Texas Supreme Court Overturns $6 Million Ruling Against American Midstream
(P&GJ) — The Supreme Court of Texas has ruled in favor of American Midstream, overturning a $6 million judgment and reinstating the company’s counterclaims and request for attorneys’ fees in a long-running contract dispute.
The case stemmed from a 2017 lawsuit filed by Rainbow Energy Marketing Corp., which alleged breach of contract, fraud, and negligent misrepresentation after terminating a gas transportation agreement. A trial court had awarded Rainbow over $6 million in lost profits.
On Jan. 13, Haynes Boone partner Polly Fohn argued the appeal, stating the trial court misinterpreted the contract by adding the terms “scheduled” and “physical,” which distorted the parties’ original agreement.
“The trial court was wrong to blue-pencil the words ‘physical’ and ‘scheduled’ into the parties’ agreement,” Justice James P. Sullivan wrote. “These two words created a cascade of errors that we now correct.”
The Texas high court also dismissed Rainbow’s claims of repudiation, tort liability, and its speculative model for lost profits.
“This is a decisive win for our client and a strong affirmation of Texas contract law,” said Mark Trachtenberg, who led the appellate team with associate Kaylen Strench. “The Court’s opinion reinforces that parties are bound by the words they agree to, not by terms added later through litigation.”
The appeal came from the First Court of Appeals in Houston. Jackson Walker attorneys Joseph A. “Tré” Fischer, Richard A. Howell, Luke Gilman, and Jennifer Caughey also represented American Midstream.
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