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Court of Appeals of Texas, Fourteenth District
May 7, 1992, Rendered and Delivered ; May 7, 1992, Filed
Appellant, David R. Sylvan, appeals a take-nothing judgment rendered against him in a suit against Amoco Gas Company, appellee, for breach of contract and breach of the duty of good faith and fair dealing. In one point of error, appellant asserts that the trial court's take-nothing judgment is in direct conflict to the Texas Supreme Court's decision in Edwards v. Lone Star Gas Co. 782 S.W.2d 840 (Tex. 1990). We reverse and remand.
In June of 1976, appellee entered into a Gas Purchase Contract with Sun Oil Company under which appellee would purchase natural gas for interstate use. Two years later, Sun Oil Company assigned its interest to appellant. Under that contract, appellee was obligated to purchase all gas of a specified quality that was produced. The contract provided for redetermination of the purchase price every other [*2] year as follows:
The redetermined price shall be computed by taking the average . . . of the three (3) highest prices per MMBtu for gas being paid by intrastate pipeline companies to non-affiliated producers on the applicable October 1, under contracts covering purchase of gas in Texas Railroad Commission District Nos. 5 & 6.
In August of 1980, appellant sought redetermination of the contract price. Appellee responded with a list of the three "highest prices paid by intrastate pipeline companies" as of October 1, 1980. Appellant accepted this price quote based on appellee's representations. Two years later, appellant again requested redetermination of the contract price pursuant to the contract. In this instance, appellee quoted a price which it described as "an average of the three highest prices." Once again, appellant accepted the quoted price. However, appellee was merely paying the static highest price available as of the date of redetermination. This price did not adjust with the monthly increases in inflation and real growth as was required under the Natural Gas Policy Act of 1978. 15 U.S.C.A. §§ 3312, 3315 (1982). This act placed a price ceiling [*3] on intrastate contracts for the sale of natural gas but also authorized the Federal Energy Regulatory Commission to make monthly adjustments to the price ceiling to reflect inflation and real growth. Id.
When appellant learned of the discrepancy in payments made to him by appellee, he brought suit seeking to be reimbursed for the difference between the static price paid to him and the adjusted monthly price. In addition to the allegation of breach of contract, appellant brought suit for breach of the duty of good faith and fair dealing. Appellant moved for summary judgment but it was denied and he was ordered to enter mediation. When mediation proved unsuccessful, appellant filed a new motion for partial summary judgment on whether the contract was unambiguous under the Texas Supreme Court's opinion in Edwards. 782 S.W.2d at 840. The trial court sustained the motion and found the contract to be unambiguous; however, the trial court found that the redetermination clause did not require "price" to include escalations for inflation and real growth. On that basis, the trial court entered a take nothing judgment against appellant.
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1992 Tex. App. LEXIS 1219 *; 1992 WL 91249
DAVID R. SYLVAN, Appellant v. AMOCO GAS COMPANY, Appellee
Notice: [*1] PURSUANT TO RULE 90(i) OF THE TEXAS RULES OF APPELLATE PROCEDURE, UNPUBLISHED OPINIONS SHALL NOT BE CITED AS AUTHORITY BY COUNSEL OR BY A COURT.
Prior History: On Appeal from the 129th District Court. Harris County, Texas. Trial Court Cause No. 88-05215
Disposition: Reversed and Remanded
redetermination, high prices, contracts, monthly, third party, trial court, intrastate
Contracts Law, Contract Interpretation, General Overview