Uretek (USA), Inc. v. Ureteknologia De Mexico S.A. De C.V.

Filing 70

MEMORANDUM AND ORDER entered DENYING 68 First MOTION for New Trial. (Signed by Judge Lee H Rosenthal) Parties notified.(leddins, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
URETEK (USA), Inc.,
Plaintiff,
VS.
URETEKNOLOGIA de MEXICO
S.A. de C.V.,
Defendant.

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CIVIL ACTION NO. H-11-3060

MEMORANDUM AND ORDER
Uretek (USA), Inc. moved for a new trial and for the court to reconsider the award of
attorney’s fees to the defendant, Ureteknologia de Mexico (“UdeM”). (Docket Entry No. 68).
UdeM has responded. (Docket Entry No. 69). Based on the pleadings, the motion and response,
the record, and the relevant law, Uretek’s motion for a new trial is denied. The reasons are
explained below.
I.

Background
Uretek licensed to UdeM patented technology for concrete rehabilitation and repair using

Uretek’s expansive polyurethane foam. The 2003 Sublicense Agreement allowed UdeM to use and
sell these processes and products in the Republic of Mexico. The 2003 Sublicense Agreement
required UdeM to purchase from Uretek a specified amount of Uretek’s proprietary polyurethane
foam, Star 486, each year from 2004 through the contract term. The Agreement granted UdeM an
exclusive sublicense to provide and distribute current and future Uretek processes and products
within Mexico and prohibited Uretek from competing with UdeM. The Agreement also restricted
UdeM from purchasing Star 486 and other materials from companies other than Uretek.

In this lawsuit, Uretek alleged that in 2007, 2008, and 2010, UdeM failed to purchase the
amount of polyurethane the 2003 Sublicense Agreement required. Uretek also alleged that UdeM
refused to pay the agreed price for the foam and services Uretek provided on a project in Mexico
City that Uretek worked on with UdeM in December 2009. Uretek alleged that in May 2010, a
UdeM representative met with Uretek’s president, Brent Barron. After two meetings, in June 2010,
Barron signed what Uretek contended was a draft amendment to the 2003 Sublicense Agreement
and what UdeM contended was the final June 2010 First Amendment. In this lawsuit, Uretek denied
that it signed the June 2010 Amendment to the Sublicense Agreement with the intent to be bound.
Although Barron wrote his initials on the June 16, 2010 First Amendment and the June 16, 2010
Release, Uretek contended that Barron was told by UdeM’s representative that the Amendment was
a draft that would be revised further. Uretek contended that Barron initialed the pages intending to
indicate that he had read them, not that he agreed to them.
Uretek sought a declaratory judgment that the June 2010 First Amendment and 2010 Release
to the Sublicense Agreement never became effective and that UdeM breached the 2003 Sublicense
Agreement. Uretek sought damages and attorney’s fees. Uretek contended that it terminated the
Sublicense Agreement because UdeM failed to purchase the required amounts of polyurethane foam
in 2007, 2008, and 2010 and failed to pay the full price for the foam and services that it did purchase
for the Mexico City project in December 2009.
UdeM answered and asserted affirmative defenses to the breach of contract claims, including
ratification and release. UdeM alleged that in the June 2010 First Amendment, the parties agreed
to amend the 2003 Sublicense Agreement, including removing the prior requirement that UdeM buy
a minimum amount of polyurethane foam from Uretek each year. UdeM contended that on June 16,

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2010, Barron executed the 2010 First Amendment and 2010 Release by initialing each page. UdeM
denied making misrepresentations to Barron and asserted that it was clear that the First Amendment
and the Release were final and intended to be binding once executed. UdeM also pointed out that
in and after June 2010, Uretek deposited checks from UdeM that clearly stated on the face of the
checks that they were under the First Amendment to the Sublicense Agreement.
UdeM alleged that the June 2010 Release was of all claims Uretek might have against UdeM
from 2003 through June 16, 2010, which included all the claims Uretek asserted in this lawsuit.
UdeM asserted that it paid Uretek in exchange for the Release, that no more money was owed, and
that Uretek wrongfully terminated the Sublicense Agreement.

UdeM also asserted several

counterclaims, including for a declaratory judgment that the 2003 Sublicense Agreement was
modified by the May 2010 Letter Agreement and June 2010 First Amendment, which are valid and
enforceable, and for specific performance of the 2003 Sublicense Agreement as modified.
At trial, the jury found that Uretek had failed to prove that UdeM had obtained Brent
Barron’s initials on the June 2010 Amendment and Release by fraudulently misrepresenting that the
documents were drafts and not intended to be final or binding. The jury found that Uretek did not
agree to amend the 2003 Sublicense Agreement in June 2010 but did ratify this Amendment, and
that Uretek agreed to the Release.
This court resolved the parties’ posttrial motions and entered judgment on July 10, 2013.
The judgment declared that: (1) the 2003 Sublicense Agreement, as modified by the May 2010
Agreement and the June 2010 First Amendment, is valid; (2) Uretek’s termination breached the 2003
Sublicense Agreement as modified; (3) the June 2010 Release is valid, and (4) that Uretek would

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take nothing on its claims against UdeM. The court denied UdeM’s request for specific performance
and granted its request for attorney’s fees. (Docket Entry No. 67).
Uretek timely moved for a new trial under Federal Rule of Civil Procedure 59(a). (Docket
Entry No. 68). UdeM responded. (Docket Entry No. 69).
II.

Whether Uretek’s “Newly Discovered Evidence” Is a Basis for a New Trial
Rule 59(a) of the Federal Rules of Civil Procedure provides that a “court may, on motion,

grant a new trial on all or some of the issues . . . after a jury trial, for any reason for which a new trial
has heretofore been granted in an action at law in federal court.” FED. R. CIV. P. 59(a). A district
court may grant a new trial on the ground that there is newly discovered evidence material to the
outcome. Diaz v. Methodist Hosp., 46 F.3d 492, 495 (5th Cir. 1995). The court must consider
whether the evidence: “(1) would probably have changed the outcome of the trial; (2) could have
been discovered earlier with due diligence; and (3) is merely cumulative or impeaching.” Id. The
burden is on the party moving for a new trial to demonstrate that the new evidence clearly weighs
in favor of a new trial. Id.
Uretek contends that a new trial is warranted because it has evidence that UdeM breached
the amended Sublicense Agreement by performing work in Mexico without purchasing Star 486
from Uretek and by using polymer that it purchased from a third party without authorization. Uretek
attaches declarations by Ronald E. Park, a sales representative at Bayer MaterialScience, LLC, and
Brett Barron, Uretek’s president. Park and Barron state that Bayer produces Star 486 under an
exclusive agreement with Uretek but that UdeM and its affiliate, Urelift, have not purchased Star
486 from Bayer or Uretek within the last year. (Docket Entry No. 68, Exs. B & C). Uretek also
submitted photographs of work performed by Urelift in Guadalajara, Mexico between June 22 and

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23, 2013. The photographs are of vehicles advertising that Urelift uses the Uretek method and of
containers marked “Uretek ISO” and “Uretek Resin.” (Docket Entry No. 68, Exs. A & A-1–A-16).
Uretek has not shown that this evidence, had it been considered by the jury, would likely
have changed the trial’s outcome. The jury found that Uretek agreed to modify the Sublicense
Agreement in 2010. Although Paragraph 8H(3) of the original Sublicense Agreement prohibited
UdeM from purchasing material from third parties and made such purchases a basis for contract
termination, that paragraph was deleted by the June 2010 First Amendment. There is also
uncontested evidence that Uretek notified UdeM that it terminated the Sublicense Agreement and
refused to sell UdeM Star 486. The evidence that Uretek submitted with its motion for new trial
suggests that UdeM purchased polymers from third parties within the last year — well after Uretek
terminated the Sublicense Agreement. To the extent that UdeM breached its Agreement with Uretek
by purchasing polymers from third parties, Uretek’s earlier termination of that Agreement excused
the breach. Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 200 (Tex. 2004).
Uretek has also failed to show that, with due diligence, it could not (and did not) discover
UdeM’s third-party purchases before trial. In support of its motion for new trial, Uretek submitted
evidence showing that: (1) UdeM did not purchase Star 486 from Uretek or Bayer within the last
12 months and (2) UdeM continued to provide concrete repair services to its customers after it
stopped purchasing Star 486 from Uretek and Bayer. Uretek has not explained why this information
was not presented before trial. In response to Uretek’s motion for new trial, UdeM submitted
pretrial deposition testimony by UdeM’s president, Francisco Javier Alvarez, stating that Urelift was
continuing to do business using polymers it purchased from companies in Mexico. (Docket Entry
No. 69, Ex. A).

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Uretek has not shown that its new evidence could not have been discovered with due
diligence before trial or that, had it been presented to the jury, it likely would have changed the
trial’s outcome. Uretek’s motion for new trial on the ground of newly acquired evidence is denied.
III.

Whether UdeM Was a “Prevailing Party” Entitled to Attorney’s Fees
Uretek moves, in the alternative, for a new trial on UdeM’s attorney’s fee award. In a June

27, 2013 Memorandum and Opinion, this court awarded UdeM attorney’s fees under the 2003
Sublicense Agreement, as modified by the 2010 First Amendment, and under Chapter 38 of the
Texas Civil Practice and Remedies Code. (Docket Entry No. 65 at 18–23). Uretek contends that
this award was improper because UdeM was not a prevailing party. Uretek points out that UdeM
did not succeed on its counterclaim for a declaratory judgment that Uretek executed the June 2010
Amendment to the 2003 Sublicense Agreement or its request for specific performance. Uretek cites
no authority to support its argument that UdeM was not a prevailing party under Texas law.
In Intercontinental Group Partnership, v. KB Home Loan Star L.P., 295 S.W.3d 650 (Tex.
2009), the Texas Supreme Court considered whether a plaintiff could recover attorney’s fees under
a contract provision awarding fees to the prevailing party. The jury had found the defendant
breached the contract but awarded no damages. Following United States Supreme Court precedent,
the Texas Supreme Court held that to be a prevailing party and recover fees, “a claimant must obtain
actual and meaningful relief, something that materially alters the parties’ legal relationship.” Id. at
652 (citing Farrar v. Hobby, 406 U.S. 103, 111–12 (1992)). Because the plaintiff had sought
damages, but not a declaratory judgment, it had not prevailed for the purpose of a fee award. The
court emphasized that the result might have been different if the plaintiff had sought and obtained
a declaratory judgment. “The dissent cites a variety of situations where we agree the plaintiff would

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‘prevail’: when the plaintiff obtains rescission of the contract, specific performance, an injunction,
or a declaratory judgment.” Id. at 659 (emphasis added). Distinguishing such cases, the court
explained that, “[t]oday’s decision is not grounded on the fact that [the plaintiff] received no money
damages, but rather on the fact that [it] received nothing at all.” Id. A party that obtained a
declaratory judgment, on the other hand, “prevails” because “a declaratory judgment, by its nature,
is forward looking: it is designed to resolve a controversy and prevent future damages. It affects a
party’s behavior or alters the parties’ legal relationship on a going-forward basis.” Id. at 660.
In this case, as in Intercontinental Group, the contract includes a provision awarding
attorney’s fees to the “prevailing party” in a dispute. UdeM succeeded on its declaratory judgment
counterclaims that the 2003 Sublicense Agreement as modified by the May 18 and June 16, 2010
Amendments was valid; the June 16, 2010 Release was valid; and that Uretek’s termination of the
Sublicense Agreement was improper. After considering the jury verdict and the parties’ posttrial
motions, this court entered final declaratory judgment in UdeM’s favor. Under Texas law, UdeM
was a “prevailing party” entitled to its attorney’s fees.
UdeM is also a “prevailing party” because it successfully defended against Uretek’s breachof-contract claims. As explained above, Uretek sued UdeM for a declaratory judgment that the June
2010 Amendment to the 2003 Sublicense Agreement was not effective because it was not executed,
was not supported by consideration, and was obtained through fraud. Uretek also sought damages
for its claim that UdeM breached the 2003 Sublicense Agreement. The jury concluded that Uretek
— not UdeM — breached the Sublicense Agreement and awarded Uretek no damages. This court
entered final judgment that Uretek take nothing. Although in Intercontinental Grp. P’Ship, the
Texas Supreme Court reserved the issue, id., at 657–59, Texas intermediate appellate courts

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routinely affirm attorney’s fee awards under contractual attorney’s fee provisions to parties who
have successfully defended against breach-of-contract claims. See, e.g., Johnson v. Smith, No.
07–10–00017–CV, 2012 WL 140654, at *3 (Tex. App.—Amarillo Jan.18, 2012, no pet.); Old HH,
Ltd. v. Henderson, No. 03–10–00129–CV, 2011 WL 6118570, at *4 (Tex. App.—Austin Dec. 9,
2011, no pet.); Fitzgerald v. Schroeder Ventures II, LLC, 345 S.W.3d 624, 629 (Tex. App.—San
Antonio 2011, no pet.); Silver Lion, Inc. v. Dolphin St., Inc., No. 01–07–00370–CV, 2010 WL
2025749, at *18 (Tex. App.—Houston [1st Dist.] May 20, 2010, pet. denied).
Uretek’s motion for a new trial on this court’s attorney’s fee award is denied.
III.

Conclusion
Uretek’s motion for a new trial is denied.
SIGNED on July 30, 2013, at Houston, Texas.

______________________________________
Lee H. Rosenthal
United States District Judge

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