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Case 4:12-cv-03477 Document 24 Filed in TXSD on 06/04/13 Page 1 of 9

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

MUREX N.A., LTD.,

Plaintiff,

v.

DELTA COMMODITIES GMBH,

Defendant.

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CIVIL ACTION NO. H-12-3477

MEMORANDUM AND ORDER

This case is before the Court on the Motion for Summary Judgment [Doc. # 10]

filed by Defendant Delta Commodities GmbH (“Delta”), to which Plaintiff Murex

N.A., Ltd. (“Murex”) filed a Response [Doc. # 12], and Delta filed a Reply [Doc.

# 18].1 The Court has carefully reviewed the full record and applicable legal

authorities. Based on this review, Defendant’s Motion is denied.

I.

BACKGROUND

Murex and Delta are both sellers of ethanol. Murex entered into a contract with

Delta to purchase a shipment of ethanol which Murex planned to resell. The ethanol

was to be shipped aboard the M/T SHAMROCK JUPITER from Brazil, and delivered

to Murex between August 15 and August 31, 2012. Murex alleges that the vessel

1Also pending is Murex’s Motion for Leave to File a Sur-Reply [Doc. # 21], which

is denied.

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made additional stops during the voyage, resulting in delivery of the ethanol to Murex

after August 31, 2012.

Murex filed this lawsuit against Delta on November 28, 2012. Murex alleges

that the late delivery caused it to lose $285,295.36 because the price for ethanol in

August 2012 was $0.2168 per gallon higher than the price in September 2012.

Defendant moved for summary judgment, arguing that Murex’s claims and

damages are precluded by the terms of the parties’ contract. The Motion has been

fully briefed and is now ripe for decision.

II.

STANDARD FOR SUMMARY JUDGMENT

Summary judgment is proper only if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with any affidavits filed in support

of the motion, show that there is no genuine issue as to any material fact, and that the

moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a); see

also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Weaver v. CCA Indus., Inc.,

529 F.3d 335, 339 (5th Cir. 2008). The moving party bears the burden of

demonstrating that there is no evidence to support the nonmoving party’s case.

Celotex Corp., 477 U.S. at 325; Nat’l Union Fire Ins. Co. v. Puget Plastics Corp., 532

F.3d 398, 401 (5th Cir. 2008).

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If the moving party meets its initial burden, the non-movant must go beyond the

pleadings and designate specific facts showing that there is a genuine issue of material

fact for trial. Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001)

(internal citation omitted). “An issue is material if its resolution could affect the

outcome of the action. A dispute as to a material fact is genuine if the evidence is

such that a reasonable jury could return a verdict for the nonmoving party.” DIRECT

TV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 2006) (internal citations omitted). The

Court construes all facts and considers all evidence in the light most favorable to the

nonmoving party. Nat’l Union, 532 F.3d at 401.

III. ANALYSIS

A.

Contract Interpretation

“Contract interpretation, including the question of whether the contract is

ambiguous, is a legal question. Instone Travel Tech Marine & Offshore v. Int’l

Shipping Partners, Inc., 334 F.3d 423, 428 (5th Cir. 2003). “The court’s primary

concern is to give effect to the written expression of the parties’ intent.” Id. The

Court should consider “all parts of the contract together to ascertain the agreement of

the parties, ensuring that each provision of the contract is given effect and none are

rendered meaningless.” Id.

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“Whether a contract is ambiguous is a question of law for the court to decide

by looking at the contract as a whole in light of the circumstances present when the

contract was entered into.” Id. at 431. “[A] contract is ambiguous only when the

application of the applicable rules of interpretation to the instrument leave it genuinely

uncertain which one of the two meanings is the proper meaning . . ..” Id. (quoting R

& P Enterprises v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 519 (Tex. 1980)).

“Ambiguous contracts may require consideration of evidence beyond the four

corners of the contract in order to determine the parties’ intent, thus involving

questions of fact . . ..” Burns v. Louisiana Land & Exploration Co., 870 F.2d 1016,

1018 (5th Cir. 1989). A court, after determining that the language of a contract is

ambiguous, is authorized “to consider the parties’ interpretations and admit extrinsic

evidence to determine its true meaning.” Columbia Gas Transmission Corp. v. New

Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996).

B.

Damages

Delta argues that Murex’s claimed damages are not recoverable under the terms

of the parties’ contract. The parties’ Purchase and Sale Agreement (“Agreement”)

states: “Neither PARTY shall be liable to the other PARTY for any loss of

production, profits or use or any other indirect or consequential damage, irrespective

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of cause or negligence (including gross negligence) on any party.” See Agreement,

Exh. 1(A) to Motion, ¶ 17.2. Delta argues that Murex’s claim for lost profits is barred

by this paragraph of the Agreement.

Murex admits that its damages are lost profits, but argues that the paragraph

precludes damages only for lost profits that are “indirect” but not for lost profits that

are “direct.” Under Texas law, lost profits may be either direct or indirect. See, e.g.,

Cherokee Cnty. Cogeneration Partners, L.P. v. Dynegy Marketing and Trade, 305

S.W.3d 309, 314 (Tex. App. – Houston [14th Dist.] 2009, no pet.). Direct damages

“flow naturally and necessarily from a defendant’s wrongful act” and are intended to

“compensate the plaintiff for a loss that is conclusively presumed to have been

foreseen by the defendant as a usual and necessary consequence of its wrongdoing.”

Id. Indirect, or consequential damages, “result naturally, but not necessarily, from the

defendant’s wrongful acts.” Id. (quoting Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex.

1998)). Lost profits may be either direct or indirect damages, depending on their

nature and what was contemplated by the parties. Id. (citations omitted). Profits that

are lost on the contract itself, “such as the amount a party would have received on the

contract minus its saved expenses,” are clearly direct damages. Id. Profits that are

“lost on other contracts or relationships resulting from the breach may be classified

as ‘indirect’ or consequential damages.” Id. “Stated differently, if a party’s

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expectation of profit is incidental to the performance of the contract, the loss of that

expectancy is consequential.’” Id. (internal quotations and citations omitted).

In Cherokee County, a Houston, Texas court of appeals held that the lost profits

were direct damages because they were profits that were built into the parties’

agreement itself by obligating the plaintiff to purchase gas at a specific, agreed-upon

price regardless of the current market price and providing expressly that the plaintiff

could resell the gas to a third party. Id. at 315. Similarly, in the case at bar, the parties

understood that Murex would purchase the ethanol at a specified price and resell it to

a third party. Murex submitted the Affidavit of Phil Dalton, its Director of New

Product Development, who stated under oath that he discussed with Delta’s

representatives Murex’s intention to resell the ethanol “immediately upon delivery.”2

See Affidavit of Phil Dalton, Exh. 2 to Response, ¶ 3. Delta has submitted no

evidence to the contrary. The undisputed evidence in this record shows that the

parties’ expectation was that Murex would immediately resell the ethanol which,

based on the holding in the Cherokee County case, could support a finding by the

fact-finder that Murex’s lost profits were “direct.”

2Extrinsic evidence of surrounding circumstances may be considered to “inform,
rather than vary from or contradict the contract text.” Houston Exploration Co. v. Wellington
Underwriting Agencies, Ltd., 352 S.W.3d 462, 469 (Tex. 2011).

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Paragraph ¶ 17.2 of the Agreement precludes liability for “any loss of . . .

profits or any other indirect . . . damage.” Id. (emphasis added). The paragraph must

be construed to preclude only lost profits that are indirect damage; otherwise, the word

“other” is superfluous and has no meaning. Consequently, the parties’ Agreement

precludes recovery of indirect lost profits, but not direct lost profits. Murex has

presented evidence that raises a genuine issue of material fact regarding whether its

lost profits in this case were direct damages and, therefore, recoverable under the

Agreement. As a result, the Court denies Defendant’s Motion for Summary Judgment

that Murex’s claimed damages for lost profits is precluded by the Agreement.

Delta argues also that the damages are not recoverable because they were

unforeseeable. As discussed above, Murex has presented evidence that the parties

contemplated that Murex would resell the ethanol immediately upon delivery. This

evidence precludes summary judgment for Delta that the lost profits caused by the

allegedly late delivery were unforeseeable.

C.

Delivery

Delta argues that “delivery” under the contract occurred when the ethanol was

loaded on the vessel in Brazil on August 15, 2012 and, therefore, delivery was timely.

Delta concedes that there is “some ambiguity” in the terms of the Agreement as they

relate to “delivery.” See Motion, p. 11. The Court agrees. The Agreement states that

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“[Delta] shall sell and deliver to [Murex] – CIF (Cost, Insurance and Freight) from

Port of Vitoria, Brazil ‘LOAD PORT’ to Texas City - Oil tanking terminal, USA

‘DISCHARGE PORT.’” See Agreement, ¶ 1.1. Paragraph 8.1 of the Agreement

contains the same language regarding delivery “in one safe berth . . . from Load Port

of Vitoria, Brazil to Discharge in Oil Tanking City Terminal.” See id., ¶ 8.1. On the

other hand, paragraph 10.1 of the Agreement provides in pertinent part that the

“Delivery shall be . . . at the discharge at Oil Tanking Texas City Terminal.” See id.,

¶ 10.1. Paragraph 12.2 provides, however, that the risk of loss “shall be transferred

from [Delta] to [Murex] as soon as the PRODUCT passes the ship’s manifold at the

LOADING PORT.” Id., ¶ 12.2.

The parties’ extrinsic evidence is equally conflicting and raises a fact dispute

regarding the parties’ intent. Delta submitted the Declaration of Paulo Carrara, its

Manager for Commodities, who stated that Delta “made legal delivery, as per CIF

terms, when the cargo was loaded on the ship and the title passed to Murex.” See

Carrara Declaration, Exh. to Reply, ¶ VII. In Murex’s Affidavit of Phil Dalton, he

states specifically that he negotiated delivery in Texas City, Texas, which would not

be a normal part of CIF terms. See Dalton Aff., ¶ 2.

The terms of the Agreement are ambiguous. The extrinsic evidence raises a fact

dispute regarding the parties’ intent as to whether legal delivery for purposes of the

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requirement that delivery occur between August 15 and August 31, 2012, was at the

time of loading the cargo in Brazil or only upon final delivery in Texas. As a result,

Defendant is not entitled to summary judgment on this issue.

IV. CONCLUSION AND ORDER

The damages claimed by Murex for lost profits are “direct” damages not

precluded by the parties’ Agreement, and Murex has presented evidence that the lost

profits were foreseeable. There exists a fact dispute regarding the parties’ intent as

to when and where “delivery” would occur. As a result, it is hereby

ORDERED that Defendant’s Motion for Summary Judgment [Doc. # 10] is

DENIED. It is further

ORDERED that Plaintiff’s Motion for Leave to File a Sur-Reply [Doc. # 21]

is DENIED.

SIGNED at Houston, Texas this 3rd day of June, 2013.

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