Opinion
05-22-00359-CV
06-21-2023
ENVIRODIGM, INC., MICRO SPACE INNOVATIONS, LLC D/B/A GREEN POLYMER SYSTEMS, AND KOMODO FIRE SYSTEMS, INC., Appellants v. TEXAS INSTRUMENTS INCORPORATED, Appellee
On Appeal from the 192nd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-19-20259
Before Justices Pedersen, III, Garcia, and Kennedy
MEMORANDUM OPINION
NANCY KENNEDY JUSTICE.
Envirodigm, Inc. ("Envirodigm"), Micro Space Innovations, LLC ("MSI"), and Komodo Fire Systems, Inc. ("Komodo") (collectively, "appellants") appeal the trial court's grant of summary judgment in favor of appellee Texas Instruments Incorporated ("TI"). In six issues, appellants argue the trial court erred by entering a take-nothing judgment against them in their claims against TI and by granting judgment in favor of TI on its breach-of-contract counterclaim. We affirm. Because all issues are settled in law, we issue this memorandum opinion. Tex.R.App.P. 47.4.
Background
TI is a Dallas-based technology company that designs and manufactures semiconductors and various integrated circuits. Some of TI's manufacturing processes produce chemical byproducts, some of which TI sells to third parties instead of treating and disposing of the chemicals as waste. Envirodigm is a California-based corporation that contracts with businesses like TI to purchase their chemical byproducts and re-use them.
In June 2014, Envirodigm and TI entered into a chemical purchase and sale agreement ("2014 PSA") pursuant to which Envirodigm agreed to purchase phosphoric-acid-based product for a one-year term. In April 2015, Envirodigm and TI entered into another chemical purchase and sale agreement ("2015 PSA") pursuant to which Envirodigm agreed to purchase phosphoric-acid-based product, isopropyl alcohol, and N-methyl-pyrrolidone for a two-year primary term with an option to extend for two additional one-year terms. Although the parties did not renew the 2015 PSA, TI continued to sell chemical byproducts to Envirodigm from April 2017 until September 2017, when Envirodigm and TI entered into a chemical purchase and sale agreement ("2017 PSA" or "PSA") pursuant to which Envirodigm agreed to purchase phosphoric-acid-based product, isopropyl alcohol, and N-methyl-pyrrolidone for a two-year primary term. Under the 2017 PSA, Envirodigm agreed to use the chemical byproducts or sell them "only to TI-approved end user(s)."
In May 2019, Envirodigm and TI agreed to amend the 2017 PSA ("First Amendment") to amend the prices of the chemical byproducts. The First Amendment provided that the prices would "be reviewed every six (6) months during the Primary Term and each Renewal Term, and documented in an addendum to this Agreement if new pricing is agreed upon." In July 2019, TI sent Envirodigm's owner Shawn Sahbari requests for quotes, inviting him to submit prices for phosphoric-acid-based product, isopropyl alcohol, and N-methyl-pyrrolidone. At the same time, TI sent requests for quotes to other companies. On August 1, 2019, TI sent a notice of termination to Sahbari, informing him TI would not be renewing the 2017 PSA with Envirodigm.
On December 20, 2019, Envirodigm filed suit against TI, asserting claims for breach of contract, common-law fraud, fraud by non-disclosure, tortious interference, interference with prospective business relations, promissory estoppel, and negligent misrepresentation. In a single pleading, TI filed an answer, including a general denial of Envirodigm's allegations and affirmative defenses; a counterclaim for breach of contract, asserting Envirodigm had failed to pay over $40,000 in invoices under the 2017 PSA; and requests for disclosure. In July 2021, Envirodigm filed a first amended petition in which it added appellants MSI and Komodo as plaintiffs and a claim for fraudulent inducement.
In its second amended petition, appellants alleged that prior to executing the 2017 PSA, Envirodigm was led to believe that its role with respect to the services it provided to TI was "expanding" and "[t]o meet that expansion, Envirodigm . . . [formed] additional business units, such as Komodo and . . . [MSI] . . . to provide an outlet for the products Envirodigm was asked to consume from [TI]."
In January 2022, TI filed a traditional and no-evidence motion for summary judgment, seeking dismissal of all of appellants' claims against it and judgment on its counterclaim. That same month, TI filed a motion to exclude the opinions and any potential testimony of appellants' expert witness. The following month, appellants filed their second amended petition and their response to TI's motion for summary judgment, as well as their response to TI's motion to exclude. TI filed its reply and objections to and motion to strike appellants' summary-judgment evidence.
The trial court conducted a hearing on TI's motion for summary judgment, at the conclusion of which the judge ruled the motion should be granted. One month after the hearing, the judge signed an order granting TI's motion for summary judgment, overruling TI's objections to and motion to strike appellants' summary-judgment evidence, and denying TI's motion to exclude as moot. That order dismissed appellants' claims against TI with prejudice and entered judgment on TI's counterclaim against Envirodigm in the amount of $41,136, plus attorney's fees and interest. Appellants timely filed their notice of appeal.
Discussion
I. Standard of Review
We review an order granting summary judgment de novo, taking as true all evidence favorable to the nonmovant and indulging every reasonable inference in the nonmovant's favor. JLB Builders, L.L.C. v. Hernandez, 622 S.W.3d 860, 864 (Tex. 2021) (citing Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005)). To be entitled to traditional summary judgment, the movant has the burden to prove that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Id. (citing Tex.R.Civ.P. 166a(c) and Hillis v. McCall, 602 S.W.3d 436, 439-40 (Tex. 2020)). By contrast, a party may obtain a no-evidence summary judgment when "there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial." Id. (citing Tex.R.Civ.P. 166a(i)). A properly filed no-evidence motion shifts the burden to the nonmovant to present evidence raising a genuine issue of material fact supporting each element contested in the motion. Id. (citing Tex.R.Civ.P. 166a(i) and Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006)). A no-evidence summary judgment is improperly granted if the respondent brings forth more than a scintilla of probative evidence to raise a genuine issue of material fact." Id. (citing Tex.R.Civ.P. 166a(i); King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003); and Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002)).
II. Appellants' Issues
Appellants raise the following six issues to challenge the trial court's order granting summary judgment in favor of TI:
(1) Whether the trial court erred by granting TI's motion for summary judgment on Envirodigm's claim for breach of contract;
(2) Whether the trial court erred by granting TI's motion for summary judgment on justifiable reliance grounds against appellants' claims for fraud, fraud by nondisclosure, fraudulent inducement, negligent misrepresentation, and promissory estoppel;
(3) Whether the trial court erred by granting TI's motion for summary judgment on Envirodigm's and MSI's damage claims;
(4) Whether the trial court erred by granting TI's motion for summary judgment on Envirodigm's negligent misrepresentation claim;
(5) Whether the trial court erred by granting TI's motion for summary judgment on MSI's and Komodo's claims for fraud and tortious interference with prospective relations; and
(6) Whether the trial court erred by granting TI's motion for summary judgment on TI's breach-of-contract counterclaim.
III. TI Did Not Breach the 2017 PSA (Breach of Contract Claim)
In their first issue, appellants argue the trial court erred by granting TI's motion for summary judgment on Envirodigm's claim for breach of contract. A breach of contract action requires proof of four elements: (1) formation of a valid contract; (2) performance by the plaintiff; (3) breach by the defendant; and (4) "the plaintiff sustained damages as a result of the breach." See S & S Emergency Training Sols., Inc. v. Elliott, 564 S.W.3d 843, 847 (Tex. 2018) (quoting USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 501 n.21 (Tex. 2018)).
In their second amended petition, appellants urged TI breached the 2017 PSA in the following ways:
(a) Overbilling;
(b) short-shipping materials;
(c) causing overpayments for commitments related to transportation costs;
(d) causing overpayments for commitments related to warehouse fees;
(e) nonconformance to the specifications contained in the [2017 PSA];
(f) wrongful classification of materials; and
(g) termination of the PSA in violation of the PSA's terms.
In its petition, Envirodigm claimed TI breached the 2017 PSA by causing overpayments for commitments related to transportation costs and warehouse fees. But, as appellants' brief notes, these are not separate claims of breach but rather claimed expenses appellants incurred as a result of the alleged "short shipments." See San Antonio River Auth. v. Austin Bridge & Rd., L.P., 601 S.W.3d 616, 631 (Tex. 2020) (noting direct and consequential damages are those that result from the defendant's breach). In light of resolution of Envirodigm's claims of short shipments above, we need not further address these arguments. See Tex. R. App. P. 47.1.
Appellants offered no argument in support of this claim. Accordingly, we conclude it is waived on appeal.
In its motion for summary judgment, TI urged that there was "no evidence that TI breached the PSA" and that the more specific claims for breach as set forth in appellants' petition fail as a matter of law. When a motion for summary judgment contains grounds for both a traditional summary judgment and no-evidence summary judgment, we generally consider the no-evidence ground first. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). But, where more expedient, we may resolve this issue by first addressing the traditional ground. See, e.g., Veros Credit, L.L.C. v. Sur. Bonding Co. of Am., No. 05-19-00586-CV, 2020 WL 2569911, at *4 n.3 (Tex. App.-Dallas May 21, 2020, pet. denied) (mem. op.).
A. Overbilling and Short-shipping
Envirodigm's claims regarding overbilling and short-shipping are based on its interpretation of the PSA as requiring TI to sell minimum quantities of specific chemical byproducts and its allegations that TI failed to do so and charged Envirodigm for full tanker trucks of chemical byproducts, rather than the actual amounts sold to Envirodigm. TI responds that the PSA did not set forth any minimum required quantities or require that it provide full tanker trucks of chemical byproducts to Envirodigm.
The PSA language appellants rely on is in section 5, which sets forth compensation rates and charges, more specifically that the purchase prices would be:
Isopropyl Alcohol (IPA) - $4000/tanker, BULK T/T (approx. 6500 gal) N-Methyl-Pyrrolidone (NMP) - $0.45/lb BULK T/T (approx. 5300 gal) Posphoric Acid (H3PO4)
1) >= 70% (RFAB) -- $2000/tanker, BULK T/T (approx. 42K-45K lbs)
2) <70% (RFAB) -- $100/tanker (TI to pay for freight, totes, other special requirements)
Appellants also rely on section 3 of the PSA, which provides that it "does hereby agree to purchase chemical products, which will meet the minimum specifications set forth in Exhibit A. Exhibit A provides specifications for the percentage make up the chemical byproducts, as well as a section titled "packaging" for each product. For Phosphoric Acid Based Product, the notation under "packaging" reads, "Tanker Trucks, 3,000 gallons typical volume." For IPA, the notation reads, "Tanker Trucks, 6500 - 6800 gallons typical volume." And, for NMP, the notation reads, "Tanker Trucks, 5,300 gallons typical volume."
In its response to TI's motion, Envirodigm provided its records of its purchases and the respective amounts of each, noting all were less than the "contract volume." Envirodigm also provided emails between its owner Sahbari and employees of TI in which the TI employees discuss the fact that, during 2018, TI was providing tankers that were not full to Envirodigm and Envirodigm claimed credits on its purchase orders to TI to account for its increased logistics costs. Envirodigm also provided several invoices from TI, but all were dated prior to the 2017 PSA. Both sides attached Sahbari's deposition, in which he explained his theory of overbilling as that "Envirodigm paid for a full tank or approximately 6500 and didn't receive a full 6500."
He also alleged in his deposition that even after the prices were changed under the 2019 Amendment, the subsequent purchase orders did not reflect the new pricing, but that claim was not alleged in any petition.
TI points out that in the 2019 Amendment to the 2017 PSA, the purchase prices are amended as follows:
Isopropyl Alcohol (IPA) - $1,000/tanker, BULK T/T (approx. 6500 gal)
N-Methyl-Pyrrolidone (NMP) - $10,000/tanker BULK T/T (approx. 5300 gal; minimum 5000 gal)
Posphoric Acid (H3PO4)
1) >= 70% (RFAB) -- $1325/tanker, BULK T/T (approx. 42K-45K lbs)
2) <70% (RFAB) -- $100/tanker (TI to pay for freight, totes, other special requirements)
According to TI, the fact that the term "minimum" was later included indicates the parties could have, but did not, agree to a required minimum in the 2017 PSA.
Our primary objective in construing contracts is to give effect to the written expression of the parties' intent. Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 888 (Tex. 2019). A contract's plain language controls, not what one side or the other alleges they intended to say but did not. Id. (citing Great Am. Ins. Co. v. Primo, 512 S.W.3d 890, 893 (Tex. 2017); Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 127 (Tex. 2010)). To that end, 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. Burlington Res. Oil & Gas Co. LP v. Tex. Crude Energy, LLC, 573 S.W.198, 203 (Tex. 2019) (quoting Heritage Res. Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)).
To determine the common, ordinary meaning of undefined terms used in contracts, statutes, and other legal documents, "we typically look first to their dictionary definitions and then consider the term's usage in other statutes, court decisions, and similar authorities." Pharr-San Juan-Alamo Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self Ins. Fund, 642 S.W.3d 466, 474 (Tex. 2022) (quoting Tex. State Bd. of Examiners of Marriage & Fam. Therapists v. Tex. Med. Ass'n, 511 S.W.3d 28, 35 (Tex. 2017)). Dictionaries define the term "approx.", or "approximate" or "approximately," as "near or approaching a certain state, condition, goal, or standard" or "close in value or amount but not precise." Approximate, http://dictionary.com (last visited May 23, 2023); merriam-webster.com/dictionary/approximate (last visited May 23, 2023). Accordingly, we agree with TI that the term "approx." in the 2017 PSA did not create a contractual minimum. See, e.g., Kilgore Expl., Inc. v. Apache Corp., No. 01-13-00347-CV, 2015 WL 505275, at *7 (Tex. App.-Houston [1st Dist.] Feb. 5, 2015, no pet.) (mem. op.) (noting contractual term "estimate" is defined as "an approximate judgment" or "calculation" and holding where appellee provided appellant with an approximation of the costs to be incurred, appellee did not breach and that nothing in the term "estimate" suggested that appellee intended to waive any and all further expenses).
Thus, we conclude Envirodigm's claims for breach of contract based on any alleged overbilling or short-shipping fail.
B. Nonconforming Materials
As for nonconforming materials, appellants urge the record contains evidence that TI breached the PSA by providing "non-conforming chemicals." The record contains statements from Sahbari in the form of his affidavit and deposition that Envirodigm "received shipments in which the chemicals did not meet the specifications set forth in the PSA" and that "more than ten times" Envirodigm's lab tests "showed that the specs were not in conformity with the contract." Sahbari also stated that he "would have mentioned [nonconformity] . . . to the engineers." Finally, Envirodigm offered emails between Sahbari and employees at TI, discussing whether the product received had an unusual smell or appearance. There was also an email that indicated "Bay 1 wouldn't meet [the] specifications" in the contract with Envirodigm, but there is nothing to indicate the material in Bay 1 had been delivered to Envirodigm.
We conclude the foregoing is not more than a scintilla of probative evidence and thus it is insufficient to establish a genuine issue of material fact. See JLB Builders, L.L.C. v. Hernandez, 622 S.W.3d 860, 864 (Tex. 2021) (citing Tex.R.Civ.P. 166a(i); King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003); and Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002)). Thus, Envirodigm's claims for breach of contract based on any nonconforming chemicals fail.
C. Termination of the PSA in Violation of the PSA's Terms
As noted above, on August 1, 2019, TI sent a notice of termination to Sahbari, informing him TI would not be renewing the PSA with Envirodigm. According to appellants, although the terms of the 2017 PSA indicated its "primary term" ended 24 months after the signing date of September 1, 2017, TI's notice was a premature termination that did not comply with the terms of the 2017 PSA. Appellants further argue that the 2019 Amendment had the effect of extending the 2017 PSA beyond August 31, 2019. TI's motion for summary judgment urged that this claim failed as a matter of law because the 2017 PSA expired by its own terms on August 31, 2019.
The 2017 PSA contained provision 1, Term and Termination, which provided:
a) Unless terminated as provided in this Section 1, the initial term of this Agreement will begin on the Effective Date [earlier defined as September 1, 2017] and continue for a period of twenty-four (24) months ("Primary Term") therefrom.
b) TI may, at its sole discretion immediately terminate this Agreement if ENVIRONDIGM fails to cure any noncompliance with any term of this Agreement within seven (7) business days of written notice by TI of the noncompliance. ENVIRODIGM may terminate this Agreement following at least thirty (30) days prior written notice to TI at the address listed in Section 12 below. In the event of termination, no special termination liabilities or charges will be payable by the terminating party beyond satisfaction of the obligations incurred hereunder prior to the effective date of termination.
We conclude the plain language of the 2017 PSA provides the agreement expired on August 31, 2019. As for TI's argument that the 2019 Amendment extended the contract term, we note that the only terms amended were those having to do with provision 5, Compensation Rates and Charges. The 2019 Amendment stated that, "Prices will be reviewed every six (6) months during the Primary Term and each Renewal Term," but nothing in that document indicates the parties intended to extend the Primary Term or begin a Renewal Term before the expiration of the Primary Term as defined in the 2017 PSA.
Accordingly, we conclude Envirodigm's claims for breach of contract based on early termination of the 2017 PSA in violation of its terms fail. We overrule issue one and affirm the take-nothing judgment on Envirodigm's breach-of-contract claim.
IV. Appellants Did Not Justifiably Rely on Any Alleged Misrepresentation
In their second issue, appellants argue the trial court erred by granting TI's motion for summary judgment on justifiable reliance grounds against appellant's claims for fraud, fraud by nondisclosure, fraudulent inducement, negligent misrepresentation, and promissory estoppel.
In their second amended petition, appellants claimed TI made false representations regarding whether the business relationship between TI and Envirodigm would be renewed or continue beyond 2019, whether TI would make changes in 2019 to address concerns raised by Envirodigm in 2018, and whether TI's requests for quotes, or RFPs, from Envirodigm in 2019 was no more than a mere formality. Appellants claimed TI fraudulently failed to disclose issues with third party transportation company CIMA prior to Envirodigm's execution of the 2017 PSA and their intent to terminate the business relationship with Envirodigm instead of renew it.
More particularly, appellants alleged TI made the following false representations:
(a) the business relationship between TI and Envirodigm would be renewed;
(b) the business relationship between TI and Envirodigm would continue beyond 2019;
(c) changes would be made and incorporated into the renewal agreement to address concerns raised by Envirodigm in 2018;
(d) TI would increase the volume of IPA per shipment to address concerns raised by Envirodigm in 2018;
(e) TI would reduce the collection frequency to address concerns raised by Envirodigm in 2018;
(f) concerns raised by Envirodigm in 2018 would be addressed in a renewal agreement;
(g) Envirodigm should make preparations necessary to continue the business relationship beyond 2019;
(h) pricing would be reviewed every six (6) months during the Primary Term and each Renewal Term;
(i) the RFP was a mere "formality" for renewing the relationship with Envirodigm; and
(j) the RFP was only to provide "justification" for the existing agreements between Envirodigm and TI.
More particularly, appellants alleged TI failed to disclose the following information:
(a) issues with CIMA prior to execution of the PSA;
(b) TI's intent to terminate or end its relationship with appellants if and when a suitable replacement were located prior to the execution of the PSA;
(c) that the prior representations that the business relationship would be renewed were not true;
(d) that there would be no further business relationship between Envirodigm and TI going forward;
(e) that the "bid process" was simply a sham to cover TI's pre-determined position to terminate its relationship with Envirodigm;
(f) that TI never intended to address the issues raised by Sahbari in 2018, including the short shipments;
(g) that TI intended to terminate the relationship;
(h) that TI was searching for a replacement for Envirodigm;
(i) that appellants should not be making plans to continue the business relationship beyond 2019; and
(j) that the RFP was a pretense to terminating the relationship with Envirodigm.
Appellants' remaining claims were largely premised on their claims for fraud and fraud by nondisclosure. Appellants claimed TI was liable for fraudulently inducing the execution of the 2017 PSA and the 2019 Amendment. Similarly, appellants claimed TI was liable to Envirodigm under the theory of negligent misrepresentation for the alleged false representations and failures to disclose. Finally, appellants' claim for promissory estoppel was based on TI's alleged promises about the continuation of the business relationship with Envirodigm.
TI's motion for summary judgment urged appellants' claims for fraud, fraud by nondisclosure, fraudulent inducement, negligent misrepresentation, and promissory estoppel all required appellants to show justifiable reliance and that, because they could not establish that they justifiable relied on any of the alleged misrepresentations, those claims failed as a matter of law. We agree that all of these claims require a showing of justifiable reliance. See Blankinship v. Brown, 399 S.W.3d 303, 308 (Tex. App.-Dallas 2013, pet. denied) (noting reliance as element of fraud, fraud by nondisclosure, and negligent misrepresentation); Miller Glob. Props., LLC v. Marriott Int'l, Inc., 418 S.W.3d 342, 347 (Tex. App.-Dallas 2013, pet. denied) (noting causes of action for fraudulent inducement and negligent misrepresentation require proof of reliance); Trevino & Assocs. Mech., L.P. v. Frost Nat. Bank, 400 S.W.3d 139, 146 (Tex. App.-Dallas 2013, no pet.) (noting elements of promissory estoppel include detrimental reliance); see also Anubis Pictures, LLC v. Selig, No. 05-19-00817-CV, 2021 WL 805214, at *14 (Tex. App.-Dallas Mar. 3, 2021, no pet.) (mem. op.) (affirming take-nothing judgment on promissory estoppel claim where no evidence of reasonable or justifiable reliance).
As a preliminary matter, we address appellants' challenge to the specificity of TI's motion with respect to these claims, particularly whether its motion sufficiently challenged their claims regarding TI's alleged misrepresentations and failures to disclose inducing appellants to enter into the 2017 PSA. In its motion, TI argued appellants did not justifiably rely on any representation by TI and more specifically urged that "none of the statements Plaintiffs point to as misrepresentations inducing reliance amount to a specific and definite promise of future performance." Although a summary-judgment motion "must stand or fall on the grounds expressly presented in the motion[,] . . . the "[g]rounds may be stated concisely, without detail and argument." Transcor Astra Grp. S.A. v. Petrobras Am. Inc., 650 S.W.3d 462, 478 (Tex. 2022) (citing McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 340- 41 (Tex. 1993) (quoting Roberts v. Sw. Tex. Methodist Hosp., 811 S.W.2d 141 (Tex. App.-San Antonio 1991, writ denied))). Accordingly, we conclude TI's motion urging that appellants did not justifiably rely on any representation by TI was broad enough to sufficiently challenge all of appellants' claims for fraud, fraud by nondisclosure, fraudulent inducement, negligent misrepresentation, and promissory estoppel.
Justifiable reliance usually presents a question of fact. See JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 654 (Tex. 2018) (citing Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 584 (Tex. App.- San Antonio 2011, pet. denied)). But the element can be negated as a matter of law when circumstances exist under which reliance cannot be justified. See id. (citing Nat'l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 424 (Tex. 2015) (per curiam), and AKB Hendrick, LP v. Musgrave Enters., Inc., 380 S.W.3d 221, 232 (Tex. App.-Dallas 2012, no pet.) (holding that reliance on a representation made in a business or commercial transaction can be unjustified as a matter of law)). In determining whether justifiable reliance is negated as a matter of law, courts "must consider the nature of the [parties'] relationship and the contract." See id. (quoting AKB, 380 S.W.3d at 232). In an arm's-length transaction, the defrauded party must exercise ordinary care for the protection of his own interests. See id.
Here, appellants' claims may be divided into two greater categories of claims: (1) that Envirodigm executed the 2017 PSA in justifiable reliance on TI's alleged failures to disclose issues with third party transportation company CIMA and (2) that appellants justifiably relied on TI's alleged misrepresentations and failures to disclose related to continuation and renewal of the business relationship between Envirodigm and TI in 2019. Appellants' theory regarding execution of the 2017 PSA is that, prior to execution, TI knew of and failed to disclose to Envirodigm several issues with CIMA, a transportation company that until 2018 had a lease agreement with TI that allowed CIMA to park its trucks on TI's campus. CIMA's right to park its trucks in TI's campus allowed Envirodigm to reduce its transportation costs. The 2017 PSA required delivery to Envirodigm at TI's facility and provided that, "All transportation will be through CIMA Transport until further notice." According to appellants, Envirodigm suffered financial losses in their transactions with TI after CIMA was no longer permitted to park its trucks on TI's campus.
Appellants rely on deposition statements from TI employees that they did not disclose TI's issues with CIMA to Envirodigm, in particular that of an employee of TI, who agreed that she "stayed silent concerning the ongoing issues TI was seeing with CIMA in its dealings with the other suppliers." But, appellants' evidence includes an August 3, 2017 email exchange between Sahbari and TI employees discussing some of the issues TI had experienced with CIMA, such that any claim of reliance on TI's alleged nondisclosures of issues with CIMA is not reasonable. See JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 655 (Tex. 2018) ("a person may not justifiably rely on a misrepresentation if 'there are "red flags" indicating such reliance is unwarranted.'") (quoting Grant Thornton, LLP v. Prospect High Income Fund, 14 S.W.3d 913, 923 (Tex. 2010)). Moreover, appellants did not present any evidence that TI made any affirmative disclosure or representation on the subject of termination or renewal of CIMA's lease that could have triggered a legal duty to disclose more. See Mercedes-Benz USA, LLC v. Carduco, Inc., 583 S.W.3d 553, 562 (Tex. 2019). Thus, we conclude appellants' claims based on Envirodigm's execution of the 2017 PSA fail.
Appellants' remaining claims are that they justifiably relied to their detriment on TI's alleged misrepresentations and failures to disclose related to TI's intent to renew the 2017 PSA in 2019 or otherwise continue the business relationship with Envirodigm. The statements appellants rely on are general references to renewal, including a meeting a TI invited Sahbari to join titled, "upcoming renewal." In his deposition, Sahbari made some statements of his belief that that the 2017 PSA would be "an evergreen, long-term agreement" and "an evergreen, continuous relationship" based on his "experience with the semiconductor industry." None of these statements or beliefs are more than a scintilla of probative evidence and thus are insufficient to establish a genuine issue of material fact. See JLB Builders, L.L.C. v. Hernandez, 622 S.W.3d 860, 864 (Tex. 2021) (citing Tex.R.Civ.P. 166a(i); King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003); and Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002)).
But, he also agreed that the 2017 PSA expired on September 1, 2019.
Further, to support recovery, the claimed reliance must be both reasonable and justified. See Anubis Pictures, LLC v. Selig, No. 05-19-00817-CV, 2021 WL 805214, at *14 (Tex. App.-Dallas Mar. 3, 2021, no pet.) (mem. op.). Reliance is justified only when a promise is sufficiently specific and definite that it is reasonable to rely on it as a commitment to future action. See id. (citing Davis v. Tex. Farm Bureau Ins., 470 S.W.3d 97, 108 (Tex. App.-Houston [1st Dist.] 2015, no pet.)). Neither statements of hope nor expressions of expectations can support reasonable reliance. See id. (citing Esty v. Beal Bank, S.S.B., 298 S.W.3d 280, 305 (Tex. App.-Dallas 2009, no pet.)). We conclude none of the statements appellants cite as supporting their claim of reliance are sufficiently specific or definite to support the same.
We overrule appellants' second issue.
V. TI Did Not Tortiously Interfere with Any Business Relations
In their fifth issue, appellants argue the trial court erred by granting TI's motion for summary judgment on MSI's and Komodo's claims for fraud and tortious interference with prospective relations. Having overruled appellants' issue relating to the fraud claims above, we now only address their claims for tortious interference.
Appellants' second amended petition alleged that Komodo and MSI were additional businesses formed by Envirodigm to provide outlets for products TI had asked Envirodigm to purchase in addition to the ones Envirodigm purchased under the 2017 PSA. Their claim for tortious interference alleged:
[t]here was a reasonable probability that [appellants] would have entered into business relationships with each other and with others based on the continuation of the business relationship with [TI] related to the purchase of waste products. [TI] was aware that there was a reasonable probability [appellants] would enter into such business relationships. [TI] willfully and intentionally interfered with these prospective business relationships through unlawfully tortious conduct, more fully set forth herein, and such interference was a proximate cause of damages to [appellants], more fully set forth below.
To prove a cause of action for tortious interference with a prospective contract, a claimant must establish the following elements: (1) a reasonable probability that the parties would have entered into a business relationship; (2) an intentional, malicious intervention or an independently tortious or unlawful act performed by the defendant with a conscious desire to prevent the relationship from occurring or with knowledge that the interference was certain or substantially likely to occur as a result of its conduct; (3) a lack of privilege or justification for the defendant's actions; and (4) actual harm or damages suffered by the plaintiff as a result of the defendant's interference, i.e., the defendant's actions prevented the relationship from occurring. Anderton v. Cawley, 378 S.W.3d 38, 59 (Tex. App.-Dallas 2012, no pet.).
In its motion for summary judgment, TI challenged the existence of evidence to support all four elements of appellants' tortious interference claim. TI's motion also urged that, because neither Komodo nor MSI was an approved end user of TI's products under the 2017 PSA, the causation element that requires proof that TI acted with the desire to prevent contractual relationship or knew that interference was certain to occur is negated as a matter of law.
As support for the element of "an intentional, malicious intervention or an independently tortious or unlawful act," appellants rely on the evidence discussed above to support claims that TI withheld information regarding issues with CIMA to induce Envirodigm to enter into the 2017 PSA and that TI "represented that it had decided to renew the PSA when it had no intention of doing so." Because we have already concluded appellants could not show any justifiable reliance on these alleged nondisclosures and misrepresentations, we question whether the same evidence could support this element of tortious interference. Regardless, a plaintiff can pursue a fraud claim based on an indirectly received representation if the plaintiff can show that the defendant had reason to expect the plaintiff's reliance on the statement, that is, if the plaintiff can show that the defendant possessed information that would lead a reasonable man to conclude that there was "an especial likelihood" that the defendant's representation would reach the specific plaintiff and influence its conduct. See Visa Inc. v. Sally Beauty Holdings, Inc., 651 S.W.3d 278, 312 n.66 (Tex. App.-Fort Worth 2021, pet. filed) (citing Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 581 (Tex. 2001) (quoting Restatement (Second) of Torts § 531 cmt. d (1977)), and O'Connor's Texas Causes of Action ch. 12-A, §§ 2.1.2, 2.5 (2021)). Thus, in order to establish TI's liability to MSI and Komodo, appellants must have produced more than a scintilla of evidence that TI intended or had "reason to expect" those parties would rely on its alleged nondisclosures and misrepresentations. See id; Marshall v. Kusch, 84 S.W.3d 781, 785 (Tex. App.- Dallas 2002, pet. denied).
Appellants' evidence consists of Sahbari's deposition testimony that he formed Komodo "because of TI" and that he had informed several employees of TI that he was researching and forming Komodo and that he may or may not have mentioned MSI. In his deposition in his capacity as corporate representative of Envirodigm, Komodo, and MSI, Sahbari elaborated on his statements that he informed TI employees about Komodo, stating that he informed them of plans to develop products to use phosphoric acid, but not that separate companies would be formed to produce or manufacture those products. We cannot conclude that the foregoing is more than a scintilla of probative evidence to raise a genuine issue of material fact that TI intended or had "reason to expect" Komodo or MSI would rely on any alleged nondisclosures and misrepresentations. See JLB Builders, L.L.C. v. Hernandez, 622 S.W.3d 860, 864 (Tex. 2021) (citing Tex.R.Civ.P. 166a(i); Chapman, 118 S.W.3d at 751; and Rodriguez, 92 S.W.3d at 506).
VI. Envirodigm Breached the 2017 PSA (Breach of Contract Counterclaim)
In their sixth issue, appellants argue the trial court erred by granting TI's motion for summary judgment on TI's breach-of-contract counterclaim.
A breach of contract action requires proof of four elements: (1) formation of a valid contract; (2) performance by the plaintiff; (3) breach by the defendant; and (4) "the plaintiff sustained damages as a result of the breach." See S & S Emergency Training Sols., Inc. v. Elliott, 564 S.W.3d 843, 847 (Tex. 2018) (quoting USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 501 n.21 (Tex. 2018)).
In its original answer, TI included a counterclaim for breach of contract, alleging Envirodigm had breached the terms of the 2017 PSA by failing to pay amounts rightfully due under the PSA. TI's combined answer and counterclaim included as exhibits the 2017 PSA and five invoices TI claimed were unpaid, totaling $41,136.00. Also, as evidence supporting their response to TI's motion, appellants included emails stating there were two invoices totaling $37,161 that were past due in August 28, 2019, as well as Sahbari's deposition testimony that Envirodigm received shipments on June 10 and July 24, but that it had not and "will not be paying those invoices." The trial court awarded judgment against Envirodigm on TI's counterclaim in the amount of $41,136.00. We conclude sufficient evidence supports the trial court's judgment on TI's counterclaim.
Appellants urge a genuine issue of material fact exists regarding the exact amount owed to TI. First, appellants urge that the invoices in evidence seek to charge Envirodigm for shipments made in August of 2019 after TI had given Envirodigm notice that no other shipments would be made. Review of the invoices indicates that, although they are dated in August of 2019, the charged amounts are for shipments made in May, June, and July of 2019. Appellants also argue the damages Envirodigm seeks from TI far exceed the damages TI seeks from Envirodigm, making summary judgment improper on TI's counterclaim. But, this argument for offset is inapposite here in light of our disposition of appellants' claims.
Accordingly, we overrule appellants' sixth issue.
In light of our disposition of issues one, two, five, and six, we need not address issues three and four. See Tex. R. App. P. 47.1.
Appellant's third issue argued the trial court erred by granting TI's motion for summary judgment on Envirodigm's and MSI's damage claims, and their fourth issue urged the trial court erred by granting TI's motion for summary judgment on Envirodigm's negligent misrepresentation claim.
Conclusion
We affirm the trial court's judgment.
JUDGMENT
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee TEXAS INSTRUMENTS INCORPORATED recover its costs of this appeal from appellants ENVIRODIGM, INC.; MICRO SPACE INNOVATIONS, LLC D/B/A GREEN POLYMER SYSTEMS; AND KORNODO FIRE SYSTEMS, INC.
Judgment entered.