Mr. Davis began building
the rig using his own funds and equipment. Evidence of record in the summary judgment
proceedings would support the following: In 2013, Mr. Davis received funds from Intervenor
John S. Turner, Jr., to finance construction on Rig 102. Mr. Turner provided Mr. Davis with a
total of $1,302,500 during that period. Dkt. No. 107-2. In addition to providing cash to Mr.
Davis, Mr. Turner also provided components for the rig, including a generator house and an
accumulator. Dkt. No. 173-3, at 21-22. On June 10, 2013, Mr. Davis entered into an agreement
with Intervenor Jerry Rawlinson. Under the agreement, Mr. Rawlinson was to furnish Mr. Davis
with components to be incorporated into two drilling rigs, including Rig 102. Dkt. No. 85-1.
Mr. Turner and Mr. Rawlinson both filed financing statements on Rig 102 with the Texas
Secretary of State. Dkt. Nos. 103-1 and 85-3.
Evidence offered in the summary judgment proceedings would further support the
following: In February 12, 2014, while Rig 102 was still incomplete, Mr. Davis entered into a
transaction with Big Horn. Mr. Davis and Big Horn executed a bill of sale for Rig 102, which
recited a purchase price of $6,500,000. 1 Dkt No. 115-1. Big Horn gave Mr. Davis a check for
$6.5 million, but Big Horn did not have sufficient funds in its account to cover the check.
According to Mr. Castaneda, an officer of Big Horn, Mr. Davis was aware of that fact. Dkt. No.
108-5, at 29-30. There is no evidence that Mr. Davis has ever attempted to cash that check.
Big Horn has argued that the transaction was not actually a sale and that the Bill of Sale
did not accurately reflect the true transaction between the parties. Big Horn’s position is that,
through oral agreements, Big Horn and Mr. Davis created a more complicated arrangement. Big
Horn argues that Mr. Davis agreed to transfer title to Big Horn so that Big Horn could secure the
necessary financing to finish the rig and deploy it. Dkt. No. 108-5, at 28-29. Once the rig was in
place and the drilling venture was producing profits, Big Horn would pay Mr. Davis for the rig
over time. Id. Big Horn also argued that in addition to his work on the rig, Mr. Davis agreed to
help Big Horn secure drilling contracts. Id. at 27.
There is evidence in the summary judgment proceedings of the following: Big Horn sold
Rig 102 to BCL-Equipment Leasing, LLC, on July 28, 2014, for $1.5 million. Dkt. No. 108, at
6, 8. Concurrent with that sale, Big Horn agreed to lease the rig back from BCL. Id. at 8. In
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Mr. Davis alleges that the true purchase price was $8,500,000, not the $6,500,000
recited in the Bill of Sale.
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January 2015, after Big Horn stopped making payments under its lease agreement, BCL
contacted Mr. Davis and asked to take possession of Rig 102. Mr. Davis refused.
BCL then filed this action against Mr. Davis. Mr. Davis subsequently joined Big Horn as
a third-party defendant. Dkt. No. 5. Mr. Turner and Mr. Rawlinson were permitted to intervene
in the action based on their claimed security interests in Rig 102. Big Horn filed a counterclaim
against Mr. Davis alleging that Mr. Davis had breached an oral contract to transfer title to Rig
102 to Big Horn so that Big Horn could sell the rig to BCL; that Mr. Davis failed to finish the rig
as he had agreed to do; and that Mr. Davis had failed to secure drilling contracts for Big Horn as
he had promised he would. Dkt. No. 84.
Mr. Davis has moved for summary judgment, contending that Big Horn has failed to
make a sufficient showing that all of the essential elements of its breach of contract claim are
present.
II.
Applicable Law
Summary judgment should be granted “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). Any evidence on summary judgment must be viewed in the light most
favorable to the nonmovant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)
(citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)). Summary judgment is
proper when there is no genuine dispute of material fact. Celotex v. Catrett, 477 U.S. 317, 322
(1986). “By its very terms, this standard provides that the mere existence of some alleged factual
dispute between the parties will not defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine [dispute] of material fact.” Anderson, 477
U.S. at 247-48.
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The moving party must identify the basis for granting summary judgment by showing the
absence of a genuine dispute of material fact. Celotex, 477 U.S. at 323. If the moving party
does not have the ultimate burden of persuasion at trial, it “must merely demonstrate an absence
of evidentiary support in the record for the nonmovant’s case.” Johnson v. GlobalSanteFe
Offshore Servs., Inc., 799 F.3d 317, 320 (5th Cir. 2015). At that point, the burden shifts to the
non-moving party to produce evidence establishing that there is a genuine issue of material fact
for trial. Brandon v. Sage Corp., 808 F.3d 266, 270 (5th Cir. 2015).
III. Discussion
Mr. Davis has sought summary judgment on a number of issues. He argues, first, that
Big Horn’s alleged oral agreements are unenforceable under the Texas Statute of Frauds.
Second, he argues that Big Horn has failed to proffer evidence supporting several elements of its
breach of contract claim. Specifically, Mr. Davis argues (1) that Big Horn has failed to show
that it performed its obligations under those agreements, and in particular it has failed to show
that it performed certain conditions precedent necessary for it to recover under those agreements;
(2) that Big Horn has failed to create a disputed issue of fact as to Mr. Davis’s breach of those
agreements; (3) that Big Horn has failed to point to evidence that it was damaged as a result of
the breach; and (4) that Big Horn has failed to show that the alleged oral agreements were
supported by consideration. Finally, Mr. Davis argues that even in the event that Big Horn
recovers on its claim under the oral agreements, Big Horn would not be entitled to the award of
attorney’s fees that it seeks in its Counterclaim, because it did not present its claim to Mr. Davis
within the 30-day notice period set forth in Chapter 38 of the Texas Civil Practice and Remedies
Code.
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A. Statute of Frauds
The Statute of Frauds imposes a signed writing requirement before certain types of
promises or agreement will be enforced by a court. In Texas, the following promises are subject
to the Statute of Frauds:
(1) a promise by an executor or administrator to answer out of his
own estate for any debt or damage due from his testator or
intestate;
(2) a promise by one person to answer for the debt, default, or
miscarriage of another person;
(3) an agreement made on consideration of marriage or on
consideration of nonmarital conjugal cohabitation;
(4) a contract for the sale of real estate;
(5) a lease of real estate for a term longer than one year;
(6) an agreement which is not to be performed within one year
from the date of making the agreement;
(7) a promise or agreement to pay a commission for the sale or
purchase of:
(A) an oil or gas mining lease;
(B) an oil or gas royalty;
(C) minerals; or
(D) a mineral interest; and
TEX. BUS. & COMM. CODE § 26.01(b).
Mr. Davis’s entire argument on this issue consists of the unelaborated assertion that
“[t]he Big Horn Defendants have no evidence sufficient to raise a genuine issue of material fact
that . . . valid contracts existed that do not violate the Statute of Frauds.” It is not clear from that
single assertion why Mr. Davis thinks that the oral promises in this case are subject to the Statute
of Frauds.
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After reviewing the parties’ submissions, the Court concludes that it is far from clear that
the Statute of Frauds renders the alleged oral promises in this case unenforceable in the absence
of a signed writing. Big Horn has alleged that Mr. Davis promised Big Horn that he would
transfer the title of Rig 102 to Big Horn and that he would arrange for Big Horn to execute
drilling contracts with Landmark Drilling. In the case of the promise to transfer title, the Court
does not see how that promise could fall within any of the categories of agreements subject to the
Texas Statute of Frauds. In the case of the promises relating to obtaining drilling contracts for
Big Horn, the Court concludes on the record presented to it that Mr. Davis has not shown that the
agreement constituted a “promise or agreement to pay a commission for the sale or purchase of
. . . an oil or gas mining lease.” Id. at § 26.01(b)(7). Mr. Davis has neither alleged nor shown
that there was any commission associated with the drilling contract aspect of the alleged oral
agreements. Therefore the Court concludes that Mr. Davis is not entitled to summary judgment
that any of the oral promises alleged by Big Horn would be unenforceable under the Texas
Statute of Frauds.
B. Other Contract Issues
Mr. Davis raises several other contract issues: contract formation, performance under the
contract, breach, damages, and consideration. Mr. Davis’s allegations as to all of those issues are
entirely conclusory. That is not enough to satisfy the moving party’s burden under the applicable
summary judgment standard, even as to an issue on which the moving party does not have the
burden of proof at trial. As the Fifth Circuit has stated, “a mere conclusory statement that the
other side has no evidence is not enough to satisfy a [summary judgment] movant’s burden.”
Ashe v. Corley, 992 F.2d 540, 544 (5th. Cir. 1993). The movant has the burden of “identifying
those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue
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of material fact.” Celotex, 477 U.S. at 322. Here, Mr. Davis has alleged, in conclusory fashion,
that the Big Horn failed to prove five separate elements of contract recovery, but he has not
provided any elaboration of why they are not met. That failure requires that the Court deny
summary judgment on those issues.
In any event, in its response to Mr. Davis’s summary judgment motion, Big Horn has
pointed to evidence that would support its theory that the arrangements between Big Horn and
Mr. Davis are governed by the alleged oral agreements between them. First, as Big Horn points
out, there is a disputed issue of fact as to whether the Bill of Sale for Rig 102 accurately reflects
any or all of the true facts as to the contractual undertakings of the parties. Evidence in the
summary judgment record would support a finding that various representations in the Bill of Sale
are not true and that those representations were designed to facilitate financing arrangements
rather than to reflect the actual agreements reached by the parties. Indeed, even Mr. Davis does
not contend that the Bill of Sale accurately reflects the entire agreement between the parties,
since he contends that the sale price of the rig was $8,500,000, not the $6,500,000 recited in the
Bill of Sale.
Second, the deposition testimony of Big Horn’s representatives gives rise to a disputed
issue of fact as to whether Big Horn and Mr. Davis entered into oral agreements, supported by
promises by each party, to effect the sale of Rig 102 and for Mr. Davis to seek to obtain drilling
contracts for Big Horn. That same evidence also creates a factual dispute about whether Mr.
Davis breached the terms of those oral agreements and whether Big Horn was injured by that
alleged breach.
Finally, summary judgment is inappropriate on these contract issues because in the case
of disputes over the existence, terms, and performance of an oral contract, the credibility of the
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parties is likely to be highly relevant. See Rough Creek Lodge Operating, L.P. v. Double K
Homes, Inc., 278 S.W.3d 501, 507 (Tex. Ct. App. 2009). And credibility determinations are
functions for the jury, not the court on summary judgment.
Anderson, 477 U.S. at 255.
Therefore, the Court denies summary judgment on the issues of contract formation, performance
under the contract, breach, damages, and consideration.
C. Attorney’s Fees
Mr. Davis argues that even if Big Horn should prevail on its contract claims, it would not
be entitled to attorney’s fees under Chapter 38 of the Texas Civil Practice and Remedies Code
because it did not present a demand to Mr. Davis without the requisite 30-day notice. To recover
attorney’s fees, “the claimant must present the claim to the opposing party,” and “payment for
the just amount owed must not have been tendered before the expiration of the 30th day after the
claim is presented.” TEX. CIV. PRAC. & REM. CODE § 38.002. “The purpose of the presentment
requirement is to allow the person against whom a claim is asserted an opportunity to pay within
thirty days of receiving notice of the claim, without incurring an obligation for attorney’s fees.”
Canine, Inc. v. Golla, 380 S.W.3d 189, 193 (Tex. Ct. App. 2012). The party seeking fees has the
burden to plead and prove that it made a presentment of the claim to the defendant. Id. No
particular form of presentment is required, and both oral and written demands for payment have
been held to be sufficient. Jones v. Kelley, 614 S.W.2d 95, 100 (Tex. 1981). “However, neither
the filing of a suit, nor the allegation of a demand in the pleadings can alone constitute
presentment of a claim or a demand that the claim be paid.” Llanes v. Davila, 133 S.W.3d 635,
641 (Tex. Ct. App. 2003).
Mr. Davis alleges that Big Horn failed to present the required claim or demand for
payment. Big Horn has not responded in any way to rebut or address Mr. Davis’s assertion in
that regard. The burden is on Big Horn to establish presentment, and as it has not responded to
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this argument it has failed to meet its burden. Upon review of the record, the Court does not find
any demand other than in the pleadings in this action that could be construed as a demand for
Mr. Davis to pay Big Horn’s claim against it. For its part, Big Horn has not supplied any
exhibits or declarations showing that a presentment was made. Because of the absence of any
evidence of presentment, the Court grants summary judgment that Big Horn may not recover its
attorney’s fees under Chapter 38 of the Texas Civil Practice and Remedies Code.
IT IS SO ORDERED.
SIGNED this 11th day of April, 2016.
_____________________________
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE
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