Case: 12-20466 Document: 00512547486 Page: 1 Date Filed: 02/28/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 12-20466 February 28, 2014
Lyle W. Cayce
Clerk
METROPLEXCORE, L.L.C.,
Plaintiff - Appellant
v.
PARSONS TRANSPORTATION, INCORPORATED,
Defendant - Appellee
Appeals from the United States District Court
for the Southern District of Texas
Before DEMOSS, DENNIS, and PRADO, Circuit Judges.
PER CURIAM:
This appeal arises from a contracting dispute between Plaintiff-Appellant
MetroplexCore LLC, a Texas environmental engineering firm, and Defendant-
Appellee Parsons Transportation Group, Inc., an Illinois general contracting
firm, which contracted with the Harris County, Texas Metropolitan Transit
Authority (“METRO”) to design, build, and operate a Houston-area transit
system. Parsons had prepared an initial bid to be the lead contractor for the
passenger rail line, and the bid had included, among other companies,
MetroplexCore as a “team member” responsible for various supervisory and
environmental projects. Parsons did not win the bid, and another company
began work on the project. Several years later, the initial contractor was unable
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No. 12-20466
to proceed with the project, and METRO awarded Parsons the contract for the
remainder of the project, along with a new set of Parsons subcontractors. After
several months had elapsed, MetroplexCore notified Parsons that it believed it
was entitled to a share of the profits. Parsons denied it had an agreement with
MetroplexCore, and MetroplexCore filed suit.
The district court granted summary judgment upon determining that no
enforceable joint venture agreement existed, and that MetroplexCore could not
recover on its alternative claims of fraudulent misrepresentation, promissory
estoppel, and quantum meruit. We agree that the summary judgment evidence
did not present any genuine issue of material fact as to MetroplexCore’s joint
venture and quantum meruit claims, and MetroplexCore does not challenge the
dismissal of its fraudulent misrepresentation claim on appeal. However, because
the district court impermissibly resolved certain disputed questions of fact at the
summary judgment stage, and because those facts, taken in a light most
favorable to MetroplexCore, would give rise to a claim to relief for promissory
estoppel, we AFFIRM in part and REVERSE in part.
I.
Parsons Transportation Group, Inc., is an engineering and construction
corporation incorporated in Illinois, with offices located in Houston, Texas.
MetroplexCore, LLC, is a Texas minority-owned environmental engineering
company. In 2006, the Metropolitan Transit Authority of Harris County, Texas
(“METRO”) solicited bids to build a passenger-rail line in Houston. Parsons
assembled subcontractors to join it in a venture called the Houston Transit
Solutions Team (“HTS Team”) with it in bidding. MetroplexCore and Parsons
agreed that if the bid were accepted, MetroplexCore would be hired to “manage”
the geotechnical and hazardous-material work for the design and development
phases and supervision on the project and, according to Parsons, would
“participate in that contract to a minimum 10% level.”
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METRO awarded the contract to its first-ranked bidder, the Washington
Group Transit Management Company (“Washington Group”). However, on
METRO’s request, the Parsons team complied and executed an extension
agreement providing that its proposal would “remain valid until May 27, 2007.”
METRO’s Request for Qualifications provided that, for “Phase I,” although
METRO would negotiate with its highest-ranked bidder, “METRO will have the
right to terminate unsuccessful discussions and to proceed with discussions with
the next highest ranked Offeror.” There was no similar language under the
header “Phase II” of the Request.
The Washington Group commenced “Phase I” of the project and worked on
it for approximately a year, from May 2007 to April 2008. MetroplexCore
performed some subcontracting work for a group doing work under the
Washington Group, “Team Express,” during this time, although it had not been
a part of Washington’s original bid. However, the Washington Group was
unable to maintain its METRO-required qualifications to complete Phase II, and
METRO terminated the contract April 29, 2008. METRO then began discussions
with Parsons about taking over the contract for Phase II, which was slated to
end by 2013.
Ultimately, Parsons won the Phase II contract, and the METRO board
passed a resolution permitting it to proceed on the project on March 4, 2009.
Parsons did not submit a separate bid to perform the Phase II work, but the
parties generally agree that the scope of the project had changed in Phase II as
a result of the work that Washington Group did, and that the Phase II contract
was at least “based on” Parsons’ original bid, even if the specifications and team
members had changed somewhat.
It is MetroplexCore’s role, or lack of a role, in the Phase II work that is
disputed in this appeal. MetroplexCore argues that Parsons represented that
it would have the same role as provided in Parsons’ original bid, and that
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MetroplexCore and Parsons were joint venturers in the project. However,
MetroplexCore did not produce documents substantiating its alleged
management or joint venture role in Phase II other than documents relating to
Phase I and an email chain discussing MetroplexCore’s role or possible role in
Phase II. Parsons produced a joint venture agreement it had with its Phase II
collaborators, which did not list or mention MetroplexCore. MetroplexCore did
not produce a similar joint venture agreement or written document regarding its
role, if any, in Phase II.1
Instead, MetroplexCore alleges that METRO board members relied on
MetroplexCore having a continued role in the contract when the members voted
to award Parsons the Phase II contract. James Dixon, a member of the Small
and Disadvantaged Business Committee for METRO’s board, stated he was
“impressed” with Parsons’ proposal in part because its inclusion of
MetroplexCore “demonstrated a commitment to actually involve a reputable
small business not merely as a subcontractor, but actually as a principal or
prime partner in the management of the performance under the METRO
contract,” citing “MetroplexCore’s prior good work history . . . and good
reputation.” He averred that “but for Parsons’ oral and written documents
assuring [him] and other board members that MetroplexCore would be a
significant part of the management team, it is not likely that Parsons would ever
have been seriously considered for the project.” In addition, MetroplexCore
alleges that Parsons Vice-President Sallye Perrin represented, both orally and
in writing, that MetroplexCore would be on the “management team” for Phase
II.
Parsons denied this allegation, and submitted an affidavit from Perrin in
support. Perrin averred that “[t]hroughout 2008 and 2009, Parsons met with
1
MetroplexCore explicitly disavows a theory of recovery based on breach of contract.
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many subconsultants, including Metroplex[C]ore, regarding the procurement
process for work on the Modified Scope [i.e., Phase II]. During this meeting,
[she] communicated the process Metroplex[C]ore would have to go through if it
sought to perform any work on the Modified Scope.” She further averred that
Parsons did not sign any contract with MetroplexCore regarding work to be done
on Phase II.
MetroplexCore’s officers recalled things differently. In its opposition to
Parson’s motion for summary judgment, MetroplexCore submitted, among other
evidence, affidavits of MetroplexCore’s President and former Chief Operating
Officer, Zia Qureshi, and sole shareholder, Willard Jackson, that contradicted
Perrin’s statements in her affidavit. Qureshi averred that Perrin repeatedly
assured her and other MetroplexCore personnel that “Parsons was going to
honor its oral and written commitment that MetroplexCore be a management
partner now that the [Phase II] contract was in place.” She and other
MetroplexCore personnel described in detail the assurances and meetings
MetroplexCore had with Parsons. Qureshi stated in her affidavit, “Perrin made
repeated assurances . . . regarding MetroplexCore’s work on the management
team. MetroplexCore was asked to provide a matrix of work and services to be
provided or managed under the Parsons/METRO agreement. Within one . . .
hour of leaving the June 1, 2009 meeting, [Qureshi] prepared and faxed back to
Ms. Perrin and [another Parsons agent] a 16-item matrix setting forth our
services,” which MetroplexCore submitted as evidence.
Jackson averred that when he met with Perrin, she assured him that his
company was part of Parsons’ Phase II team. After a conversation on March 5,
2009, Jackson followed up with Perrin via email, writing: “It was great talking
to you this morning. I’m looking forward to getting this project kick[ed] off. It
has been a long time coming.” Jackson states that he “was personally present
and sitting with Sallye and other Parsons representatives in front of the METRO
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Board when they voted on the contract. [He] also assured them that
MetroplexCore was part and parcel with the finally-negotiated Parsons Facility
Provider contract” i.e., Phase II. He stated that “Dixon, before casting his vote,
asked [Jackson] to confirm that in fact the prior representations about
MetroplexCore being a partner on the management team and participating in
the long-term operations was in fact still in place. [Jackson] and Sallye Perrin
confirmed again to him that this was the case.” Jackson averred that Perrin
made the following specific statements, among others, to him and MetroplexCore
after the Washington contract was terminated:
Willard, our commitment to you is still in play with METRO and we can still get
the contract.
Willard, if Parsons gets the Facility Provider contract after the Washington
Group’s contract is terminated, we are still committed to MetroplexCore being
on the management team.
Willard, please stay on our team because we can still get the METRO contract
if the Washington Group does not finalize the contract with METRO.
Let’s keep our team together because we don’t know what’s going to happen
with the Washington Group and the final contract.
Willard, we are going to live up to our commitment to you.
According to Jackson, “[a]ll of the above statements were repeatedly made to
[him] and MetroplexCore representatives by Sallye Perrin even after the
Washington Group received an initial award from the METRO Board and up to
the time that the Washington Group was terminated and Parsons selected[.]”
However, Jackson explained, Perrin did not follow through with those
promises once Parsons obtained the METRO contract and the project was
underway. Jackson recalled that, after the June 1, 2009, meeting concluded,
Perrin approached him and stated: “Willard, I know we made commitments to
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MetroplexCore. I need you to give me a break. I overcommitted to a lot of people
to get the contract.” Jackson responded that it “was her problem, that [he] had
relied upon Parsons’ commitments throughout the process, had expended
tremendous personal, political and financial capital to win support for Parsons’
contract and that [he] expected Parsons to live up to the deal they made with
MetroplexCore.” Jackson states that Parsons cut off communication with him
and MetroplexCore from that date on. On December 23, 2009, MetroplexCore
wrote to Parsons to inquire as to its share of the profits. Perrin denied that
MetroplexCore was part of the Phase II process.
MetroplexCore filed suit against Parsons2 in state court in Harris County,
Texas, seeking a declaratory judgment and damages for breach of contract,
promissory estoppel, and negligent or intentional misrepresentation.3 Parsons
removed the case to the United States District Court for the Southern District
of Texas. Parsons filed a motion for summary judgment, which the district court
granted on July 3, 2012. MetroplexCore filed its Notice of Appeal on July 7,
2012, and filed an amended Notice of Appeal on August 8, 2012.
II.
The basis for the district court’s jurisdiction was diversity of citizenship.
See U.S. CONST. art. III, § 2, cl. 7; 28 U.S.C. § 1332. The amount in controversy
exceeds $75,000; MetroplexCore, LLC is a Texas limited liability company; and
Parsons Transportation Group, Inc. is corporation with offices located in
Houston, Texas, and incorporated in Illinois. The record reflects that Parsons
lists its main address as being in Washington, D.C., and it is undisputed that
2
MetroplexCore also filed suit against Perrin and METRO, but Perrin was dismissed
as a party and MetroplexCore abandoned its claims against METRO. Parsons is the only
remaining defendant and is the only appellee in the present appeal, and MetroplexCore does
not challenge the dismissal of Perrin on appeal.
3
On appeal, MetroplexCore does not challenge the grant of summary judgment as to
its negligent misrepresentation claim.
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Parsons’ principal place of business or “nerve center” is a state other than Texas.
Hertz Corp. v. Friend, 559 U.S. 77, 93 (2010).4 This Court has jurisdiction to
review the timely appealed final decisions of district courts. 28 U.S.C. § 1291.
The district court entered final judgment on July 3, 2012. MetroplexCore
entered its original Notice of Appeal on July 5, 2012, which contained sufficient
notice and was timely filed. See FED. R. APP. P. 3(c)(1), 4(a)(1)(A). Jurisdiction
is therefore proper.
III.
“We review the district court’s grant of summary judgment de novo,
affirming only if the moving party has demonstrated that there is no genuine
issue as to any material fact and that judgment as a matter of law is warranted.”
Total E & P USA Inc. v. Kerr-McGee Oil & Gas Corp., 719 F.3d 424, 434 (5th Cir.
2013) (citing McMurray v. ProCollect, Inc., 687 F.3d 665, 669 (5th Cir. 2012);
FED. R. CIV. P. 56(c)). “In determining whether a case presents triable issues of
fact, we, like the district court, may not make credibility determinations or
weigh the evidence and we must resolve all ambiguities and draw all permissible
inferences in favor of the non-moving party.” Id. (citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255 (1986); Int’l Shortstop, Inc. v. Rally’s, Inc., 939
F.2d 1257, 1263 (5th Cir. 1991)).
This action was removed from Texas state court to the District Court for
the Southern District of Texas, and it is undisputed that Texas law applies. See
Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3, 4-5 (1975) (per curiam);
4
While “[t]he burden of persuasion for establishing diversity jurisdiction . . . [is] on the
party asserting it,” Hertz Corp., 559 U.S. at 96, in resolving jurisdictional questions,
undisputed facts and “‘facts expressly or impliedly found by the district court are accepted on
appeal unless the findings are clearly erroneous,’” Pederson v. La. State Univ., 213 F.3d 858,
869 (5th Cir. 2000) (quoting Complaint of Tom–Mac, Inc., 76 F.3d 678, 682 (5th Cir. 1996)).
Because nothing in the record suggests that Parsons maintains its principal place of business
in Texas, we accept the district court’s implied finding to this effect and conclude that § 1332’s
requirement of complete diversity is met and subject-matter jurisdiction is proper.
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Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Erie R.R. v.
Tompkins, 304 U.S. 64 (1938).
IV.
A.
First, MetroplexCore argues that the district court erred in concluding
that there was no genuine issue as to the formation and existence of an
enforceable joint venture agreement.5 In Texas, “[a] joint venture has four
elements: (1) a community of interest in the venture, (2) an agreement to share
profits, (3) an agreement to share losses, and (4) a mutual right of control or
management of the enterprise. Generally, a joint venture is governed by the
rules applicable to partnerships.” Smith v. Deneve, 285 S.W.3d 904, 913 (Tex.
App. 2009) (citations omitted); accord, e.g., Ben Fitzgerald Realty Co. v. Muller,
846 S.W.2d 110, 120 (Tex. App.—Tyler 1993, writ denied) (“The principal
distinction between a joint venture and a partnership is that a joint venture is
usually limited to one particular enterprise. As a general rule, a joint venture
is governed by the same rules as a partnership, and vice versa.” (citations
omitted)); see also TEX. BUS. ORG. CODE § 152.051(b) (“[A]n association of two or
more persons to carry on a business for profit as owners creates a partnership,
5
Parsons argues that MetroplexCore forfeited its joint venture claim by failing to plead
it below. We disagree. Although MetroplexCore asserted a cause of action for breach of
contract and did not mention in its complaint any allegation that it was part of a “partnership”
or “joint venture,” MetroplexCore alleged that Parsons invited MetroplexCore to “join as a part
of [Parsons’] proposal” and that MetroplexCore would be part of the “team,” and explicitly
relied on a partnership and joint venture theory in its opposition to Parsons’ motion for
summary judgment. MetroplexCore also emphasized in other district court filings that it was
not alleging that it had a subcontractor agreement with Parsons, but rather that it was a
“principal in the management team handling the contract.” As such, Parsons was aware of
MetroplexCore’s joint venture theory of the case and therefore cannot claim prejudice or
“unfair surprise,” and the district court had an opportunity to rule on the joint venture theory.
E.g., Allied Chem. Corp. v. Mackay, 695 F.2d 854, 856 (5th Cir. 1983). We therefore review
MetroplexCore’s joint venture argument under the usual standard.
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regardless of whether: (1) the persons intend to create a partnership; or (2) the
association is called a ‘partnership,’ ‘joint venture,’ or other name.”).
Section 152.052(a) of the Texas Business Organizations Code sets out five
factors for determining whether a partnership has been created:
(1) receipt or right to receive a share of profits of the business; (2) expression of
an intent to be partners in the business; (3) participation or right to participate
in control of the business; (4) agreement to share or sharing: (A) losses of the
business; or (B) liability for claims by third parties against the business; and (5)
agreement to contribute or contributing money or property to the business.
That section further provides that “[a]n agreement by the owners of a business
to share losses is not necessary to create a partnership.” Id. § 152.052(c).
Conversely, simply showing “the right to share or sharing gross returns or
revenues” is insufficient “by itself” to show that “a person is a partner in the
business.” TEX. BUS. ORG. CODE § 152.052(b), (b)(3). “Shared rights to profits
and to control the business are generally considered the most important factors
in establishing the existence of a partnership.” Westside Wrecker Serv., Inc. v.
Skafi, 361 S.W.3d 153, 166 (Tex. App.—Houston [1st Dist.] 2011, pet. denied).
“First, Texas defines a ‘community of interest’ as ‘a commonly shared
incentive between the parties as to the progress and goals of the joint
venturers.’” Ballard v. United States, 17 F.3d 116, 118 (5th Cir. 1994) (quoting
Hasslocher v. Heger, 670 S.W.2d 689, 693 (Tex. App.—San Antonio 1984, writ
refused n.r.e.) (in turn citing W.H. Hodges & Co. of Alexandria, Inc. v. Donley
Cnty. State Bank, 407 S.W.2d 221, 224 (Tex. 1966))). MetroplexCore produced
evidence of a community of interest in the venture at least in Phase I, and
arguably in Phase II, because the parties had a mutual interest and “commonly
shared incentive” in obtaining the METRO contract. Id. This factor is met. Cf.,
e.g., S. Sur. Co. v. Tex. Emp’rs’ Ins. Ass’n, 2 S.W.2d 310, 312 (Tex. Civ.
App.—Waco 1927, writ ref’d) (holding there existed a genuine issue of material
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fact as to whether a construction venture was intended as a partnership or
whether it was intended as a general contractor-subcontractor relationship);
Westside Wrecker, 361 S.W.3d at 166 (assessing whether construction project
participants formed a community of interest); Ben Fitzgerald Realty, 846 S.W.2d
at 122 (same). However, this factor alone is not sufficient to create a partnership
or joint venture; more indicia are required. See TEX. BUS. ORG. CODE
§ 152.052(b), (b)(3).
As regards profit-sharing, MetroplexCore argues that there was an
agreement to share the profits in respective 90% and 10% shares, citing Perrin’s
2007 letter that MetroplexCore “will participate in the contract to a minimum
10% level.” Jackson attested that “Sallye Perrin assured [him] verbally that if
MetroplexCore accepted Parsons’ commitments, [MetroplexCore] would . . .
receive not less than ten percent . . . of the value of any METRO Facility
Provider contract awarded to Parsons . . . [and] ten percent . . . of the value from
the operations of the rail system by and through Parsons’ partner, Veolia.”
However, the promise made on Parsons’ own behalf (as opposed to on behalf of
Veolia) only relates to Phase I of the project, and the written evidence does not
unequivocally establish that MetroplexCore was entitled to 10% of the profits
instead of 10% of, for instance, the workload or management responsibility.
Moreover, Parsons produced evidence that it had profit-sharing joint venture
agreements with its other collaborators, and there is not evidence that
MetroplexCore had a similar contract. Even taken in a light most favorable to
MetroplexCore, it is difficult to say that a reasonable trier of fact could find that
there was an agreement to share 10% of the profits. But even if there were a
genuine issue of material fact as to the profit-sharing element, Texas law
specifically provides that “the right to share . . . gross returns or revenues,
regardless of whether the persons sharing the gross returns or revenues have a
common or joint interest in the property from which the returns or revenues are
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derived,” “by itself, does not indicate that a person is a partner in the business.”
TEX. BUS. ORG. CODE § 152.052(b), (b)(3). More evidence of a partnership or joint
venture is required.
MetroplexCore has not met either of the two remaining common-law
elements of a joint venture. MetroplexCore did not attempt to argue that it had
an agreement to share losses with Parsons, see Smith, 285 S.W.3d at 913,
although, as noted above, this factor is not necessary to establish a partnership,
see TEX. BUS. ORG. CODE § 152.052(c). Importantly, MetroplexCore also did not
allege or argue that it, along with Parsons, had a “mutual right of control or
management of the enterprise.” Smith, 285 S.W.3d at 913; see TEX. BUS. ORG.
CODE § 152.052(a)(3). It pointed to evidence that it had a “management role” in
the operation, but the evidence shows that for Phase I, MetroplexCore would
manage certain aspects of the project; the record does not contain evidence that
MetroplexCore would have a coequal or “mutual” right to control and manage
the enterprise. E.g., Smith, 285 S.W.3d at 913. Furthermore, MetroplexCore
has not argued or presented any evidence of the other factors listed in section
152.052(a) for determining whether a partnership has been created, viz., that it
would share in “liability for claims by third parties against the business” or that
it had “agreed to contribute or contributing money or property to the business.”
TEX. BUS. ORG. CODE §§ 152.052(a)(4)(B), (a)(5).
Finally, even if the evidence could support a finding of the existence of a
joint venture agreement with respect to Phase I of the project, the evidence does
not create a genuine issue of fact with respect to Phase II of the project.
MetroplexCore relies on assertions in its witnesses’ affidavits that the original
bid never dissolved and that the Phase II bid was “based on” the original bid and
that, even though the technical specifications had changed, it was not “totally
different” from that “contemplated” in the original bidding process. However,
the Parsons contract very well could have been based on the original bid, even
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though the original bid—and therefore the MetroplexCore-Parsons agreement—
had technically expired. The question is whether the MetroplexCore-Parsons
agreement had expired or dissolved before the Phase II negotiations began. The
only evidence in the record on this point is the parties’ bid extension agreement,
which states that “the offer represented by [the Parsons team] Proposal . . . will
remain valid until May 27, 2007,” indicating that the agreement dissolved on or
after that date—well before Washington Group’s contract terminated on April
29, 2008. In rebuttal, MetroplexCore cites the rules in METRO’s Request for
Qualifications, which provided that, for “Phase I,” METRO would “have the right
to terminate unsuccessful discussions” with the first-ranked bidder “and to
proceed with discussions with the next highest ranked Offeror.” However, there
was no similar language under the header “Phase II” of the Request; and in any
event METRO’s rules did not purport to bind METRO or the original bidders to
keep their “teams” together for the duration of the project, which was slated to
last for years. The only evidence on point is Parsons’ extension agreement
providing that the bid would expire on May 27, 2007. Thus, the record is devoid
of evidence that would support the existence of an enforceable joint venture
agreement with respect to Phase II of the project.
The evidence does not demonstrate a genuine issue as to whether
MetroplexCore and Parsons had a joint venture agreement, or that, if there was
one, that it remained effective into the parties’ Phase II negotiations. Because
MetroplexCore’s joint venture claim is premised entirely on its role in Phase II
of the contract, Parsons is entitled to summary judgment on that claim.6
6
Because we conclude that there is no genuine issue of material fact regarding the
alleged joint venture agreement with consideration of both the written and parol evidence in
the record, we need not consider the parties’ alternative contentions regarding the
applicability of the Statute of Frauds. See TEX. BUS. & COMM. CODE § 26.01(a).
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B.
MetroplexCore alternatively contends that it is entitled to recover in
quantum meruit. “Quantum meruit is an equitable theory of recovery which is
based on an implied agreement to pay for benefits received.” Heldenfels Bros.,
Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992) (citing Vortt
Exploration Co., Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990)).
“Quantum meruit is an equitable remedy which does not arise out of a contract,
but is independent of it. Generally, a party may recover under quantum meruit
only when there is no express contract covering the services or materials
furnished. This remedy ‘is based upon the promise implied by law to pay for
beneficial services rendered and knowingly accepted.’ Recovery in quantum
meruit will be had when non payment for the services rendered would ‘result in
an unjust enrichment to the party benefited by the work.’” Vortt, 787 S.W.2d at
944 (citations omitted). To recover in quantum meruit, a plaintiff must establish
that: “1) valuable services and/or materials were furnished, 2) to the party
sought to be charged, 3) which were accepted by the party sought to be charged,
and 4) under such circumstances as reasonably notified the recipient that the
plaintiff, in performing, expected to be paid by the recipient.” Id.
The Texas Supreme Court has held that a partner in a joint undertaking
or venture generally cannot recover in quantum meruit against another partner
because a joint venturer does not “render[ ] services for [another joint venturer]
. . . . Instead, pursuant to the joint venture agreement, he perform[s] [ ] services
for the joint venture. To recover in quantum meruit, the plaintiff must show
that his efforts were undertaken for the person sought to be charged; it is not
enough to merely show that his efforts benefitted the defendant.” Truly v.
Austin, 744 S.W.2d 934, 937 (Tex. 1988) (citation omitted). In Truly, the plaintiff
partner “rendered services for the joint venture in an effort to enhance the
success and profitability of a project in which he held a 40% ownership interest[,]
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. . . thus act[ing] to benefit his own financial interests as well as those of his
co-joint venturers”; therefore, he could not recover in quantum meruit. Id.
By contrast, when the plaintiff has provided a service or benefit to the
defendant for which the plaintiff would reasonably expect to be reimbursed, as
opposed to acting for the participants’ joint benefit, the plaintiff may be entitled
to relief on a theory of quantum meruit. See, e.g., Vortt, 787 S.W.2d 942. In
Vortt, both the plaintiff, Vortt Exploration, and the defendant, Chevron, had
mineral-rights contracts on different portions of a tract of land, and they entered
into negotiations with an eye toward entering into a joint operating agreement.
Id. at 943. The negotiations were ultimately unsuccessful, but in the course of
the negotiations, Vortt furnished Chevron with “confidential” seismic services,
graphics, and maps that Vortt had ordered and paid for. Id. at 945. Chevron
ultimately declined to enter into a joint operating agreement with Vortt, but
then utilized the maps and seismic information Vortt had provided to build a
producing well. Id. Vortt sued for quantum meruit, and the Texas Supreme
Court affirmed an award in its favor because the evidence supported a finding
that “Chevron knew that Vortt furnished the information with the expectation
that a joint operating agreement would be reached” and that Vortt expected to
be paid for the services rendered. Id.
Under the foregoing authorities, MetroplexCore has not made out a case
for quantum merit. First, for the reasons stated above, the record does not
support a finding that Parsons and MetroplexCore had a formal joint venture
agreement for Phase II of the project; however, the record does suport that they
shared a “community of interest,” meaning “‘a commonly shared incentive
between the parties as to the progress and goals of the joint venturers.’” Ballard,
17 F.3d at 118 (quoting Hasslocher, 670 S.W.2d at 693). We conclude that the
reasoning of Truly is applicable to the case at bar because MetroplexCore
“act[ed] to benefit [its] own financial interests as well as those of” Parsons.
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Truly, 744 S.W.2d at 937. The valuable services that MetroplexCore alleges that
it performed were “expend[ing] valuable time and effort meeting with Metro’s
board members and local congressmen and community leaders presenting and
endorsing the HTS[ ] [Team] proposal” to help Parsons successfully obtain the
second-ranked status for Phase I and, ultimately, the Phase II bid, “all in the
expectation that Parsons would honor its promise to involve MetroplexCore as
a 10% joint venturer in [the team’s] work on the Project.” But that type of
activity—lobbying to improve a bid’s chances of success—is precisely what the
Texas Supreme Court in Truly would likely consider to be “services for the joint
venture in an effort to enhance the success” of the community of interest. 744
S.W.2d at 937. Therefore, there is no unjust enrichment to Parsons for
MetroplexCore’s activities.
Vortt is unavailing to MetroplexCore in the face of Truly, as well as
distinguishable on its facts. Here, unlike in Vortt, there is no evidence or other
indication that MetroplexCore reasonably expected to be reimbursed for its
lobbying activities. For one thing, the summary judgment evidence shows that
MetroplexCore’s intended role was to work on the team’s environmental and
hazardous material issues and to assume a management role in certain
capacities; it does not show that MetroplexCore expected or hoped to join the
team to perform professional lobbying services. Even if MetroplexCore was
included in the bid because of its professional network or good reputation among
METRO board members, this quality is not a “service” of a type for which a team
member is usually compensated. This is a basic difference between this case and
Vortt, where the plaintiff performed tangible work—producing seismic maps and
similar documents—of a type for which a company would normally expect to be
compensated.
Moreover, the parties’ relationship is different from that in Vortt. Unlike
in Vortt, where the parties never ultimately formed a joint operations
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agreement, here, MetroplexCore and Parsons did have a formal agreement that
governed the parties’ relationship leading up to the original bid. It was during
this period that MetroplexCore engaged in its lobbying activities to benefit the
both of them—i.e., to help the team secure the METRO bid—even though the
effort was initially unsuccessful. This is more akin to the situation described in
Truly, where the plaintiff was acting to benefit both partners, as opposed to only
conferring a benefit upon the defendant. Under the circumstances, the lobbying
activities were not something for which MetroplexCore could have reasonably
been expected to be reimbursed because MetroplexCore and Parsons were in the
same “community of interest” in that venture, Smith, 285 S.W.3d at 913, even
if, as discussed above, there may have been only a contingent contracting
agreement rather than a joint venture as such.
Finally, the record does not contain evidence that MetroplexCore engaged
in lobbying activities during Parsons’ discussions with METRO for the Phase II
contract. The lobbying activities discussed in the summary judgment evidence
were conducted to improve the HTS Team’s chances of success leading up to the
original bid. Thus, the evidence demonstrates only that MetroplexCore
conducted lobbying activities at the time when its relationship with Parsons was
governed by a contingent contracting agreement and the parties were engaged
in a community of interest. There is no similar evidence to show that
MetroplexCore continued these activities during or leading up to the Phase II
negotiations when, as discussed above, there was no such agreement.
In sum, there is no genuine issue of material fact as to whether
MetroplexCore furnished valuable services for the benefit of Parsons alone,
rather than the community of interest that included MetroplexCore; nor as to
whether services were rendered “under such circumstances as reasonably
notified the recipient that the plaintiff, in performing, expected to be paid by the
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recipient.” Vortt, 787 S.W.2d at 944 (citations omitted). Accordingly,
MetroplexCore cannot recover in quantum meruit as a matter of law.
C.
Finally, MetroplexCore asserts that it is entitled to recover from Parsons
under a theory of promissory estoppel. Under Texas law, “[t]he requisites of
promissory estoppel are: (1) a promise, (2) foreseeability of reliance thereon by
the promisor, and (3) substantial reliance by the promisee to his detriment.”
English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983); see also, e.g., Fretz Constr.
Co. v. So. Nat’l Bank of Hous., 626 S.W.2d 478, 483 (Tex. 1981). “The function
of the doctrine of promissory estoppel is . . . defensive in that it estops a promisor
from denying the enforceability of the promise.” Wheeler v. White, 398 S.W.2d
93, 96 (Tex. 1965). In sum, “[w]here a promisee acts to his detriment in
reasonable reliance upon an otherwise unenforceable promise, . . . the
disappointed party may have a substantial and compelling claim for relief. . . .
‘A promise which the promisor should reasonably expect to induce action or
forbearance of a definite and substantial character on the part of the promisee
and which does induce such action or forbearance is binding if injustice can be
avoided only by enforcement of the promise.’” Id. (quoting RESTATEMENT OF
CONTRACTS § 90); see also, e.g., Fretz, 626 S.W.2d at 480 (quoting and applying
Restatement test for promissory estoppel). The burden of proving all the
essential elements of promissory estoppel is on the party asserting the doctrine.
Concord Oil Co. v. Alco Oil & Gas Corp., 387 S.W.2d 635, 639 (Tex. 1965). “In
a claim for promissory estoppel, only reliance damages are allowed.” Cent. Tex.
Micrographics v. Leal, 908 S.W.2d 292, 298 (Tex. App.—San Antonio 1995, no
writ) (citing Fretz, 626 S.W.2d at 483).7 Reliance damages seek to put the
7
In Texas, claims of promissory estoppel and detrimental reliance based in contract are
the same cause of action. E.g., Univ. of Tex. Sys. v. Courtney, 946 S.W.2d 464, 468 (Tex.
App.—Fort Worth 1997, writ denied); Garner v. Corpus Christi Nat’l Bank, 944 S.W.2d 469,
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injured party in the position that he or she would have been in had he not relied
on the promise. See Fretz, 626 S.W.2d at 478. Such damages “includ[e]
expenditures made in preparation for performance or in performance, less any
loss that the party in breach can prove with reasonable certainty the injured
party would have suffered had the contract been performed.” Hart v. Moore, 952
S.W.2d 90, 97 (Tex. App.—Amarillo 1997, pet. denied).
In Fretz Construction Co. v. Southern National Bank of Houston, the
plaintiff, Fretz, was a general contractor who agreed to perform construction
work on an office building in Houston. 626 S.W.2d at 479. Fretz had previously
entered into a construction contract with the builder, Aqua-Con of South Texas,
Inc., but that contract was cancelled due to Aqua-Con’s inadequate funding. Id.
Aqua-Con then obtained funding from the Southern National Bank of Houston,
which assured Fretz that he would be reimbursed for his contracting services
and expenses if he agreed to go forward with the project. Id. at 479-80. Fretz
signed a new contract with Aqua-Con that had similar specifications as the prior
cancelled contract. Id. After completing work on the project, however, Aqua-Con
defaulted on its obligation to pay Fretz his agreed fee, and Fretz filed suit
against the bank for, inter alia, promissory estoppel arising from the bank’s
“assurances” to Fretz. Id. at 479-80, 481.
The Texas Supreme Court affirmed the jury’s verdict in favor of Fretz,
holding that all of the elements of promissory estoppel were met. Id. at 479. The
court held that the bank’s “assurances” to the plaintiff that Fretz would be paid
his share of the project’s proceeds was sufficiently concrete because it amounted
to a promise above and beyond what the defendant was already obligated to do
by virtue of its financing agreement with Aqua-Con, id. at 479-81; Fretz relied
by waiting to sign the contract and to deliver the performance bonds to Aqua-
480 (Tex. App.—Corpus Christi 1997, writ denied), modification on other grounds recognized
by Ash v. Hack Branch Distrib. Co., 54 S.W.3d 401, 414 (Tex. App.—Waco 2001, pet. denied).
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Con until he received the bank’s reassurances, id. at 483; it was reasonable for
the bank to expect that Fretz would rely because the bank had been informed
that Fretz needed its reassurance before he would proceed, id.; and Fretz
suffered foreseeable, cognizable damages because he had expended funds in
preparation for the project, id. at 483-84, in particular because “the work
performed pursuant to the oral agreements was work which was called for under
the original contract,” id. at 484. Accordingly, the court held that the jury was
justified in awarding Fretz damages on his theory of promissory estoppel. Id.
1.
First, there is a genuine issue as to whether Perrin made promises that
she could have reasonably foreseen would induce reliance. As an initial matter,
the district court rejected MetroplexCore’s promissory estoppel claim in part
because it concluded Perrin’s statements were hearsay. However, Perrin was an
“agent or employee” of Parsons, a party to this action, and the parties do not
dispute that Perrin was acting within the scope of her duties as Vice-President
when she made the alleged statements. FED. R. EVID . 801(d)(2)(D). The
statements would therefore be admissible as nonhearsay. See id.; Moss v. Ole
S. Real Estate, Inc., 933 F.2d 1300, 1312 (5th Cir. 1991) (“If parties to the
lawsuit or agents of the parties made the statements [in question], the
statements are not within the definition of hearsay and are admissible against
the parties.”). We may properly consider Perrin’s alleged statements in
assessing whether the summary judgment evidence creates a genuine issue of
material fact.
The summary judgment record is replete with references to the specific
“reassurances” that Perrin made to MetroplexCore during and leading up to the
Phase II negotiations. Willard Jackson stated that he “was personally present
and sitting with Sallye and other Parsons representatives in front of the METRO
Board when they voted on the contract. . . . [and that he] and Sallye Perrin
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confirmed again to [Dixon] that this was the case.” Jackson further averred that
Perrin made the following specific statements, among others, to him and
MetroplexCore after the Washington contract was terminated: “[O]ur
commitment to you is still in play with METRO and we can still get the
contract”; “[I]f Parsons gets the Facility Provider contract after the Washington
Group’s contract is terminated, we are still committed to MetroplexCore being
on the management team”; “[P]lease stay on our team because we can still get
the METRO contract if the Washington Group does not finalize the contract with
METRO”; “Let’s keep our team together because we don’t know what’s going to
happen with the Washington Group and the final contract”; and “[W]e are going
to live up to our commitment to you.” Perrin, in allegedly making those
statements to MetroplexCore’s officers on her company’s behalf, promised to
include MetroplexCore in the project if her company was awarded the contract.
As in Fretz, those promises went above and beyond any duty that Perrin owed
MetroplexCore because she was no longer under any contractual duty to include
MetroplexCore in her company’s project since their joint bidding agreement had
expired. See Fretz, 626 S.W.2d at 479.
Moreover, given the parties’ prior relationship during the original bidding
process, and the specific nature of Perrin’s alleged repeated reassurances, a
reasonable trier of fact could conclude that Perrin could have reasonably
expected her promises to induce substantial reliance on the part of
MetroplexCore. A fact-finder could reasonably conclude that Perrin was
promising to abide by the same terms to which MetroplexCore and Parsons had
agreed during their first round of bidding. See id. at 484 (concluding the bank’s
promise was sufficiently concrete to reasonably and foreseeably induce reliance,
and observing, in support, that “the work performed pursuant to the oral
agreements was work which was called for under the original contract”).
Furthermore, the summary judgment record could support a finding that Perrin
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was on notice that MetroplexCore would rely on her promises. Jackson averred
that, after his June 1, 2009 meeting with Perrin when she asked him to give her
a “break” because she “overcommitted” on the contract, Jackson immediately
responded that it “was her problem, that [he] had relied upon Parsons’
commitments throughout the process, had expended tremendous personal,
political and financial capital to win support for Parsons’ contract and that [he]
expected Parsons to live up to the deal they made with MetroplexCore.” See id.
at 483 (concluding the plaintiff’s reliance was reasonable because the bank had
notice that Fretz needed its reassurance before he would proceed with the
project). In sum, a fact-finder could conclude that MetroplexCore’s reliance was
foreseeable.
Next, there is a genuine issue as to whether MetroplexCore “reasonably
and substantially” relied on Perrin’s promises. In Fretz, the Texas Supreme
Court held that the jury was justified in finding that the plaintiff suffered
foreseeable, cognizable damages because he had expended funds in preparation
for the project and that the work he had performed in reliance on the bank’s
promise was work that was related to the work that he had been called upon to
perform under the parties’ original written contract, which had expired. Id. at
483-84. In particular, the court noted, the plaintiff had not delivered a contract
to its client until after he received assurances from the bank that he would be
paid, and he did not deliver payment or performance until after it received those
assurances. Id. The Texas Supreme Court held that the timing of these actions
and the actions themselves constituted “some evidence of reasonable reliance by
Fretz.” Id.
Here, as in Fretz, there is evidence in the record that would allow a jury
to find that MetroplexCore actually relied on Perrin’s promises to it and its
officers. As MetroplexCore’s summary judgment evidence reflected, in reliance
upon Parsons’ agreement to enter into a joint venture with MetroplexCore to
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pursue the Project, MetroplexCore severed ties with Team Express, Inc., the
Washington Group’s project, at Parsons’ behest, forfeiting a subcontract it
estimates to be worth $2 million; passed up on other business opportunities; and
retained extra personnel for several years in anticipation of working on the
Project at great expense. Specifically, Zia Qureshi, President and former Chief
Operating Officer of MetroplexCore, attested:
Because of the promise and commitment by Parsons/Perrin to MetroplexCore,
we decided to retain extra staff that would have been laid off in anticipation of
handling the Parsons work. Also, because we were handling other business as
well, we began to plan for staffing needs to handle the increased Parsons work.
Average cost per support employee retained was approximately $60,000-$80,000
and six-figure amounts for other technical professionals. I have clear
recollection of our retention of employees that likely would have been otherwise
laid off [who] were retained in anticipation of the Parsons[ ] work. In this
regard, not only did we retain employees that may otherwise have been let go
(approximately 4-6), we also understood that we had to keep open capacity to
handle this business at a moment’s notice. As such, we held off on and/or could
not accept additional work that would conflict with our capacity to handle the
Parsons/METRO business.
Jackson attested to similar figures:
MetroplexCore . . . retained approximately 10-15 workers on staff in our
engineering department during the time between April 2007 and March 2009
in anticipation of handling the Parsons work. Retaining these workers was
undertaken in order to have enough people on hand to handle the
Parsons/METRO work. This retention of workers resulted in a loss to us of
between $1-$3 million dollars in extra costs to our business. Also, by giving up
our interests in Team Express, we forfeited an additional $2 million in profits
in reliance upon the commitments made by Parsons and Sallye Perrin.
MetroplexCore alleges it would not have undertaken any of these actions but for
Perrin’s repeated assurances that MetroplexCore would be a part of the Phase
II “team.” Based on the foregoing summary judgment evidence, we conclude that
a jury could reasonably find that MetroplexCore actually and substantially
relied on Perrin’s promises.
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The district court concluded that MetroplexCore did not actually rely on
Perrin’s promises when it opted to keep on extra staff or to divest itself of its
interest in Team Express in 2009, and that it did not actually lose other
opportunities by waiting for marching orders from Parson. A trier of fact might
very well conclude that from the evidence, but a trier of fact could also conclude
that MetroplexCore did actually rely; at the summary judgment phase, the
district court impermissibly resolved disputed questions of fact in favor of the
moving party, Parsons. We conclude that there is enough evidence in the record
to create a genuine issue as to whether MetroplexCore substantially relied to its
detriment on Perrin’s promises and reassurances.
There is also enough evidence to create a genuine issue as to whether the
reliance was reasonable. MetroplexCore presented evidence that its members
genuinely believed and relied upon Perrin’s statements and promises. Allegedly
on Perrin’s request, Qureshi prepared a detailed list of services in which
MetroplexCore had “high competence” as requested by Perrin. Similarly, after
a conversation with Perrin on March 5, 2009, Jackson followed up via email,
writing: “It was great talking to you this morning. I’m looking forward to
getting this project kick[ed] off. It has been a long time coming.” Likewise,
Jackson states that, after “the Washington Group failed to approve a final
contract with METRO and was terminated,” he “was personally present and
sitting with Sallye and other Parsons representatives in front of the METRO
Board when they voted on the contract. [He] also assured them that
MetroplexCore was part and parcel with the finally-negotiated Parsons Facility
Provider contract [i.e., Phase II]. . . . Dixon, before casting his vote, asked
[Jackson] to confirm that in fact the prior representations about MetroplexCore
being a partner on the management team and participating in the long-term
operations was in fact still in place. [Jackson] and Sallye Perrin confirmed again
to him that this was the case. . . . This confirmation of the
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Parsons/MetroplexCore commitment was made within hours of the Board voting
to approve the contract with Parsons.”
On the other hand, Jackson avers that after the June 1, 2009, meeting
concluded, Perrin approached Jackson and stated: “Willard, I know we made
commitments to MetroplexCore. I need you to give me a break. I overcommitted
to a lot of people to get the contract,” and that Parsons subsequently cut off
communication with him and MetroplexCore. Meanwhile, Perrin avers that she
never made any such promises.
Given the public and repeated nature of Perrin’s alleged statements, and
given the plainly conflicting accounts of what transpired, the question of
MetroplexCore’s reliance must be resolved by a trier of fact.
2.
Finally, Parsons argues that MetroplexCore’s promissory estoppel claim
is barred by the Statute of Frauds, citing Ford v. City State Bank of Palacios, 44
S.W.3d 121, 139 (Tex. App.—Corpus Christi 2001, no pet.) (“When promissory
estoppel is raised to bar the application of the statute of frauds, there is an
additional requirement that the promisor promised to sign a written document
complying with the statute of frauds.”). However, MetroplexCore is asserting
promissory estoppel as a separate cause of action, not as a defense to the Statute
of Frauds. See, e.g., Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 693 (Tex.
2002) (listing promissory estoppel as separate “cause of action”); Fretz, 626
S.W.2d at 479, 484 (same); Wheeler, 398 S.W.2d at 96 (setting out elements of a
“claim for relief” under a theory of promissory estoppel). In its promissory
estoppel claim, brought in the alternative to its joint venture claim,
MetroplexCore is not seeking to enforce an alleged oral contract to participate
in the Phase II project in this claim, but rather to recapture the damages it
incurred in reliance on Perrin’s promises. Cf., e.g., Ford, 44 S.W.3d at 139;
Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429, 438 (Tex. App.—Dallas 2002, pet.
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denied) (“To invoke the application of promissory estoppel where there is an oral
promise to sign an agreement, . . . the agreement that is the subject of the
promise must comply with the statute of frauds. That is, the agreement must
be in writing at the time of the oral promise to sign it.”) (citation omitted)
(emphasis added); Sullivan v. Leor Energy LLC, No. H-05-3913, 2006 WL
2792909, at *5 (S.D. Tex. Sept. 27, 2006) (unpublished) (differentiating between
promissory estoppel as a cause of action and as a defense to the application of
the Statute of Frauds and explaining that the latter has a different set of
elements, namely, “(1) that the parties’ oral agreement had been reduced to
writing; (2) that the Defendants promised to sign that existing written
agreement; and (3) that [the plaintiff] relied on the Defendants’ promise to sign
the agreement to his detriment”), aff’d, 600 F.3d 542 (5th Cir. 2010). The
Statute of Frauds is no bar to MetroplexCore’s claim for reliance damages under
its theory of promissory estoppel.
We therefore conclude that the district court erred in granting summary
judgment to Parsons on MetroplexCore’s promissory estoppel claim.
CONCLUSION
For the foregoing reasons, we AFFIRM the order granting summary
judgment as to MetroplexCore’s claims of breach of a joint venture agreement,
fraudulent misrepresentation, and quantum meruit claims, but we REVERSE
the order as to MetroplexCore’s promissory estoppel claim and REMAND for
further proceedings.
26