ML20096G541
| ML20096G541 | |
| Person / Time | |
|---|---|
| Site: | Comanche Peak  |
| Issue date: | 05/18/1992 |
| From: | Samples M WORSHAM, FORSYTHE, SAMPELS & WOOLRIDGE (FORMERLY |
| To: | Rutberg J NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| References | |
| NUDOCS 9205260129 | |
| Download: ML20096G541 (90) | |
Text
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4 WOHSIIAhi, FORSMiiE. SA>tpEts & WootoHinoE
- A1ToHNEYS AND COUNSELORS AT TAW THikTv-Two MuhOnge,ooi gav tN tont R Datt.re. Texas 7520 f t Lt3*MONt 17 41999 3 000
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- 't"* a, C it May 18, 1992 Mr. Joseph Rutberg Office of the General Counsel e
U.
S. Nuclear Regulatory Commission 11555 Rockville Pike, Room 15D19 Rockville, Maryland 20854 Ret Texas Utilities Electric Company, Comanche Peak Steam Electric Station, Units 1 and 2. Docket Nos.,50-445A ajid 50-446A
Dear Mr. Rutberg:
This is in reference to the letter to you dated May 6,
- 1992, from - John Michael
- Adragna, counsel for Cap Rock Electric Cooperative, Inc., in which he complains that Cap Rock has not been furnished with a copy of my letter to you of April 21, 1992.
Although my April 21' letter was nothing more than a follow-up to TU 1
Electric's-informal meeting with you and others in January 1992 regarding Cap Rock's letter of January 6, 1992, to Mr. Murley,2 and I I assume that Cap-Rock's counsel does not imply any impropriety as a result of this meeting since it is TU Electric's understanding that Cap Rock has likewise had informal discussions with the NRC Staff from-time to time on issues req =irding TU Electric.
2Cap Rock's January 6 letter was not submitted pursuant to any of the.NRC's rules or regulations and did not seek any Commission action but was apparently filed only to color the record concerning (continued...)
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920S260129 920518 i
PDR ADOCK 05000445 I
M PDR
while TU Electric has certainly not embarked upon a " strategy of disinformation and innuendo" (as Mr. Adragna allegos), in order to allay any possible concern or misconception regarding TU Electric's motives, I am providing Mr. Adragna with a copy of that, letter and all attachments,3 together with a copy of this letter.
The District Court in Midland, Texas has now denied cap Rock's request for a mandatory temporary injunction to compel TU Electric to facilitate cap Rock's proposed purchase of power and energy from West Texas Utilities Company.
TU Electric will shortly be filib a formal response to Cap Rock's Comments.5 llevertheless, I would like to respond to several of the false 3(... continued) the Texas litigation between Cap Rock and TU Electric.
By its April 21 letter, all TU Electric did was to present its side of the story and furnish to the llRC a copy of the 1990 power Supply Agreement as axecuted by the parties and certain other relevant information which Cap Rock neglected to provide with its letter.
As indicated in note 3 below, virtually all of the other documents contained in TU Electric's April 21 letter had previously been furnished to the NRC.
As Mr. Adragna.till recognize, the vast majority of the 3
documents contained in the four binders constitutes or relates to NRC filings during 1988 and 1989 in connection with the dispute that TU Electric believed was " settled" by the execution of the 1990 Power Supply Agreement between TU Electric and Cap Rock.
These documents were provided on the assumption that the NRC had closed its files on the previous dispute between Cap Rock and TU Electric and that such documents were no longer available to the NRC Staff.
All of the remaining documents were produced in discovery proceedings in the pending Midland litigation.
Furthermore, the information contained in my letter of April 21, as well as the documented summary attached
- thereto, is merely reflective of the position taken by TU Tiectric in the Midland litigation (and previous proceedings before the NRC) and will certainly come as no surprise to Cap Rock.
'It is TU Electric's position that such purchase would violate the 1990 Power Supply Agreement between the parties.
I indicated in my April 21 letter that TU Electric would file 5
a foresl response to Cap Rock's Comments in the above proceeding after the Midland Court had ruled Ln Cap Rock's request for a temporary injunction.
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-3 accusations and misleading statements made by Mr. Adragna in his letter of May 6.6 Among other things, Mr.
Adragna accuses counsel for TU
~
Electric of " unilaterally abrogat t ing)" the agreement regarding the conf'dential negotiations with the llRC Staff in 1989 and 1990.
First of all, no such negotiations were held in 1989.
Prior to the first meeting with the 11RC Staff on January 11, 1990, TU Electric requested that Cap Rock execute a confidentiality agreement' which TU Zlectric had prepared and brought to the meeting.
However, Cap Rock declined to sign the agreement and the negotiations proceeded on the basis that TU Electric's settlement proposals would not be disclosed or used for any purpose whatsoever "without the express written consent of TU Electric" (emphasis supplied).'
The llRC Staff was not a
partye,to any confidentiality agreement or undetstanding.
Taus, as the party requesting the confidential treatment and the party whose consent was required for disclosure, TU Electric has not breached the confidentiality agreement.
Furthermore, at the conclusion of those discussions, the partiss consummated a settlement and executed a power supply agreement and general releases into which the confidentiality agreement was merged.
The 1990 Power Supply Agreement contains an entireties clause which does not perpetuate any confidentiality agreement.
Cap Rock also claims that TU Electric's introduction into evidence at the injunction hearing in the Midland litigation of a
" summary of the settlement"' violates a purported agreement between counsel for Cap Rock and counsel for TU Electric that "the settlement was to speak for itself and that neither (TU Electric) nor Cap Rock would file any suqmary or characterizations of the
'I w. 1 not attempt in this letter to deal with the merits of Cap Rock's claims regarding the 1990 Power Supply Agreement as those issues will be f ully covered in TU Electric's formal response to Cap Rock's Comments.
However, as a matter of information, I am enclosing TU Electric's post-hearing brief in the Midland litigation.
TU Electric requested that Cap Rock sign a confidentiality 7
agreement to prohibit Cap Rock from making inaccurate and misleading "ublic disclosures regarding the negotiations in the press and 64sewhere, as cap Rock had done on other occasions in an effort to discredit TU Electric.
E u Vol. III, Tab 64 of the attachments co my letter of April 8
21, 1992.
'The summary to which Mr. Adragna refers was furnished to the NRC in July of 1990 following execution of the 1990 Power Supply Agreement (an Vol. IV, Tab B, of the information furnished with my letter of April 21).
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-4 terms of the settlement with the NRC."
As counsel for TU Electric, I am certainly not aware of any such agreement and. in fact, Mr.
Adragna's letter of June 28, 1990, to the NRC, informing the Staff of the execution of the 1990 Power Supply Agreement, itself summarizes the key fontures of the settlement a r.4 is not inconsistent with the TU Electric summary.
Mr. Adragra's letter *of June 28, 1990, was furnished to the Midland Court at. t e same time as the TU Electric summary.
Additionally, Mr. Adragna'r letter of January 6, 1992, to Mr. Murley of the NRC (to which my April 21 letter informally responded) generally summarizes and characterizes Cap Rock's current interpretation of the settlement.'O Finally, Cap Rock strongly takes issue with Mr. Pitt Pittman's purported testimony in the Midland litigation to the effect that "the NRC found the allegations in Cap Rock's
- August, 1988
'significant changes' comments to be totally without merit."
Although the transcript of the injunction hearing at which Mr.
Pittman testified is not yet available to the parties and thus his
- verbatim testimony on this issue is unavailable at tnis time, the f act remains that the Director of Nuclear Reactor Regulation of the NRC found r.o significant antitrust changes in the acti' ties of TU Electric as a resuAt of the complaints of Cap Rock or c orwise and refused to change his finding upon consideration o.
- ap Rock's request for reevaluation.
Mr. Pittman's notes of the _anuary 1990 meetings with the NRC were also furnished to the Midland Court.
Cap Rock does not challenge the accuracy of the NRC Staff's position as expressed in those meetings.
In his May 6 letter, Mr. Adragna also requested a meeting with you and other representativen of the Commission, which we understand will occur on Wednesday, May 20, 1992.
Since TU Electric has not been given the opportunity to attend and participate in any such meeting (which is perfectly acceptable to TU Electric), it does respectfully request an informal meeting with the NRC Staff sometime during the week of May 25 or as early thereafter as convenient.
Very4truly%,urs,
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9 MDS/mkm 10It is interesting to note that Mr.
Adragna's letter of January 6, 1992, to the NRC, which contains a totally inaccurate and mislending characterization of the 1990 Power Supply Agreement, predates Cap Rock's knowledge of the contemporaneous summary of the Power Supply Agreement furnished to the NRC by TU Electric in July i
of 1990, about which Cap Rock now complains.
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P i Enclosures
/
/
cci Mr. Wm. M.
Lambe - With Enclosures to this letter only John Michael Adragna, Esq. - With
Enclosures:
1.
Letter, dated April 21, 1992, from M. D. Sampels to Mr. Joseph Rutberg and attachments:
(a)
"TU Electric / Cap Rock Electric Cooperative, Inc. - Documented Summary of Events";
(b)
Four binders containing, among others, the documents referenced in the aforesaid
" Documented Summary of Events"; and 2.
" Defendant's Reply Brief in opposition to Plaintiff's Request for Temporary Injunctive Relief,"
filed April 29,
- 1992, in the Midland litigation; and 3.
Letter ruling, dated May 11, 1992, from the Hon.
Judge John G.
Hyde to Messrs. Richard C.
Balough and M.
D.
Sampels, denying Cap Rock's request for injunctive relief in the Midland litigation.
JOHN G. HYDE DISTRICT JUDGE 2387H JUDICI AL DISTRIC1 COURT P. O.
BOX 1922 G
MIDLAND, TEXAS 79702 TELEPHONE 915 688 1142 FAX 915-668-1218
~
Mar 11,1992 Mr. Richard C Balough Attorney at Law 1403 West 6th Street Midland, Texas 78703 Mr. M. D. Sampels Attorney at Law 2001 Bryan Tower, Suite 3200 Dallas, Texas 75201 Re: Cause Numt " B-38,879; Cap Rock Electric v. Texas Utilities Gentlemen:
The evidence in this case does not establish irreparable harm which would justify the imposition of ' injunctive relief.
Further, the evidence does not establish that the remedy at law is inadequate to provide appropriate redress for any damages established at trial.
The Court finds that the underlying claim of the dispute can be properly l-addressed in a trial on the-merits and, accordingly, I will deny the Plaintiffs' l
t equest for a temporary injunction.-
l Very truly yours, o n G. Hy JGH/ch.
l cc: Mr. Tom W. Gregg, Jr.
Mr. J. Brian Martin L
Mr. Charles Tighe
- _ _ _ _ - _.-- _ - _ ~ _. _ _ _.._ - -
i.
I NO. B-38,s79 CAP ROCK E!2CTRIC 5
IN THE DISTRICT COURT COOPERATIVE, INC.,
5 5
Plaintiff, 5
v.
5 MIDLAND COUNTY, TEKA8 5
TEKA8 UTILITIES S
ELECTRIC COMPANY, 5
5 Defendant.
5 23sth JUDICIAL DISTRICT DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO FJAINTIFF'8 REOUEST FOR._.TfMPORARY INJUNCTIVE_-RELIEF COTTON, BLED 805, TIGHE & DAWSON charles L. Tighe Stdte Bar No. 20024000 Rick D. Davis, Jr.
State Bar No. 05537700 500 W.
Illinois, Suite 300 Midland, Texas 79702 WORSEAN, FOR8YTRE, SAMPEL8
& WOOLDRIDGE M. D. Sampels State Bar No. 17557000 Angela Agee Hatton State Bar No. 09221050 David P.
Poole-State Bar No. 16123750 2001 Bryan Tower, Suite 3200 Dallas, Texas 75201 L
April 29, _292 i
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TABLE OF CONTENTS I.
INTRODUCTION............
1 II.
ARGUMENT AND AUTHORITIES 7
i A.
Cap Rock's Request for Injunctive Relief 7
1.
The Requirements of Injunctive Relief in Texas 7
2.
The Mandatory Injunctive Relief Sought by Cap Rock Would Disrupt the Status Quo, a Disfavored Result Contrary to the Purpose of an Injunction.
9
- 3..
Cap Rock has Failed to Prove that it will suffer Extrems Hardship if the Injunction is not Granted, because there is no contract between cap Rock and WTU 12 B.
Cap Rock Has Failed to Carry its Burden of Proof Necessary for a Mandatory Injunction.
16 1.
Cap Rock has Failed to Show Why the Situation is So Extraordinary that a Mandatory Temporary Injunction Should be Granted, Since Cap Rock has Failed to Show a Substantial Likelihood of Success on the Merits
'L 6 a.
The 1990 Power Supply Agreement does not Lack a Quantity Term 19 b.
Contract Demand is a Planning and Billing Tool, not the_ Quantity of Power and Energy to be Purchased by Cap Rock and Sold by TU Electric.
22 c.
The-1990 Power Supply Agreement Specifies the Standard to be Applied in Determining the Points of Delivery, thereby Fixing Their Identity with Absolute Certainty 30 1
=.. - _ - _, -.
d.
There is No Gap or Homent in Time between the Termination of the 1963 Agreement and the Effectiveness of the 1990 Power Supply Agreement during which Cap Rock could have removed 1ts points from TU Electric's control area
,36 c.
The Physical Completion of Exhibit A is not required for the 1990 Power Supply Agreement to be an Enforceable Contract 43 f.
The 1990 Power Supply Agreement is a fully Enforceable Contract which Requires Cap Rock to purchase all of its power and energy requirements upon the effective date of the agreement 48 9
There was a Meeting of the Hinds between TU Electric and Cap Rock on all essential terms of the 1990 Power Supply Agreement 55 h.
The Texas Courts Favor the Presumption that Contracts are Enforcer.ble 63 1.
==
Conclusion:==
Cap Rock cannot show any possible likelihood of success on the merits.
65 2.
Refusal to Grant the Injunctive Relief Requested will not Result in Irreparable Injury 65 Evidence that Cap Rock will pay more a.
money for its electrl7ity if it continues to buy power from TU Electric rather than WTU is not evidence of irreparable harm, since Cap Rock has an adequate remedy at law for any such damages.
66 b.
Testimony that higher power costs might cause Cap Rock to lose existing and potential customers or that higher l
power costs might cause financial harm to Cap Rock's customers cannot form a l
basis for injunctive relief.
68 11
c.
Cap Rock's complaint that it cannot go back in time and re-intervene in TU Electric's rate case has no relevance to its request for injunctive relief, since the requested injunction cannot restore Cap Rock to that pos; tion.
70 d.
Assertions that Cap Rock's business reputation and relationship with WTU and other companies will be adversely affected if it is not permitted to enter into the proposed contract with WTU do not demonstrate irreparable injury 71 e.
The testimony of Whitfield Russell that uncertainty as to cap Rock's power supply would prevent customers from considering cap Rock as a potential power source does not support the relief requested 74 f.
==
Conclusion:==
cap Rock has completely failed to carry its burden of proof to show that the refusal to grant injunctive relief would result in irreparable harm to Cap Reck 75 III. CONCLUSION.
76 l
l 111 n
l I
NO. B-38,879 CAP ROCK ELECTRIC 5
IN THE DISTRICT COURT COOPERATIVE, INC.,
5 5
Plaintiff, v.
HIDLAND COUNTY, TEXA8 S
TEXA8 UTILITIES ELECTRIC COMPANY, 5
5 Defendant.
5 238th JUDICIAL DISTRICT DEFENDANT'S REPLY BRIEP IN OPPOSITION TO PLAINTIPP'S REOUEST POR TEMPORARY INJUNCTIVE RELIEP TO THE HONORABLE 7DDGE OP BAID COURT Texas Utilitieu Electric Company ("TU Electric"), Defendant in the above-entitled and numbered cause, files this its Reply Brief in Opposition to Plaintiff's Request for Temporary Injunctive Relief, and for same would show the Court the following:
I.
1 INTRODEQI2H Cap Rock Electric Cooperative, Inc.
(" Cap Rock") is asking the Court to enter an injunction restraining TU Electric from interfering with an alleged contract between cap Rock and West Texas Utilities Company ("WTU") providing for Cap Rock to purchase all of itt> power and energy requirements from WTU.
Cap Rock is also asking the Court to issue a mandatory injunction ordering TU Electric to reduce the output of its generators to allow WTU to sell all of Cap Rock's power and energy requirements to Cap Rock, and to wheel WTV's power and energy over TU Electric's transmission system to Cap Rock.
l e.
The evidence in this case demonstrates that Cap Rock has failed to carry its burden of proving that it is entitled to the injunctive relief it seeks, in that Cap Rock has failed, as a matter of law, to show a substantial likelihood of success on the merits or the existence of irreparable injury in the event the injunction is not granted.
When read as a whole and not in isolated pieces taken out of context as Cap Rock has consistently done, the Power Supply Agreement, dated June 28, 1990, ("1990 Power Supply Agreement") (Def. Exh.11) contains each and every essential term relating to the sale and purchase of power and energy necessary to make it a fully enforceable and binding contract.
Specifically:
1.
The 1990 Power Supply Agreement expressly defines in Sections 3.07 (a), 3.01, 3.02 and 3.03 the amount of power and energy Cap Rock is required to purchase from TU Electric and TU Electric is required to sell to Cap Rock; 2.
Contract
- Demand, as used in the 1990 Power Supply Agreement is a plann$ng and billing tool, not the quantity of power and energy to be purchased and sold under the agreement; 3.
The 1990 Power Supply Agreement specifies in Section 1.11 the standard to be applied in determining the Points of Delivery, thereby f xing their identity with absolute certainty; 4.
There is no gap or moment in time between the terminatien of the 1963 Agreement and the effectiveness of the 1990 Power Supply Agreement during which Cap Rock could have removed its Points of Da. livery from TU Eleceric's control area thereby avoiding its obligations under the 1990 Power Supply Agreement; DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFFS' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 2 1
5.
The physical completion of a piece of paper labeled
" Exhibit A" is not required for the 1990 Power Supply Agreement to be an enforceabic contract; 6.
The 1990 Power Supply Agreement is a full-reguirements contract upon the ef f ective. date of the agreement and, as cap Rock has publicly admitted, requires Cap Rock to give two or three years' notice before it may reduce load supplied by TU Electric; 7.
There was a meeting of the minds between TU Electric and Cap Rock on all essential terms of the agreement, as evidenced by the objective intent of the parties expressed in the writing itself as well as the public representations made by both parties shortly after the execution of the contract.
i In addition, with regard to Cap Rock's alleged irreparable harm, none of the testimony presented by Cap Rock is sufficient to demonstrate the existence of irreparable injury in the event the injunction is not granted, since such testimony is either entirely speculative or relates to alleged injuries for which, if proven, Cap Rock would have an adequate remedy at law.
Specifically:
1.
Evidence that Cap Rock will pay more money for its electricity if it continues to buy power from TU Electric rather than WTU is not evidence of irreparable harm, since Cap Rock has an adequate remedy at law for any such damage; 2.
Mr. Collier's testimony that higher power costs might cause Cap Rock to lose existing and potential customers or that higher power costs might cause financial harm to Cap Rock's customers cannot form a basis for injunctive relief because such testimony is purely speculative and, even if proven to exist, any such harm to Cap Rock's customers is not harm to cap Rock -- the applicant for injunctive reliefs 3.
Cap Rock's complaint that it cannot go back in time and re-intervene in TU Electric's rate case has no relevance to its request for injunctive relief, since the requested injunction cannot restore Cap Rock to that position and DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PIAINTIFF8' BIOUEST_LQR TEMPORARY INJUNCTIVE RELIEF - Pace 1
i the injury that is to be prevented by an injunction munt be injury that will occur in the future; 4.
Assertions that Cap Rock's business reputation and relationchip with WTl and other companies will be adversely affacted if it is not permitted to ehter into the proposed contract with WTU, even if true -- which they are not, do not demonstrate irreparable injury because Cap Rock has an adequate remedy at law for any such injury; 5.
The testimony by Mr. Russell that uncertainty as to Cap Rock's power supply would prevent customers from considering Cap Rock as a potential power source does not support injunctive relief, since the testimony is purely conjectural and, even if true, Cap Rock would have an adequate remedy at law for any such injury.
Before addressing the specific requirements of injunctive relief and the evidence before the Court, it is instntetive to examine precisely what cap Rock is asking the Court to order -- an examination which reveals the truly extraordinary nature of the temporary injunction being sought by Cap Rock.
At the heart of Cap Rock's injunction request is its desire to immediately begin purchasing all of its power and energy requirements from WTU, prior to a final adjudication of the law and the facts-in the underlying contractual dispute between cap Rock and TU Electric regarding the enforceability of the 1990 Power F ttly Agreement.
However, even if the requested injunction were gtar.ced, the evidence before the Court demonstrates that the relief being sought by Cap Rock cannot be implemented because, as discussed.in detail below, there is no-contract between Cap Rock and WTU.
Nor has Cap Rock introduced any evidence to prove that DEFENDANT'S' REPLY BRIEF IN OPPOSITION TO PIAINTIFF8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF
_ Pace 4
1 i
WTU would be willing to sell any electric power and energy to Cap Rock until the underlying contractual dispute between Cap Rock and TU Electric has been finally adjudicated.
In the absence of such evidence, any injunction order would be fruitless since WTU, not being a party to this case, cannot be simultaneously enjoined to sign a contract with Cap Rock and sell power Lnd energy to Cap Rock.
Furthermore, even if one were to assume for the sake of argument that WTU would sell power and energy to cap Rock merely on the basis of a temporary injunction order, Cap Rock has failed to put on any evidence to show how the wheeling service it is asking this court to require TU Electric to provide is to be accomplished.
Under what terms and conditions will TU Electric be required to wheel? At what price?
For what period of time?
Cap Rock does not say.
Cap Rock has also failed to introduce any evidence as to the specific manner in which the Court is supposed to order TU Electric to operate its generation and transmission system in order to cease supplying power and energy to Cap Rock and effect the transfer of power from WTU to Cap Rock.
Does cap Rock suggest that the Court take over the operation of TU Electric's control area, including the _ dispatching of its-generation and the control of its transmission-system,- in order to ensure that the ultimate relief Cap Rock seeks (i.e., to obtain power from WTU)-is accomplished?
DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 5,
I Again, Cap Rock does not say.
Nor dous cap Rock address the fact that, as its own expert testifed, wheeling is the transfer of power and energy from one control area to another control area.
The evidence is clear that Cap Rock is not a control area.
Thorofore, for the transaction it proposes to be implemented, both TU Electric and WTU would be required to take affirmative action to effect the wheeling.
However Cap Rock does not explain how that action by WTU could be mandated, since WTU is not before the Court. Indeed, in its pleadings, its evidence at the injunction hearing and its Brief, Cap Pock has completely ignored all of the details as to how the relief it seeks is to be accomplished.
- Thus, without any supporting evidence, Cap Rock is, in essence, asking this Court to: (i) form a contract for the sale and purchase of power between Cap Rock and an entity which is not before the Cottrt ( i. e., WTU) ; (ii) form a contract between Cap Rock and TU Electric for wheeling serv (ce and mandate the specific terms of that service; and (iii) order TU Electric to alter the current operations of its generators and transmission system in a manner as yet unspecified by Cap Rock.
There is simply no support in the record, nor any basis in law or equity, for using the extraordinary remedy of mandatory injunctive relief to accomplish these results.
Therefore, for these reasons and the reasons set forth below, as well as in TU Electric's Motion to Deny Plaintiff's Request for DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNcTIVE RELIEF - Pace 6
l Temporary Injunctive Relief, the Court should deny Cap Rock's request for a temporary injunction.
II.
ARGUMENT AND__AUTHORLTlXA A.
Cap Rock's Requent for Injunctive Relief 1.
The Requirements of Injunctive Relief in Texas In determining whether Cap Rock is entitled to the relief it requests, it is important to note that Cap Rock seeks not just injunctive relief, but mandatory injunctive relief.
Mandatory injunctive relief does not simply maintain the status que until the rights of the parties are finally adjudicated, but rather compels a party to take affirmative action which alters the status quo and the presently existing rights and obligations of the parties.
In order to demonstrate a right to the mandatory injunctive relief its seeks, Cap Rock must qarry its burden of proof to show that:
1.
Cap Rock has a substantial llPelihood of success on the merits of the case; 2.
There is a substantial threat of irreparable injury; 3.
The threatened injury to cap Rock outweighs the threatened harm which the injunction may cause TU Electric; and DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' BJOUEST FOR TEMPORARY INJUNCTIVE RFMIF - Pace 7 1
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4, The granting of the injunction will serve the public's interest.1 Egg e.g.,
Parks v. U.S. Home Corn., 652 S.W.2d 479, 485 (Tex. App.
Houston (1st Dist.) 1r writ dism'd v.o.j.).
Even if Cap Rock were nw seeking a mandatory injunction, its burden of proving the necessity for injunctive relief prior to a final adjudication on the merits would be difficult:
An applicant for a temporary injunction seeks extraordinary relief.
He seeks to immobilize the defendant from a course of conduct which it may well be his right to pursue.
Camn v. Shana20, 348 S.W.2d 517, 519 (Tex. 1961).
However, because cap Rock seeks mandatory injunctive
- relief, its burden is e
substantially higher.
Before a mandatory injunction may be issuedt The right of the complainant must be clear and unmistakable on - the law and the facts and there must exist an urgent and paramount necessity for the issuing of the writ in order
'The third and fourth requirements for injunctive relief and cap Rock's inability to satisfy those requirements were thoroughly addressed in TU Electric's Motion to Deny Plaintiff's Request for Temporary Injunctive Relief at pages 44-45.
That discussion will not be repeated here.
However, with respect to the third element, TU Electric would point out the unrebutted testimony of Mr. Bunting at the injunction hearing which established that, shortly af ter the execution of the 1990 power Supply Agreement, TU Electric added additional capacity to and extended its purchases under certain cogeneration purchase agreements, in order to have sufficient capacity available-to meet its system load requirements, including Cap Rock's 100 megawatts of load.
Mr. Bunting further testified that. the cost' to TU Electric of purchasing power and energy sufficietnt to serve 100 megawatts of load is -approximately $20 million por year -- a cost which far exceeds the threatened harm to Cap Rock which-it quantified in'its Original Petition, and a cost F
which TU_Ellectric would be required to bear-if Cap Rock abrogates its obligations.under the 1990 Power Supply Agreement.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFFS' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - PaceJ
t to prevent extreme or other serious damage which would ensuo from withholding it.
i i
Amarillo vs. Mutual Beneficial Association, 53 S.W.2d 329, 331 (Tex. Civ. App. -- Amarillo 1932, no writ) (emphasis added).
Because of the substantially higher burden of proof which accompanies the extraordinary relief afforded by a mandatory injunction, such an injunction is rarely granted prior to a final and complete hearing.
Rhodia. Inc.
- v. Harris County, 470 S.W.2d 415, 419 (Tex. Civ. App. -- Houston (1st Dist.) 1971, no Vrit).
A temporary mandatory injunction will be granted only with great caution andLin cases of extreme hardship.
Arvin Harrell Co. vs.
Southwestern Bell Tel dene Comoany, 385 S.W. 2d 696, 697 (Tex. Civ.
f App. -- Austin 1964, no writ).
2.
The Mandatory Injunctive Relief Bought by Cap Rock Would Disrupt the status Quo, a Disfavored Result Contrary to ths Purpose of an Injunction The very purpose of a tempora'ry injunction is to preserve the status quo ' pending trial.
Keystone Life Ins. Co.
v.
Marketino r
tig naaement.
Inc., 687 S.W.2d 89 (Tex. -- App.
Dallas 1985, no writ).
- However, a mandatory temporary injunction changss the status quo and, therefore, is disfavored by the courts.
Sig Havnie
- v. General Leasina Co.. Inc.,-538 S.W.2d 244 (Tex. App.
Dallas-1976, no writ).
As the Texas Supreme court has explained, "[t]he status quo (in an injunction case) is the last actual, peaceable, noncontested DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFFS' REQUEST.FOR, TEMPORARY INJUNCTIVE RELIEF - Pace 9 l
t
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acatus which preceded the pending controversy.
Rio Three Industries, Inc.
v.
Railroad Com'n, 618 S.W.2d 543, 548 (Tex.
1981).
In this case, the "last actual, peaceable, nqncontested status which proceded the pending controversy" was the situation in which TU Electric sells to Cap Rock, and Cap Rock purchases f rom TU Electric, all of Cap Rock's power and energy requirements.
TU Electric has been cap Rock's full requirements power a'.:1 energy supplier for the past fifty years.
Cap Rock's Original Petition at 3.
When Cap Rock filed the instant lawsuit on December 20,
- 1991, it was purchasing all of its power and energy requirements from TU Electric under the Agreement for Purchase of Power executed by the parties in 1963
("1963 Agreement").
By letter dated December 19,
- 1991, Cap Rock terminated the 1963 Agreement effective at 12:01 a. ni, on February 1, 1992 (Def. Exh.
20], at which instant the 1990 Power Supply Agreement immedic.tely became effective in accordance with the provisions of Section 2.01.
(Def. Exh. 11)
Although the enforceability of the 1990 Power Supply Agreement is the subject of the underlying dispute in this case, it is undisputed that TU Electric has continued to supply all of Cap Rock's power and energy requirements since February 1, 1992.
- Thus, at all times since the initiation of this litigation by Cap Rock through the present date (and indeed for the past fif ty years), the status quo has been the situation in which TU Electric sells to Cap DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 10 d
l Rock, and cap Rock purchases from TU Electric, all of Cap Rock's power and energy requirements.
It is therefore truly astounding that Cap Rock would argue in its Brief that the status quo is the termination of the 1963 Agreement.
Cap Rock Brief at 34-36.
Simply put, Cap Rock's argument is that its attempt to change the status quo (i.e.,
Cap i
Rock's status as a full-requirements customer of TU Electric) constitutes the status quo to be preserved in this case pending trial.
flothing could be further from the truth.
In fact, the injunction order Cap Rock seeks would significantly disrupt the status c.uo by requiring TU Electric to take affirmative action to reduce its generation of power, cease supplying all of Cap Rock's power and energy requirements and wheel power f rom WTU through TU Electric's transmission system to Cap Rock.
Such an order would, in essence, allow Cap Ro,ck to repudiate its contractual obligations under the 1990 power Supply Agreement, prior tu a final adjudication of the law and the facts in this case.
Thus, any injunctive relief, mandatory or otherwise, which would require TU. Electric to act or refrain from acting would drastically alter the status quo.
Cap Rock has failed to prove that its requested injunctive relief is necessary to preserve the status quo and, as discussed in the following section, Cap Rock has DEFENDANT'8 REPLY BRIEF IN OPPOSITION 70 PLRINTIFF8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 11 c:
__,_..-_,_._._,,a.__
failed to prove that it will suffer extreme hardship if the mandatory temporary injunction it seeks ic not granted.
3.
Cap Rock has Failed to Prove that it will suffer Extreme Hardship if the Injunction is not Granted, because there is no Contract between Cap Rock and WTU Cap Rock's allegations and arguments regarding its alleged
" contract" with WTU have taken many shapes and forms throughout t'
3roceedit g, varying as needed to meet whatever immediate factual and legal obstacle cap Rock is eneking to overcot2e at the moment.
In its Original Petition, Cap Rock premised its request for injunctive relief upon the existence of a contract between Cap Rock and WTU.
Cap Rock stated in its original Petition, without equivocation, that Cap Rock (has) entered into a contract with West Texas Utilities (WTU).
Under the WTU
- contract, Cap Rock will buy its full requirements for electricity for its entire system from WTU. ***
The WTU purchase will begin on 12:01 a.m. Feb,ruary 1, 1992.
(Def, Exh. 22 at 6.)
Mr. Collier, who, under oath, verified the statements in Cap Rock's Original Petition (Def. Exh. 22 at 14),
sinilarly testified at the injunction hearing that he "believe(s) that there is a contract with_WTU."
(March 27, 1992, Tr.,_p. 10.)
However, by Intter dated February 18, 1992, written af ter this lawsuit was filed but before the injunction hearing began on March 26, 199; Mr.
Don Welch, WTU's Vice President of Operations, I
informed Mr. Collier that "WTU's negotiations with Cap Rock.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO P"JIhr1IFF8 '
REQUEST FOR _ TEMPORARY INJ UNCTPyE RELIEF = Pace 12
)
10 have not resulted in a contract between WTU and Cap Rock."
(Pl.
Exh.
9, emphasis added.)
In
- addition, WTU's designated j
representative, David Teeter, testified in his o.'tal deposition in this case that there is no WTU contract:
Q:
So, there -- there is no contract between WTU and Cap Rock, is there?
l A:
That is correct.
(Def. Exh. 72 at 65, emphasis added.)
The fact that there is not now, not nas there ever been, a contract between Cap Rock and WTU is further supported by Cap Rock's own admissions.
For
- example, despite Mr.
Collier's assertions at the injunction hearing that he " believed" Cap Rock
+
had a contract with WTU, Mr. Collier admitted that as far as he knows WTU has not executed the proposed coatract:
Q:
Did you receive back from WTU executed copies of [the WTU contract and attachments thereto)?
A.
No, we have not.
l (March 26,
- 1992, Tr.,
p.
125, emphasis added.]2 Cap Rock also admitted in its March 25, 1992 CoLments filed at the Nuclear Regulatory Commission ("NRC") that:
Althcugh Cap Rock returned its ccpies (of the proposed WTU contract) on January 2, 1992, the contract was never executed by WTU.
2The document Cap Rock has represented to be the WTU contract (Def. Exh. 38), while signed by Cap Rock, is not signed by WTU.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8'
, REQUEST FOR T3)(PORARY INJUNCTIVE RE LIEF - Pace 13
\\
l 1%P D h. 52 at 25.)3 Finally, Cap Rock admits in its Brief that "WTC has not returned a signed contract to Cap Rock Electric" and Cap Rock does not have a " signed contract with WTU today."
Cap Rock Brief at 34.
-Thus, clearly no contract between Cap Rock and WTU existed on the date Mr. Collier verified cap Rock's original Petition, nor does such a contract exist at the present time.
The fact that there is no WTU contract Significant because t
the rignt to equitable relief must be detma 6i.ed as such right may or may not exist at the time of the hearing.
Hammon vs. Wichita County, 290 S.W.2d 545, 546 (Tcx. Olv. App. -- Fort Worth 1956, no writ).
At the time Cap-Rock filed this suit and asked for injunctive relief, it did not have a contract with WTU.
At the time of the temporary injunction hearing, Cap Rock did not have a contract with WTU._
Cap Rock does not have a contract with WTU today.
The lack of a WTU contract is also significant becauce it shows that_ Cap Rock cannot meet its burden of proving that the facts upon which its request for mandatory injunctive relief are based are clear and unmistakable.
Amarillo vs. Mutual Beneficid 3This statement to the NRC is particularly revealing bs ause it shows that, eve's though Cap Rock stated in its Original Petition filed on Decembei' 20, 1991 that Cap Rock had " entered _ into a contract" with WTU a Ptatement Mr.
Collier swore in his verification was "true and correct" (Def. Exh. 22 at 14) -- Cap Rock did not even-return to WTU the copies of the ',roposed '.WTU contract that Cap Rock had signed until January 2, 1992, thirteen days after the original Petition was filed in which Mr. Collier swore to the existence of that contract, i
DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJtTNCTIVE RELIFF - Pace 14
P hsfipiation, 53 S.W.2d 329, 331 (Tex. Civ. App. -- Amarillo 1932, no writ).
Furthermore, while Cap Rock argues that "if there is no valid contract between Cap Rock Electric and TU Electric, WTU will provide electricity to Cap Rock Electric as planned" (Cap Rock Brief at 25), Cap Rock has not introduced any evidence that, if the injunction were granted, WTU would be willing to execute the
-proposed contract and begin selling power to Cap Rock before this litigation'between Cap Rock and TU E:.
- tric is finally resolved.
In fact, the February 18, 1992 letter from Mr. Welch, WTU's Vice-President of Operations, to Mr. Collier, written af ter Cap Rock had filed this lawsuit, (Pl.
Exh.
9) suggests that WTU would be unwilling to sell any power and energy to Cap Rock until this legal dispute comes to an end.
For example, Mr. Welch states that WTU is only willing to sell power and energy to Cap Rock "once Cap Rock's relations.uip with TU Electric ha,s ended." (Pl. Exh.
9, emphasis added).
In that same_ letter, Mr. Welch also stated:
i As you know, unless and until cap Rock has validly terminat2d its relationship with TU Electric WTU cannot' finalize any agreement to sell electricity to Cap Rock.
(Pl'. Exh. 9)'
'The fact that WTU has taken such a-position after receiving _
notification that-TU Electric contests-Cap Rock's interpretation of the 1990 Power Supply Agreement is irrelevant to the issue of whether Cap Rock has a contract with WTU.
As the evidence _in this case clearly'shows, Cap Rock-did not have-a contract with WTU on the date it filed this lawsuit.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO-PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE__ RELIEF - Pace 15
Such evidence makes **
clear thtt WTU is not willing to finalize a contract with Cap Rock for the sale of power until the contractual dispute between Cap Rock and TU Electric has come to an
- an end that will not come at the conclusion of t's temporary enc injunction hearing.
Therefore, because the overwhelming weight of the evidence demonstrates that WTU has no contractual obligation to sell power to Cap Rock, nor is it willing to enter into such a contract with Cap Rock until the underlying contractual dispute between TU Electric and Cap Rock is finally resolved, Cap Rock has failed to establish that it would suffer " extreme hardship" through its inability to immediately begin purchasing pour from WTU if the requested injunction is not granted.
MLMarrell Co., 385 S.W.2d at 697.5 B.
Cap Rock Has Failed to Carry its Burden of Proof Necessary for a Mandatory Injunction 1.
Cap F.ock bas Failed to Show Why the Situation is So Extraordinary that a Mandatory Temporary Injunction Should be Granted, Since Cap Rock has Failed to Show a substantial Likelihood of Success on the Merits Cap Rock has also failed to carry its burden of proving a
clear and compelling right of recovery on the merits.
Amarillo vs.
5In addition, since there is no contract between Cap Rock and WTU, there can be no " substantial threat of irreparable injury" to Cap Rock if the injunction it seeks is not granted -- a necessary prerequisite for injunctive relief.
Parks vs. U.S. Home Coro., 652 S.W.2d 479, 485 (Tex. App.
Houston (1st Dist.)
1983, writ dism'd, w.o.j.).
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 16 t
-. - - - - ~
. -. -. -. ~
l Mutual Beneficial Association, 53 S.W.2d at 331 (Before a temporary mandatory injunction will issue, "[t]he right of the complainant must be clear and unmistakable on the law and the facts ").
.The ultimate relief being sought-by Cap Rock in this case is a declaratory order that the 1990 Power Supply Agreement is unenforceable.
Cap Rock's entire legal argument as to the "unenforceability" of the 1990 Power Supply Agreement is based upon the theories that the agreement "contains no quantity term (and no points of delivery) and specifically authorizes Cap Rock Electric to determine the quantity of electric power, if any, to be taken from TU Electric." Cap Rock Brief at 2.
Cap Rock bases its theory of a " missing quantity term" upon the fundamentally erroneous premise that " Contract Demand", as defined in Section 1.01 of the 1990 Power Supply Agreement, is the quantity of power and energy to be purchased by Cap Rock and sold by TU Electric under that contract.
Cap Rock's theory that the Points of Delivery are somehow " missing" from the 1990 Power Supply Agre*. ment is likewise based upon the erroneous premise that Cap Rock has the right under the 1990 Power Supply Agreement to determine "which, if any, Points of Delivery, are to be included on Exhibit A."
Cap Rock 4
Brief at 10.
Cap Rock attempts to support these theories by looking solely
.to a few of the provisions 'of the 1990 Power Supply Agreement,
- DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIlf8' F_EOUEST FOR-TEMPORARY INJUNCTIVE RELIEF - Pace 17
~
g w.
m
taken in-isolation and out of context, thus breaking one of the cardinal. rules of contract law -- namely, that all parts of the contract are to be taken -
together, and such meaning.
. given to them as will carry out and effectuate to the fullest extent the intention of the parties.
General American Indemnity Co. v. PeoDer, 339 S.W 2 d 663, 661 (Tex.
1960)(emphasis added).'
As the Texas Supreme Court stated in Southland Royalty Co.
- v. Pan American Petroleum Coro., 378 S.W.2d 50, 53 (Tex. 1964):
in construing a contract all the provisions thereof must be construed together in order to arrive at the true intent of the parties.
We think-the orderly manner of proceeding, though, is to start at the beginning of the contract and take up the pertinent provisions as they come, and when we analyze cach one of them then look at the matter as a whole and try to arrive at the proper construction to be placed on the whole contract.
When the provisions of the 1990_ Power Supply Agreement are examirmed "as a whole" and " construed together" as required, the multiple flaws in Cap Rock's argurants become evident.
Such a
'ggg aAso, R. H. Sanders Corn
- v. Haves, 541 S.W.2d 262 (Tex.
Civ. App. -- Dallas 1976. no writ)(all language in a contract is
-presumed to have some meaning and it is improper to rely on a single clause for construction); N. M. Uranium. Inc. v. Moser, 587 S.W.2d 809 (Tex. Civ. App.
Corpus Christi 1979, writ ref'd n.r.e. ) (each part of an agreement must be considered with every other part to determine the affact of one part on another); Crown West. Inv.. Inc.
v.
Orcantile Nat. Bank. DallAE, 504 S.W.2d 785 (Tex. Civ. App. -- Tyler 1974, no writ) (construction is not to b.
on the basis of detached or isolated portions of the contract);
Duracon. Inc. v. Price,-817 S.W.2d 147 (Tex. App. -- El Paso 1991, no writ)(the courts presume that the parties intended cvery clause to_have some effect).
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 14.
reading reveals that the 1990 Power Supply Agreement contains all of the essential terms necessary to be an enforceable contract and requires cap Rock to purchase from TU Electric and requires TU Electric to sell to Cap Rock all of Cap Rock's power and ener'gy requirements upon the effective date of the agreement, until such time as Cap Rock gives the requisite two or three year notice to reduce load supplied by TU Electric.7 Thus, as shown from the four corners of the contract and the virtually uncontested testimony of TU Electric's witnesses, the 1990 Power Supply Agreement is initially a full-requirements contract and, as recognized in cap Rock's Brief, is therefore a fully enforceable, binding agreement.
Cap Rock Brief at 1.s a.
The 1990 Power Supply Agreement does not Lack a Quantity Tara It is cle.ar from the four corners of the 1990 Power Supply Agreement that " Contract Demand", as defined in Section 1.01, is not the quar.tity of power and energy to be sold by TU Electric and
~
purchased by Cap Rock.
That quantity is instead set forth in Sections 3.07(a), 3.01, 3.02 and 3.03.
7A clear example of Cap Rock's failure to read the 1990 Power Supply Agreement "as a whole" is the fact that Cap Rock's Brief omits uny discussion of the notice requirements contained in Sections 2.04 and 2.05 of the 1990 Power Supply Agreement.
As discussed in detail below, those notice requirements are one of the most critical elements -- if not. the critical element -- of the
" bargain" the parties made in tha 1930 Power Supply Agreement, a"(P]laintiff cheerfully concedes that (requirements contracts) are (fully enforceable in Texas)".
Cap Rock Brief at 1.
DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNO2'IVE RELIEF - Pace 19 l
l
Section 3.07(a) specifies that:
Power and energy will be sold by TU Electric and purchaced by Cap Rock under this Agreement at the Points of Delivery identified on Exhibit A hereto in the amounts specified in Sections 3.01, 3.02 and 3.03.
(Emphasis added).
Section 3.01 of the 1990 Power Supply Agreement requires that:
Except ao otherwise permitted by this Agreement, Cap Rock shall purchase from TU Electric and TU Electric will sell to Cap Rock all of Cap Rock's power and er.ergy requirements, including normal load growth, at each of the Points of Delivery for resale to Cap Rock's customers. (Emphasis added).
Section 3.02 provides thau In the event and to the extent cap Rock gives the requisite notico pursuant to Section 2.04 hereof and during the period (s) that TU Electric may be required to schedule under Article V hereof, Cap Rock shall purchase from TU Electric and TU Electric will sell to Cap Rock, at each of the Points of Delivery (except Points of Delivery which are retained as full requirements Points of Delivery pursuant to Section 3.01 above (the
" Retained Full Requirements Points of Delivery"),
unless and until such Points of Deliver become partial requirements ' Points of Delivery as permitted therein), partial requirements power and energy for resale to Cap Rock's customers.
(Emphasis added).
Section 3.03 specifies that the power and energy supplied hereunder shall include normal load growth for each Point of Delivery specified in Exhibit A hereto.
Section 3.07(a) expressly refers to the " amounts" of power and energy to be purchased by Cap Rock and sold by TU Electric as being specified in the remainder of the foregoing sections.
It is'a well-recognized rule that " terms used in.
. any... contract, DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOU5?BT FOR TEMPORARY INJUNCTIVE RELIEF - Pace 20
are to be given their plain, ordinary, and generally-accepted meaning unless the (contract) itself shows them to have been meant in a technical or different sense."
General American-Indemnity J
C.p_,,,, 333 S.W.2d at 662.
Here there is no indication in the 1990 Power Supply Agreement that the term " amount" as used-in Section 3.07(a) is to be given anything other than its " plain, ordinary, and generally accepted meaning. " That meaning of the werd " amount"
-is."a quantity."
Webster's New Universal Unabridaed D$;;.1;ionary 60
-(2nd ed. 1983).
Thus, far from lacking a " quantity" term as cap Rock contends, the 1990 Power Supply Agreement expressly identifies, in Section
-.3. 07 (a), the quan;ity of power and energy to be purchased by cap Rock and sold by TV Electric as being the " amounts" specified in the full-requirements, partial requirements and load growth sections' -- i.e., Sections 3. 01, 3. 02 and 3. 03.
Significantly, the term " Contract Demand" does not.even appear in Sections 3.0'/(a),
-3.01, 3. 02 ' or 3. 03.
Therefore, it is ludicrous to suggest, as Cap Rock does, that the " amount" or " quantity" of power and energy Cap Rock is obligated to purchase under the 1990 Power Supply Agreement is " Contract Demand."
Instead, as discussed in the - following section, the term' " Contract Demand," as defined and used in the 1990 Power -Supply Agreement, is a-tool used for planning and billing purposes.
DEFENDANT'8 REPLY BRIEF IN. OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 21
b.
Contract Demand is a Planning and Billing Tool, not the Quantity of Power and Energy to be Purchased by Cap Rock and Sold by TU Electric contract Demand is defined in Section 1.01 as follows:
" Contract Demand" shall mean the maximum amount of power and energy expressed in kilowatts (Contract Kw) that Cap Rock projects TU Electric will be required to provide at each Point of Delivery.
Contract Demand will be specified on Exhibit A,
which may be changed from time to time as provided in Section 3.08 hereof.'
The rate of charge for the power and energy to be purcr.ased by Cap Rock under the 1990 Power Supply Agreement (in the amounts specified in Sections 3.01, 3.02 and 3.03) is set forth in Section 3.05 which provides as follows:
It is distinctly understood and agreed that the monthly rate of charge (including any charges for power and energy in excess of contract Demand and any demand determinations af fecting billing demand) for all power and energy which Cap Rock shall purchase from TU Electric and TU Electric is required to sell to cap Rock under this Agreement shall be pursuant
'c o TU Electric's Rate WP Wholesale Power, or its successor, as the same may from time to time be fixed and approved by the PUCT. (Emphasis added.)
~~
'Section 3.08 of the-1990 Power Supply Agreement provides, in relevant part, that:
Contract Demand shall be specified for each Point of Delivery identified _ on Exhibit A.
Contract Demand at any Point of Delivery may be changed from time to time on Exhibit A, upon 12 months' prior written notice to TU Electric-(but no more frequently than-once every 12 months),
as the result - of normal lot.d growth or normal load reductions (which, in either case, does not include load transferred to or from another
- source, including Cap Rock) at each sucn Point of Delivery.
f' DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 22
.-~ -
The fact that Section 3.05 expressly recognizes that the power and energy to be purchased by Cap Rock under the 1990 Power Supply Agreement may be "in excess of Contract Demand" is furthe,r evidence that Contract Demand was not intended by the parties to express the
" quantity" of power and energy that the parties agreed would be purchased and sold under the 1990 Power Supply Agreement.
That fact is also savidenced by the provisions of the TU Electric tariff applicable to the 1990 Power Supply Agreement as provided for in Section 3.05 thereof -- i.e.,
Rate WP, Wholesale Power (Def. Exh. 64).
As Mr. Houle testified at the injunction hearing'0, Rate WP is the tariff approved by the Public Utility Commission of Texas
("PUCT") pursuant to which TU Electric sells wholesale power and energy.
The approved tariffs of regulated public utilities, such as TU Electric, "are recognized as having the force and effect of law."
Southwestern Bell Telechone Co.
v.
Rucker, 537 S.,W.2d
- 326, 331 (Tex. Civ. App.
El Paso, 1976, writ ref'd n.r.e.).
"(T]hese tariffs carry the dignity of statutory law."
Southwestern Bell TV echone Co.
v.
Vollmer, 805 S.W.2d 825, 829 (Tex. App. -- Corpus Christi 1991, writ denied).
TU Electric's Rate WP states that it is:
'OThe transcript for the continuation of the injunction hearing on April 14 and 15, 1992 is not yet available and, therefore, citations to that transcript cannot be made at this time.
DEFENDANT'S REPLY Br.IEF IN OPPOSITION TO PLAINTIFFE' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 23
Applicable,
.in the event that Company has entered into an Agreement for Electric Service with respect thereto, to full requirements and pr.rtial requirements power and energy sold by the (TU Electric) to..
rural electric-distribution cooperatives for resale to ultimate consumers.
[Def. Exh. 64, Application Section, emphasis added.)
The monthly rate for such full and partia'. requirements power, as specified in Rate WP, is composed of a " Customer Charge", "Demend Charge" and
" Energy Charge."
(Def. Exh. 64, Monthly Rate Section.)"
The customer's demand (in kilowatts) for purposes of calculating the monthly bill is determined under the Demand Determination Section of Rate WP.12 Section 3.05 of the 1990 power "Mr.
Houle testified at the injunction hearing that the customer charge recovers the cost of metering and billing.
The energy charges, including fuel, recover variable costs incurred by TU Electric in providing a kilowatthour of energy.
The demand charge recovers the fixed cost of facilities (i.e.,
the cost of installed generation and other facilities) required to ::.:.e electric service available in the amount required by the customer.
iiSpecifically, the Demand Determination Section provides that:
" Demand for calculation of the monthly bill is the largest of:
1.
Current month kW:
2.
80% of the on-peak kW; 3.
50% of the contract kW; 4.
50% of the annual kW."
-[Def. Exh. 64, emphasis added. )
The term " contract kW" is defined in the Definitions Section of Rate WP as.the " maximum kW specified in the Agreement for Electric Service."
(Def.
Exh.
64]
The definition of " Contract Demand" in Section 1.01 of the 1990 Power
-Supply Agreement likewise uses the term " contract kW". (Def. Exh.
11 at 2)
DEFENDANT'S REPLY BRIEF IN OPPOSITIOJi TO PLAINTIFF 8' REQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 24
i Supply Agreement exprest'Ly recognizes this section of Rate WP by providing that the monthly rate of charge will include "any demand determinations af fecting billing demand." (Def. Exh.11 at 15]
Mr.
Houle testified that the demand determinations under Rate WP allocate demand charges among wholesale cus'.omers in accordance with the demands that the customers place on TU Electric's system."
Novhere in Rate WP does the tarif f provide that the quantity of full or partial requirements power and energy to be provided and charged for is the Contract Demand (or contract kW) specified in the applicable agreement for electric service.
Rate WP bases the monthly rate of charge upon the customer's demand and y
its energy usage, as well as the customer charge.
Rate WP does, however, include an additional charge equal to
"$1.00 per kW for each current month kW in excess of the contract kW" (i.e., Contract Demand). (Def. Exh. 64.]
This is the charge referred to in Section 3.05 of the 1990 Power Supply Agreement when it states that the " monthly rate of charge (includes) aLny charges uAs Mr. Houle explained, since TU Electric must plan to have in place sufficient generating capacity, transmission capacity and distribution capacity to serve what TU Electric expects will be the maximum demands of its customers in one peak hour of the year, as well as having additional generating capacity to protect itself against emergency loss of a ger-*ating unit or the shut down of a unit for maintenance, the demans charge under Rate WP is structured to impose a greater charge on the customerr who contribute to TU Electric's system peak demand as opposed to those customers whose greatest requirements do not occur during that peak hour of the year.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 23, I
l
for power and energy in excess of Contract Demand."
(Def. Exh. 11 at 15]"
Mr. Houle testified that the charge of $1.00 per kilowatt in excess of Contract kW is designed to impose a surcharge on a wholesale customer who fails to accurately estimate its expected (i.e.,
projected) power and energy requirements at a point of delivery.
Requiring a customer to project its maximum demand at each point of delivery in the form of the Contract Demand specified in the agreement for electric service, and then impoaing a surcharge if Contract Demand is exceeded, provides an economic incentive for the customer to accurately project its maximum demands.
Mr. Piet Pittman and Mr. Houle testified that these projections assist TU Electric in its planning process so it can nave the necessary capacity available to meet its customers' maximum demands.
Therefn e, as both Mr. Houle and Mr. Pitt Pittman testified, contract Demand is primarily a planning tool -- it is not a quantity term.
The planning and billing function of Contract Demand is further evidenced by TU Electric's Service Regulations (Def. Exh.
65), which, ac Mr. Houle testified, are approved by the FUCT as a
" Notably, Cap Rock did not elect to fill in Exhibit A by projecting zero contract Demands as its original Petition claims that it has the right to do.
The reason for this is clear -- Cap Rock knows thhe, under Rate WP, the result would be a monthly surcharge of $1.00 per kilowatt of actual metered demand in excess of zero.
DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST POR TEMPORARY INJUNCTIVE RELIEF - Pace 26
part of TU Electric's Tariff for Electric Service just as every individual tarif f, including Rate WP, is approved.
Section 4.02 of the Service Regulations provides, in pertinent part, that:
If Customer refuses to sign or delays in signing the Agreement for Electric Service,
[TU Electric)
- may, by written notice to customer, assign the maximum electrical load (contract kW) to be used for billing purposes in accordance with the Tariff for Electric Service.
[Def. Exh. 65, Section 4.02, emphasis added.)
Section 10.06 of the 1990 Power Supply Agreement expressly provides that:
Except as otherwise specifically provided for in this Agreement, the sale of power and energy by TU Electric to Cap Rock under this Agreement shall be subject to the service regulations cf TU Electric's Tariff for Electric Service as same may from time to time be fixed and approved by the PUCT.
[Def. Exh. 11 at 48.)
Since the pUCT has expressly authorized TU Electric to assign
-contract kW (Contract Demand) to a customer "for billing purposes" without regard to whether the customer is purchasing 411 or ant partial requirements power and energy, it simply defies all logic to suggest, as Cap Rock does, that Contract Demand is the quantity of power and energy to be purchased and sold that TU Electric and
--its-customers
" bargain" for when negotiating agreements for electric service.
There is absolutely no support in the 1990 Power Supply Agreement, or in the provisions of TU Electric's Rate WP and DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 27
. - ~. -
6
- Service Regulations which expressly govern the sale of power under the 1990 Power Supply Agreement, for c.3ncluding anything other than the fact that Contract Demand functions merely as a billing and planning tool.15 This is further evidenced by Mr. Pittman's testimony that TU Electric does not curtail the electric power and energy it provides to _ its full-.or partial requirements wholesale customers just because they excee eir contract Demands and that, in fact, it is not unusual M w le customers, such as Cap Rock, to exceed their Contract-De l'
.., {
Finally, Cap Rock makes the astounding argument that the 1990 Power Supply Agreement cannot possibly be a full-requirements contract because, according to Cap Rock:
Contract Demand is not necessary for a full requirements contract.
Under a
full l
requirementi contract, Cap Rock Electric must F
purchaise all' the electricity going through the meter.
Cap Rock Brief at 23.
Cap Rock then attempts to distinguish the
-1963 Agreement -- which Cap Rock admits was a ' full-requirements
_. con ract -- from the 1990 Power Supply Agreemert by arguing-that,_
t while the 1963 Agreement "had a billing provision for contract-kW",
it did not define the term Contract-Demand.
Cap Rock Brief at 23.
15Significantly,_ Cap Rock's Brief completely ignores the evidence introduced at the hearing by TU Electric and the testimony of Mr. Pittman and Mr. Houle ' regarding Contract Demand, as well as TU Electric's approved Rate WP and Service Regulations.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REODEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 28
. ~.
r
~
-t l
The fundamental flaw in Cap Rock's argument and what it fails to point out tc the Court is that, while the 1963 Agreement does not contain c specific definition of contract kW or contract demand, it does include an " Exhibit A" which contains' a column specifying the " Maximum kW of Power" --
i.e.,
tha contract kW or contract demand -- for each point of delivery. (Pl. Exh. 15, Exhibit A)
Since the 1963 Agreement was originally executed, the contract demand figures contained in Plaintiff's Exhibit 15 have been D
changed numerous times by the parties.
Cap Rock's most recent
,V request for changes in contract demand under the full-requiremen 1963 Agreement were set forth in a letter dated October 8,
1991 from Mr. Mark Sullivan, Cap Rock's Engineering Manager, to Mr.
Curtis Conkle of TU Electric. ( De f. Exh. 4 6 )
Mr. Sullivan's letter specifically states that "We request that the following contract demands be changed." (Def. Exh. 46, emphasis added.)
Each of the changes requested in Mr.
Sullivan's letter are increases in contract demand, increases clearly designed to avoid the potential of Cap Rock being charged the $1.00 per kilowatt surchargo for each kilowatt in excess of contract demand under TU Electric's Rate WP.
Thus, in light of the provisions of the 1963 Agreement and Mr.
Sullivan's letter, it is truly amazing that Cap Rock would admit, on the one hand, that the 1963 Agreement is a full-requirements agreement, but then argue on the other hand that the 1990 Power DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFFD'
}tEQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 29
Supply Agreement cannot possibly be a full-requirements contract because it mntains provisions pertaining to Contract Demand.
The fallacy in Cap Rock's argument is plain.
Contract Demand had exactly the same function under the 1963 Agreement as it does under the 1990 Power Supply Agreement it was and is a planning and billing tool, not a quantity term.
c.
The 1990 Power Supply Agreement Specifies the standard to be Applied in Determining the Points of s
E
- Delivery, thereby Fixing Their Identity with Absolute Certainty Cap Rock's argument that the 1990 Power Supply Agreement "contains no points of delivery" (Cap Rock Brief at 2] and that Cap Rock has the right to determine "which, if any, Points of Delivery, are to be included" under the agreemant [ Cap Rock Brief at 10] suf fers from the same f atal flaws as its arguments regarding Contract Demand.
Cap Rock fails to read the contract as a whole and ignores the plain meaning of the words used in the agreement.
The Points of Delivery at which Cap Rock is required to purchase, and TU Electric is required to sell, power and energy in the amounts specified in Sections 3.01, 3.02 and 3.03 are defined in Section 1.11 as follows:
" Points of Delivery" shall mean all points within TU Electric's Control Area at which TU Electric maintains an electrical connection with Cap Rock existing on the effective date hereof, each of which Points of Delivery shall be specified on Exhibit A barato, which shall be amended frcm time DEFENDANT'S REPLY DRIEF IN OPPOSITION To PLAINTIFFS' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 30
to time in accordance with Section 3.07(b) hereof.
(Emphasis added).
Cap Rock's contention that the specific identification of the Points of Delivery is a determination lef t solely to the option of Cap Rock or is a matter which has yet to be negotiated by the parties (Cap Rock Brief at 10) is completely at odds with the plain
{
wording of Section 1.11.
Section 1.11 clearly states that the I
PoO 22 of Delivery are all points: (i) within TU Electric's control
{gh
,2 u, (ii) at which TU Electric maintains an electrical connection a
L.th Cap Rock; (iii) existing on the effective date of the agreement.
Section 1.11 further mandates that "cach of (such)
Points of Delivery shall be specified on Exhibit A hereto."
(Emphasis added)
Section 1.11 does not state that ' Cap Rock may elect which of such Points of Delivery to specify on Exhibit A'
or that 'the Points of Delivery to be specified on Exhibit A shall be negotiated by the parties,'
But that is exactly what Cap Rock argues Section 1.11 means.
Cap Rock would thus have this Court rewrite Section 1.11 and form a new contract between the parties -- one they did not negotiate themselves.
This the courts uniformly refuse to do.
In 9_eneral American Indemnity Co. v. PeDDer, the Texas Supreme e
Court reversed the judgments of both the trial court and the Court of Appealt which had interpreted the phrase "in an aircraft" in an insurance policy to cover an accident that occurred after the passenger had left the aircraft and was inside the air terminal.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 31
t 339 S.W.2d 660 (Tex. 1960).
Applying the plain meaning of the word "in",
the Supreme Court held that the passenger "was not in an aircraft at the time her injuries were sustained."
M. at 661 (original emphasis).
As the Supreme Court explained:
To adopt the view of the respondents, as approved by the trial court and the Court of Civil Appeals, would be to make an entirely new contract between the parties.
A court is not at liberty to revise an agreement while professing to construe it.
E.
In the case at hand, Section 1.11 of the 1990 Power Supply Agreement nandates -- througl the use of the word "shall" -- that all of the Points of Delivery meeting the definition set forth in Section 1.11 are to be specified on Exhibit A.
Nothing is left to Cap Rock's option or to later negotiation by the parties.
The mers fact that the 1990 Power Supply Agreement, when executed by the parties on June 8, 1990, did not contain a list of the names of the Points of Delivery on Exhibit A does not render the contract unenforceably uncertain as Cap Rock contends.
It is well-recognized by the Texas courts that "(w) hen an agreement provides a standard to be applied in determining [an element of the contract),
the contract is sufficiently definite to be
The word "shall" is "used to express a
command or exhortation" and is "used in laws, regulations, or directives to express what is mandatory."
Webster's Ninth New Colleciate Dictionary 1081 (1988).
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 32
4 enforceable." Penvell v. Barrett, 724 S.W.2d 902, 905 (Tex. App. -
- San Antonio 1987, no writ) (emphasis added).
The " standard to be applied in determining" the -Pcints of Delivery is clearly specified in Section 1.11.
The Points of Delivery are all points: (!) within TU Electric's control area; (ii) at which TU Electric maintains at electrical connection with Cap Rock; (iii) existing on the ef fective date of the agreement."
When that standard is applied, the Points of Delivery under the 1990 Power Supply Agreement can be, and have been, identified "As Mr. Pittman testified at the injunction hearing, the reason the parties agreed to a "stancard" for determining the Points of Delivery, rather than listing them by name when the 1990 Power Supply Agreement was signed on June 8, 1990, was due to the surrounding circumstances, which the Court is required to consider when construing even an u;. tiguous contract.
City of Pinehurst v.
Spooner Addition Water Co.,
432 S.W.2d 515, 519 (Tex. 1968);
p_eg e
also Parker Chirocractic Research F.
- v. Fairmont Dallas Hotel Co.,
500 S.W.2d 196, 201 (Tex. Civ. App. -- Dallas 1973, no writ)("In construing a contract the court is to take the wording of the instrument and consider the same.in the light of the surrounding circumstances.
").
When the 1990 Power Supply Agreement was negotiated and fo; some time thereafter, Cap Rock was in the process of consolidating various of its points of delivery under the 1963 Agreement and converting certain points from distribution voltages to transmission voltagas.
The parties agreed that the 1990 Power Supply Agreement, as set forth in Section 2.01 thereof, was not to become effective until Cap Rock's termination of the 1963 Agreement, but Mr. Pittman explained that no one knew exactly when that would be.
Therefore, to account for the ongoing consolidations and conversions of Cap Rock's points of delivery under the 1963 Agreement, the parties agreed to identify the Points of Delivery under the 1990 Power Supply Agreement by specifying the standard in Section 1.11.
Under that standard, the points in existence on tha effective date of the 1990 Power Supply Agreement i.e.,
the points in existence upon termination of the 1963 Agreement -- are the Points of Delivery under the 1990 Power Supply Agreement.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIt*E RELIEF - Pace 33
with absolute certainty.
In fact, their identity is so readily determinable that even cap Rock has not disputed that the points identified by TU Electric during testimony at the injunction hearing, and in writing prior to the hearing, are the Points 'of Delivery at which TU Electric supplied all of Cap Rock's power and energy requirements upon thn effective date of the 1990 Power Supply Agreement -- February 1, 1992 -- and continues to supply all of its requirements today.
At the injunction hearing, TU Electric's witness Mr. Henry Bunting identified the Points of Deliw.ry in TU Electric's control area at which TU Electric supplied Cap Rock's power and energy requirements, excluding the Lone Wolf division of Cap Rock, as of February 1,
1992 (the effective date of the 1990 Power Supply Agreement) on the map introduced into evidence as Defendant's Exhibit 50.
Mr.
Bunting similarly identified the Points of Delivery in TU Electric's control area at which TU Electric supplied power and energy to the Lone Wolf division of Cap Rock, as of February 1.
- 1992, on the map introduced into evidence as Defendant's' Exhibit 63.
In a letter dated January 30, 1992 from Mr. Darrell Bevelhyner of TU Electric to Steve Collier, TU Electric listed each of these Points of Delivery, by the same names depicted on Defendant's Exhibits 50 and 63 and with the current Contract Demands. (Def.
Exh.
21)
Mr.
Bevelhymer's letter informed Cap Rock that it DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 34
.?
accepted Cap Rock's December 1991 letter as notice of termination of _ the 1963 Agreement, effective at 12:01 a.m. on February 1, 1992 and that:
Thereaf ter, TU Electric will supply Cap Rock's power and energy requirements in accordance with the provisions of the 1990 l
Power Supply Agreement, at the points of delivery and at the contract demands set forth 1
below-i TCao Rock 1 Points of Delivery Contract Demand Pembrook.
13,000 Schwartz 9,000 Triangle 14,000 West Stanton 9,000 Cantrell 8,750 Tate 6,000 St. Lawrence 15,500 Stiles 13,000 Vealmoor 15,500 Eiland 4,000 Mcdonald 16,000 Phillips 10,500 Lake Thomas 3,800 Roscoe 2,100 China Grove 600 Colorado City 2,100 Mitchell County 1,100 Loraine 900 Brook-Hyman Morgan Street 650 Scurry County 2,400 (Def. Exh. 21 at 1-2)ts.
At no time has-Cap Rock disputed that the points of delivery which existed under the 1963 - Agreement at the moment it was
-Dir. Bevelhymer's letter-further states that "TU Electric is presently serving all of Cap Rock's power'and energy requirements
.-at the foregoing _ points of delivery." (Def. Exh. 21 at 2)
DEFENDANT'8 R.EPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 35
.w.--
~
i terminated are the same Points of Delivery which existed on February 1, 1992 -- the date when the 1990 Power Supply Agreement became effective.
d.
There is No Gap or Noment in Time between the Termination of the 1963 Agreement and the Effectiveness of the 1990 Power Supply Agreement during which Cap Rock could have removed its poir.ts from TU Electric *s control area-Cap Rock also attempts to argue that' it had made arrangements with WTU under which the Cap Rock delivery points were to be moved to WTU's control area effective February 1,1992 (Cap Rock Drief at 24), so that, on the effective date of the 1990 Power Supply Agreement, "none of Cap Rock Electric's delivery points would have been in TU Electric's control area."
Cap Rock Brief at 25.
- Thus, according to Cap Rock, its delivery points would not have come within the definition of Points of Delivery in Section 1.11.
This argument fails for two simple reasons.
First, there is-no gap or moment in time between the termination of the 1963 Agreement and the effectiveness of the 1990 Power Supply Agreement during which Cap Rock could have effected such a move to WTU's control area.
Second, even if such a gap existed -- which it does
In fact, Cap Rock's alleged " contract" with WTU (Def. Exh.
- 38) identifies.the exact same points of delivery as those listed in Mr. Bevelhymer's January 30, 1992 letter to Mr. Collier (Def. Exh.
21).
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 36
~..
n l
l I
terminated are the same Points of Delivery which existed on February 1, 1992 -- the date when the 1990 Power Supply Agreement became effective."
d.
There is No Gap or Moment in Time between the Termination of the 1963 Agreement and the Effectiveness of the 1990 Power Supply Agreement during which Cap Rock could have removed its points froa TU Electric's control area rg Cap Rock also attempts to argue that it had made arrangements with WTU under which the Cap Rock delivery points were to be moved t o WTU's control area ef fective February 1, 1952 (Cap Rock Brief at 24], so that, on the effective date of the 1990 Power Supply Agreement, "none of Cap Rock Electric's delivery points would have been in TU Electric's control area."
Cap Rock Brief at 25.
- Thus, according to Cap Rock, its delivery points would not have come within the definition of Points of Delivery in Secti on 1.11.
This argument fails for two. simple reasons.
First, there is no gap or moment in time between the termination of the 1963 Agreement and the ef fectiveness of the 1990 Power Supply Agreement during which Cap Rock could have effected such a move to WTU's control area.
Second, even if such a gap existed -- which it does "In fact, Cap Rock's alleged " contract" with HTU (Def. Exh.
- 38) identifies the exact same points of delivery as those listed in Mr. Bevelhymer's January 30, 1992 letter to Mr. Collier (Def. Exh.
21).
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' BEOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 36 i
l
not, the a'rrangements cap Rock was negotiating with WTU did not include moving the cap Rock points into WTU's control area.
Section 2.01 of the 1990 Power Supply Agreement states that:
This Agreement shall become effective, with respect-to Cap Rock, from and af ter Cap Rock's termination of (the 1963 Agreement].
[Def. Exh.
11 at 5 ] 20 Mr. Collier admitted at the injunction hearing that Section 2.01 is the section of the contract which "says when one becomes effective and the other one ceases to be effective."
(March 26, 1992, Tr.,
p.
156).
However, despite repeated opportunities to do so, Mr. Collier was unable to point to a single provision in the 1990 Powe-Supply Agreement which states that there is a gap or a momem in time between the termination of the 1963 Agreement and the effectNeness of the 1990 Power Supply Agreement during which Cap Rock has the right to move its points out of TU Flectric*
control area, thereby avoiding the Section 1.11 mandate that "all points within TU Electric's Control Area existing on the effective date" of the 1990 Power Supply Agreement are the Points of Delivery which "shall be specified on Exhibit A."
(Def. Exh. 11 at 4)
Nor does 20Section 2.01 contains a similar provision with respect to Lone Wolf Electric Cooperative (Def. Exh. 11 at 5), which was merged with Cap Rock after the execution of the 1990 Power Supply Agreement.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 37
Cap Rock point to any such provision in its Brief.
The reason it has not done so is clear.
No such provision exists.21 What Cap Rock does say in its Brief, however, is that, if there is no " instant in time", then " Cap Ro7k Electric could never leave the TU Electric system."
Cap Rock Bcief at 23.
That Cap Rock would make such an argument is truly 1stounding.
The 1990 Power Supply Agreement affords Cap Rock various opportunities to reduce the load to be supplied by TU Electrio or to terminate the agreement entirely -- on the giving of the proper notice.
What the 1990 Power Supply Agreement does not do is permit Cap Rock to
" leave the TU Electric system" without giving the notice it agreed to give.
The fact that there is no
" moment in time" is further evidenced by Steve Collier's own admissions during the negotiation of the 1990 Power supply Agreement and after the agreement was executed.
In a memorandum dated May 23, 1990 from Steve Collier to David Pruitt, Jerry Dover, John Adragna, Earnest Casstevens, Tom Gregg and Michael Moore, Mr. Collier stated as follows:
I am writing to ask you to consider the best approach for terminating our current all-requirements wholesale power contract with TU Electric.
The draf t power supply agreement that we are negotiating is currently worded so 21 Furthermore, as Mr.
Pittman pointed out during cross-examination at the injunction hearing, had Cap Rock attempted to move its points of delivery out of TU Electric's control area prior to its termination of the 1963 Agreement, Cap Rock would have been in breach of what it admits was a full-requirements contract.
DEFENDANT'S REPLY BRIEF IN OPPOSITION To PLAINTIFFS' REOUEST FOR TEMPOPARY INJUNCTIVE RELIEF - Pace 38
ha to_become effective upon termination of the all-requirements contract.
There would be some advantage to having the current all-requirements contract terminated.
prior to the time that the new power supply agreement becomes effnetive.
If it were, it might be possible to remove _some load from the power supply agreement immediately without the two or three year notice otherwise provided for in the power supply agreamsnt.
- However, given our current circumstances, it does not appear-that this will be possible.
[Def. Exh. 41'at 1, emphasis added.]
Plaintiff's Exhibit 16 is a draft power supply agreement dated May 21, 1990 -- two days before M r <.
Collier _ wrote this memorandum.
Significantly, the first paragraph of Section 2.01 in the May 21, 1990 draf t is identical to the wording in the-first paragraph in Section 2.01 of the 1990 power Supply Agreement.
The notice provisions to reduce load in f.ections 2. 03-and 2. 04 of the May 21, 1990 draft are also virtually identical to the notice provisions in Sections 2.04 and 2.05 of the 1990 power Supply Agreement.
Clearly, when Mr. Collier wrote the May 23, 1990 memorandum he recognized that, because the dra R agreement "become(s) effective upon termination of the all-requirements -~ contract", there was no
_ gap or moment in time in which to " remove some load from the power supply agreement immediately without the two or three year notice otherwise provided for in the power supply agreement."
(Def.-Exh.
41]
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' l_
REQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Page 39 L
Just'as there was no gap in the May 21, 1990 draft, there is no gap in the 1990 Power Supply Agreement which the parties executed on June 8, 1990.
That fact was clearly recognized by Cap Rock's Mr. Collier shortly thereaf ter when, in a July 15, 1990 press release, Cap Rock announced the execution of the " LANDMARK" 1990 Power Supply Agreement and explained that:
The agreement becomes effective when Cap Rock Electric terminates it (sic) current power supply contract with TU Electric, Collier said.
The new contract requires two or three years notice by Cap Pock to begin serving load with other power suppliss, Collier explained.
d (Def. E2. 15 at 2, emphasis added.)
)
Thus, the implication in Cap Rock's Brie' at ngo 18 that Mr.
Collier has always taken the position that Cap Rock had the right to make a "one time option to leave the TU Electric system
~
immediate1'/ upon the Effective Date" of the 1990 Power Supply J.greement is directly contradicted by Mr. Collier's own words, as shown in Defendant's Exhibit 15.2h lisuch fncts are but one example of Mr. Collier's willingness to testify under oath to whatever facts are believed necessary at a given point in time in order to lend credence to the baselesa positions advanced by Cap Rock.
TU Electric suggests that the weight to be accorded to all of Mr. Collier's testime.sy should be determined in light of Mr. Collier's demonstrated propensity to disregard the truth when the facts do not support the position he chcosos to advance.
Cap Rock also asserts in its Brief, in connection with the testimony regarding Mr. Collier's contract to monetarily benefit in the event that cap Rock successfully abrogates the 1990 Power Supply Agreemen:., that " Cap Rock voluntarily corrected a potential (continued...)
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO FLAINTIFF83 REQUEST FOR TEMPORARY INJUNCTIVE AELIEF = Pase 40
- _ _ -. -.. -. ~ _. - -. _ -. -.
t The true reaaen cap Rock has now developed the f'anciful
" moment in time" theory is that it wishes to abrogate its contractual obligations to TU Electric in order to avail-itself of more economical power supply alternatives, without having to give TU Electric the two or three year noticu to which it committed when it signed she 1990 Powcr Supply Agreement.
The Texas Courts 22(...continuad) misunderstanding of the tacts surrounding Mr. Collier's success fee."
Cap Rock Drief at 17, n.
3.
TU Electric is confident the i
Court will recall the actuni circunstances of the matters related to the disclosure of Mr. Collier's success fee contracts, and the vigorous attempts by Cap Rock and Mr. Collier to persuade the Court that no signed success fee agreements existed when in fact the l
existence of such signed _ agreements was known not only to Mr.
Collier but to cap Rock's attorneys as well.
The Court will also endoubtedly recall that Mr. Collier later tastified that he had a direct financial interest in the outcome of this case.
r TU Electric will not undertake on exhaustive review of each of the many'inconsistenci.es and contradictions between Mr. Collier's testimony and.the other evidence introduced at the hearing.
However, TO Electric would point out that a request for injunctive relief is based in equity _ and At is fundamental that a party seeking equity must come to the court with " clean hands." Foxwood Homeowners Association v. - Ricles,- 673 S.W.2d 376 (Tex. hpp.
Houston (1st-Dist.) 1984, writ re f ' d n. r. e. ) ; 22.R Alf Q Tru lv v.
Austin, 744 S.W.2d 934, 938 (Tex. 1988) ("(1)t is well-settled that a party seeking = an equitable remedy must do equity and come to court with clean _ hands").
The complicity-of the representatives of Cap Rock and their refusal to be candid with'the Court must color Cap Rock's entire case which -is founded principally on the testimony of Mr. Collier.
The misleading testimony by Mr. Collier, along with Cap Rock's misrepresentations to the Court, demonstrate the complete lack of veracity of Mr. Coll!4r, and his lack of credibility regarding the 1990 Power Supply Agreement due to his significant and direct financial interest in the outcome of this
-While these serious matters have yet to be dealt _with,__
it case.
is nonetheless clear that Cap Rock's and Mr. Collier's actions and misreprasentations are hardly the conduct of a party _ with clean hands.
t DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY INJtTNCTIVE RELIEF - Pace 41 2
m
-rv. v w
,v.-.-.e s.-
we-.
w,--_v---
w-,
..v-.w,,. - - - -,
-,-,m-mren,--.wy-4 e,,w er
-+.,-u
,e r-+,--c-
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-vw-v--------
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~.
l uniformly refuse to allow a party to a contract to avoid its contractual obligations simply because performance is not economically advantageous or has become more burdensome than anticipated.23 Cap Rock should not be permitted to do so here.
- Finally, regardless of Cap Rock's novel " moment in time" theory, WTU has testified that. Cap Rock's points were never to be moved to WTU's control arca under the proposed contract between WTU and Cap Rock.
In stark contrast to Steve Collier's testimony at the injunction hearing and the argu7ents Cap Rock's Brief, WTU's designated representative, David Teeter, testified in his oral deposition hs follows Q.
Mr. Teeter, let me ask you this question.
Under the proposed contract between cap L
Rock and WTU, _is Cap Rock to become a part of WTU's control area?
A.
No.
Q.
Are they to remain a
part of TU Electric's control area?
A.
Yes.
(Def. Exh. 72 at 133; 3.g3 diso pp. 142-143).
Consequently, even if Cap Rock were correct in its " moment in time" theory (which it is not) and even if Cap Rock did have a contract with WTU (which it 23Valere Transmission Co. v. Mitchell Enerov, 743 S.W.2d 658, 663 (Tex.-Civ. App. -- Hotiston (1st Dist) 1987, no writ); Alamo Clav Products = Inc. v. Gunn Tile Company of San Antonio. Inc., 597 S.W.2d 388 (Tex.. Civ. App. -- San Antonio 1980, writ ref'd n.r.e. ) ;
Mahrer v.
Mahrer, 510~S.W.2d 402, 405 (Tex. Civ. App. -- Dallas 1974, no writ).
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR. TEMPORARY INJUNCTIVE RELIEF - Pace 42
does not) its Points of Delivery would still have been located in TO Electric's control area on the effectivo datre of the 1990 Power Supply Agreement and thus would come within the scope of Section 1.11.
e.
The Physical Completion of Exhibit A
is not required for the 1990 Power Supply Agreement to be an Enforceable Contract At the heart of Cap Rock's contentions regarding the alleged unenforceability of the 1990 Power Supply Agreement is the fact that Exhibit A to the agreement was not filled out when the agreement was executed on June 8,
1990.
Cap Rock argues that
" execution of Exhibit A relating to points of delivery and hence gur.ntity, is a condition precedent to the parties' obligations" which has not been fulfilled, thereby nullifying any right to performance.
Cap Rock Brief at 2.
Again, Cap Rock has failed to read the 1990 Power Supply Agreement "as a whole" and, with this argument, again att.empts to l
read into the agreement a provision which does not exist.
Contrary to cap Fock's assertions, Exhibit A is not a separate " agreement",
regarding the Points of Delivery or the quantity of power which Cap Rock is to purchase r. iar from TU Electric, which the parties left i
to be agreed upon in the future.
Nowhere in the 1990 Power Supply Agreement did the parties state that Exhibit A was to be " executed" i
{
[
or " negotiated" at some future date.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEliPORARY INJUNCTIVE RELIEF ~ Pace 4 3
1 What the 1990 Power Sup}.ly Agreement does provide is a mandate that Exhibit A be filled in on the effectivo date with the Points of Delivery determined by applying the standard spo.cified in Section 1.11 and the Contract Demands projected by Cap Rock in j
accordance with Sections 1.01 and 3.08.I' Exhibit A,
far from 24To assist TU Electric in its planning process, Cap Rock is obligated under Sections 3.08 and 1.01 of the agreement to specify "the maximum amount of power and energy expressed in kilowatts (Contract KW) that Cap Rock projects TU Electric will be required to provide at each Point of Delivery."
In fact, as clearly reflected by the notes taken at the June 4, 1990 meeting between Cap Rock and TU Electric by Angela Agee Hatton (Def. Exh. 78) and John Michael Adragna (Def. Exh. 79), Mr. Collier was well aware at the time the 1990 Power Supply Agreement was being negotiated that the Contract Demande he would specify would be the same contract demands that' existed under the 1)63 Agreement on the date it was eventually terminated by Cap Rock.
Defendant's Exhibit 78 states, in relevant part:
C
.. also re: Exh A, he's assuming when its filled out 1st time, on day 1, its whatever contract KW is on today's full reg'ments K
(Ray Rhodes has schedule MDS
- might not fill in Exh A until-effective date of this K (MDS pt'd out p 4 it should say in-def of POD " effective date" and C.
said right)
C
- agreed good. idea to say effective date on page 4 1.11 -- that avoids problem of changes between now
& then Defendant's Exhibit 79 similarly states, in relevant part:
the column for " Contract Demand" i
S.C.:
Exh. A would be the current-Ray Rhodes has _ a schedule __under__ which, gg.
l "Knott & Ackerly becomes Reed, etc.
l (continued...)
DEFENDANT'8 KEPLY BRIEF IN OPPOSITION To PLAINTIFF 8' l
RLOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 44 l
n-n,. - -
,.,.-..n.._,
_,_.-._,__.-a.
being blank, as Cap Rock contends, containP Column headings for th9 name, contract Demand and voltage of each Point of Delivery and states that this "(1)nformation (is) to be Specified on the Effective Date of this Agreement".
Thus, whether to complete Exhibit A by specifying the Points of Delivery and Contract Demands was not left to the discretion or option of either party.
In addition, TU Electric's Service Regulations (Def. Exh. 65, Section 4.02) give TU Electric the right to assign contract kW for billing purposes if a customer refuses to specify its Contract Demands.
Due to Cap Rock's failure to recognize and abide by its obligatione under the 1990 Power Supply Agrooment, this is precisely what TU Electric did in Mr. Bevelhymer's January 30, 1992 l'(... continued)
M.S.:
You wouldn't actually need to fill out Exhibit A
- p. 4 -- Section 1.11 -- change " existing on the date hereof" to the
" effective date hereof" Cap Rock uakes what can at best be described as a convoluted argument in its Brief that "(t]hese notes have nothing to do with whether or how Exhibit A should be filled out" and that they pertain only to the Points of Delive y in Section 2.05 of he agreement. (Cap Rock Brief at 26)
While part of the discussion at the June 4,
1990 meeting involved Section 2.05, these Exhibits speak for themselves and clearly reveal that Mr. Collier was referring to Exhibit A in its entirety -- not merely as it related to the Points of Delivery named in Section 2.05.
That fact was corroborated by the testimony at the injunction hearing of Mr. Pittman and Mr. Bunting who were both present at the June 4, 1990 meeting.
Yet rather than take the opportunity to have Mr.
Adragna testify at the injunction hearing to rebut Mr.
l Pittman's and Mr. Bunting's testimony and what Mr. Adragna's own notes say, Cap Rock waited until its Brief to argue that Mr.
Adragna's notes mean something other than what they plainly say.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' Rg. QUEST FOR TEMPORARY INJUNCTIVE RELLEF - Pace 45
letter to Mr. Collier.
[Def. Exh. 21).
Defendant's Exhibit 21
" completed" Exhibit A by specifying each Point of
- Delivery, i
determined in accordance with the standard in section-1.11, and assigning to each Point of Delivery the contract Detnands that were in effect under the 1963 Agreement on January 30, 1992.
Furthermore, the physical completion of a piece of paper labeled " Exhibit A" is not a condition precedent to the obligations of either party with respect to the amount of power to be sold and purchased under the 1990 Power Supply Agreement.
Those obligations are governed by Sections 3.07(a),
3.01, 3.02 and 3.03 of the agreement.
Thus, neither party can avoid its obligations to sell and purchase full requirements power under the 1990 Power Supply Agreement on the effective date by refusing to fill in Exhibit A.
As Mr. Pittman testified, the physical " filling in" of Exhibit A is an administrative mechanism that is helpful in administering the contract.
It is not an act that is necessary in order to ascertain the obligations of the parties.
Even if Exhibit A were disregarded entirely and there vera no Contract Demands to be applied for planning and billing purposes, the parties' obligations with respect to the sale and purchase of power and energy under tne 1990 Power supply Agreement can still be detemnined from the face of the agreement.
If, however, the court were to find that the specification of Contract Demands on Exhibit A is a missing term of the agreement DEFENDANT'8 REPLY BRIEF IN OPPOSITIOP TO PLAINTIf?u' REQUEST FOR TEMPORARY INJUNCTIVE REJ.,,1 - Pace 11
that needs to be completed, the court, acting as the finder of fact, may supply reasonable contract Demands.
A finder of f act mt.y supply reasonable terms of an agreement, so long as they do not form the " essence" of the contract.
1[yJ ro-Li n e Mg,f. Co. v. Pu l i ds,
674 S.W.2d 382, 387 (Tex. App. -- Corpus Christi 1984, writ ref'd n.r.e.).
In Hydro-Line, the Court held that a joint venture agreement clearly guaranteed the appellee employment but omitted certain terms of employment, such ss salary.
151. a t 3 87.
Since the " essence of the contract was the joint venture agreement", the finder of fact was permitted to supply a " reasonable salary and other terms. "
ist. a t n.
4.; gag alig Hendalin v.
Del 2E12, 406 S.W.2d 897, 900 (Tex.1966) ("Where the parties have done everything else necessary to make a binding agreement for the sale of goods or services, theit failure to specify the price does not leave the contract so incomplete that it cannet be enforced.
In such a case it will be presumed that a reasonable price was intended.")
In this case, tne " essence of the contract" was the purchase and sale of full-requirements power and energy and, upon the giving of the requisite notices, partial requirements power and energy.
The Court can therefore, if necessary, supply a reasonable Contract Demand for each Point of Delivery at which such power and energy i
will be delivered to be used for billing and planning purposes.
The most reasonable contract Demand terms to supply are those which i
were in effect at each Point of Delivery immediately prior to the l
DEFENDANT'8 REPLY,BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY IK7]ZERTIVE RELIEF - Pace 47 l
l offactive date er the 1990 Power Supply Agreement (i.e.,
those specified in ifr.
Bevelhymer's January 30, 1992 letter to Mr.
Collier, Def. E xh. 21).
~
f.
The 1990 Power Supply agreement is a
fully Enforceable contract which Requires cap Rock to purchase all of its power and energy requirements upon the effective date of the agreement For all of the reasons set forth above, the 1990 Pcwor Supply Agreement is a fully enforceable and binding contract which contains all of its essential terms.
Moreover, an is evident from the four corners of the writing, the 1990 Power Supply Agreement requires Cap hock to purchase from TU Electric and TU Electric to sell to cap Rock all of Cap Rock's power and energy requirements upon the effective date of the agreement, until such time as Cap Rock gives the requisite two or three year notice to reduce load supplied by TU Electric.
Section 3.01 of the 1990 Power Supply Agreement expressly requires that:
Except as otherwise permitted by this Agreement, Cap Rock shall purchase from TU Electric and TU Electric will sell to Cap Rock all of Cap Rock's power ano energy requirements, including normal load growth, at each of the Points of Delivery for resale to Car Rock's customers.
Cap Rock may, upon i
reasonable advance written notice, elect to retain one or more of its Pointo of Delivery (having voltage levels of less than 60,000 volts) which exist on the effective date of this Agreement as full requirements Points of Delivery pursuant to i
this Section 3.01 (notwithstanding the purchase of partial requirements power pursuant to section 3.02 DEFENDANT'S REPLY BRIEF IN OPPOSITIO# TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCT1VE RELIEF - Pace 48
below at Cap Rock's remaining Points of Delivery),
in which event, upon the giving of the notices required by Section 2.04 hereof, Cap Rock may, from time to time, convert one or more of such Points of Delivery to partial requirements Points of Delivery under the provisions of Section 3.02 hereof.
(Emphasis added).
As discussed above, there is no gap or " moment in time" betwoon the termination of the 1963 Agreement and the effective date of the 1990 Power Supply Agrecrent which permits Cap Rock to remove any of its Points of Delivery from TU Electric's control area or otherwise " elect" not to take full-requirements power and energy from TU Electric when the 1990 Power Supply Agreement becomes effective.
Furthermore, the only provisions in the 1990 Power Supply Agreement which give Cap Rock the right to reduce load supplied by TU Electric are set forth in Sections 2.04 and 2. 0 5. 25 Those provisions require specific notices, given after the agreement becomes effcetive, before Cap Rock may reduce the load supplied by TU Electric.
The fact that notice, and the expiration of the notice period, is required be' ore Cap Rock may purchase power from 25Section 2.04 requires the giving of "three years' advance written notice in years one through five, inclusive, and... five years' advance written notice thereafter."
(Def. Exh. 11 at 7)
Section 2.05 permits Cap Rock, with certain limitations, to snrve all of the power and energy requiretaents of its custome.s at nine specified Points of Delivery by another supplier on two years' advance written notice, given in years one through five, so long 6.
the Centract Demand at such Points of Delivery does not exceed 30 MW.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFFS' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 49
another supplier is cicarly evidenced in Section 3.02 of the 1
agreement, which provides that In the ovent and to the extent Cap Rock givei the requisite notice pursuant to Section 2.04 hereof and during the period (s) that TU Electric may be required to schedule under Article V hereof, Cap Rock shall purchase from TU Mlectric and TU Electric will sell to Cap Rock, at each of the Points of Delivery (except Points of Delivery which are retsined as full requirements Points of 1
Delivery pursuant to Sectaon 3.01 above (the
" Retained Full Requirements Points of Delivery"),
unless and until. such Points of Deliver become partial requirements Points of Delivery as permitted therein), partial requirements power and energy for resale to Cep Rock's customers.
(Emphasis added).
Cap Rock argues in its Brief at pages 21-22 that TU Electric's reliance on Section 3.01 is misplaced because the second sentence oh that section permits Cap Rock tot upon-reasonable advance written notice, elect to retain one or more of its Points of Delivery (having voltage levels of less than 60,000 volts) which exist on the effective date of this Agreement as full requirements Point 9 of Delivery pursuant to this Section 3.01-(notwithstanding the purchase of partial requirements power pursuant to Section 3.02 below at Cap Rock's remaining Points of Delivery).
(Emphasis added)
In an incredibla leap of logic, Cap Rock contends that this sentence - must mean the 1990 Power Supply Agreement is not a full cequirements contrac'; from day one, because otherwise there would have been no need for Cap Rock to give notice to " retain" a Point of Delivery as a full requirements point.
The plain meaning of the word " retain" is the completc answer to Cap Rock's argument.
i i
DEFENDANT'S-REPLY BRIEF IN OPPOSITION TO PLAINTIFFS' REQUEST FOR TEMPORARY...INJUNCTIVE RELIEF - Pace $0 p
= - -
To " retain" means "to keep in possession or use."
Webster's tiinth flew Colberlate Dictionary 1006 (1988).
Thus, to " keep" Points of Delivery "in use" as full requirements Points of Delivery plainly means that they were full requirements Points of Delivery to begin with --
i.e.,
on the effective date of the agreement.26 The fact that the 1990 Power Supply Agreement is a full-requirements contract on the effectivo date thereof is further 26Cap Rock's argument that the introductory clause of Section
- 3. 0 t, which reads "Except as otherwise permitted by this Agreement",
Leans that it can elect not to purchase full-recuirements power from TU Electric on the effective date of the agreement is likewise unfounded.
Cap Rock relics on the fact that early drafts of the agreement expressly referred to Section 3.02 in this introductory language.
Cap Rock Brief at 21.
For example, the introduction to Section 3.01 in the draft contained in Plaintiff's Exhibit 17 states:
"Until Cap Rock commences the purchase of partial requirements power and energy in accordance with the requirements of Section 3.02 hereof There is no mystery here.
The answer lies in reading the 1990 Power Supply Agreement as a whole, not in isolated pieces as cap Rock consistently attempts to do.
Such a reading reveals that there are circumstances in which Cap Rock is required to purchase full-rcquirements power and energy from TU Electric after it has begun purchasing partial requirements power and energy under l
Section 3.02.
For example, Section 5.00 of the Power Supply l
Agreement states that "After the expiration of the (scheduling) period (s) provided in Section 5.07 hereof, all Points of Delivery remaining in TU Electric's Control Area vill be full requirements t
Points of Delivery pursuant to Section 3.01 hereof.
(Emphasis added.)
Therefore, unlike the language in the early drafts, the final language in Section 3.01 does not limit the applicability of Section 3.01 to just the period from the effective date until Cap Rock begins purchasing partial requirements power and energy, but encompasses situations such as that anticipated in Section 5.08.
I i
DEFENDANT'S REPLY BRIEF IN OPPOSITION To PLAINTIFF 8' l
REOUEST FOR TEMPORARY INJtTNCTIVE RELIEF - Pace Si l
w,..,, ~.
r
l demonstrated by the evidence of the circumstances surrounding the negotiation and execution of the hgreemc st, evidence which -- even in an unambiguous contract -- the ccurt is required to consider, along with the wording of the instrument itself, in construing the
-meening of the writing.
City of Pinehurst v.
SDooner Addition Water Co., 432 S.W.2d 515, 519 (Tex. 1968); Parker Chiroor?;t.ig Research F. v. Iairmont Dellas Hotel Co2, 500 S.W. 2d 19 6, 201 (Tex.
Civ. App.
Dallas 1973, no writ).
As Mr. Pittman testified at the injunction hearing, when the parties began the negotiation of the 1990 Power Supply Agreement in January 1990,27 Cap Rock wanted TU Electric bound for a
long term to supply all of its requirements, but cap Rock did not want to be similarly bound --
- instead, it wanted the freedom to lurchase their requirements elsewhere without giving any notice to TU Electric.
TU Electric, on the other hand, was unwilling to be put in the position of having Cap Rock move on and of f its system at will, because of the problem that presents with regard to the planning of resources for TU Electric and the reliability of TU Electric's system.
These positions of the parties are fully set forth in Defendant's Exhibit 7 (Cap Rock's " Essential Power Supply Services to be Provided by TU 2r he events-leading up -to the negotiation of the 1990 Power T
L
_ Supply Agreement are fully detailed in TU Electric's Motion to Deny l
Plaintif f's Request for Temporary Injunctive Relief and will not be repeated here, l
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8'
- REOUEST FOR 'fEMPORARY IEUNCTIVE RELIEF - Pace 52
~
Electric") and Defendant's Exhibit 8 ("TU Electric's Settlement Proposal").2s Mr. Pittman testified that the parties finally resblved this fundamental difference in positions by compromising and agreci'ng that, for a period of ten years, TU Electric would commit to sell to cap Rvek all of its requirements and that with two or three year's notice in the first five years, Cap Rock would be entitled to purchase power from other sources.
That is the compromise and agreerent embodied in thn 1990 Power Supply Agreement.
This compromise and ag-ement-is further evidenced by Defendant's Exhibit 57 (Summary of Settlement Discussions between Texas Utilities Electric Company and Cap Rock Electric Cooperative, Inc.)
- which, as Mr.
Pitt.aan testified, was transmitted by TU Electric to the NRC in July 1990 after the execution of the 1990 Power Supply Agreement.
This Summary states that:
1 TU Electric initially offered to sell partial requirements power and
- energy, upon termination of the (1963) Agreement, pursuant to Paragraph D. (2) (k) of the Comanche Peak License conditions.
. which conditions its obligations to sell full and partial requirements power and energy on, among other things, " reasonable advance notice. " Cap Rock sought. tc purchase such power and energy l
"immediately" upon termination of the (1963)
Agreement and at such time as it begins to supply a portion of its requirements with power from other sources.
sCap Rock's characterization of Mr. Pittman's testimony at page 17 of its Brief is completely incorrect, as shown by Defendant's Exhibit 7.
l DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO Pl.AIMTIFFS' l
REQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 53
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The-parties finally agreed that Cap Rock will purchase full requi.ements power and energy from TU Electric under the (1990 Power Supply Agreement) until and to the extent it gives three years notice in years one through five,"
and five years notice thereafter, to reduce load to be supplied by TU Electric.
(Def. Exh. 57 at 1, emphasis added.)
Shortly after the execution of the 1990 Power Supply Agreement, Cap Rock, quoting Mr. Collier, similarly characterized its obligations. under the agreement in the July 15, 1990 press release in which Cap Rock announced the execution of the "LANDMARX" 1990 Power Supply Agreement-and explained that:
The agreement becomes effective when Cap Rock Electric terminates it (sic) current power supply contract with TU
- Electric, Collier said.
The new contract requires two or three yours notice by Cap Rock to begin serving load with other power s3pplies, Collier explained.
(Def. Exh. 15 at 2, emphasis added.)
In sum, the plain meaning of the 1990 Power Supply Agreement, as corroborated by the contemporaneous expressions-of the parties,-
confirms that the agreement is a full-requirements contract, which requires cap Rock to purchase all of its power and energy requirements from TU Electric until it gives the requisite notices to reduce load.
Such full-requirements contracts, as Cap Rock itself admits, are fully enforceable in Texas.
Pace Corocration v.
Jackson, 284 S.W.2d 340 (Tex. 1955).
l' l
DEFENDANT'8 REPLY'BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY IMJUNCTIFE RELIEF = Pace 54 i
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g.
There was a Meeting of the Minds between TU Electric and Cap Rock on all essential terms of the 1990 Power Supply Agreement Cap Rock argues in its Brief that, if the Court r6jects its contentions 'is to the unenforceability of the 1990 Power Supply Agrernent, the evidence at the injunction hearing nonetheless
" clearly demonstrates that there was no meeting of the minds between the parties with respect to a requirements contract for cap Rock Electric's power needs."
Cap Rock Brief at 4.
In Cap Rock's view, the " evidence (at the injunction hearing) abundantly shows that the parties attributed vastly different meanings to the 1990 (Power Supply Agreement),
that they never shared a
common understanding of their rights and obligations under the purported contract."
Cap Rock Brief at 4.
Cap Rock bases its contention on Mr. Collier's testimony that he " believed that the document he was negotiating allowed him the flexibility to move all of Ca,p Rock Electric's load beginning on the teffective date of the 1990 (Power Supply, un a e aent). "
Cap Rock Brief at 17.
/ ge'n. Cap __ Rock misstates basic contract law as it applies to the "mceting of the minds" doctrine.
It is not sufficient for one party to a contract to merely allege:
"This contract does not say what I meant it to say and so, therefore, there was no meeting of the minds." Nere that the law, any party who wished to be relieved of its contractual obligations could easily avoid those obligations l
I DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' EEOUEST FOR TEMPORARY iNJUNCTIVE RELIEF - Pace 55
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by an after-the-fact allegation of its subjective intent, as Mr.
Collier attempts to do here.
That is not the law.
The determination as to whether the parties to a contract have a " meeting of the minds" is based on an objective standard of what the parties said and did in the contre.ct.
This objective standard determines the true intentions of the contracting parties.
Mang
- v. Petrade international, Inc., 754 S.W.2d 696 (Tex. App.--Houston (1st Dist.) 1988, writ denied).
The Restatement of Contracts describes meeting of the minds r4s the " manifestation of mutual assent".
Restatement (Second) of contracts, Chap.
3, i 17, comment c.
Manifestation of mutual assent requires only that each party either make a promise or agree to render a performance.
Id. $ 18.
In Adams, the Court was faced with determining whether there was a meeting o' the minds between parties to a ccntract for the sale of gasoline. 754 S.W.2d at. 717.
The seller brought suit against the buyer for its failure to honor the agreement and purchase gasoline in accordance with the contract. M. at 704.
The buyer argued that because the contract did not specifically statn when payment under the contract would be made, there was no meeting of the minds on an easantial term of the agreement. M. at 717.
The buyer contended that the industry standard for time of payment
- was-payment -upon invoice and receipt - of-delivery confirmation documents; however,-the buyer alleged that the sellen expected i
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFFS' REOUEST FOR TEMPORARY.IN UNCTIVE RELIEF - Pace 56 aem re---
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payment before delivery thus negating mutual assent. M. at 71';.
The Court found that there was a meeting of the minds on the essential terms of the contract and stated:
The determination of whether there was a meeting of the minds must be based on objective standards of what the parties said and did and not on their alleged subjective states of mind.
M. at 717 (enphasis added) ; see alsq, Slade E Ehg.jng, 446 S.W.2d 931, 933 (Tex. Civ. App. -- Tyler 1969, no writ).
When ascertaining the objective intent of the parties to a contract the express language of the agreement cannot be overlooked.
Enon v. Lecaiker, 214 S.W.2d 694 (Tex. Civ. App.
Galveston 1948, no writ).
This rule is consiscent with the often cited rule that a court called on to construe the meaning of a contract must ascertain and give effect to the intention of the parties as revealed by the language of the instrument.
R & P Enterorises v. LaGuarta, Gavrel & Kirk Inc., 596 S.W.2d 517 (Tex.
1980).
An agreement is to be viewed as of the time it was made and not in light of subsequent events, First Nat. Bank v. Kinabrew, 589 S.W.2d 137 (Tex. App. -- Tyler 1979, writ ref'd n. r.o. ), and the objective intent of the parties, as expressed in the instrument, controls.
Vanauard Ins. Co. v. Stewart, 593 S.W.2d 736 (Tex. App.
-- Houston (1st Dist.) 1979) aff'd, 603 S.W.2d 761 (Tex. 1980).
The impact of these rules of construction is that Cap Rock should not be allowed to alter the meaning of the 1990 power Supply Agreement based on its current intent, or claim to have had a DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' BIOUEST FOR TEMPORARY INJU11QTIVE RELIEF - Pace 57
l different interpretation at the time the 1990 Power Supply Agreement, was executed in order to attempt to show a lack of meeting of the minds.
Instead, the express terms of the sgreement must be examined to determine its legal effect and the objective intent of the parties.
Such an examination reveals that the 1990 Power Supply Agreement clearly identifies a meeting of the minds between TU Electric and cap Rock on each of the subject matters addressed by the agreement, including not only Cap Rock's obligation to purchase from TU Electric and TU Electric's obligation to sell full requirements power until the proper notico is given, but the wheeling and scheduling of power for Cap Rock as well as the supply of regulatior, services.
The many months of negotiat
's between TU Electric and cap Rcck resulted in not only a full requirements contract initially, but a contract that allows Cap Rock the ability to acquire its power requirements from third i
parties along with other associated rights, provided Cap Rock gives the requisite notice.
The 1990 Power Supply Agreement.provides each and every essential term necessary for the enforceability of such rights.
In Vise v. Foster, the Court of Appeals considered a contract for the sale of oil.
247 S.W.2d 274 (Tex. Civ. App. -- Waco 1952, writ ref'd n.r.e.).
The Court stated that:
a careful reading of th6 contract in suit shows-that the minds of the parties met on the material matters relating to the sale and delivery of 100,000 barrels of oil.
We find I
l DEFENDANT'8 REPLY BRIEF IN OPPO8ITION TO PLAINTIFF 8' EKOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 58
)
that the contract was dated; that it named the parties; that it set forth the authority of the parties to make the contracts it described the commodity and the volume to be bought and sold and the consideration to be paid ~
therefor; the rate of delivery as well as the time of payment was each specified and the modo and manner of transporting and delivering the commodity was agreed upon. * * *
- *
- since each and every material element of the contract with reference to the sale was mutually agreed to and set forth and nothing of any material nature was left cut to be agreed
- upon, we think the contract was binding.
- 14. at 277, 278 (emphasis added).
Such is exactly the case here."
Finally, it should not be forgotten that, shortly after the execution of the 1990 Power Supply Agreement, Cap Rock held itself out to the public as having acquired extremely desirable services from TU Electric in the contract, and yet admitting that "the new contract requires two or three years notice by cap Rock to begin serving load with other power supplies.
" (Def. Exh. 15 at 2)
-- views that are entirely consistent with the very position taken by TU Electric in this case and by both parties immediately after the execution of the agreement, as discussed above.
"Accordingly, Cap Rock's statute of frauds argument must also i
fail.
The statute of frauds, Tex. Bus. & Com. Code i 26.01(a)
(Vernon 1987), is satisfied, with respect to agreements defined l
therein, if there is a " written memorandum which is complete within itself in every material detail, and which contains all of the essential elements of the agreement.
Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978).
Every " material detail" and all the " essential elements" necessary to enforce the 1990 Power Supply Agreement are set forth in the contract, which has also clearly been signed by Cap Rock and TU Electric.
DEFENDANT'8 REPLY BRIEF Ih' OPPOSITION TO PLAINTIFF 8' RE00EST FOR. TEMPORARY INJONCTIVE RELIEF - Pace 59
The fact that Cap Rock was fully aware at all times of its obligations under the 1990 Power Supply Agreement is further evidenced by the fact that Mr. Collier informed David Krupnick of the Southwestern Public Service Company on June 21, 1990 (Def. Exh.
13] that (Cap Rock) he.d reached a new power supply agreement with TU on June 8.
ine agreement allevs them to move 30 MW of their north system load off TU with 2 years' notice.
(Emphasis added.)
(Hgg also, Def. Exh. 43, Mr. Collier's notes for Briefing the cap Rock and Lone Wolf Boards of Directors regarding the 1990 Power Supply Agreement in which he states that one of the " con's" of the l
contract is that it "still has 3 yr notice.")
- However, notwithstanding Cap Rock's recognition of its contractual obligations to TU Electric, Cap Rock nevertheless embarked on a course of conduct entirely inconsistent with those obligations, knowing full well that TU Electric would take the 1
positiore that the 1990 Power Supply Agreement requires Cap Rock to purchase full-requirements power and energy from TU Electric upon Cap' Rock's termination of the 1963 Agreement, until proper notice is given.
For example, in a June 19, 1991 report to David Pruitt, Cap Rock's General Manager (Def.
Exh.
29),
regarding Cap Rock's propos.ed purchase of power from WTU Mr. Collier stated that:
-It is very likely that TU Electric will vigorously oppose our plan to move all of our l
l
' DEFENDANT'S REPLY BRIEF IN OPPOSI'fION TO PLAINTIFF 8' REQUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 60 i
i
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load into the WTU control area in making the transition from our (1963 Agreement) to the new power supply agreement which we executed last year.
In a July 15, 1991 report to David Pruitt (Def. Exh. 16) regarding the power supply negotiations with WTU, Steve Collier also stated that Please be aware that this power supply arrangement (with WTU) has souie risk of opposition or even litigation by TU Electric.
We will be terminating our existing all-requirements agreement with TU Electric sometime in the next few months when the PUCT issues a final order in the Comanche Peak nuclear plant rate case.
We read our new contract with TU Electric as allowing us to fill in the amount of load that we will choose to serve under the new contract.
TU Electric will take the position that all of tho existing load must be transfarred to the new contract and then two or three years notice given to serve load from WTU.
(Emphasis added).
Mr. Collier similarly informed Mr. Welch of WTU, by letter dated June 12, 1991 (Def. Exh. 28'), that:
As we discussed, TU Electric is not likely to be pleased.
. and can be expected to insist that we do not have the - option of simply moving all of the load to WTU in making the transition from our current (1963 Agreement) to the new power supply agreement that we executed in June, 1991.
In actions that clearly do not reflect the " clean hands" required of an applicant seeking equitable
- relief, Foxwood Homeowners Association v.
Ricles, 673 S.W.2d 376 (Tex. App.
Houston (1st Dist) 1984, writ.ref'd n.r.e.), Cap Rock did not seek DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 61 4
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e a judicial determination of its rights earlier, but instead consciously "hid behind the log" and waited until the last moment to present TU Electric and the Court with what cap Rock hoped would be final arrangements regarding Cap Rock's proposed purchase of power from WTU and to request that the Court grant it the extraordinary relief of a mandatory injunction to implement those arrangements.
In fact, Cap Rock waited until the fall of 1991 before informing TU Electric that it had no intention of abiding by the 199n Power Supply Agreement.
By letter dated October 23, 1991 (Pl. Exh. 10), Mr. Collier informed Mr. Develhymer that:
we anticipate being able to terminate (the 1963 Agreement) without having to serve any wholesale load temporarily under the new (1990) power supply agreement
[and that Cap Rock would) begin purchasing all of [its) wholesale power requirements from WTU as early as January, 1992.
TU Electric responded by letter dated November 4, 1991 (Def Exh.
- 18) informing Cap Rock that TU Electric expected Cap Rock to comply fully with the 1963 Agreement and the 1990 Power Supply Agreement and, in order to comply with these contracts, it would not be possible for Cap Rock to purchase pover elsewhere, including Cap Rock's proposed purchase fro'n WTU, until the cancellation of the 1963 Agreement and upon expiration of the notice periods provided
- for in the 1990 Power-Supply Agreement and compliance with all other terms of that contract.
DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR T3]iPORARY INJUNCTIVE RELIEF = Pace 62
,..n..v,
..,,.n..
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4 Thus it is clear that Cap Rock's current position is nothing more than a contrivance developed for the purpose of attempting to avoid its obligations under the 1990 Power Supply Agreedent, i
In light of the express terms of the 1990 Power Supply Agreement embodying the objective intent of the parties, and the actions of the parties contemporaneous with the execution of the agreement, it defies reason for cap Rock to now claim that there was no meeting of the minds concerning the fundamental terms of the 1990 Power Supply Agreement, and is but another example of the unreliability of the testimony of Mr. Collier.
h.
The Texas courts Favor the Presumption that contracts are Enforceable Finally, it is important to note that the Texas Courts have long presumed that when parties make an agreement they intend it to be effectual, not inoperative.
Contracts will always be construed in f avor of mutuality.
12Xgs Gas Utilities Comoany v. Barrett, %60 S.W.2d 409 (Tex.
1970).
- Further, parties to a contract are presumed to intend that it will be enforced, not that they l
deliberately executed an ins lid agreement.
Woods v.
Sims, 154 l
Tex. 59, 273 S.W.2d 617 (1954).
i l
In this case, Cap Rock is advancing the implausible argument i
t that it executed an unenforceabl u contract.
The presumption of enforceability strikes at the very heart of Cap Rock's contentions.
Contracts must be construed so as to render them effective instead i
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REODEST FOR TEMPORARY INJWCTIVE RELIEF
_ Pace 63
of ineffective.
Walker v.
Tennie Trust Co.,
80 S.W.2d 935, 936 (Tex.
1935);
(in dealing with a usury issue and holding that
.when the contract by its terms, construed as a"whole, is
- doubtful, or even susceptible of more than ano reasonable construction, the court will adopt the construction which comports with legality").
- Thus, if a contract is susceptible of two constructions, and only one of those will render the agreement valid and ef fective, the construction which results in validity will be adopted in order to render the contract valid.
Tenole-t Eastex. Inc. v. Addison Bank, 672 S.W.2d 793 (Tex. 1984) (holding that if two constructions of writing are possible, construction which renders contract possible of performance will be preferred to one that renders its performance impossible or meaningless);
l Harris v.
Powe, 593 S.W.2d 303 (Tex. 1979); Sumrall v.
Navistar IJnancial coro., 818 S.W.2d 548, 559 (Tex. App. -- Beaumont 1991, writ requested); Bora-Warner Acbeet.
v.
Tascosa Nat. Bank, 784 S.W.2d 129 (Tex. App. -- Amarillo 1990, writ denied).
The Harris court held that if two constructions exist, the one which would validate the contract must prevail.
Isl at 306.
Put another way, a court must reject any interpretation of a contract which will nullify one or more of the contractual provisions.
Benae v.
Scharbauer, 259 S.W.2d 166 (Tex. 1953); Ey"rm_Coro.
v.
Eastman Kodak Co., 589 S.W.2d 473 (Tex. App. -- Texarkana 1979), rev'd on other arounds, 603 S.W.2d 208 (Tex. 1980).
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY IR7UNCTIVE. RELIEF = Pace 64
1.
==
Conclusion:==
Cap Rock cannot show any possible likelihood of success on the merits.
None of the evidence that Cap Rock presented at the he'. ring on its request for injunctive relief and nothing Cap Rock has asserted in its Brief can establish that Cap,
.tas even a remote chance of success on the merits, much less a substantial likelihood of ultimately proving that the 1990 Power Supply Agreement is unenforceable or that there was a no " meeting of the minds" of the parties.
Because cap Rock has not shown, by any standard and certainly not by the standard required for mandatory injunction relief, that it has any likelihood of prevailing on the merits in this ca.se, the Court should deny Cap Rock's request for injunctive relief.
2.
Refusal to Grant the Injunctive Relief Requested will not Result in Irreparable Injury.
It is well established in ' Texas that it is an abuse of discretion to grant an injunction unless it is clearly established by the evidence that -the party seeking such relief is threatened with an actual, irreparable injury if the injunction is not granted.
Dallas General Drivers v. Wamix. Inc2, 156 Tex. 405, 295 S.W.2d 873, 879 (1956).
In his testimony during the injunction Scaring, Mr. Collier articulated the following reasons why cap Rock i
would be irreparably harmed if Cap Rock's request for an injunction was not granted:
l DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 65
~
= _ _ _ -.
l 1.
Cap Rock would pay more money for its electricity if it continues to buy power from TU Electric rather than WTU; 2.
The higher cost for power might cause cap Rock to losa existing and potential new customers; 3.
The higher cost might cause financial harm to Cap Rock's Customerse 4.
Cap Rock e annot go back in time and re-intervene in TU Electric's past rate case; and 5.
Cap Rock's business reputation and relationship with WTU and other companies will be adversely affected.
As the following sections demonstrate, none of the foregoing testimony is sufficient to demonstrate irreparable harm.
Evidence that Cap Rock will pay more money for its a.
electricity if it continues to buy power from TU Electric rather than WTU is not evidence of irreparable harm, since cap Rock has an adequate remedy at law for any such damages.
In its Original Petition, Cap Rock asserts that if it does not obtain the requested injunctive, relief, it "will pay more for electricity" than what it would pay if WTU were to provide cap Rock's power and energy requirements.30 At the hearing, in an attempt to prove irreparable harm, Mr. Collier testified that:
l 30In fact, in its sworn Petition, Cap Rock set out the measure of such damages through its specific allegations regarding the difference in power costs between TU Electric and WTU, Incredibly, Cap Rock asserts in its Brief, in a section entitled " Cap Rock has Proven Damages are Incalculable", the specific amount of savings that would result if Cap Rock were granted injunctive relief.
Cap Rock Brief at 28.
DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQQERT FOR TEMPORARY INJUNCTIVE RELIEF - Pace 66
s
. as we have pointed out in some of our pleadings, the power that we're buying from TU Electric is more expensive than the power that we would be buying from WTU.
(March 26, 1992, Tr., at 136-137)
It is-fundamental that an injunction will not be granted where there is a:1 adequate remedy at law.
Story v. Storv,176 S.W.2d 925 (Tex. 1944);;Home_Savinus Ass'n v. Ramirez, 600 S.W.2d 911 (Tex.
Civ.
App.
Corpus Christi
- 1980, writ ref'd.
n.r.e.;.
-Specifically, loss of income and fina.',cial distress, because they can___be remedied by an awarf. of damages, are not irreparable injuries. Samosor,. JEr.g, 415 U.S.
61, 90, 94 S.Ct. 937, 953 (1974); liunt v. Bankers Trust,h, 646 F.Supp. 59, 64 (N.D. Tex.
1986).
Any difference in price between TU Electric's power and itTU's power can, as cap Rock hau done,-be measured l'.i dollars and cents and, the re f t.,
as a matter of law, cannot support a request for injunctive rel, Krenek v. South Texas Electrical CooDerativo, Inc., 502 S.W.2d 605 (Tex. App.
1973, no writ)
(if adequate relief may be granted by an award of damages, no injunction will issue); Bank of Southwest v. Harlinaan National Bank, 662 S.W.2d 113-(Tex. App. -- Corpus Christi 1983, no writ) (reversible error committed as a matter of law by granting a temporary injunction
-when the damages were capable of calculation and the defendant was solvent); Enterorise International. Inc.
v.
C,g.rporaci >n Estatal Petrolera Ecutoriana, 762 F.2d 464, 471-73 (5th cir. 1985)
(An DEFENDANT'8-REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY IMJUNCTIVE RELIEF - Pace 57
injury is reparable only if it cannot be undone through monetary r M M 8*s)-
h;
~
b.
Testimony that higher power costs might cause Cap Rock to lose existing and potential customers or that higher power costu might cause financial harm to Cap Rock's customers cannot form L basis for injunctive relief,
.er also testified that the purchase of more expensive powar r e
.1 Electric might cause Cap Rock to lose existing or potes
'ustomers and might possibly cause detriment to those
+-
FF Cu s tota L"S.
\\
Now, to what extent the nigher price that now exists than would have exit.:ed under the WTU arrangenent cw.ses us not to obtain a customer that we might have otherwise obtained or to lose a customer that we may have or to have a customer that we have experience some reversal or setback to not drill an oil well, to not plant a field of cotton, to not do this or that, to go out of businest because of the power oc '. 4
.ou know, how do you ever get r.cck to rn'st point?
(March 26, 1992, Tr. at 137, emphasis added.)
Such tes?.imony cannot, as a matter of law, support Cap Rock'r request for injunctive relief, and certainly not its request for mandatory injunctive relief, because: (1) a temporary injunction is an inappropriate remedy to address a potential loss cf revenues since damages are available; (ii) such estimony is purely speculative; and (iii) even if proven to exist, the pocential harm will result to someco e other than cap Rock, the applicant for the injunction.
DEFENDANT'S REPLY BRIEF IN OPPCSITICW TO PLATNTIFFS' REOUEST FOR TEMPORARY IE7EdCTIVE 'stELIEF - Pace 68
- -. - - _ ~ _
l l
A significant reason wr" such testimony is insufficient to support ~a request for injunctive relief is that it is purely speculative.
In order to justify injunctive relief, 'an clieged irreparable injury must be real and immediate, not based on surmise or conjecture.
Cano v. Sh a ntlO.D, 348 S.W.2d 517, 519 (Tex. 1961);
Frey v.
DeCord ava Bend Estates owner's Association, 647, S.W.2d 246 (Tex. 1983).
See also Carter v. Orleans Parish Public Schools _, 725 F.2d 261, 263 (5th CP 1.984) (injunctive relief is inappropriate when sought to preve..
injury that is speculative at best).
consequently, Mr. Collier's testimony of what "may" or "might" happen in the future is far too speculative to support a request for a temporary injunction.
The right to equit.able relief must be determined as such right mcy or may not exist at the time of the hearing.
Hammon v. Wichitq_ County, 290 S.W.2d 545, 546 (Tex. Civ.
l-App. -- Fort Worth 1956, no writ).
Testimony as to an applicant's fear, apprehension or the possib'ilities of some asserted harm-is insufficient to establish any injury, "let alone irreparable injury."
Mother and Unborn Baby Care of North Texas. Inc. v. Doe, CB9 S.W. 33t, 338 (Tex. App. -- Corpus Christi 1985, writ dism'd.).
Even assuming that the evidence showed that Cap Rock may lose customers if it-is unable to obtain injunctive relief, the loss of such revenues can be measured in dollars, and, thus, injunctive relief in not permitted.
Bark of Southwest v. Harlincen National Bank, 662 S.W.2d 113 (Tex. App. -- Corpus Christi 1983, no writ).
DEFENDANT'S REPLY ERIMF IN OPPOSITION TO PIJLINTIFF8' REOUEST FOR TEMPORARY INJUNCTIvL, RELIEF - Pace 69
Cap kock's -assertions w!Ph regard to the speculative, mown effects of an inability to buy power from other than TU Electric cannot support Cap Rock's application for injurctive relfef.
In his testimony, Mr. Collier additionally claims that cap Rock will be irreparably harmed if it does not obtain injunctive relief bect.se such failure "might" cause financial L m to persons located in ics service area.
Such testimony cannot support an injunction fmt two reasons.
First an applicant for injunctive rilief must show that the issuance of the injunction is necessary for the protection of a right which is an existing right vested in 1
the applicant, not some third party.
Hammon v. Wichita County, 290 S.W.2d 545 (Tex.
Civ.
App.
Fort Worth
- 1956, no writ).
Furthermore, as already pointer out the alleged irreparable injury must be real and immediate, and cannot be based on surmise or conjecture.
Camp, 348 S.W.2d at 519.
c.
Cap Rock's soaplaint that it cannot go back in time and re-intervsne in TU Electric's rate case has no relevance to its request for injunctive relief, since the requested injunction cannot restore cap Rock to that position.
Mr. Collier further testified that, in his opinion, Cap Rock would be irreparably harmed if-its request for injunctive relief is not granted because in 1990, as required by the 1990 Fower Supply Agreement, Cap Rock withdrew its intervention in TU Electric's then pending rate case:
DEFENDANT'8 REPLY BRIEF IN OPPOSITION To PLRITTIFF8' REQg()T FOR TEMPORARY INJUNCTIVE RELIEF - P;ue 3 r
we'll never be able to go back and do that (intervene).
It's a past opportunity never to be regained.
(March 26, 1992, Tr. at 136, emphasis added)
~
It is precisely because Cap Rock's opportunity at such partic!pation is a "past opportunity" i aver to be regained that such facts cannot support Cap Rock's request for injunctive relief.
A mandatory injunction requires that the irreparable injury to be prevented by the injunction will occur in the future.
Pivonka v.
l Hall, 376 S.W.2d 912 (Tex. Civ. App. -- Amarillo 1964, writ ref'd.
+
n.r.e.).
SSA also Los Anceles v. Lvons, 461 U.S.95, 75 L. Ed. 675, 103 S.Ct. 1160 (1983).
This Court's decision to grant or deny Cap Rock's request cannot affect or remedy Cap Rock's "past opportunity" to participate in TU Electric's prior rate case.
The refusal to grant the injunction will most certainly not cause Cap Rocx. future irreparable injury.
Therefore, as a matter of law, such testimony cannot prov.ide a basis for injunctive relief.
d.
Assertions that Cap Rock's business reputation and relationship with WTU and other companies will be adversely affected if it is not permitted to. enter into the proposed contract with WTU do not demonstrate irreparable injury.
Mr. Collier's testimony regarding alleged irreparable injury to Cap Rock's business reputation was as follows:
Furthermore, by having to continue to buy power from TU Electric, we have been I
don't know how to say it, estranged, alienated l
DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 71 i
I from our business partner.
We go through a long negotiation, negotiate an agreement, and then we're prevented from going through with it, and it affects our relationships with that.
business partner, as is evidenced I think in my view by the letter that they sent us in February, and other business partners that we might do business witn who would conclude, you know, how con you do business with Cap Rock?
They sign contracts with you, but TU doesn't let them go through with them, and so the opportunities that we may have to do business with others I
think are severely and profoundly affected.
(March 26, 1992, Tr., at 136)
First, and most importantly, Mr. Collier's testimony regarding the allegedly strained relations with WTU is simply untrue.
WTU's Vice-President of Operations, Don Welch, has informed Cap Rock, in writing in evidence incroduced by Cap Rock and in fact referenced by Mr. Collier in his testimony, that WTU " stands ready, willir.g and able to begin selling electric energy to Cap Rock.
.. once Cap Rock's relationship with TU Klectric has ended.
(Pl.
Exh 9]
Therefore, in the unlikely event Cap Rock were to ultimately prevail on the merits in this case, there simply has been no injury to Cap Rock regarding its potentin busirer.s relatJ. ship with WTU.
The other deficisney with such testimony is that the asserted harm is of Cap Rock's own makir.g.
Until this lawsuit comes to a final conclusion, it is disputed whether Cap Rock even had the right to enter into the proposed contract with WTU.
If the final determination of this Court 15. that the 1990 Power Supply Ag, eement DEFENDANT'S REPLY BRIEF IN OPhCSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY 7NJUNCTIVE RELIEF - Pace 72
a is enforceable in accordance with TU Electric's view of the parties' obligations, Cap Rock has only itself to blame for publicly misrepresenting its rights under the 1990 Power Supply Agreement and wrongfully entering into negotiations with WTU at a
- r..me when it was obligated to purchase all of its power supply from TU Electric.
Such testimony therefore cannot constitute a basis for injunction relief in this case.
Further, even if Mr. Collier's testimony were true, it is
.well-settled that Cap Rock would have the right to pursue a cause of action for any harm to its business reputation or interference with its relationship with WTU.
Siq e.g.,
Idpht v.
Transport Insurance Company, 469 S.W.2d 433, 43E-39 (Tex. Civ. App.--Tyler
- 1971, writ ref'd n.r.e.).
Accordingly, the existence of an adequate remedy at law precludes any cuch damage which might be shown to exist from constituting irreparable harm.
Finally, Mr. Collier's above-quoted testimony is insufficient to support a request for temporary injunction because a relative deterioration of competitive position does not satisfy the requirementi of inadequacy of compensatory damages.
Merrill Lynch.
Pierce. Fenner & Smith. Inc.
v.
E.
P.
Hutton &
Co.,
Inc.,
403 F.Supp 336 (E.D. Mich. 1975).
f DEFENDANT'8 REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST FOR TEMPORARY IMJUNCTIVE RELIEF'- Pace 73
The testimony of Whitfield Russell that uncertain :/
e.
as to Ccp Rock's power supply would prevent customers from considering Cap Rock as i potential power source does not support the relief requested.
Cap Rock argues in its Brief that irreparable harm was demonstrated by the testimony of Whitfield Russell to the effect that a large industrial customer would not consider Cap Rock as a potential source of power as long as the dispute with TU Electric was ongoing.M
- Notably, Mr.
Russell's testimony was purely conjectural in that he did not refer to a single specific instance whera such a " potential" industrial customer had elected not to do business with Cap Rock.
Thus, it is not proof of irreparable harm.
Camp, 348 S.W.2d at 519.
Even more signif.icantly, even if Cap Rock could show the existence of such a potential customer, and if Cap Rock could show that the 1990 Power Supply Agreement is unenforceable, Cap Rock wculd have the right to seek datages for any harm to its business resulting from actions of TU 11ectric.
Licht, 469 S.W.2d at 438-UCap Rock attempts to attribute significance in its Brief to the fact that TU Electric did not put on evidence at the hearing to rebut the testimony of Mr. Collier and Mr. Rus'. ell regarding Cap Rock's purported irreparable harm.
Since such testimony was, at the time of the hearing, obviously insufficient in light of the authorities set forth in 1U Electric's Motion to Deny Plaintiff's Request for Temporary Injunctive Relief, it would simply have been an injudicious use of the Court's time to put on evidence regarding these issues when it was clear that Cap Rock had failed to carry its burden of proof as a matter of law.
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REQUEST POR TEMPORARY INJUNCTIVE RELIEF - Pace 74
_ ~ - - - -.. - - - - -
_ - -. ~... - -.
1 39.
~ Therefore,- Mr.. Russell's testimony does not demonstrate irreparable injury.
f.
==
Conclusion:==
Cap Rock has completely failed to carry-its burden-of proof to show that _the refusal to grcnt injunctive relief would result in irreparable
-harm to Cap Rock.
As set forth above, Cap Rock. wholly failed to put forth any evidence that' the refusal of this Ccurt to r, rant Cap Rock the requested injunctive relief will result in ir u parable harm.
Each-and. every part of Cap Rock's testimony on this element of its application fails to even remotely meet the significant burden of proof required for a mandatory injunction.
In fact, the absence of any m ti evidence is even more clearly denonstrated by the fact
.that Cap Rock's Brief fails to cite even one case which provides any authority to support Cap Rock's claim that its evidence _is sufficient for an inj unction.32, Accordingly, in the face of an T
32Apparently recognizing the lack of_ proof on this element, Cap Rock makes the-ridiculous' assertion that,--as:a result'of Section 8.05.of.the 1990 Power Supply Agreement, TU Flectric has " admitted" that. damages are incalculable.
Cap -Rock! Brief at 27.
Such an-argument hardly watrants e - reply since, as Cap Rock arimits-in its Brief, Section.8.05-addresses only-'the:incalculability of damages in the-event-of a " Default" under the 1990 Power Supply Agreement'
- and the _ agreement of the L parties that a non-Defaulting party is-entitled; to _ specific performance.-
The ' existence of such a provision has absolutely 7no _ relevance here_ since Cap Rock's
-l asserted rightito injunctive relief is not based upon an alleged
" Default"-under the 1990-Power Supply Agreement.
i L
DEFENDANT'S' REPLY BRIEF IN OPPOSITION TO PLAINTIFFS' REQUEST FOR TEMPORARY INJUNCTIVE RELIEF = Ptae 75-
obvious lack of proof of irreparable injury, Cap Rock's request for injunctive relief must be denied.33 III.
CONCLUSION The motivation for the position taken by Cap Rock and its principal witness in this suit is clear.
If the 1990 Power Supply Agreement is binding on the parties upon Cap Rock's termination of the 1963 Agreement ac TU Electric maintains, Cap Rock must purchase 33Cap Rock ine)u. icably arguns la its Brief that the antitrust laws, and particulc -ly the " essential facilities" doctrine, are somehow relevant to the Court's determination of Cap Rock's injunction request.
Cap Rock Brief at 29-30.
TU Electric would point out that Cap Rock's Original Petition fails to set forth any basis for the applicabili<y of the antitrust laws in this case.
Nor did Cap Rock put on any evidence at the hearing on its request for an injunction that has any relationship to the arguments set forth in Cap Rock's Brief related to these issues.
The simple fact i
is that cap Rock is not seeking any relief in this case under the federal antitrust laws.
Such arguments are, therefore, entirely irrelevant to the question of whether Cap Rock has carried its burden of proving that it is entitled to injunctive relief.
In any event, the issues related to the applicability of the antitrust laws to Cap Rock's attempts to obtain wheeling from TU Electric for power from other suppliers, while Cap Rock is a contractual full-requirements customer of TU Electric, were the very' subject of the proceedings before the NRC which the execution of the 1990 Power Supply Agreement was intended to settle.
TU Electric's position before the NRC is set forth in Defendant's Exhibit 5 (Response of TU Electric to Request of Cap Rock for an Order Enforcing and Modifying Antitrust License Conditions).
In that proceeding, as evidenced in Defendant's Exhibit 6,
the NRC Staff announced to TU Electric and Cap Rock that TU Electric was not obligated to provide any of the services requested by cap Rock, including the wheeling of power from other sources, "as long as Cap Rock remains a customer of TU Electric pursuant to the terms of its full requirements contract with TU Electric".
(Def. Exh. 6)
DEFENDANT'S REPLY BRIEF IN OPPOSITION TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pagj_Z,f, i
all of its power and energy requirements from TU Electric pursuant to that agreement, until it gives the requisite notice to reduce load supplied cy TU Electric cr to to minate the agreement.
Cap Rock has located a potential source of power at a cost lower than that provided for by the 1990 Power Supply Agreemer.t.
Thus Cap Rock is attempting to avoid its obligations under the 1990 Power Supply Agreement simply in order to avail itself of a more economice.1 source of power, to the detrimant of TU Electric and its other customers, and to allow its principal witness to collect a
" success fee" for facilitating the abrogation of Cap Rock's obligations under the 1990 Power Suppl.y Agreement.
The Texas Courts uniformly refuse to allow a party to a contract to cvoid its contractual obligations simply because performance is uneconomical and u p Rock should not be permitted to do so here.
With regard to Cap Rock's request for injunctive relief, as discussed in this Brief and in TU Electric's Motion to Deny Plaintiff's Request for Temporary Injunctiva Relief, Cap Rock simply has not, and cannot, satisfy its burden of proving even one of the four elements required before the granting cf mandatory injunctivo rt 1.ef is appropriate.
Accordingly, TU Electric prays that this Court deny Cap Rock's request for temporary injunctive relief during the pendency of the trial of this cause.
DEFENDANT'S REPLY BRIEF IN OPPOSITICN TO PLAINTIFF 8' REOUEST FOR TEMPORARY INJUNCTIVE RELIEF - Pace 77
Respectfully submitted, CC TON, BLEDBOE, TIGHE & DAWSO'd By:
Charles L. Tighe State Bar No. 20024000 Rick D.
Davis, Jr.
State Bar No. 05537700 500 W.
Illinois, Suite 300 Midland, Texas 79702 (915) 684-5782 WORBHAM, FORBYTHE, SAMPELS
& WOOLDRIDGE By:
M.
D.
Sampels State Bar No. 17557000 Angela Agee Hatton State Bar No. 09231050 David P.
Poole State Bar No. 16123750 2001 Bryan Tower, Suite 3200 Daflas, Texas 75201 (214) 979-3000 (214) 880-0011 (fax)
DEFENDANT'S R3 PLY BRIEF IN OPPOSITION TO PLAINTIFF 8' EfOUEST FOR TEMPORARY INJUNCTIVB RELIEF - Pace 78
l l
l CERTIFICATE OF BERVICE I hereby certify that a true and correct copy of the foregoing Brief has, -this 29th day of April,1992, been sent to the fc" loving counsel for Cap Rock in the manner indicated:
Mr. Richard C. Balough 1403 West 6th Street Austin, Texas 78703 (512) 477-8657 (Fax) by Federal Express and certified mail, return receipt requese.ed Mr.-J. Brian Martin Lone Star-Abstract & Title 600 North Loraine P.O. Drawer 1490 Midland, Texas 79702 (915) 683-2217 (Fax) by Hand Delivery and certified mail, return receipt requested Tom W. Gregg, Jr.
219--S. Zoeningheim Street P.-O. Drawcr 1032 (76902)
San Angelo, Texas 76903 (915)-655-9180 (Fax) by Federal Express and certified mail, return receipt requested I
.i
-DEFENDANT'S REPLY'BRIEF IN OPPOSITION TO Pi s.ti'IFF8 '
REOUEST FOR TEM D RARY INJUNCTIVE RELIEF - Iace 79
__