ML20098D273
| ML20098D273 | |
| Person / Time | |
|---|---|
| Site: | Comanche Peak  |
| Issue date: | 05/20/1992 |
| From: | Adragna J CAP ROCK ELECTRIC COOPERATIVE, INC., MILLER, BALIS & O'NEIL |
| To: | Rutberg J NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| References | |
| NUDOCS 9205280164 | |
| Download: ML20098D273 (58) | |
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TAW Omcts MILLER, BALIS & O'NEIL A PROrr131CNAL CDRPOIL*TKW hllllAM I MllAIR het POttRTTIV. ' b%fET, k W.
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$111AN N. Kfl1Y yyAyronta ggey mes, JON AD(AN 1 LIEJKinTT7 UtOMAS L 00RAK y
JOHN MICitAFL ADILAONA JOHN P. 0RTfx1 MARY A HTEMAN
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- ADMT!TEDIN FlDRIDA 0%,.Y
- ADMTT!T.D IN MA%ACHt'MTf1 UNLY May 20, 1992 ylA_ZEDERAL EXP.BRER Joseph Rutberg, Esquire Office of the General Counsel 11555 Rockville Pike, Room 15D19 U.S. Nuclear Regulatory Commission Rockville, MD 20852 Re:
Texas Utilities Electric Company, Comanche Peak Steam Electric Station, Unit No.
2, Docket No. 50-446A.
Dear Joe I would like to express my thanks to you, Bill and Steve for taki nce the time to meet with Steste Collier and me.
.As we discussed, I am enclosing copies of the "Brief of Cap Rock Electric Cooperative, Inc.," which was filed with the District Court for Midland County on April 23, 1992.
In addition, the executive summary and other summary that we discussed were provided you by TUEC at Tab A.
I have enclosed copies for your convenience.
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4 Joseph Rutberg, Esquire May 20, 1992 Page 2 If you have any questions, please do not hesitate to call Kee.
Very truly yours,
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John Michael Adragna Attorney for Cap Rock Electric Cooperative, Inc.
JMx/Jm cc:
William Lambe (Via Federal Express)
Merlyn Sampels, Esq. (w/o encl.)
Steven B. Collier (w/o encl.)
Richard Balough, Esquire (w/o encl.)
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POWER SUPPLY AGREEMENT DETWEEN TEXAS UTILITIES ELECTRIC COMPANY AND CAP ROCK ELECTRIC COOPERATIVE, INC.
EXECUTIVE SUMMAR_X Effective Date, Term and Termination 1.
The Agreement, which becomes effective upon Cap Rock's termination of its current full requirements contract, has a term 1
of ten years.
(Sections 2.01 and 2.02)
During years one througn five, Cap Rock may terminate the Agreement on three years' notice and TV Electric may terminate on notice equal to the balance of the ten-year term.
Thereafter, either party may terminate on five years' notice. (Seccion 2.02)
Full and Partial Requireme"ts Power and Enerov 1.
Upon the effective date of the Agreement, Cap Rock will purchase full requirements power and energy from TU-Electric at all of its Points of Delivery (" POD's").
(Section 3.01) 2.
Upo:: expiration of the Section 2.04 notice period to reduce load supplied by TU Electric (i.e.,
three years notice during years one through five and five years thereafter) and during the period TU Electric will schedule under Article V, Cap Rock may purchase partial requirements power and energy under Section 3.02.'
TU Electric may also reduce load to be supplied to Cap Rock on notice equal to the balance of the ten-year term during years one through five and on five years' notice thereafter.
(Section 2.04) 3.
After Cap Rock becores a Control Area under Section 6.01, the partial requirements power and energy it purchases under the Agreement will be accounted for under a mutually satisfactory procedure.
(Section 3.02)
If Cap Rock moves POD's to another utility's control Area (other than under Section 2.05) and there is no load reduction, TU Electric will continue to sell power and energy at those POD's under a mutually acceptable power supply the Agreement becomes ef f ective with re';pect to Lone Wolf Electric Cooperative, Inc.
(" Lone Wolf") upon the termination of its Current full r0QVirefients Contract. However, i f Cap Rock and (C7e biot t d3 not consclicate within the time specified Fi Section 3.07(b)( f v). TU Electric's obligations and Cap Roct's rights with respect to Lone Wolf Under the Agreement terminate.
Upon reasonable advance nottce, Cap Rock may retain some P00's (under 50,000 volts) as full 3
regattemenft F00's af ter it begins partial recairements purchases at the remaining ?OO's and later conve. t them to partial requirements POD's af ter giving the section 2.04 notices. (section 3.01) In accition, on 24 months' l
notice, att of Cap Rock's requirements at one or mnre of nir.e speci fied P00's (but not to exceed. in tPe
[
aggregate, 30 W of Contract Demand) may be served t:v another utility during years one through five, if service i
begins prior to June 1, in which case the demand determinations under Rate WP Wholesale Power will not be
(
imposed af ter service cornmences. (Section 2.05) t
agreement at Rate WP Wholesale Power.3 (Section 3.02) 4.
During the Agreement, if Cap Rock wishes to: (i) purchase power and energy previously supplied from a Firm Power Resource; (ii) add a POD previously moved from TU Llectric's Centrol Area to a Control Area other than Cap Rock's; or (iii) otherwise increase the power and energy to be supplied at any POD (othoc than normal load growth or increases due to consolidation of POD's),
TU Electric will, on three years'
- notice, sell full and partial requirements power in accordance with Rate WP Wholesale Power, or its successor, under the Agreement.
Such sales are subject to Sections 5.07 and 5.08 which limit the number of years TU Electric will schedule and require all POD's in TU Electric's Control Area after the scheduling period to be full requirements POD's.
(Section 3.15(a))
5.
If Cap Rock or TU Electric cancels the Agreement, or if Cap Rock causes any POD's (other than under Section 2.05) to become a part of another Control Area (other than Cap Rock) and, 4.f there is-a load reduction, gives the Section 2.04 notice, TU Electric
-will:
t (i) on three years' notice (or five years' for full requirements POD's under Sactions 5.08 and 7.02 (b)), sell full and partial requiremente power in accordance with Rate WP Wholesale Power, or its successor, under a mutually acceptable agreement for electric service (which shall not include scheduling or regulation services),
if TU Electric has suf ficient bulk power available and the sale would not impair its ability to render adequate and reliable service to its customers or its ability to discharge prior conmitments; and (ii) provide firm transmission wheeling, on a transaction specific basic, under mutually acceptable interconnection and transmission wheeling agreement (s) on terms that fully compensate.TU Electric for its costs plus a reasonable return on investment, tcgether with all costs for any additions or modifications necessary to accommodate each wheeling transaction, provided TU Electric has adequate transmission and distribution capacity available (if distribution wheeling services are then being of tered) and the transaction would not unreasonably impair TU-Electric's system reliability or emergency transmission capacity.
(Section 3.15(b))
'U Electric will set t such power and energy notwithstarding the provisions of its prorcsed P*te WP Wholesale Ocwer pending bef ore the Public Utility Cocynission of Temas ("PUCI") providing that power and energy is avaltable under this Rate Schedule "onty when fu Electric has suf ficient bulk power and adequate transmislion to provide the requested service afd the sale does not iFCair its ability to render 80eqJate and reliable service to its own customers or the ability to discharge prior corrnitments,"
2 a
E P
Schedulina 1.
Upon expiration of the Section 2.04 notices and execution of whee' ling agreement (s), TU Electric will schedule power f rom up to six Power Supply Resources (but no more than three in any 24-hour period, at least one must bn a Firm Power Resource) in accordance with the limitations in Article V.
(Section 5.01(a))
2.
TU Electric's obligation to schedule is limited to Firm Power Resources, except when it agrees to schedule economy energy.'
(Section 5.01(a))
A Firm Power Resource is a Power Supply Resource fully backed up by an ERCOT member utility, other than TU Electric, which (1) is available at all times, even under adverse conditions, (ii) includes both installed and spinning reserves, and (iii) is of a level of firmness not less than the ERCOT utility's firm native load customers.
(Section 1.08) 3.
Cap Rock will pay a scheduling charge of $1.00/Mwh, but not less than $10,000 or more than $20,000, por month per Firm Power Resource, which charges will be escalated annually under the
- formula in Section 5.06.5 During scheduling, Cap Rock will pay the cost of additional or replacement computer hardware / software changes or the addition of personnel and other costs incident to implementation and administration of schedules and continuation of scheduling, not to exceed $150,000 during any 36-month period.
(Section 5.06) 4.
TU Electric will schedule for two years.
If Cap Rock, due to no fault of its own, fails to become a Control Area within that period, TU Electric vill schedule for a maximum of five years (subject to Section 6.01 which limits regulation services to five years less the number of years of scheduling).
(Section 5.07)
Af ter these. period (s), all POD's remaining in TU Electric's Control Area must be full requirements POD's.
(Section 5.08) packup, Standby, Emeroency and Scheduled Maintenance Bulk Power 1.
TU Electric will not provide any backup or standby service, including installed or spinning reserves, nor will it plan for nor is it obligated to serve any Cap Rock requirements not expressly provided for in the Agreement.
(Section 4. 01) 2.
If a scheduled Firm Power Resource is not delivered for any reason, Cap Rock must (subject to the sale of emer7ency poser)
(:enarny energy scheduling, if any, wit s be under rmJtually satisf actory agreemef is Canceiv5te by et tber party on 30 cays' riotice with charges in the same amounts as f or Firm Power pesources. (section 5.01(b))
Such charges do not arply to a Firm Power Resource not schecuted during any calendar month, 3
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immediately curtail load 6 equal to the Firm Power Resource, unloos it makes arrangements (satisfactory to TU Electric) to replace it with another Firm Power Resource, or, under limited circumstances, a sourde other than a Firm Power Resource.I (Section 4.01) 3.
If a scheduled firm Power Resource is not delivered due to no fault of Cap Rock, TU Electric will sell emergency power, if available, in the an.ount of the Firm Power Resource for up to ten hours at the rate in Rate WP Wholesale Power, including the demand determinations.
If the Firm Power Resource is not delivered due solely to an emergency caused by the failure of TU P.lectric's transmission facilities or facilities at Texas Utilities System operating Center, TU Electric will sell emergency power (at the same rate) for an additional four days. (Section 4.02) 4.
During the scheduling period (s),
if Cap Rock owns or controls generation (located in TU Electric's interconnected system), TU Flectric will sell scheduled maintenance power, if available, on mutually satisf actory terms, at Rate WP Wholesale Power, including demand determinations.
(Section 4.04) 5.
TU Electric is not required to sell emergency or scheduled maintenance power if it would result in the curtailment of its native load customers, the inability to discharge prior commitments or otherwise impair its ability to render adequate and reliable electric service.
(Section 4.05) 6.
Any power and energy taken from TU Electric as a result of Cap Rock's presence in TU Electric's Control Area, not permitted by the Agreement (and not due to TU Electric's interruption of firm transnission service) will, among all consequences provided for, including the Default provisions, be paid for at TU Electric's Rate WP Wholesale Power, plus the demand determinations.
(Section 4.06)
Regulation Services and Availability of Emeroency and Scheduled MLaintenance Power after Cao Rock becomes a Control Area 1.
To f acilitate creation of a Cap Rock Control Area, TU Electric wil. sell up to 15 MW of regulation power and energy, plus associated se rvices,
under a
mutually acceptable agreement containing terms and conditions consistent with good utility practicos within ERCOT.
Charges (plus an initial implementation 6
to later than sin months t>ef ore it begins taking po.er f rom a firm po.ee tesource, Cap Rock must devetcp (in cooperation with fu Electric) a nutually acceptable curtailment plan (subject to amencent oncer iection 4.03) identifying load equal to tne firm Po.er Resource to t,e curtailed and the means for implementation in accordance with section 4.01.
(section 4.03)
I OeLivery by fu Electric of such a replacement Firm pewer Gesource is timited to the tesser of i
f our consecutive days or the tength of the emergency, and three such emergencies in any 12 month period, unless the evrgency is due solely I( en emergency caused by the f ailure of TU Electric's transmission f acilities, in which event delivery wiL L continue for the length of tr<e emergency wit %t a t imi t on t he ntrt>e r o f emer genc i es.
4
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fee) will be mutually satisfactory. (Section 6.01(a))
2.
Cap Rock is solely responsible for securing Control Area statusafrom the ERCCT member utilities (including all associated costs), failing in which TU Electric has no obligation to sell regulation services.
TU Electric will support Cap Rock's discussions with the ERCOT member utilities within the context of the Agreement.
(Section 6.01(a))
3.
If Cap Rock purchases regulation services and becomes a Control Area, all scheduling will terminate.
TU Electric is not required to sell regulation services for more than five years less the number of years it has scheduled. (Section 6.01(a))
If, due to no fault of Cap Rock, unanticipated delays in construction or certification of generation facilities delay Cap Rock's continued qualification as a Control Area af ter this period, TU Electric will continue providing such services for no more than 18 months.
(Section 6.01(b))
4.
When Cap Rock becomes a Control Area, TU Electric will cooperate, in its capacity as an ERCOT member, in making available emergency and scheduled maintenance bulk power in-accordance with the ERCOT Operating Guides.
(Section 6.02)
Transmjssion WheeliDa and Distribution Services 1.
In connection with scheduling, TU Electric will wheel, on a transaction specific basis, to transmission and distribution POD's under mutually acceptable wheeling agreement (s).
(Section 7.01) 2.
When Cap Rock becomes a Control Area and during the Agreement, IU Electric will provide firm transmission wheeling for firm power Cap Rock purchases from other sources, on a transaction specific casis, under mutually acceptable interconnection and-transmission wheeling agreement (s).
(Section 7.02(a)(i))
3.
For two years after Cap Rock becomes a Control Area, TU Electric will provide distribution services (under a mutually acceptable agreement) to Points of Interconnection under 60,000 volts for which Cap Rock has demonstrable plans to supply at transmission voltages within the two-year period, the identity and plans for which must be furnished to TU Electric within a
reasonable time before Cap Rock becomes a Control Area.
(Section
- 7. 02 (a) (ii)
All such points must be supplied at transmission j
voltages within the two-year period, failing in which they revert l
to full requirements POD's under Section 3.01.
(Section 7.02(b))
4.
'Such wheeling will be at fully allocated embedded cost, plus a reasonable return on investmert; together with all costs for additions or modifications necessary to accommodate each transaction (which TU Electric can forecast when the agreements are 5
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m___ _ _. _ _ _ _ _
r 4
nado) over the term of the agreements.
Upon payment of these costs, Cap Rock is entitled to firm transmission service for the term of the agreements.
(Sections 7.01 and 7.02(c))
5.
TU Electric's obligations to schedule or wheel are subject to Cap nock's making and maintaining arrangements for the delivery of all resources; with respect to Firm Power Resources, arrangements must be for firm transnission service.
(Section 7.03)
Withdrawal of Particination and alpaissal of Litigittion 1.
Upon execution of the Agreement, Cap Rock and Lone Wolf, their
- agents, attorneys and consultants, will cease all participation, directly or indirectly, in TU Electric's pending rate case before the PUCT in DocRet tio. 9300 and withdraw all testimony, motions or other filings on their behalf and take no action TU Electric considers adverse to its interests, except cap Rock may participate in the rate design phase in support of TU Electric's proposed cost allocation and rate design.
Cap Rock and Lone Wolf and their employees will not concult, directly or indirectly, with any other firm, person or entity in connection with any issues pending in this cc.se, or support, financially or otherwise, any firm, person or entity in its participation.
(Section'10.]7(a))
2.
Cap Rock will move for dismissal of its appeal in Cao Epck Electric Coonerative. Inc. v. United States fluclear Reaulatory Commisrior. and the United States of Americ_g, lio. 89-1735, pending in the United States Court of Appeals for the District of Columbia Circuit, and move to withdraw its " Request for an Order Enforcing and Modifying Antitrust License Conditions," filed May 12, 1989, in Texag Utilities Electric Company (Comanche Peak Steam Electric Station).
Cap Rock and TU Electric agree that any order of dismissal may refer to the Agreement and the Futual Release
- provided that in no event wil.1 TU Electric be required to admit or indicate, nor shall Cap Rock asselt, that TU Electric has at any time or in any manner been in violation of the Licensa conditions for Comanche Peak Steam Electric Station Units 1 and 2 (" License Conditions") or any other law or regulation promulgated by any government agency-or entity, or taken any action inconsistent therewith.
.tior shall the Agreement constitute any amendment of, addition to or interpretation of the License Conditions and Cap Rock and TU Electric agree that the Fluclear Regulatory Commission shall have no jurisdiction to enforce, directly or indirectly, any provision of the Agreement, its enforcement jurisdiction being limited to the License Conditions.
(Section 10.17(b))
Ifu u_aj Re.12a_se j
1.
Contemporaneously with execution of the Agreement, the parties executed a Mutual Release'in the form attached as Exhibit E to the Agreenent.
(Section 10.16)
G
I CAUSE NO. IKA,879 I
CAP ROCK 12ICTRIC 8
IN TIIE DISTRICT COURT OF COOPERATIV2;, INC..
8 8
Plaintiff, 8
I 8
V.
8 MIDLAND COUNTY. TEXAS 8
I TEXAS UTIUTIES 12.ECDUC 8
COMPANY.
8 9
Defendant.
8 238TIIJUDICIAT DISTRICT I
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BRIEF OF CAP ROCK ELECTRIC COOPERATIVP, INC.
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m I
I CAUSE No.DO3,879 I
CAP ROCK E2ETRIC 8
IN TIIF, DISTRICT COURT OF COOPERATIVE, INC.,
8 8
Plaintiff, 8
8 V.
g MIDIAND COUNTY, TEXAS 8
17.XA9 ITTIIETIES ELECTRIC 8
I
- COMPANY, 8
9 Defendant.
8 238TII JUDICIAT, DISTRICT I
I URIEF OF CAP RCCK EUCCTIUC COOPERATIVE, INC, I
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I AIRIL 23,1972 I
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I' CAUSC NO. D 38.879 CAP ROCKI21:CTRIC 8
IN TIIE DISTRICT COURT OF COOPERATIVE. INC.,
8 M
Plaintiff, V.
8 MIDLAND COUNTY, TEXAS E
I TEXAS UTILITIES ELECTRIC 8
- COMPANY, 8
8 Defendant.
S 238TII JUDICIAI, DIST.UCT I
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I DRIEF OF CAP ROCK ELECTIUC COOL'ERATIVE. INC.
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l TABLE OF CONTENTS g
Table of Authorities B
I.
1000 Document Is Unenforceable 5
A.
The 1990 Document Lacks Essential Temts 5
I B.
A Purported Agreement. Lacking An Essential Tenn. Is 7
Unenforceable C.
The 1990 Document is Too Indefinite To Be Enforted 8
D.
Completion Of Exhibit *A* Is Condition Frecedent To 10 I
Performance E.
An Agreensent To Agree is Unenforceable 12 v.
'the 1990 Document Violates 'Ihe Statute of Frauds 13 1
Specific Perfortnance Cannet Be Ordered 14 I
Conclusion 10 II.
Testimony At IIcaring 17 A.
Cap Rock Electric Could 1. cave TU Electric On EITective Date 18 B.
Paragraph 3.01 Does Not Support Full Requirements Theory 20 C.
Paragraphs 1.01 and 1.11 Do Not Support Full Requirements 22 I
Theory D.
Cap Rock Efta.Jic l{ad Contml Area Move Ready 24 E.
Adragna's Notes Refer To Paragraph 2.05 25 F.
Conclusion 2G III.
Request For Injunction 27 A.
Cap Rock Electric Has Proven Damages Are Incalculable 27 I
B.
TU Electric Controla Essential Facilities 29 1.
TU Electric Must Make Facilities Available W
2.
TU Electric is Exercising Monopoly leveraging 32 I
C.
TU Electric Interfered With WTU Arrangements 3'l D.
Injunction Would Preserve Status Quo St IV.
Conclusion 37 Certifl?. ate Of Service 30 l
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TABLE OF ALTrl!ORITIES PAGiNA CASES:
Aspen Highlands Skting Corp. u. Aspen Skiing Co.,738 F.2d 1509 (10th Cir.1984),
32 a))'d 472 U.S. 585 (1985)
Aspen Skiing Co. v. Aspen ifighlands Skiing Corp.,472 U.S. 585 (1985) 32 Berkey Photo. Inc. v. Eas(man Kodak Co., F.2d 263 (2d Cir.1979) 32,33 Doddy u. Gray,497 S.W.2d 600 (Tex. App. Amarillo,1973, wnt refd, n.r.e) 13 Drraff & Afountandor v. Tennant. 218 S.W.2d 847 Rex.,1949) 13 Dryant v. Clark 358 S.W.2d 614 (Tex. Sup.,1902) 15 Cohen v. AfcCufclun 565 S.W.2d 230 (Tex. Sup.,1978) 13 Dobson u. Afetro 1.abel Corporation. 780 S.W.2d G3 frex. App. Dallas,1990) 13 Gerries v. Afustang Explorafton Co. 600 S.W.2d 640 frex. App Corpus Christi.1984) 7 Gulf Ca.struction Company v. Sc(f, 07G S.W.2d 624 frex. Civ. App.--Corpus Christi.
11 1984)
H. D. Zachry Company v. Afaerz. 223 S.W.2d 552 frex. Civ. App. San Antonio 3.8.12 1949)
Hohenberg Brothers Company v. George E. Gibbons & Co., 537 S.W.2d 1 frex.1970) 2,11 Henderson v. KRTS. Inc.,822 S.W.2d 709 (Tex. App. liouston [lst Dist.],1992) 35 Image Technical Services v. Eastman Ko(ak Co., 903 F. 2d 612 (9th Cir.1990) 30 Jones u. Riley,471 S.W.2d 650 (Tex. App.--Fort Worth,1971) 14 Kerasotes Affch. Theatcrs v. National Amusements,854 F.2d 135 (6th Ctr.1988) 33 Kjellander v. Smith 652 S.W.2d 595 (Tex. Civ. App. Tyler,1983) 34 AfCl Communications u. American Tel & Tet Co.,708 F. 2d 1081 (7th Ctr.1983) 30,32 Afiller u. Vaughn & Taylor Construction Company,345 S.W.2d 852 7
frex. Civ. App.- Ft. Worth 1961, writ refd n.r.e.)
Afoonet) u. Ingram. 547 S.W.2d 314 (Tex. Civ. App,--Dallas 977, writ refd n.r.e.)
- 2. 9 O'Nef! u. Pouell 470 S.W.2d 775 frex. Civ, App. Ft. Worth,1971, writ refd n.r.e.)
9 Otter Taff Pouer Co. p. U.S., 410 U.S. 306 (1973) 31 l
Paige and Wirtz Construction v. Van Doran Drt-Teco Company. 432 S.W.2d 731
- 5. I2 (Tex. Civ. App. -Amarillo, IFR wrt? refd n.r.e.)
'I Paragon Resources v. NationalItcf Gas Dist. Corp.,095 F.2d 991 (5th Cir.1983) 3 11 1E
TAB 12 OF AUTHOlHTIES IWENCL CASES:
Aspen Highlands Skitna Corp p. Aspen Skitng Co.,738 F.2d 1509 (loth Cir.1984),
32 aD'd 472 U.S. 585 (1985)
Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,472 U.S. 585 (1985) 32 Derkey Photo. Inc. v. Eastman Kodak Co., F.2d 263 (2d Cir.1979) 32,33 Doddy v. Gray,497 S.W.2d 600 (Tex. App.--Amarillo,1973, wnt refd, n.r.e) 13 Brrutt & Afountandor v. Tennant. 218 S.W.2d 847 (Tex. 1949) 13 Dryant v. Clark,358 S.W.2d 614 (Tex. Sup.,19G2) 15 Cohen u. AfcCutchtn. 565 S.W.2d 230 (Tex. Sup.,1978) 13 Dobson u. Afetto Label Corporation. 786 S.W.2d 63 (Tex. App. Dallas.1990) 13 Gerdes v. Afustang Explaraffon Co.,666 S.W.2d 640 (Tex. App.--Corpus Christi,1984) 7 Gu(f Construction Company v. Sc(f, 676 S.W.2d 624 (Tex. Civ. App.--Corpus Chdsti.
11 1984)
H. B. Zachm Company v. Afae. 223 S.W.2d 552 (Tex. Civ. App.- San Antonio 3.8.12 1949)
Hohenberg Dmthers Company v. George E. G(bbons & Co.,537 S.W.2d 1 (Tex.1976) 2,11 Henderson u.10rIS. Inc.,822 S.W.2d 769 (Tex. App. Itouston (1st Dist.l.1992) 35 Image Technical Services u. Eastman Kcdak Co., 903 F. 2d 612 (9th Cir.1990) 30 Jones v. Rf!cy,471 S.W.2d 650 (Tex. App.- Fort Worth.1971) 14 Kerusofes Affch. Theaters v. Naf tonal An.userner.f s. 854 F.2d 135 (6th Cir.1988) 33 f(lcllander v. Smith. 65". S.W.2d 595 (Tex. Civ. App. Tyler,1983) 34 AfCl Communications u. American Tel. & Tel. Co., 708 F. 2d 1081 (7th Ctr.1983) 30,32 hitller u. Vaughn & Tuyfor Construction Company,345 S.W.2d 852 7
(Tex. f'iv. App. Ft. Worth,1961, writ refd n.r.e.)
Afooney v. Ingram. 547 S.W.2d 314 frex Civ. App.- Dallas. 977, wnt refd n.r.c.)
- 2. 0 O'Neft v. Poucil. 470 S.W.2d 775 frex. Civ. App.--Ft. Worth 1971, writ refd n.r.c.)
9 L-Otter Tail Pouer Co. p. U.S., 410 U.S. 366 (1973) 31 Paige and Wirtz Construction v. Van Doran Drt Teco Company. 432 S.W.2d 731 3.12 (Tex. Civ. App.--Amanilo 1968, writ ref'd n.r.e.)
Paragon Resources v. Naffonal fuel Gas Dist. Corp.,695 F.2d 991 (5th Cir.1983) 3 l
11 I
a-5m=-e-
- - - +
b4 &.
m---
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Parker Chiroprocuc Research Foundation v. Fairmont Dallas Hotel Comix1ny.
3, G.14 550 S.W.2d 196 (Tex. Civ. App.. Dahas,1970)
Pasadena Associates v. Connor 400 S.W.2d 473 frex. App.--liouston 3,11, 4
l14th Dist.l 1970, writ refd n.r.e.)
12 Pine u. Gibraltar Sautngs Associattvi. 519 3.W.2d 238 (Tex, Civ. App.- Houston 8
j l1st Dist.) 1974. writ refd n.r.e.)
i Rutherford v. Randal. 593 S.W.2d 949 frex.1980) 3 Scott v. Ing!c Bros. Fact /lclnc.,489 S.W.2d 554 (Tex.1972) 8,12 Sun Od Co. p. Aic.dL'y,620 S.W.2d 720 frex.1981)
- 3. 6 U. S. v. Termtnal Ratimad Assac., 224 U.S. 383 (1912) 31 l
United States v. Gr(#W1. 334 U.S.100 (1948) 33 United States u Offer Thd Poner Co.,331 F.Supp. 54 (D.Minn.1971), affd 31 410 U.S. 300 (1973)
Uniterstly National Bank v. Ernst & Whinney. 773 S.W.2d 707
- 2. 8 (Tex. App.--San Antonio,1989)
Walker u. Hartne 695 S.W.2d 572 (Tet App.- Corpus Christi.1985) 3 Westside Atttsays Inc. p. J. R. Attcrqft Corporation. 694 S.W.2d 100 35 (Tex. App.-Houston l14th Dist.l.1985) 07HER A1.'THORITIES:
15 U.S.C. 9 2 32.33 A. Corbin. Contmets Section 95,100 (1952) 1.4.16 Restatement of Contract (Second) Section 33 (19) 2, 8 i
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...__.m CAUSE NO. B-38,879 CAP ROCK EUDCTRIC 5
IN THE DIS'IRICT COURT OF COOPERATIVE. INC..
5 8
I'laintifY.
8 8
V.
S MIDLAND COUNIT. TEXAS 8
TEXAS UTILITIES ELECTRIC 9
COMPANY.
9 5
Defendant.
5
'238TH JUDICIAL DISTRICT mf5T OF CAP ROCK Em*TRIC COOPERA'nVE. INC.
TO THE HONORABLE JUDGE HYDE:
A bedrock principle of the common law is that a bilateral contract consists of-promises exchanged between parties for which the law will grant a remedy if the promises are not abided. The application of this time honored principle is the crux of the dispute between CAP ROCK ELECTRIC COOPERATIVE. INC (Cap Rock Electric) and TEXAS UTILITIES ELECTRIC COMPANY (TU Electric).
The dispute is not about whether requirements contracts are enforceable in Texas: plaintiff cheerfully concedes that they are, ' And it is not about the intricacies end complex 10es of the generauon and sale of electric power; simple mastery of basic contract law doctrines-- and not an engmeering degree -is more than suiTicient to the task at hand.
Once all of the underbrush is cleared away, the question for the Court is a simple 1
one: Is a purported agreement that lacks a quantity term enforteable in this state? On this question there is no division of authority; such " agreements" are unenforceable.
As Professor Corbin succinctly put it. "a court cannot enforce a contract unless it can
.detennine what it is." A. Corbin, Contracts Section 95 (1952). This is all the more the L
-case since TU Electric audaciously seeks specific performance, asking the Court to l
ll L
.u.
, a.
articulate, define, and perfect obligations that were stillborn, having never come into
- being, in this light, Cap Rock Electric has requested that this Court enter a declaratory judgment finding that there is no btnding contract with 'IU Electric as a matter oflaw.
Further, given that TU Electric controls all of the essential facilitiesl necessary for Cap Rock Electric to receive any electricity, plaintiff seeks an equitable remedy of an injuncuon to prevent 'IV Electric from interfering with the delivery of electricity over those essential facilities from other power sources.
The crttical document, and indeed the only document that the Court need examine, is entitled
- Power Supply Agreement Detween Texas Utilities Electric Company and Cap Rock Electric Cooperaf tve. Inc., dated as of June 8,1990* (Plainttirs
]
l Exhibit 3: hereinafter *1990 Document *). As more fully explained below, the document l
contains no quantity term (and no pointe. of delivery) and specifically authorizes Cap Rock Electric to determine the quantity of electric power, if any, to be taken from TU Electric. This fundamental flaw cannot be overcome by abundant parol evidence or moribund legal arguments. And this flaw surfaces and resurfaces i J. der a variety of doctrinal headings. Without a quantity tenn, the purported contract lacks essential terms and is too indefinite to be enforced. See, eg., Universuy National Bank u. Ernst &
Whinney, 773 S.W.2d 707 (Tex App.--San Antonio,1989); Mooney v. Ingram 547 S.W.2d 314 (Tex. Civ. App.--Dallas 977, writ ref'd n.r.e.). See generally Restatement of Contract (Second) Section 33 (19). There simply was no meeting of the minds on what was to be sold and brought. The execution of Exhibit A. relating to points of delivery and hence quantity is a condition precedent to the parties' obligations under the 1990 Document. Since that condition was neither fulfilled nor discharged, there is no right to performance. See Hohenberg Brothers Company v. George E. Gibbons & Co., 537 I
N essential facihties dortnne is addnesed in the irgurwson eeruun d this Bnet Cap Rock Unetne Coopreuve. Inc. v. Tataa Utihua Electne Company, Cause Na B 38.879 Drtd d Cap Rari Eketric. coopen etive, Inn
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S.W.2d 1,3 (Tex.197Gl. Ilence the alleged contract is 1.o more than an unenforceable agreement to agree in the future. Sec. c.g., Paige and W(rtz Conrtruction v. Van Doran Brf-Teco Company, 432 S.W.2d 731, 735 (Tex. Civ. App.~ Amarillo,1968, writ refd n.r.e.). And, in a rephrasing of all of the doctrinal calamities that beset TU Electnc, the alleged transaction falls ur ter the Texas Statute of Fmuds and the 1990 Document is in clear violation of the Statute.
To be entirely clear on what is before the Court, Cap Rock Electric does not contend that the 1990 Document is ambiguous. To the contrary, Cap Rock contends that that Document is quite intelligible: it is unambiguously indefinite, containing no quantity tem 2. In the absence of any ambiguity, the Court cannot consid:r extrinsic or parol evidence in its interpretation. See, e.g., Walker v. Horine, 695 S.W.2d 572, 577 (Tex. App.. Corpus Christi,1985): Parker Chiropractic Research Foundation u.
Futernont Dallas Hotel Company. 550 S.W.2d 196, (Tex. Civ. App. Dallas,1973); N. D.
Zachq/ Company v. Maerr,223 S.W.2d 552,554 (Tex, Civ. App.- San Antonio 1949), it cannot create ambiguity where none exists. Sun Off Co. v. Madleg. 626 S.W.2d 726,732
. (Tex.1981); Paragort Resources v. National Fuel Gas Dist. Corp.,695 F.2d 991,995 (5th Cir. 1983), The Court must limit its search for meaning to the four corners of the r
writing. Rutherford u. Randal, 593 S.W.2d 949, 953 (Tex.1980). Under such circumstances. Ole matter is entirely one oflaw for the Court. Pasadena Assoctcfes v.
Connor,400 S.W.2d 473. 478 frex. App.--ilouston (14th Dist.l 1970, writ refd n.r.e.).
Because the 1990 Document, standing alone, is determinative of this case.
plaintiff will assume c.rguendo in the next section of the brief that there was a meeting of the minds, that there are no contract formation issues before the Court. Even if a f
l contract is properly fonned under applicable contract rules, it may still be I
unenforceable-and that is clearly the case here. In the words of Professor Corbin. *it is not enough that the parties think that they have made a contract; they must have Cap Rock Electric cooperenve, Inc. v. Texas Utihnen lectric Co*npany, Cause Na 8 38,879 Ilriddcap Rock O.srtric Conspensekve. tru
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l expressed their intentions in a manner that is capable of understanding. It is not even enough that they have actually agtred, if their expressions are not such that the court can dete:Taine what the terms of that agreement are." Corbin, Contracts Section 95.
If this Court rejects Cap Rock Electric's contentions with respect to enforreability, the parul and extrinsic evidence 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. The four days of testimony gtve the Court great insight into the acrimony between the parties. The testimony also illuminates the persistent efforts of Cap Rock Electric to find another source of power and the equally tenacious efforts of TU Electric to prevent that from happening. But more importantly, the evidence abundantly shows that the parties attributed vasdy different meanings to the 1990 Document, that they never shared a common understanding of their rights and obligations under the purported contract. Thus, there is a complete absence of mutual assent to the same material terms and conditions. Were the Court to find that an enforceable contract was properly fonnea. It would be faced with the onerous task of writing a contract to which one of the parties never assented and monitoring it until its termination.
It is precisely this situation that the rules on essential terms, indefiniteness, and conditions precedent were designed to avoid.
I Cap lbek 11ectne Coopersteve, Inc, y, Teama Utihties Electne Car. nr, Cam Na 1 3sf 79 BrW(4 cap ikark ILu tr6e C4m tethe. Inc.
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i
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l L
1900 DOCUMENT IS UNENFORCEADLE.
For purposes of this section of the brief. Cap Rock Electdc will assume, without waiving it, that Cap Rock Electric entered into an agreement with 'lil Electric and that both Cap Rock Electdc and '111 Electric intended to be bound in some manner by the 1990 Document. In other words, Cap Rock Electdc will ignore the intentions of the parties, pot sible lack of a meeting of the minds, and formation issues. Even with these assumptions, this Court mtst find the 1990 Document is unenforceable.
A.
The 1990 Document iar ke Essential Terms.
In this case, the Court is confronted with a purported contract that lacks its most essentht! eternent a quantity tenn.
Section 3.01 of the 1990 Document starts with the phrase "Except as otherwtse permitted by this agreement," Cap Rock Electric is to purthase from nl Electric and RJ Electric is to sell "all of Cap Rock's power and energy requirements, including nonnal load growth, at each of the Points of Delivery for resale to Cap Rock's customers. 2 I
Points of Delivezy is defined under Section 1.11 of the Agreement as:
- Points of Delivery
- shall mean all points within TU Electric's Control Area at which TU Electric maintains an electrical cormection with Cap Rock existing on the effective date hereof, each of which Points of Delivery shall be specified on Exhibit A hereto, which shall be amended l
from time i.o time in accordance with Section 3.07(b) hereof, (Emphasis I
added.)
i Exhibit "N attached to the 1990 Document contains the notation:
(Information to be Spectfled on the E1Iecuve Date of this Agreementl.
1 Exhibit "T sso ho/ 3 column for listing the name of each of the Points of Delivery cc %
e 1990 Document and another column for listing the Contract Demand.
i Contrau y.: mand is defined under the Agreement as:
l 2
l Of ew.n mort inierest is the emmal smicaux of Saduti 3.01. It providca that: Tap furk nuy. u;:::t r===e.ble advar
- utta notkt. elect to retain urw or more of sta Ibtnts of Deltvery... whth exist ori the effer"Jve date c4 this Actement as
?!! req 2L enents Pofnts e/ Delivery pursuant to this recuan 3.01.
- If this is a full requirements contract from the eflecuve date. why does this senterxx require nouce for those debvery putnis to remain full requirements 7 cap iksk D,rtnc Cmptwsuve, Inc. v. Texas Utahtas Dectne Company; Cause Na IL38.879 Ikief(4 cap Ikui Firtric ca4=wsth% frn
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- Contract Demand
- shall mean the ruaximum 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 Exhibf t A. which may be changed from time to time as provided in Section 3.08 hereof. (Emphasis added.)
f ne only indication of how Exhibit "A* is to be filled out is under the dellnition 1
of Contract Demand where it states that contract demand is the amount of power and energy *that Cap Rock projects W Electric will be required to provide at each Point of Delivery." (Emphasis added). In other words, it is within Cap Rock Electric's sole discretion to determine what, If any, Contract Demand is to be included on Exhibit *A*,
TU Electric must accept whatever Contract Demand Cap Rock Electric designates.
This is not an all requirements contract as TU Electric alleges. If it were, there would be no need for an Exhibit *A*, there would be no need to specify the Contract Demand on Exhibit "A", and there would be no need to give Cap Rock Electric the discretion to determine both Contract Demand and Points of Delivery. In other words, in order for the 1990 Document to be efective and have any meaning, Exhibit *A* must be completed. Therefore Exhibit "A" is a material and essential terTn and a condition precedent of the parties obligations under the 1990 Document.
The prior dealings of the parties cannot be relied upon to fill in the missing quantity term. The 1990 Document contains a merger clause in Section 10.02 that specifically negates prior and contemporaneous understandings and representations.
The Court cannot look to prior documents and must enforce the " agreement
- as written.
f Parker Chiropractic Research Foundation v. Fairmont Dallas Hotel Company, 500 S.W.2d 196 (Tex. Civ. App.--Dallas,1973); Sun 00 Company v. Afadeley,626 S.W.2d 726 l
frex.,1981). The 1990 Document is unambiguous in that it lacks an essential term-.the quantity of electricity to be purchased by Cap Rock Electric from TU Electric.
Cap thrk Doctne Cooperative,Inc. v. Texas Utthtas Doctnc Company, Cause Na IL38.879 Inf of Cap Rrxt Dnetric Corgwrath% Is.
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B.
A Purported Agreement, lacking An rasential Tenn. Is Unenforceable, in order for a purported contract to be enforceable, the essential te:Tns of the contract must be set forth in the agreement. Their absence is fatal. For example, in
~
Gcrdes v. Afustang Ehploration Co.,666 S.W.2d G40 (Tex. App. Corpus Christi 1984),
the price to be paid for water was left for future negotiations. In reviewing the contract.
the Court found that it leaves completely open one of the mosa important considerations of the parties conceming future negotiations, i.e., the price to be paid for the water. This is the essence of the proposed contract and not a detail to be supphed by the court. Where any essential term of a contmet is open for future negotiations there is no binding contract.
. The portion of paragraph 19 quoted above is clearly unenforceable.
Id. at 644. Just as a missing price term precludes judicial enforcement, a missing quantity term has the same effect. hfiller v. Vaughn & Taylor Construction Company, 345 S.W.2d 852 (Tex. Civ. App.- Ft. Worth.1961, writ rei'd n.r.c.) is directly on point. In Af(Iler, a question arose as to v hether there was breach of an employment contract for an auctioneer to sell certain property. The Court found that the written contract "showed by its terms that the quantity of property to be sold was to be deterrnined by a hst prepared by the owner and said hst not having been prepared, the contract was not completed.* (Emphasis added.) Id. at 853. In explaining its position, the Coust obued:
A contract is not sttftclently certain to be ertforced {fitfalls to spec {fy the quantity of the goods to be sold. This is also true of a contract that l
leaves the quantity to be sold or bought entirely optional with the seller l
or buyer... The contract shows by its own terms that there remained a certain matter for future determination, to-wit, what kind and how much property was to be sold as shown by a list prepared by the owner, which list was never prept red or submitted to appellant. The contract was therefore incomplete... If the agreement sought to be enforced as a contract leaves material matter open for further negotiation and i
agreement is not an enforceable contract 'on account of not being riefinite and certain.
1 l
l kl at 853. (Emphasis added.)
1 Cap kk Dertne cooperative. Inc. v. Texas Utibtwo Mectne corr.pany: Cause Na ik38.879 Bridof Cap Ikut lirtr* coops nuve, lie.
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In this case, the amount of contract demand is an item solely within the discretton of Cap Rock Electric under Secuon 1.01 of the 1990 Document. Exhibit *A*
by its language declares that the *infonnation to be specilled on the effecuve date of this agreement Schedule A was never completed. As in Miller, there air matenal matters for future detem11 nation-the quantity to be sold and where the purchase is to be made.
In this cas', the option is solely up to the buyer (Cap Rock Electric) and is unenforceable.
Since material matters have not been determined by Cap Rock Electric and TU Electric in order to complete Exhibit *A*, the 1990 Document is not an enforreable contract. See Scott v. Ingle Bros. Pactlle Inc. 489 S.W.2d 554 (Tex.1972h Pine v.
Gibmffar Savings Association. 519 S.W.2d 238 (Tex. Civ. App.- Houston (1st Dist.) 1974, writ ref'd n.r.e.): H. D. Zachry, supra.
C.
The 1990 Document Is Too Indefinite To De Enforced.
Indefinite contracts are not enforceable in Texas. As the court stated in University National Bank v. Ernst & Whinney, 773 S.W.2d 70'1 (Tex. App. San Antonio,1989):
If an alleged agreement is so indefinite as to make it impossible for a court to fix the legal obligations and liabilities of the parties, it cannot constnute an enforceable contract... A lack of definiteness in an agreement may concern the time of performance, the price to be paid, the work to be done, the service to be rendert.d or the property to be transfetied... There is no authority to ask ajury to supply an essential term i t the ct uact tohich the partics tocre unable to complete by mutual agrrement.
Id. at 710. (Emphasis added.) See also Restatement 9 33 (contract is too indellnite to be i
l enforced unless It provides "a basis for determining the existence of a breach and for giving an appropriate remedy").
The 1990 Docutnent clearly falls under the Unfuersity National Bank rule.
l Indeed. this case is quite similar to the situation in Pine, supra. In that case, a lender t
brought an action for a deficiency judgment. One of the questions raised was whether l
l Cap ikxk Ehrtric Cmporative. Irac. v. Texas Utihties Electric company, Cause h IL38.879 Ilr$cf <d Cap Itai 12nctrk cagwrath% Iw.
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the savings and loan agreed to participate in the develorn:nt program. We Court summartzed the agreement as one where Gibraltar would Itnd to Pine wha",ver amount of money he needed at any ti te within three yeans to construct houses. These loans were to be made according to prevailing market rates and industry standards. The Court found that the agirement was unenforreable:
Although the interest rates probably could have been determined fmm prevailing market rates Gibraltar had the right to reject the plans of the houses, there was no agreement as to the total amount to be loaned or when and how the interest was to be paid, when and how the principal was to be paid, the ratto of loan to appraisal value, or when the loans would rnature... The agreement to provide interim constructing financing was no more than an agreement to agree, and Gibraltar's failure to agree to make these did not amount to a breach of contract.
Id. at 243 244.
Again, looking at the 1990 Document and Ibdtibit *A* there is no agreernent as
- to the total amount of electric power to be purchased under Exhibit *A*, and thus there is no enforceable agreement. And courts are not free to fill in essential terms and conditions as they wish:
It is essential to the validity of a contract that it be sufficiently certain to define the nature and extent of his obligations. If an agreement is so indefinite as to make it impossible for a Court to fix legal liability of the parties thereto, it cannot constitute an enforceable contract.
A review of the teims and provisions of the contract here involved clearly show that the contract is incomplete because many of the essential terms thereof had not been resolved by the parties to it and because of the lack of essential parties to the contract. There was no meeting of the minds of such parties on materials matters. The agreement left such material matters open for future adjustment and agreement.
OW d v. Powell 470 S W.2d "*5, 778, 779 (Tex, Civ. App. iFt. Worth 1971, writ refd n.r.c.). Sintlarly, in Moonej v. Ingmm. 547 S.W.2d 314 (Tex. Civ. App. Dallas,1977,
=
writ refd n.r.e.), there was a contmet to share in the profits in the sale of a rar.ch. The share would.be based upon the proceeds from the portion of the ranch where l
improvements were made. The ranch was sold, but there war, never a survey to cap Rock Dertne coop reuve, Inc. v. Texas Utiht.es Dartne compaar. cause No Ins.679 Dried of ciap Ilare IL tr6e c4wgwendve, tre.
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o determine what part of the ranch inchided the improvements. While it was possible that a survey could have been conducted and a detennination made as to what part of the ranch included the improvements, the Court rejected such judicial intervention.
The contract is not, in itself, sufflciently definite to provide a measure of plaintiffs recovery. The amount of compensation for plaintiffs services was made to depend upon future events that never took place. Accorthg to the contract, Engitsh was first to have a survey made of the land ne proposed to reserve, and then he was to sell the
' remaining lands' tor pnce over and above his investment in the ranch before Plaintiff would be entitled to any share in the pruftts. Since these events never xcurred. the court has no means of detertnining the amount that would be due to plaintiff if English had fully perfonned.
Consequently, the contract is too indefinite to support the damages awarded by the trial court.
ki at 31*/.
While it is possible in this case to determine where Cap Rock Electric and n!
Electric are physically connectr.1, the Court should not do so. - And, in any evem, the exercise, would be futile. The 1990 Document contemplates more than a mere physical inspection to fill out Exhibit *A*,
it requires a determination by Cap Rock Electric of 4
which, if any, Points of Delivery, are to be included and a determination of the amount, and what amount, if any, of Contract Demand, is to be included on Exhibit Y", Since the parties were unable to fill out and negotiate Exhibit *A* to the 1990 ent, this Court should not attempt to do what the parties failed to do.
D.
Completion Of Exhibit "A" Is Condition Precedent To Perforaance.
The duty to purchase power from TU EleMric by Cap Rock Electric was contingent upon the completion of Exhibit "A*.
In other words, the preparation of Exhibit *A* is a condition precedent to Cap Rock Electric's duty to perfomt under the P
1990 Document.
l-Conditions precedent to an obligation to be perfortned are those acts or events, which occur subseqwnt to the making of a contract, that must occur before there is cap Rork Dertne Cepeauve, Inc, v. Texas Uuhties Dectne Company, Cape Na 11-38.879 IMuf dcap ikxA Dutrk casettva.Inc.
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l right to perfomtance and before there can be a breach of contractual duty. Hohenber0 Brothers Cornpanp u. George E. Giblons & Co. 537 S.W 2d 1. 3 frex. b,/6).
A condition precedent may be'cither a condition to the formation of a contract or to an obligation to perform an existing agreement.
Conditions may, therefore, relate either to the formation of the contracts i
or liability under them. [ Citing riohr'bergl. Conditions precedent to an obligation to perfonn are those acts or events which occur subsequently to the making of the contract that must occur before there is a rig'It to immediate performance and before there is a breach of contractual duty.
Ibtri. Gulf Construction Companp u. Sc(f, 670 S.W.2d 624. 027 (Tex. Civ. App.--Corpus Christi.1984). No particular wortis ave necesary to create a condition precedent, but the condition must rCate to an essential or material term and b, consistent with the contract viewed as a whole. Id. In thts case, the completion of Exhibit "A" was both a condition to the formation of the agreement and to Cap Rock Electric's duty to perform any obligations artsing under the 1990 Document.
Pasadena Associates, supra is on point with respect to a condition precedent to the obligation to perform, and it is controlling. In Pasadena. the plaintiff sought to hold the dei * / ants liable for breach of a promise to lend money to finance the construction of a new hospital wing. The defendants argued successfully that the performance of their promise was conditional upon the receipt by them of a commitment from the Tennessee Life Company to lend them the money in the first instance.
'The Court held that the agreement was imambiguous and its construction presented a question cf law for the court to determine from the four corners of the agreement. Reviewing the contract as a whole, the court in Pasadena found the defendants *were not obligated unconditionally to finance the expansion project involved, but they were to become liable only upon the issuance of a mortgage loan commitment by Tennessee Life Insurance Company or another lending institution." Id.
at 478.
l cap IWk Electric cmperative, Inc. v. Texas UtMia Electric company, cewe.4a 1F38.879 inr6etot Cap Itati lhtile Cenpers#ve. las
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Just as the loan commitment in Pasadena was "the key to the entire transaction" (Id. at 478), the quantity term in this case was the linchpin of the proposed deal, ne defendants in Pasadena were not bound to perfonn until the condition was met. Cap Prrk Electric is not bound to perform untilit exercises is discretion under the 1990 Document to specify the Points of Delivery and the Contract Demand and to fillin Exhibit "A" Until the contmet quantity is specifled, there is no enforceable agreement.
E.
An Agreement To Agree is Unenforceable.
M best, t!. 1990 Document may be viewed as an agreement to agree in the future.
"A purportect contract which is no more than agreement to agree in the future on essential terms, or one which does not adequately specify es:,ential terms, orclinarily will be unenforceable." Paige and Winz Construction v. Van Doran Brt Teco Company, 432 S.W.2d 731, 735 (Tex Civ. App.--Aman 11o.1968, wnt refd n.r.e.).
In Scott v. Ing!c Bros. PacificInc.,489 S.W.2d 554 Crex. Sup.,1972), the Company pun:hased a plant and was to keep Scott as an employee. The contract stated that an employrnent agreement has been prepared even though none had. "An agreement simply to enter into negotiations for a contract later does not create an enforceable contract." Id. at 555.
Even where there has been a proposed settlement to litigation the Courts have found no agreement to exist where future items were left to be negotiated. This is what occurred in H. B. Zachry Cw; pop-
- 1. Maerr, 223 S.W.2d 552 (Tex. Civ. App.--San Antonio,1949). In that case tae parties entered into a settlement of a lawsuit. The Defendants claimed no agreement had been reached since there was a matter left to future agreement that was not specified in the court settlement. ne Court agreed.
The agreement further shows on its face that it is incomplete, that there remained a further agreement to be entered into, that is, the place upon the ground where the avenue for ingress and egress was to be built.
Thus material matters were left for future adjustment and there was no btndtng agreement entered into between the parties. All the essential terms of the contract must be settled and there must be a meeting of the Cap Rrk Electne Cooperauve hv. v. Texas Utihuen Electne Company, Caume Na Ik38,879 Brief of Cap Ex* Dottite Caqcuuve.b,c.
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minds on all such matters. I'.e alleged agreement on its face shows that it was incomplete and the tnaljudge should not have entered judgment based on incomplete agreement.
Id.at534.
F.
'Ite 1990 Document Violates The Statute of Frauds.
The 1990 Document also cannot be enforted; it does not conform to the Statute of Frauds. Tex. Bus, and Com. Code Sec. 26.01. The Statute of Frauds requirrs that a promise or agreement is not enforceable unless it is in writing if it is not to be perfonned within one year from the date of the making the agreement. The 1990 Document clearly falls within the requirements of the Statute of Frauds.
The memorandum required 'y the statute must be a written memorandum which is complete within itself in every material detail, and which contains all of the essential elements of the agreement, so that the contract can be ascertained from the writing without resorting to oral testimony, Cohen u. AfcCutchtn, 565 S.W.2d 230,232 (Tex. Sup.,19781. See also, Brratt &
Afoua -for u. Tennant, 218 S.W.2d 847 (Tex. 1949); Boddy v. Gray, 497 S.W.2d 600 (T'
n.
>marillo,1973, writ refd, n.r.e); Parker Chiropractic Research Fd., supra.
TM ' a r applie ! n Dobson u. Afetro Labd Corporation, 786 S.W.2d 63 (Tex. App.--
Dala 19W when an employee sued his former employer for wrongful discharge. In analyzing the agreement in Dobson, the court looked at the statute:
Therefore, to satisfy the Statute of Frauds, the written memorandum must contain all the essential elements of the agreement between Dobson and Metro Label. The memorandum signed by Abbott shws only that he made an offer on July 14, 1987, for some unspecified managerial position at a salary of $60,000 per year, with no initial bonus arrangemerit. Dobson now contends that this writing establishes much more, namely that it was he who was hired, that his employer was Metro Label, that the job he accepted was a general manager of three Metro Label plants, and that the perid sf employment was for one full year.
The memorandum itself, however, cannot be stretched so far.
Considerable parol supplementation is needed to convert what is now a nebulous offer by Abbott into the definitive employment contract between Metro Label and robson upon which Dobson relles to obtain a recovery. Since resort to eal testimony is necessary to complete the Cap ibxk Dertne Cooperauve. Inc. v. Texas Uuhum Dectne Company: Cause ha Ib38.879 IMef etCop Ibsk Dnctric Ccwcrative.Inc.
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material terms of the contract, we hod that as a matter of law the memorandum does not satisfy the Statute of Frauds.
Id. at GG.
In this case, the 1990 Document, like the agreement in Dobson, cannot be
' stretched so far" as to make it enforceable. The Court must flll out Exhthit "A', project the Contract Demand for Cap Rock Electric, and determine all of the Points of Delivery covered by the 1990 Document. In the absence of a quantity term, the 1990 Document violates the Statute of Frauds and is unenforceable.
G.
Specific Performance Cannot De Orcered.
The lack of agreement on material terTns and conditions can further be demonstrated by looking at '11] Electric's counter-claim for specific performance of the 1990 Document, in cruer for this Court to grant ~1TJ Electric's request for specific performance, the Court can only look at the 1990 Document for two reasons.
First, the 1990 Document itself contains the above cited merger clause, stating that the document is complete onto itself. In Jones u. Rfici),471 S.W.2d 650 (Tex App.--
Fort Worth,1971), the court was faced with a document that contained a provision that the agreement
- sets fotth the entire agtrement between the parties hereto, and all prior
." Id. at agreements, whether written or oral, are either merged herein or rescinded.
G55. The court found this language " prevents this written option agreement from being modifled, varied. or contradicted by parol evidence of prior or contemporaneous oral agreements or negotiations between these parties." Id. at 661.
Second, case law prohibits a court, when specific performance is requested, frons looking beyor'd the four corners of the document. la Parker Chiropractic Research Fd.,
supra. the foundation sought specific performance. The Court reviewed the rules regarding specific perforrn ice and stated:
Cap ilock Electne Coopernuve. Inc. v. Texas Jtihuas Electne Company; Cause Na luaE79 8
rskf o(Cap itack ELxane Cooperative, lac.* 14
4 (1)
A decree of specific performance must be based on a valid completed contract that possesses the essentials qf <x binding legal obilgation. It w(!! not be granted where material terms qf the contract were not agreed to but !$ tofuture a4/ustment...
(2)
A decree of specific perfonnance Of a contract is not a matter qf right, but rests in the sound discretion of the court; c discretion not arbitrary but judicial, and exercised under the estabhshed doctrines and settled principles of equity...
(3)
The right to the remedy depends upon certain conditions:
(a) the contract must be reasonably certain, unambiguous and based upon valuable considerations; (b) it must be fair in all its parts, free from misinterpretation, misapprehension, fraud, mistake, impsition or surprise: (c) the situation of the parties must be such that specific perfonnance will not be harsh or oppressive; and (d) the one seeking the remedy must come to the court with clean hands...
(4)
Specific performance wth not be decreed unless the terms of the contract are so expressed that the court can determine with reasonable certainty what is the duty qf each party and the conditions qf cach perfonnance...
Thus, to be enforceable, a contract to enter in to a future contract must spec (fy n!! (ts material and essential terms, and leave none to be agreed upon as a result offuture negotiations. Where a preliminary contract leaves certain terms to be agreed upon for the purpose of a final contract there can be no implication qf t" hat the parties ef t! agree upon.
(Emphasis added.)
kl. at 200-201. Clearly none of these rules have been followed in the 1990 Document and this Court cannot require specific performance.
The mle requiring certainty before specific performance can be ordered requires the contract terms to be expressed 'with such certainty and clarity that it may be understood without recourse to parol evidence to show the intention of the parties.'
Bryant v. Clark. 358 S.W.2d 614. 616 frex. Sup.,1962). Since specific performance is designed to Lompel performance, it " demands a clear. definite and precise understanding of all of the terms; they must be exactly ascertained before their perfonnance can be enforced." (Emphasis in original.)
This Court cannot determine how Cap Rock Electric is in breach of the 1990 Document. In order to have specific peifonnance, this Court will need to assume control of the 1990 Document until it is terminated. This Court will have to detennine Cap Rock Eterme Coopeisuve. inc. v. Tnas Uuhune Elecme Company Cause No. BM879 Hdd o(Cap Rami metr 6e Coopniradve, law. 15 l
Cap Rock Electitc's contract demand at each Point of Delivery, detennine the Points of Delivery, determine which delivery points can be moved under Paragraph 2,05, determine how emergency service is to be provided, how regulation service is to be provided, how maintenance service is to be provided and how back up resources are to be determined, and every other aspect of the 1990 Document that was left to future negotiations by the parties.
IL Conclusion, "Ill Electric has not found or cited in its initial Trial Drief a stagle case, and it will not find such a case, in which an essential term such as the quantity of what is to be bought and sold is omitted or left for future negotiation and a court has found an enforceable contract. Whether under the Statute of Frauds or the doctrines of essential terms, indefiniteness, agreements to agree, or conditions precedents, courts consisten0y decline the honor of wnting a contract for the parties. This is particularly true if one of the parties seeks specific performance. And this is not a mat.ter of good faith or reasonableness of interpretation. Rather it is a matter of the proper role of courts in relation to freedom of contract. Once again, no one has made this point more cogently than Professor Corbin: "If no method is agreed upon for rendering [ thel subject matter lof an alleged contract] sufficiently definite for enforcement, the agceeme-'t must nearly always fail of legal effect; it is not customary for courts to fill the gap by finding that a ' reasonable
- amount of goods or land or labor has been agreed upon as the exchange for money." Corbin @ 100.
Cap ikrk Electne Cooperstave. Inc. v. Texas Uuhues Elcetnc Company; Cause Na EL33,879 IMc(o(Cap hk Dcctric Cor4=vative. Inc.
- 16
II.
TESTIMONY AT HEARING.
Five witnesses testified at the four day hearing. Cap Rock Electric's witnesses were Steven E, Collier, director of Power Supply arid Regulatory Affairs for the cooperative, and Whitfleld Russell, an expert witness on power supply contracts and negotiations.
A fair summary of the testimony is that Cap Rock Electric's Mr. Collier believed that the document he was negotiating allowed him the fle.xibility to move all of Cap a
Rock Electric's load beginntng on the effective date of the 1990 Document. "Ihis is supported by Paragraph 3.01 of the 1990 Document. This was not a recent interpretation by Mr. Collier. It is a position he took from the time that the 1990 Document was negotiated.3 The testimony is clear that Cap Rock Electric wanted to be free from W Electric as soon as possible. The 1963 Contract between TU Electric and Cap Rock Electric allowed Cap Rock Electric to leave the TU Electric system on 30 days notice whenever TU Electric changed its rates. Plaintiffs Exhibit 15. December 5,1972 amendment.
Since that was the case, why would Cap Rock Electric sign a new contract that would require it to give three years' notice to TU Electric before it could leave?
W Electric's witness Pitt Pittman testified that what Cap Rock Electric was seeking was a three year contract and that was the " quid pro quo" for signing the 1990 Document.4 The 1990 Document clearly contradicts Mr. Pittman. Exhibit E of the 1990 Document is the mutual release. In signing the 1990 Document, Cap Rock Electric gave up any claim, demand, action, suits or damages in the following:
1.
Public Utility Commission (PUC), Docket Nos. 9300 and 5640.
3 TU Electne sought to discredit Mr. Colber's Laetimony twesume Mr. Collier iniumily was to recave e sucresa fee for the West Texas Utihtaes contreet aannes. Cap Srk Elertne voluntarity corrected a pA.nal nusundentanding of the facta surnmnding Mr. Colles succese fee. TU Electne has yet to explain the prepnety ofits intrusion and invasion of pnvacy into the attaney-chent relauonship.
The trantnpt of the heanng on Apnl 14-16.199" has not been tranaenbed, so then can be no citataon to the reconi at this tame.
4 When the transenpt is enmpleted, Cap Rxk Eler. ie will provide otations.
Cap ikk Electne Cooperuuve, Inc. v. Texas Utihues Electne Company: Cause h Ik38.879 Ildrin(Cao Radt Ehtric Cooperative.Inc.
- 17
2.
Nuclear Regulatory Commission (NRC). Docket Nos. 50-445A and 50-44GA.
3.
District of Columbia Court of Appeals Cause No. 89-1735.
4.
Any claims under the 1963 Contract.
Simply, Cap Rock Electric gave up its right to pursue RJ Electric for antitrust activities at the NRC and gave up its right to seek lower rates at the PUC. What Cap Rock Electric believed it gained was flexibility to find a new power supplier and the obilgation by nj E'ectric to provide partial requirements, backup, standby, emergency, scheduling and wheeling ser -ices under the 1990 Document.
A.
Cap Rock Electric Could Leave RI Electric On Effective Date.
Cap Rock Electric's Mr. Collier believed that the 1990 Document gave Cap Rock Electric the one-time option to leave the TU Electric system immediately upon the Effective Date. This could be done if Cap Rock Electric found a new power supplier and was able to move its delivery points from the TU Electric control area. 71 tis was expressly provided for under Paragrr.ph 1.11 of the 1990 Document. Mr. Collier's interpretaticr' was confirrned in contemporaneous correspondence sent to third parties. This can be shown in the following Exhibits:
1.
Letter of Steven Collier to Scott Moore at West Texas Utiliues dated July 26,1990. Plaintiffs Exhibit 4. on Page 6:
.. the transition from our power supply agreement that we have negotiated with TU Electric may allow us to serve some of our load from CSW with less notice.
2.
Letter of Steven Collier to Scott Moore of West Texas Utilities dated October 5,1990. Plaintlirs Exhibit 5. on Page 1:
the transition process from the existing contract to the new contract should enable us to immediately begin to take power from other sources.
3.
Letter of Steven Collier to Don Welch of West Texas Utilities dated June 12,1991, Defendant's Exhibit 28. on Page 2:
Cap Rock Dectnc Cwpmuve. Inc. v. Texam Utihties Dectnc Company, Caune Nn. Ik341.879 Ilr6cf of Cap linri lixt 6e coupwsuve,Inc. 14
i I
As we discussed. TU Electric is not hkely to be pleased with this prospect 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 all-requirements wholesale power supply agreement to the new power supply agreement that we executed in June,1990, ne evidence shows that by transition period, Cap Rock Electric's Mr. Collier was referring to the opportunity to enter no Contract Demand or no Points of Delivery on Exhibit *A* at the time the 1990 Document became effective. He viewed this ar. a one time opportunity under Pamgraph 1.11.
This position is further supported by Defendant's Exhibit 26, which are the nc'.es of David Krupnick of Southwestern Public Service Company and the designation from Mr. Krupnick's deposition, Plainti!Ts Exhibit 20. Mr. Krupnick's vivid testimony on this point elicited by TU Electric's own attorney was:
Q.
But your best recollection is that Steve Colher is the one that made those representations?
A.
The majority of those discussions were with Steve Collier.
Q.
And specifically, was it your understanding that Steve Cc111er said. SVhen the 1990 Power Supply Agreement between TU Electric and Cap Rock goes into effect. Cap Rock can designate something less than all their points of delivery to be served by that contract by TLT?
A.
His discussions with us indicated they could indicate anything from zero to all of their delivery points under that.
Q.
And he said that specifically that you recall; is that right?
A.
As I recall. It may not have been those exact words, but that was certainly the understanding that we received from him.
Q.
Dat Cap Rock, if it chose to, could designate zero points of
- delivery to be served by TU Electric under the 1990 agreement; is that your understanding from what Steve Collier told you?
A.
Under the 1990'IU/ Cap Rock agreement?
Q.
Yes, sir.
A.
Yes, that was my understanding.
Cap Rock Dertne Cmperative, Inc. v. Tesas Utihties Dectne company, Caume Na ik34,879 Br6etof Cap Rock Datr6e ConWm inc.
- 19
Q.
And was it your understanding that Cap Rock had the choice to receive zero electricity as of the very first day that 1990 agreement between TU Electric and Cap Rock went into elTmt?
A.
Receive zero Gectricity from W7 Q.
Yes.
A Purchase zero electricity from W is what I understood.
Q.
Okay. Meaning that Steve Collier represented to ynu that if Cap Rock chose to, it enuld purchase all ofits power supply needs from a supplier other than W Electric: is that correct?
A That's iny understanding, yes, sir.
9 And that they could do so beginning on the first day that the 1990 agreement between ~IU Electric and Cap Rock went into effect?
A Yes, sir, that was my understanding.
PlaintM
?xhibit 20. Deposition Page 52 line 7 to Page 53 line 23.
These representations were made by Mr. Collier to Mr. Krupnick closer to the sununer of 1990." Deposition at Page 50. lines 18 to 21. This would be shortly after the 1990 Document was signed.
Mr. Krupnick also testified that the timing of the SPS contract was tied to the engineering and construction of a transmission line, not the notice provtsions in the 1990 Document. Plaintiffs Exhibit 20. Deposition Page 86. hne 6 to Page 87, line 17.
IL Paragraph 3.01 Does Not Support Full Requirements Theory.
TU Electric's witnesses contend that the 1990 Document is a full requirements contract. They cited Paragraph 3,01 in support of their contention. Reliance on this section is not warranted for seveal reasons.
First. Pamgraph 3.01 starts with the following:
Ex upt as otherwise permitted by this Agreement.
TU Electric % Mr. Pittman said this was intended to refer to Paragraph 3.02 of the agreement. Paragraph 3.02 deals vith partial requirements. He said in retrospect, the language should have been more specific in the reference to Paragraph 3.02.
Cap Rock Dectne Coopermuve.1nc. v. Texas Muhues P.leene Ccmpany cause Na B M.879 IM4 of Cap rux* nectr6c C mtweaths Inc.
- 30 3
llowever, a review of the earlier drafts of the contract do not support, indeed contradict, his contention. Paragraph 3.01 became less restrictive, not more restrictive for Cap Rock Electric, as negotiations continued.
Plaintiffs Exhibit 16, the May 21,1990 draft of the 1990 Document shows the language of 3.01 stated in pertinent part:
Except as provided in Section 3.02 hereof...
The next draft of the agreement,1".aint11Ts Inhibit 17, expanded the hnguage to include more thanjust 3.03. We revision stated:
Until Cap Ibek commences the purchase of partial requirements power and energy in accordance with the requirements of Section 3.02 bereof,,
in other words, rather than going from a general statement to a specific statement, the tirafts of the 1990 Docurnents went from the specific (*Except as provided in Section 3.02') to the general ("Excep, as otherwise pennitted by this As,reement").
De parties obviously meant to refer to more than Section 3.02 when those changes were fitnlly adopted. This is further supported by reviewing the languege on Exhibit "A" and comparing it to the language on Exhibits "B" and *D' Exhibit "A" does not refer to any specific paragraph of the 199G Jocument but Exhibits "B' and "D" have specific references to specille paragraph numbers.
I Second, reliance on Pamgraph 3.01 is misp'. aced becauce of the second sentence
.i of that paragraph. The sentence trads as follows:
... Cap Rock may, upon rensonable advance written notice, elect to retain one or more of its Points of Delivery (having voltage levels of less than 60.000 volts) whten exist oa the effective date of this Agreement as full requirements Points of Delively pursuant to this Section 3.01.
(Emphasis added.)
What does this sentence mean? The plain meaning is that in order for Cap Rock Electric to retain one or more of its 60,000 volt points of delivery as full requirements.
9 a
Cap Rock Dactne Caipermuva. Inc. v. Tatas Uuhues Doctne Company Cause No. ik38 879 l
tir64of Cec Rma F3ertne Coopersove,Inc.
- 21
Cap Rock Electric must give TU Electric reasonable notice.
Failure to give notice obviously means that they are not full requirements points on the e(Tective date. What, then, are these points? If this is an all requirements contract from day one as TU Electric contends, then why must Cap Rock Electrk olve notice to retain these points as full requirements points of delivery? The answer must be that this is not a full requirements contract and that Cap Rock Electric, pursuant to Paragraphs 3.01, 1.01 and 1.11, has the right to elect which, if any, points of delivery to include on Exhibit "A*.
C.
Pamgraphs 1,01 and 1.11 Do Not Support Full Requirements Thecay.
This is further supported by the language change in Paragraph 1.01.
Plaintifl's Exhibit 16, the May 21,1990 draft, has the following definition of " Contract Demand *:
1.01 " Contract Demand" shall mean the maximum annual gross metered load projected by Cap Rock at each Point of Dehvery less the portion of the firm capacity of Cap Rock's Firm Power Resources, if any, which is allocated to such Potnt of Delivery, expressed in kilowatts (Contract Kw).
m the same draft, Points of Delivery was defined as:
1.08
- Points of Delivery" shall mean all points at which TU Electric maintains an electrical connection with Cap Rock, each of which shall be specified on Exhibit A hereto.
The final 1990 Document changes those definitions to:
1.01 " 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 wf!! be specified on. Exhibit A. which may be changed from time to time as provided in Section 3.08 hereof, 1.11
" Points of Delivery" shall mean all points within TU Electric's Control Area at which 'I1J maintains an electrical connection with Cap Rock cristing on the egcctive date heruf, each ofwhich Fo[nts of Delivery shall be specified on Exhibit A hereto, which shall be amended from time to time in accordance with Section 3.078 (b) he cof.
Cap Rock 21,wtne Cmperauve. Inc. v. Texas tuhum Ehrtne Company; cause Na ik38.879 Brief of Cap Rex
- Detnc Cagnvadw,Inc.
- 22
E The above bold Italic shows the significant changes. By changing the language from the earlier draft, the parties to the 1990 Document wanted to express a different concept. Contract Demand took on the significance of being a term that Cap Rock Electric was to project and once having been projected, then TU Electric would be required to provide.
A fundamental question is why is Contract Demand in the 1990 Document if it is a full requirements contract as TU Electric contends? As Cap Rock Electric's Mr.
Russell testified, Contract Demand is not necessary for a full requirements contract.
g Under a full requirements contract, Cap Rock Electric must purchase all the electricity going through the meter. Thus, there is no need for determining Contract Demand in the 1990 Document unless the parties contemplated that Cap Rock Electric could purchase partial requirements. Compare PlaintitTs Exhibit 15, the 19G3 Contract, which was a full requirements contract, with the 1990 Document. The 1963 Contract did not have a Contract Demand term. It had a billing provision for contract kW. There also is no definition of Points of Delivery in the 1963 Contract.
Of greater significance is the change in the definition to Points of Delivery. It added two new concepts. Fttst, the points must be within W Electric's control area.
Second, the points must be existing on the effective date. This change is consistent with
~
Mr. Collier's testimony that Cap Rock Electric could move from RI Electric's control area and not fall under the 1990 Document. TU Electric attempted to rebut this proposition by arguing that there is no instant in time between the terminauon of the 1963 Contract and the Effective Date of the 1990 Docu>nent. If this were so, Cap Rock Electric could never Inve the TU Electric system. In his testimony, Mr. Collier explained:
Q.
(By Mr. Balough) Let me kind of try a direct route. There were some questions by Mr. Sampels concerning how there could be an instantaneous termination of the '63 Contract and implementation of Cap Rock Dertne C.mpesauve, Inc. v. Texas Uuhuen Dectne Company; Caume Na 15 38.879 IleM d Cap ilusi Iketric Conaparmths Ir e.
- 23
the '90 Contract and yet move the control area. Could you erglain to me how you believe that is possible?
A.
Yes. The matter is how do you actually effectuate the transfer of the load from tht 'IU control area to the WlUs control area contemporaneously with the transfer of the ruling agreement from the
'63 Agreement to the '90 Agreement, and maybe to build a word picture, if you're precluded from any of the reasonabie arrar'gements that utilities generally make to effectuate a switch, we know there's going to be a switch --
MR. SAMPELS: Your !!onor, I'm going to object to anwer that first of all is nonresponsive to the question. We're trying to find out 3
what this contract permits, and the answer is with respect to what some other utilities or utilities might dc,f they didn't have th's contract. Now, I object to the answer being nonresponcive.
THE COURn Objection is overndal. Go ahead.
~
A.
If ve assume that the transfer of the control areas has to be instantanec.as and at the exact same second as the transfer of the contract, let 1. : say again, that is not typically the way things are done.
5 Everybody knows you have to throv'svtches, you have to sw;tch things.
~,
and folks work together on that, but nssuming that folks aren't gotng going to work together on that, then it h Is to be instantaneous. You line everything up, you line up all the meters, you une up all the signaling, you line up everything in Wit's control area and TU's control area, and at 12:01 a.m. on February 1, you plug it into the computer and away you go.
Non, that'e not especially practical, but it is poss!ble. I've never understood utilities to do that kind of thing. We would have thts exact same problem if we moved the load under this agreement, gave three yeara notice move it to another contral area, but when do you do it?
i in the instant between the time the notice is effective at the end of the three years ana when does it start? Well, you do it and you tell the engineers r take the switches, do the things, get it done, you may be five m'.nutes cne way or the other, but you do that, but if you absolutely i
positively had to do it at an instant in time, you stand there, and at the instant in time you plug it into the computer and away you go. Now the signals are in this computer and that computer and these generators are respondtng instead of those. Now, that's not the way I understand any rearonable utnities would operate, but you could do that.
Hearings Tmnscript of March 26,1992 at Page 249, une 13 to Page 251, une 16.
D.
Cap Rock Electric Had Control Area Move Ready.
The evidence in this case demonstrates that Cap Rock Electric had made arrangements with West Texas Utilities (WI'U) under which Cap Rock Electric would operate its delively points under WTU's
- Control area by means of telemetering."
Cap lurk El,rtne Cmperauve,Inc. v, Texas Utahues Ektnc Company; Cause Nc.. IL38,A79 Brks of Cap thi Ilvtric exmmetive. Inc.
- 24
Service Agreement Between West Teus Utilities and Cap Rock Electric Page 1 of Rate Schedule TR-1, Plaintiffs E4tibit 6.
TU Electric argues that there is no contract between WTU ar'd Cap Rock Electric.
The testimony of David L. Teeter of WIU is:
Q And it was your intent on December 10th, that after you received a signed copy from Cap Rock, that WIU would, in turn, sign that agreement?
A.
Yes.
i Q.
Okay.
A.
At some point, after receipt, after it had been executed by Cap P.ock and we got it back, WIU would sign it, yes.
Deposition of David Teeter at Page 155, lhics 4 to 11.
The only intervening factor after Cap Rock Electric signed and retumed the WTU service agreement was the receipt by WrU of TU Electric's threatening letter.
Plaintiffs Exhibit 8. Despite TU Electric's threat, WrtTs Mr. Teeter stated WrU is still willing to do the deal. Teeter Deposition at Page 156, lines 10-12. Plaintiffs Exhibit 9 also shows that if there is no valid contract between Cap Rock Electric and 'IU Electde, WrU will provide electricity to Cap Rock Electric as planned. In other words, but for TU Electric's own actions and control of the essential facilities, the Cap Rock Electric /%TU agreement would be signed and would have been in place February 1,1992 so that none of Cap Rock Electric's dehvery points would have been in TU Electric's contml area.
.a iragna's Notes Refer To Paragniph 2.05.
E.
u One other issue that TU Electric attempted to raise was in Defendait's F.xhibit 53 and 79. TU Electric attempted show through these documents that Exhibit A was not to be filled out until the effective date, because Cap Rock Electric was changing the name k
of some of the dehvery points. However, Plaintiffs Exhibit 23, which is the complete set of John Adragna's notes of that meeting shows the discussion pertained to
'r'
- i l
Cap Rock Dectne Cmperadve. Inc. v. Texas Udhuns Dectne Company. Cause Na TL3a,879 fin $ef of Cap Iud Hertric Cagerauw, hr.
- 25
Paragraph 2.05 of the 1990 Document. See page 2 of Plaintiffs Exhibit 23. This Paragraph..of course, is the one that specifically lists nine delivery potnts by name, including Knott and Ackerly. Those two points of delivery are specifically mentioned in the " excerpt
- of Mr. Adragna's offered as Defendant's Exhibit 53. It was important that these delivery points be listed by name in the 1990 Document when it was written.
However, as with all other delivery points.- they would be required to be on Exhibit *A*
on the Eifective Date if Cap Roch Electne chose to take power from TU Electric at those points. 'Diese notes have nothing to do with whether or how Exhibit A should be filled out.
F.
Conclusion.
/
Thus, from four days of evidence, little new light has been shed on the 1990 Document. However, the evidence does show that Cap Rock Electric never intenG-d to
. sign up for three more years with TU Electric if another source of electncity was avadable prior to the effective date. The escape clause was Paragraph 1.11 and Psmgraph 1.01 and Exhibit *A* that allows Cap Rock Electric exclusivaly to determine what TU Elecinc would be required to sell to Cap Rock Electric.
The evidence also shows that there was no meeting of the minds between Cap Rock Electne and TU Electric. Failure of the parties to agree on the intent of the contract is fatal to its enforceability.
The evidence leads to only one result - there is no binding contmet.
Cop Rock Derme Cmpermuve, Inc. v. Texas Utahties Deetne Comoanr. Cause Na is-38.879 HrW a(Cap Rock Dectrte Camereuva. lar.
- 211
III.
REQUEST FOR INJUNCTION.
A.
Cap Rock Electric Has Proven Damages Are Incalculable.
Cap Rock Electric has requested this Court to enter an injunction to prohibit TU Electric from interfering with Cap Rock Electnc obtaining its electricity elsewhere.
An injunction is appropnate since the unrebutted and uncontested testimony in this case is that Cap Rock Electric would suffer irreparable injury if it must continue to take electricity from TU Electric. The nature of the irreparable injury was explained both in the testimony of Mr. Collier and Mr. Russell. Moreover. TU Electric has admitted that 'the potential harm to TU Electric in the event the requested mandatory injunctive relief may not be significant...* TU Elecutc's Motion to Deny Plaintill's Request for Tempomry Injunctive Relief at Page 44.
W Electric also admitted that damages in this case cannot be calculated. In Paragraph 8.05 of the 1990 Document that they seek to enforce, it states that rU Electnc and Cap Rock agree that it may be impossible to measure in terms of money the damages which may or will accrue by reason of Default under this Agreement..
- This, of course, is not a default case. but the language does show that the Parties agtred that damages cannot be calculated.
(
Cap Fock Electric has approximately 10,000 members and approximately 20.000 electric meters in a 10.000 square mile area in the Permian Basin. Heanngs -
Transcript of March 26. 1992 at Page 72 73.
Cnp Rock Electric's peak load is approximately 100 megawatts. TU Electric's Mr. Pittman testified that in 1990. W Electric's peak load was approximately 18.000 megawatts and, in 1991, was approximately 17.000 megawat s. In other words. Cap Rock Electnc compnses merely one half of one per cent of TU Eleculc's peak load. W Electric's Mr. Heruy Bunting testifled that W Electric must maintain 18 per cent of reserves for unforeseen events or approximately 3.600 megawatts. Cap Rock Electric's peak load is just 3 per cent of the reserves TU Electric must keep in case of load swings due to weather and loss or gain of Cap Rock Llertne Coopersuve. Inc. v. Texas Uuhuva taectnc company; Cam Na B-38.879 Hrief atcap Race lh W Las
- W
customers. This further shows the insignificance of Cap Rock Electric upon TU Electric. Indeed. Mr. Pittman testified that W Electric lost over 1.000 megawatts (or 10 times the size of Cap Rock Electric's load) from 1990 to 1991 without any apparent
- adverse efIect.
On the other hand, if this Court were to find that Cap Rock Electric does not have a contract with W Electric. Cap Rock Electric would see its power costs dectease by 20 per cent. This means that oil companies in the Permian Basin would realize an annual savings of more than $1.7 million and residential customers would save a total of $1 million per year. Defendant's Exhibit 43 at page 2. In a depressed economic area, such a savings is signiacant. The extreme losses lie with Cap Rock Electric, not W Electnc. if the injunction is not granted.
As tc, damages to Cap Rock Electric, to continue to purchase power from W Electric. Cap Rock Electric's Mr. Collier testifled that it means that Cap Rock Electric's rates art higher and that has several affects. He said:
Remember that we discussed earlier this morning that we have a service area in which a large part of that service ares either we or W Electric can serve customers.
Now, to what extent the higher price that now exists than would have existed under the WTU arrangement causes 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 dall an oil well, to not plant a field of cotton.
to not do this or that. to go out of business because of the power costs, you know, how do you ever get back to that point? How do we ever recover from that. If you've lost the custorner, you've lost them. You don't get them back. I don't think, just because you get money at some point.
l Somebody who's gone out of business because power costs were l
higher don't go back into business now because Cap Rock gets some money and so I think we're irreversibly disadvantaged. there, and then finally in a similar way to how we are sort of made a partah to our potential business partners, that well, we can't do business with you because we can never get around the TU roadblock. It essentially constrains considerably the actions and decisions that my board of directors, who are elected by_ their members, would make to be an entrepreneurial company to go forward and do things that are good for the members, because you draw the conclusion that, you know, no matter what we try to do, we're not going to be able to do it because TU Electric l
controls the transmission, and because they control transmission, they Cap Rock Dectrw Coopersuve. inc. v. Texas Utihtum Dectnc Comany cause Na B-38.879 n,terdcap Ho* Deetrtecooperad**. tac. 28
can take whatever view of the contracts they want to, and we're stuck, so we might as well nct try things that are good for our members, and that kind of a change in attitude I think has immeasurable adverse implications in an industry where we are in West Texas where it's important for us to t>e stepping out and doing things for our members, so I just think we' e afl'ectcd adversely in a variety of ways which we can't recover Qcm.
Hearings Transcript of March 26,1992 at Page 137 hne 4 to Page 138,line 17.
Cap Rock Electnc also has been irreparably injured because of the alienauon of WIU as a business partner. Heanngs Transcript of Man.h 76,1992 at Page 136, lines 10-24.
Cap Rock Electric's expert Mr. Russell also testined as to irreparable injury. His testimony was from the perspective of an expert who regularly represents large industrial customers in their power supply activities. His testimony was that where there is uncertainty as to the power supply as is the case here, large indusutal customers will not consider Cap Rock Electric as a potential power sourre. Since industrial customers are making decisions for the long term, these loads cannot be recovered. In addition Mr. Russell testified that this is a crtucal period for such negotiations since industrial castomern generally must make capital intensive investments for their facilities. With the cuntnt htstancally low interest rates and the low cost of gas, industrial customers are making long-term decisions now. The loss of such potential customers to Cap Rock Electnc and the loss of potential jobs to the Permian Basin are incalculable and cannot be reinedied by the payrnent of money damages at a later point in time by TU Electric.
B.
TU Electric Controls Easential Facilities.
This injunction is necessary since TU Electric maintains essential facilities that are required by Cap Rock Electne to receive electricity.
TU Electric electrically surrounds Cap Rock Electric, (i.e., Cap Rock Electric is electrically interconnected solely with TU Electnc). Cap Roca Electric cannot receive c., sock sectric copernve. inc. v. Texi2 utihti u.ctne camp ny: c u Nat 1938.a79 l
-c
- - w=
power unless it is tmnsmitted over W Electnc's lines. Cap Rock Electric is, therefore, entirely dependent upon the transmission facilities of TU Electric, its principal competitor at retail, for the tmnsmission service necessary to allow Cap Rock Electric to purchase the power Cap Rock Electric needs to compete with W Electric at retail. The only trarn.mtelon faciuties between Cap Rock Electric and WI'U are W Electric's transmission facilities. It is simpY not feasible for Cap Rock Electric to duplicate the integrated W Electric transmission grid between Cap Rock Electric and WIV. W Electric's trnmmfuion system, therefore b an
- essential facility.*
1.
TU Electric Must Maic Facilities Available.
A essential facility or
- bottleneck n2cnopoly* doctrine of antitrust law imposes upon a monopast who controls an essential facility the obligation to make that facility available to competitors on non-discriminatory terms. This doctrine ensures that "a monopolist may not retaliate against a customer who is also a competitor by denying him access to a facihty essential to his operations, absent legitimate business justificiations.* Image Techntcal Serutces v. Eastman Kodak Co., 903 F. 2d 612, 620 (9th Cir.1990).
A monopolist which denies a competitor access to an essential facility is liable I
under Section 2 of the Shennan Act for monopolizing or i.empting to monopohze trade or commerte. A party seeking to invoke the essential facilities doctrine must show:
(1) control of the essential faci!!ty by a monopolist:
(2) a competitor's inability practically or n asonably to duplicate the essential facility; (3) the denial of the use of the facihty to a competitor; and (4) the feasibility of providing access to the facility.
MCI Communtcatfons v. Amencan Tel & Tel Co. 708 F.2d 1081 (7th Cir.1983).
Cap Hata Dectric Coopersuve, Inc. v, Texas Uuhues Doctrtc Company, Cause tw fW,879 Ilder et Cap iM Decerte Cocgarsave, Im.
- 30
The obligations of a monopolist control'mg an essential facility to provide non-discriminatory access can be traced back to U. S. v. Terminal Radroad Assoc.,224 U.S.
383 (1912). In that case, a consortium of ratiroads had gained control of every rail route feeding into St. Louis across the Mississippi River. The consortium had the power to exclude any competing railroad or to force that milroad to capitulate to any terms the consoruum demanded. It was economically and geographically infeasible for a compcutor to build another bridge, herefore, the Supreme Court ruled that the consortium must allow competing railroads to use its facilities on a non-discriminatory basis. Id. at 411.
The seminal essential facilities doctrine case involves a refusal to wheel, in United States u. Otter Tafl Potver Co., 331 F.Supp. 54 (D.Minn,1971), afd 410 U.S. 366 (1973), Otter Tail, an investor owned public utility, refused to sell at wholesale or wheel electric power to several municipalities which were attempting to set up municipal power systems to compete with Otter Tail in the retail sale of power, The Court held that under the bottleneck monopoly theory. Otter Tail had v' Mated secuon 2 of the Sherman
- Act, and enjoined Otter Tail from continuing its anti-competiuve practices. The Court found that Otter Tail's:
control over transmission facilities in much of its service area gives it substantial effective control over potential competition from municipal ownership. By its refusal to sell or wheel power, defendant prevents that compeution from surfacing.
Id. at 61. As the Supreme Court subsequendy concluded, the record rnade " abundantly clear that Otter Tall used its monopoly power in the cities in its service area to foreclose competition or to destroy a competitor, all in violation of the antitrust laws.- Otter Tall Power Co. u. U.S., 410 U.S. 366. 377 (1973). Like Otter Taft TU E!cctric has complete control over transmission to its retail compeutor. Cap Rock Electric.
In a case which bears many similanties to a refusal to wheel electricity, AT&T was held to have violated the Sherman Act by refusing to interconnect MCrs long Cap Rock Eteetne conpenuve. Inc. v. Terms Utahties Doctnc company Cause Na B-38.879 BrWof cap iM necme cae lac
- 31 l
l
l l
l distance service with AT&Ts local distribution facilities. The Court found diat AT&T had complete control over the local distribution facilities required by MCI and that MCI could not practicably duplicate the local facilities. Relying on Otter Tad, the Court held that AT&Ts local facilities were a natural monopoly and that AT&T was denying an essential facility to MCI. MCI Communications Corp. v. Amertcan Telephone and Telegraph Co.,708 F.2d at 1132-23 (7th Cir.1983).
In Aspen Highlands Skifng Corp. p. Aspen Skiing Co. 738 F.2d 1509 (10th Cir.
1984). a$d 472 U.S. 585 (1985), the defendant. Aspen Skiing Co.. operated three of the four skiing facilities in Aspen, while plaintiff. Aspen Highlands operated the other. In the past. Aspen Skiing and Aspen Highlands had jointly issued a multi day ski lift ticket good at all four mountains. Then Aspen Skiing refused to issue the four area ticket L began to issue a three area ticket, good only at Aspen Skiing mountains.
Following MCT. the Court applied the four prong test. The Court held that the four aita
- nulti-day ticket was an essential facility controlled by the defendant. Aspen Highlands could not issue a ticket good at the other three Aspen areas, and week long vacaueners with a choice between a multi-day three-area ucket and a one area ticket would choose the three-areas. The Supreme coun concurred that in this case "the monopolist made a deliberate effort to discourage its customers from doing bustness with its smaller rival.' Aspen Skiing Co. u. Aspen Highlands Skitng Corp., 472 U.S.
585. GIO (1985). TU Electric's intimidation of WIU is a deliberate attempt to discourage Cap Rock Electric from doing bus! ness with anyone but 111 Electric.
2.
TU Electric Is Excrcising Monopoly Leveraging.
Another fundamental principles which underlie Section 2 of the Shermin Act.
15 U.S.C. S 2 is monopoly leveraging.
In Berket/ Photo, Inc. u. Eastman Kodak Co.. F.2d 263 (2d Cir.1979). the Second Circutt held that "the use of monopoly power attained in one market to gain a Cap Rock Electne (.mversuve. ;nc. v. Texas Unhues Ehrine Compaar. Caume No. M8.879 nrWof Cap Rosi Dactrk Celac
- 23
competitive advantage in another is a violation of 6 2 lof the Sherman Act) even if there has not been an attempt to monopolize the second market.' 'Ihis articulation of a 9-2 violation, often referred'to as ' monopoly levera61ng," precisely describes TU Electric's conduct towards Cap Rock Electric 'IU Electric is exercising its monopoly power by denying Cap Rock Electric access to more economical bulk power from utilities such as WIU unless this Court grants Cao Rock Electnc's injunction request.
TU Electric keeps Cap Rock Electnc's retail prices high. By preventing WTU or other alternative power sources from supplying Cap Hock Electric. TU Electne leverages its control of transtnission into cornplete domination of bulk power sales to Cap Rock Electdc.
Berkey Photo has its antecedents Ln United States v. Grifjlth. 334 U.S.100 (1948). In that case, the Supreme Court found a @ 2 violatfor. hen a group of motion pictuce exhibitors with competitors in so:ne localities refused to exhibit movies in localitit.s in which they had monopoly power unless the distributor granted them exclusive showing rights in the contested markets. Id. at 108.
In Kerasotes Mich. Theaters u. Naticnal Amusements. 854 F.2d 135 (6th Ctr.
1988). National Amusements alieged that Kerasotes had used its monopoly and market power in other cities to coerce distributors into provid!ng first-run films in the Flint.
Michigan area, where Kerasotes competed with National. The Court held this conduct violated 9 2 of the Sherman Act. Id. at 136-37.
'IU Electric has monopoly power over transmission and is using this power to leverage a superior position for itself in the market for bulk power by denying bulk power sellers access to captive bulk power purchases such as Cap Rock Electrtc.
C.
TU Electric Interfered With WTU Arrangements.
l This is further shown by TU Electnc's attempted interference with Cap Rock Electric's contract with %TU as discussed earlier. Cap Rock Electnc signed the contract I
l Cap bcs Dectne coopmuve, Inc. v. Texas U6huen Electne Compaar, Cam Na B 38379 ririst of Cao iku:k Dectrte cooper 3avs inc,
- 33
and returned it to WTU. On Decemoer 19,1991. Darrell Develhymer of TU Electric sent a letter to David Teeter at WTU threatening a tortlous interference suit by
- ctric against WTU if WTU followed through with the Cap Rock Electric contract. Plainti -
Mibit 8. WrU has not returned a signed contract to Cap Rock Electric. In spite of the letter. WIVs Mr. Teeter stated WT was still wanting to do the deal with Cap Rock Electric. Teeter Deposition at Page 155, line 22 to Page 156, line 12, if it were not for TU Electric's intimidation. Cap Rock Electric would have a signed contract with WTU today. This Court must enjoin TU Electric's intimidation and blockage of the essential facilities.
Moreover in order to receive the electricity from WTU, TU Electric must coordinate its generation with WTU. It is only because '111 Electric is exercising its rnonopoly power that Cap Rock Electric must seek the injunction D.
Injunction Would Preserve Statue Quo.
Normally an injunction will be granted to preserve the status quo. The status quo is the last actual. peaceable, non-contested status which proceeded the pending controversy KjeHander v. Smah. 652 S.#.2d 595. 599 (Tex. Civ. App.-Tyler.1983). In that case, an injunction was obtained to require the Defendant to remove a fence which I
ran down the rniddle of a public road in front of Plaintiffs property. In showing irreparable harm, the Plaintiffs alleged that irreparable harm would result if the fence were not removed and that the road was the ordy access to their property and that it rendered the ruad unreasonably inconvenient and hazardous. The Court found that that constituted a sufIlcient showing of irreparable injury. Id. at 599.
In this case. TU Electric controls the essential facilities to get power and energy to Cap Rock Electric. The transtnission lines are similar to the road in Kjeuander. As long as TU Electric blocks the road (transmission lines) with a fence (refusal to wheel and to coordinate with WITJ) Cap Rock Electric is being irreparably injured. The last Cap itxk Dectne empestive lac. v. Texas Unhtwo Dactne Compaar. Cause fia 848.879 BrW cf Cap Raak Dnetrie (w lae.
- M
i peaceable activity to be preserved in this case was the termination of the 1963 Contract.
TU Electric no longer is contesting that Cap Itock Electric properly tenninated the 1963 Contract. The only contested issue in this case is the enforceability of the 1990 Document.
Two other cases that discuss preserving the status quo need mention. In Wests (de Afrtacu/s Inc. u. J. R. Aircrgfl Corpomtion. 694 S.W.2d 100 (Tex. App..llouston (14th Dist.l.1985). the owners of a jet airplane brought suits seeking a temporary Injunction restraining the airplane manr.gement company, which repaired the plane from interfenng with the owners use and possession of the aircraft. The facts of the case show that the airplane had been in the hanger in the possession of the Tianageroent company. The plane rolled out of the hanger onto a public taxi way and the tow motor pulling the plane was disconnected. The owner's pilot started mowng the plane forward and the management company block the plane's path with a car. ' Die trial court found, and the appellate court agreed, that the last. non-contested status was just prior to the time the aircraft's path was blocked. Id. at 104. Cornparing Westside Afrwar/s to this case, the last peaceable action was the termination of the 1963 Contract. TU Electric is now seeking to block Cap flock Electric's purchase of power from WIli by analogy putting a car in front of the airplane. 'Ihis it cannot be able to do.
The second case is Henderson u. KfES. Inc. 822 S.W.2d 769 (Tex. App.. Houston list DLst.l 1992). In that case, a buyer of a radio statfort brought an action against the seller to prevent die seller from interfering with buyer's efforts to move the station.
l 1
The trial court granted the buyer a temporary injunction that specifically orderrd seller to refrain from filing any Federal Communications Commission license applications, objections or other documents that delay or block the contemplated move of the station. In determining what the status quo sought to re preserved was the Court looked the last peaceable time before any contested issue arose.
Cap Rock Doctne Coopereuve, ine. v. Texas Uuhues Electne Company; cause in &M.879 nr6st at cap sock metree % toe.. M
(
We find the status quo in this case was in September of 1990, when IUml was pursuing its move to Alvin, free of any impediments by Henderson.
We hold the trial court did not abuse its discretion in its order by enjoining Henderson frum further interference with KRTS's application for the Alvin location.
Id. at 774. Again, the last peaceable status between Cap Rock Electuc and TU Electnc was the termination of the 1963 Contract. That is the status quo to be pn: served. It is not the status quo for TU Electric to be using its monopoly powers in its essential facilities from blocking Cap Rock Electne to seek power and energy elsewhere.
Under the NRC anti-trust license conditions admitted as PlaintLTs Exhibit 2, w
TU Ebetric is obligated to wheel power and energy to Cap Rock Electric. As a result, the status quo is maintained by an order requidng TU Electric to wheel power from %TU to Cap Rock Electnc.
Since the termination of the contract was last actual peaceable, non-contested status which preceded this lawsuit, the tennination of the 1963 Contract must be allowed to stand and Cap Rock Electnc must be allowed to recetve electncity from WIV.
Cap &ck Electne Conoursuve, Inc. v. Texas Uuhues Electnc Company; Caume ha B-38.879 IlrW of Cap Roca h Coigma asrve. lar.
- 36 l
_ ~ _ _
i
-IV.
CONCLUSION.
Cap Rock Electric has met its burden of proof in this case. It has shown a probable success on the ments of this case, It has chown that the last peaceable, non-contested, status quo to be preserved in this case was the termination of the 1963 Contract. Moreover. Cap Rock Electric has shown that it will be irreparably injured if it must continue to buy electricity at a cost twenty per cent higher than it could buy from WIU. 'Ihe unrebutted evidence is that payment money damages later cannot adequately compensate Cap Pax:k Electnc's loss in its cornpeutive position, nor can it attract businesses that will choose to locate elsewhere during this period when Cap Rock Electric is forced to pay these higher rates. Nor can money damages be given to compcntes and businesses that are not longer in business because W Electnc's high cost of electncity has contributed to their failure.
Weighing the equities involved. 'IU Electric is a multibillion dollar company, It sales of electncity as the testirnony shows can be very significantly year by year. Fmm 1990 to 1991 for example. TU Electric's own witnesses stated that their peak demand-fell by.1,000 megawatts fmm 19.000 megawatts to 18,000 megawatts. Cap Rock Electric is but a mere 100 megawatts so its presence or absence on the TU Electric's system is i
l insignificant. On the other hand a twenty per cent reduction in the cost of power to Cap Rock Electnc is stgruficant to not only the cooperative but also its ratepayers. Equity demands that the injunction be granted.
Cap het Dertric Camereuve, Inc. v. Texas Uuhues Electne Cornpenr. Cause W ik34.879 Br4nd at Cao Hack Oneerte Coopse estm inc.
- 37
Respectfully submitted.
Richard C. Dalough Attorney at law 1403 West Sixth Street Austin, Texas 78703 (512)477 7896 (512) 477-8657/ fax B-ard C. Balough
/
tate Bar No. 01658500/
J. Brian Martin 600 N. Loraine P. O. Box 38511 Midland. Texas 79702
-(915) 686-7133 (915) 683-2217/ fax Tom Gregg. Jr.
P. O. Drawer 1032 San Angelo. Texas 76902 (915) 655-9188 (915) 655-9180/ fax -
OfCounsel:
Mark J. Yudof 6302 Shadow Mountain Drive Austin. Texas 78731 (512)345 2669 4
' Attorneys for:
Cap Rock Electric Cooperative. Inc.
f l
l cap Rock nortne coop rmtave. inc. v. Tama. Utiuties a.ctne company: c.
Na M.879 Bnist of Cap iM Dec*te Cop lae. + 38
CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the Brief of Cap Rock Electric Cooperative. Inc. was Federal Expressed. to the parties below on this the 22nd day of April,1992.
Mr. Charles L. 'nghe Mr. M. D. Sampels Mr. Harns E. Kerr Worsham. Forsythe. Sampels &
Cotton. Bledsoc. 'nghe & Dawson Wooldridge 500 W. Illinois. Suite 300 2001 Bryan Tower. Suite 3200 Midland. Texas 79702 Dallas, Texas 75201 ani C. Balough" i
Cap Rock Dertric Coopersuve. Inc. v. Tem Uuhties Deetric Compania, Cause Na B-38.879 flew at Cap M Deetree Cooperumes lac.
- 38
al distribution F--
otal distributia:.
~
ate the local fa-
~~
were a natural =
^ =-
" ' " ~ -
3 Corrununica1Lr =
317th Cir.1983.
~ ~ ' ~ "
g Corp. v. Asper. F~
the deiendant. / - e hile plaintiff. A"-
3en liighlands..e:
is. 'nten Asper --
ee area ticket, f.:x:r -
i the four pront = " --
ntial facility -
- et good at the -
en a multa. day mr
~
The Supreme -
ffort to discou;te r-Skting Co. I'. Ace -
itimidation of W. ' 1
~ ~ '
~~
siness with t. tv=
1-
=
C is Exercising ww inciples which - --
~
ging.
21stman Kodak -
monopoly pour a a.sne caenun u
i
=- a be preserved in this ca*.e was the tennination of the 1963 Contract.
-=er is contesting that Cap ilock Electric properly tertranated the 1963
- _.
- V contested issue in this case is the enforceability of the 1990 r cases that dtscuss preserving the status quo need mention. In
.=ranc. v. J. R. Aircrq/t Corpomtfon. 694 S.W.2d 100 frex. App..llouston
^1.. the owners of a jet airplane brought suits seeking a temporary
- mng the airplane rnanagement company, which repaired the plane
_ _z 's the owners use and possession of the atreraft. We facts of the
= me airplane had been in the hanger in the possession of the
-ny. The plane rolled out of the hanger onto a public tart way and ing the plane was dtsconnected. The owner's pilot started moving the athe management company block the phne's path with a car. The
-,nd the appellate court agreed that the last. non contested status was
-me the aircraft's path was blocked. Id. at 104. Comparing Westside
- m. case, the last peaceable action was the tennination of the 1963 3ric is now seeking to block Cap IL>ck Electric's purchase of power
=acy putting a car in front of the airplane. His it cannot be able to do.
= case is Henderson u. KirtS. Inc.,822 S.W.2d 769 (Tex. App..liouston
- n that case a buyer of a radio station brought an action against the rme seller from interfering with buyer's efTorts to move the station.
ted the buyer a temporary injunction that specifically ordered seller mng any Federal Communications Commission license applications, rmer documents that delaf or block the contemplated move of the
-ning what the status quo sought to re preserved was the Court looked
- ume before any c-ntested issue amse.
Cap Ract Dertne Ccupersuve. Inc. v, Texas Utihuem De;ene Companr. Caus Na B-38.879 met.< ca, u,* iwvie cow.ov i,. u
I We find the status quo in this case was in September of 1990, when IGUS was pursuing its move to Alvin, free of any impediments by IIenderson.
We hold the trial court did not abuse its discretion in its order by enjoining llenderson fmm further interferrnce with KIUSs application for the Alvin location.
Id. at 774. Again, the last peaceable status between Cap Rock Electric r.nd 'IU Electric was the terrnination of the 19G3 Contract. That is the status quo to be preserved. It is not the status quo for TU Electric to be using its monopoly powers in its essential facilities frotn blocking Cap Rock Electric to seek power and energy elsewhere.
Under the NRC anti trust license conditions admitted as Plaintiffs Exhibit 2.
TU Electrde is obligated to wheel pcrwer and energy to Cap Rock Electric. As a result, the status quo in maintained by an orrier requiring'IU Electnc to wheel power from %W to Cap Rock Electric.
Since the termination of the contract was latst actual peaceable, non-contested status which pse:eded this lawsuit, the termination of the 19G3 Contract must be allowed to stand and Cap Rock Electric must be allowed to receive electricity from W1U, gn rg. hgase sy c.p nxk ri.ctnc e muv.. ine. Tes us t i
IV.
CONCLUSION.
Cap Rock Electite has met its burden of proof in this case. it has shown a probable success on the ments of this case. It has shown that the last peaceable, non-contested, status quo to be preserved in this case was the termination of the 1963 Contract. Moreover. Cap Rock Electric has shown that it will be trTephrably hjured if it must continue to buy electricity at a cost twenty per cent highet than it could bus ima WIU. The unrebutted evidence is that payment money damages later cannot adequately compensate Cap Ib/k Electric's loss in its competitive position, tror can it attract bustnesses that will choose to locate elsewhere during this period when Cap Rock Electric is forced to pay these higher rates. Nor can money damages be given to E
companies and bi inesses that are..ot longer in business, because TU Electric's high cost of electricity has contributed to their failure.
Weighing the equities involved. TU Elcetric is a multibillion dollar company. It sales of electricity as the testimony shows can be very significantly year by year. From 1990 to 1991.: r example, 'IV Electric's own witnesses stated that their peak demand fell by 1,000 megawatts fit.n 19.000 megawatts to 18,000 megawatts. Cap Rmk Electric is b.st a mere 100 megawatts, so its presence or absence on the TU Electric's system is insignificant. On the other hand a twenty per ceat reduction in the cost of power to Cap Rock Electric is significant to not only the cooperative but also its ratepayers. Equity demands that the injunction be gmnted.
c., a a ti.<sne cm r.uv., inc.. Tex utintw,. ri.csnc comp.ny; c.u Na 164a.s79 n,w orc.,s u i w e m -. % tae. n
Respectfully subtnitted, luchard C. Dalough Attorne,,' at law 1403 West Sixth Strret Austin. Texas 78703 (512)477 7896 (512) 477-8657/ fax D *,
~ I tarti C. Balough
/
atate Bar No. 01658500/
J. Drtan Martin 600 N. ternine P. O. Dax 3881 Midland, Texas 79702 (915) 686 7133 I"15) G83 2217/ fax Tom Gregg, Jr.
P. O. Drawer 1032 San Angelo, Texas 76902 (915) 655-9188 (915) G55 9180/for Of Counsel:
Mark J. Yudof 6302 Shadow Mountain Drive Austin, Texas 78731 (512) 345-2669 Attorneys for:
Cap Rock Electric Cooperative, Inc.
c., sock i:i.cin, co>mu s inc. i.i t
i.e n.
r n.sts
a CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the Brief of Cap Rock Electric Cooperative. Inc. was Federal Expressed, to the parties below on this the 22nd day of April,1992.
hir. Charles L. T1ghe M.. M. D. Sarnpels Mr. Harris E. Kerr Worsham. Forsythe. Sarnpels &
Cotton. Dledsoc. 'ng)te & Dawson Wooldridge 500 W. Elinois. Suite 300 2001 Dryan Tower. Suite 3200 Midland. Texas 70702 Dallas. Texas 75201
/
g,+' f f28
'itani C. Dalouk.iF
/
/
/
/
Cep ikrk Dertnc Cam.vauve, Inc. v. Texas Uuhtice t;tectric company, Cause Na (W,579 InrW of Cap thxA N Ccxgaerem inc.
- W
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