South Plains Switching, LTD. Co., and South Plains Lamesa Railroad, L.L.C. v. BNSF Railway Company, F/K/A the Burlington Northern and Santa Fe Railway Company

NO. 07-06-0165-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL E

APRIL 17, 2008

______________________________

SOUTH PLAINS SWITCHING, LTD. CO. AND SOUTH
PLAINS LAMESA RAILROAD, L.L.C., APPELLANTS

v.

BNSF RAILWAY COMPANY f/k/a THE BURLINGTON
NORTHERN AND SANTA FE RAILWAY COMPANY, APPELLEE

_________________________________

FROM THE 72nd DISTRICT COURT OF LUBBOCK COUNTY;

NO. 2004-526,559; HON. RUBEN REYES, PRESIDING

_______________________________

Before CAMPBELL and PIRTLE, JJ., and BOYD, S.J.1

This case arises because of disputes between South Plains Switching, Ltd. Co.

(SAW), South Plains Lamesa Railroad, L.L.C. (SLAL), and Burlington Northern Railway

Company, formerly known as Burlington Northern and Santa Fe Railway Company (BNSF).

History

Because of the convoluted and extensive history of these disputes, it is necessary

to go into that history in some detail. BNSF is a Class I railroad whose principal business

1
John T. Boyd, Chief Justice (Ret.), Seventh Court of Appeals, sitting by
assignment. Tex. Gov’t Code Ann. §75.002(a)(1) (Vernon Supp. 2007).
is the transportation of freight in the western, midwestern, and southwestern regions of the

United States. SAW and SLAL are known as “shortline” railroads that operate in the

vicinities of Lubbock and Slaton, Texas. They provide switching services to BNSF and its

customers.

In the early 1990s, major Class I railroads such as BNSF began selling off portions

of their rail lines located near industrial centers or that served rural areas, and the sales

from which were known as “Shortline Sales.” In 1993, prior to its merger with the

Burlington Northern Railway Company (Burlington Northern), the Santa Fe Railroad

Company (Santa Fe) sold a portion of its line running generally southwest from Slaton to

Lamesa, Texas, to SLAL. The agreement between those parties was memorialized in what

is referred to here as the SLAL Asset Sale Agreement. It provided that Santa Fe conveyed

to SLAL rail freight transportation business that it had formerly conducted on the rail lines

but it reserved the right to set through routes and rates for customers. SLAL was to be

paid by a division of revenue by which SLAL would receive a certain amount of money per

car that was handled by the parties on the line covered by the agreement.

In 1999, after Santa Fe and Burlington Northern merged and became BNSF, the

entity sold to SAW approximately fourteen miles of its track that served industrial

customers in east Lubbock. This sale was memorialized in another Asset Sale Agreement.

The SAW Asset Sale Agreement provided that for cars that were billed in units of 27 or

more, the charge rate was to be $400 per car. SAW and SLAL share common ownership.

The Fort Worth Suit

Soon after the SAW Asset Sale Agreement was finalized in 1999, disputes arose

between the parties which resulted in a declaratory judgment action brought by BNSF in

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Fort Worth in 2002. In its suit, BNSF asked the court to declare that: 1) SAW could not

unilaterally impose a surcharge on traffic without its consent; 2) SAW was not entitled

under the SAW Asset Sale Agreement to acquire further assets of BNSF; 3) the SAW

Asset Sale Agreement did not limit or proscribe BNSF from providing rail service to Vulcan

Materials on Track 9200 (which SAW contended had been sold to it together with business

to be conducted on it); 4) that a 1999 quitclaim deed delivered pursuant to the SAW Asset

Sale Agreement included tracks referred to as the “Burris Tracks” by mistake and the deed

should be reformed; 5) that the term “billed” as used in the pertinent provision of the SAW

Asset Sale Agreement meant “billed to the customer” and did not mean ”waybilled” for

purposes of division of revenue; and 6) the SAW Asset Sale Agreement did not impose

liability on BNSF for what might be termed “wrongful deprivation of rent.”

SAW and SLAL responded to the suit with counterclaims alleging various breaches

by BNSF of the SAW Asset Sale Agreement including: 1) unreasonably withholding

consent to SAW’s proposed surcharge; 2) providing rail service to Vulcan Materials on

Track 9200; 3) continuing to serve customers on the Burris Tracks; and 4) improperly

paying the division of revenue based on customer billing instead of waybills. They also

made claims that BNSF had improperly transferred properties described in the SAW Asset

Sale Agreement to a property management company which had then sold or disposed of

the properties.

Prior to trial, BNSF successfully filed a motion to exclude SAW’s and SLAL’s

damage testimony. SAW and SLAL then non-suited their counterclaims for breach of

contract and damages. The case then proceeded to trial on BNSF’s declaratory judgment

claims that: 1) it did not act unreasonably by refusing to consent to SAW’s surcharge on

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its customers of $40-$60 per car; 2) that under the SAW Asset Sale Agreement, it had

reserved the right to serve Vulcan Materials on Track 9200; 3) that the Burris Tracks were

included by mistake in the 1999 quitclaim deed executed by it in connection with the Asset

Sale Agreement and the deed should be reformed to correct that error; and 4) the term

“billed” referred to in the agreement meant billed to the customer and did not mean

“waybilled” as contended by SAW.

After a four-day jury trial, the jury found that SAW had the right to impose a

surcharge upon its customers, that BNSF had access rights to Track 9200 for storage

purposes only, that the division of revenue under the agreement was to be paid on a

waybill basis and not on a freight bill basis, and that the Burris Tracks had been validly

conveyed to SAW. Those findings were incorporated into a final judgment which was

appealed by BNSF to the Fort Worth Court of Appeals. The trial court judgment was

affirmed with the exception that the appellate court held that BNSF was entitled to use

Track 9200 for other than storage purposes. See Burlington Northern & Santa Fe Railway

Co. v. South Plains Switching Ltd., Co.,174 S.W.3d 348 (Tex. App.–Fort Worth 2005, no

pet.).

The Lubbock Suit

The suit directly underlying this appeal was filed in Lubbock on June 1, 2004. In it,

SAW asserted that BNSF had breached the Asset Sale Agreement and was liable because

BNSF had: 1) unreasonably withheld consent to a surcharge; 2) wrongfully provided rail

service to Vulcan Materials on Track 9200 and refused to allow SAW to serve Vulcan

Materials on the track; 3) improperly continued to serve customers on the Burris Tracks;

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4) paid less than it should have under the division of revenue provisions of the Asset Sale

Agreement; and 5) failed to appropriately deal with SAW on certain real estate claims.

Additionally, SAW and SLAL claimed that BNSF had breached a duty of good faith

and fair dealing warranting an award of exemplary damages. They also claimed they were

entitled to specific performance and mandatory injunctive relief pursuant to the Asset Sale

Agreement. Moreover, SLAL claimed that BNSF had breached its Asset Sale Agreement

by diverting Vulcan Materials’ trains or by refusing to allow Vulcan Materials’ trains to be

routed to SLAL.

Subsequently, BNSF filed a motion seeking a partial summary judgment dismissing

all claims that had been asserted by SAW and SLAL in the Fort Worth suit and

subsequently nonsuited on the basis that they were barred under the compulsory

counterclaim rule, Texas Rule of Civil Procedure 97. This motion was granted by the

Lubbock trial court. The effect of the granting of this motion was that issues regarding the

surcharges and payment under the freight bill were eliminated from the Lubbock County

trial and the claims relating to Vulcan Materials’ trains, the Burris traffic and lease

assignments were barred as to events occurring prior to the date of the filing of the

Lubbock case on June 1, 2004.

At the conclusion of evidence, the trial court granted BNSF’s motion seeking

dismissal of SAW and SLAL’s quest for recovery because of breach of a duty of good faith

and fair dealing with consequent exemplary damages. At the conclusion of the trial, eight

questions were submitted to the jury. In its answers to questions 1 and 2, the jury found

that BNSF had failed to comply with the SLAL Asset Sale Agreement by wrongfully

diverting 18 Vulcan Materials trains to its yard in Slaton, Texas, and thereby caused

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damages to SLAL in the amount of $70,500. In answers to questions 3 and 4, the jury

found that BNSF failed to comply with the SLAL Asset Sale Contract by refusing to direct

or allow any of the Vulcan Materials trains described in SLAL’s exhibit 12 to use Track

9200 or to use a SAW switching track which caused damages to SAW in the amount of

$2,928.93.

In its answers to questions 5 and 6, the jury found BNSF failed to comply with the

SAW Asset Sale Agreement by refusing to allow SAW to serve traffic which damaged

SAW in the amount of $27,296.85. In its answers to questions 7 and 8, the jury found that

BNSF had failed to comply with the Asset Sale Agreement by failing to assign the West

Texas Industries lease which caused damages to SAW in the amount of $12,600.

Subsequent to the return of the jury verdict, BNSF filed a motion for judgment n.o.v.

in which it contended that SAW and SLAL’s lost profit calculations were improper as a

matter of law. The trial court granted the motion in regard to the jury findings in Questions

2, 4, and 6, but left intact the jury findings in Questions 7 and 8. The trial court then

entered judgment granting SAW relief on the real estate issues and for its attorney’s fees

but denied all of SLAL’s equitable requests and most of SAW’s equitable requests.

In pursuing their appeal, SAW and SLAL raise four issues for our discussion. In

their first issue, they contend that the trial court erred in granting BNSF’s motion for partial

summary judgment excluding all of their claims prior to June 1, 2004, because the Fort

Worth court’s judgment is not res judicata to those claims and the claims were not

compulsory counterclaims.

In their second issue, relating to good faith and fair dealing exemplary damages,

they argue that the trial court erred in granting BNSF’s motion for directed verdict because

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the “special relationship” between the parties supports the placing of such a duty and, thus,

it follows that a claim for exemplary damages should also have been allowed.

Their third issue concerns their injunctive relief/specific performance claims. They

reason that the trial court erred in granting judgment n.o.v. denying those claims because

they established their right to those claims either as a matter of law, or, in the alternative,

by the great weight and preponderance of the evidence.

In their fourth issue, they posit that the trial court erred in granting BNSF’s motion

for judgment n.o.v. and in denying them damages for the wrongful diversion of Vulcan

trains and the wrongful refusal of BNSF to allow SAW to service the Burris customers.

Summarized, this appeal is a challenge to the trial court’s ruling on three BNSF

motions, namely, its motion for partial summary judgment, in which it held that SAW could

not re-litigate the contract claims that were initially brought in the Fort Worth suit but then

non-suited; its motion for directed verdict in which the trial court held there was no factual

basis to support the claims for breach of an alleged duty of good faith and fair dealing; and

its motion for directed verdict in which the trial court held that appellants’ “lost profits”

calculations were improper.

BNSF Motion for Partial Summary Judgment

The standards by which summary judgments are reviewed are by now axiomatic.

When reviewing a summary judgment, the reviewing court takes as true all evidence

favorable to the nonmovant, and resolves any doubts and indulges any reasonable

inferences in the nonmovant’s favor. Provident Life & Accident Ins. Co. v. Knott, 128

S.W.3d 211, 215 (Tex. 2003); Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911

(Tex. 1997). The summary judgment is reviewed de novo, and, when the trial court’s order

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does not specify the ground or grounds relied upon for its ruling, it will be affirmed on

appeal if any of the theories advanced are meritorious. Dow Chemical Co. v. Francis, 46

S.W.3d 237, 242 (Tex. 2001).

BNSF’s motion rested upon Texas Rule of Civil Procedure 97, the compulsory

counterclaim rule. In relevant part, that rule provides:

a. Compulsory Counterclaims. A pleading shall state as a
counterclaim any claim within the jurisdiction of the court, not
the subject of a pending action, which at the time of filing the
pleading the pleader has against any opposing party, if it arises
out of the transaction or occurrence that is the subject matter
of the opposing party’s claim and does not require for its
adjudication the presence of third parties of whom the court
cannot acquire jurisdiction; . . . .

As we have noted, in the Lubbock case, SAW contended that BNSF breached the

Asset Sale Agreement and became liable for damages because: 1) BNSF unreasonably

withheld consent to a disputed surcharge; 2) BNSF provided rail service to Vulcan

Materials on Track 9200 and failed to allow SAW to serve Vulcan Materials on that track;

3) BNSF continued to serve customers on the Burris Tracks and would not allow SAW to

do so; 4) under the SAW Asset Sale Agreement, BNSF paid less to SAW than it was

required to do; and 5) BNSF failed to properly deal with SAW on “real estate claims.”

Thus, SAW’s affirmative relief claims replicated the counterclaims it had asserted, but non-

suited, in the Fort Worth case.

A counterclaim is compulsory if: 1) it arises out of the transaction or occurrence that

gives rise to the opposing party’s claim; 2) it is mature and owned by the counterclaimant;

3) it is against an opposing party in the same capacity; 4) it does not require third parties

who cannot be brought into the suit; 5) it is within the court’s jurisdiction; and 6) it is not

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pending elsewhere. Tex. R. Civ. P. 97(a); Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245,

247 (Tex. 1988). If a claim meets those elements, it must be asserted in the initial action

and cannot be later raised. Id.

Our Supreme Court has adopted a transactional approach in determining whether

the compulsory counterclaim rule is applicable in a given case. It has instructed that in

determining whether a transaction is within the purview of the rule, weight should be given

to “such considerations as whether the facts are related in time, space, origin, or

motivation, whether they form a convenient trial unit, and whether their treatment as a trial

unit conforms to the parties’ expectations or business understanding or usage.” Barr v.

Resolution Trust Corp., 837 S.W.2d 627, 631 (Tex. 1992), citing Restatement of

Judgments, §§24(1) & 24(2). This court has noted that the Rule 97a “same transaction or

occurrence” requirement has been broadly construed. See Lesbrookton, Inc. v. Jackson,

796 S.W.2d 276, 281 (Tex. App.–Amarillo 1990, writ denied). Additionally, where as here,

there is a legal relationship such as under a lease or contract, all the claims that arise from

that relationship will arise from the same subject matter and be subject to the application

of the rule in a proper case. Sanders v. Blockbuster, Inc., 127 S.W.3d 382, 386 (Tex.

App.–Beaumont 2004, pet. denied); see also Weiman v. Addicks-Fairbanks Road Sand

Co., 846 S.W.2d 414, 419 (Tex. App.–Houston [14th Dist.] 1992, writ denied). However,

where a defendant’s claim to affirmative relief asserts a theory distinct from and

independent of the issues raised in a plaintiff’s claim, it is not a compulsory counterclaim.

Astro Sign Co. v. Sullivan, 518 S.W.2d 420, 426 (Tex. Civ. App.–Corpus Christi 1974, writ

ref’d n.r.e.)

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 In contending that Rule 97a is not applicable, SAW argues that BNSF’s claims are

too broad and posits that a party is not required to bring every claim based on a contract

in a particular suit, particularly when it covers several different matters which could involve

different fact scenarios, different witnesses, and different theories of recovery. SAW

characterizes its real estate claims as involving the asserted failure of BNSF to assign

leases to SAW, and, in addition, that BNSF did not assign “other income” (i.e. rent) that

was due it under the Asset Sale Agreement, as well as the purported fraudulent “transfer

of some or all of the properties involved either before or after the signing of the Asset Sale

Agreement.”

However, in the Lubbock case, SAW asserted that pursuant to the Asset Sale

Agreement, a quitclaim deed was prepared that purportedly assigned it certain leases and

rental income and claimed it was damaged because BNSF had failed to properly assign

those leases and the rental income from them. The record shows that those were the

same leases at issue in the Fort Worth case. That being so, the compulsory counterclaim

rule would be applicable and would prevent the relitigation of those real estate claims in

the Lubbock case. Sanders v. Blockbuster, Inc., 127 S.W.3d at 386.

With regard to the Burris Tracks, both parties asserted claims involving them in the

Fort Worth case. BNSF sought a declaration that the Asset Sale Agreement did not

include the Burris Tracks because of a mutual mistake, and SAW counterclaimed that

BNSF had breached the agreement by “continuing to serve Lubbock Feeders subsequent

to May 3, 1999” and by “continuing to serve Jarvis Metals on Tracks 7 and 12 at

Burris . . . .” SAW chose to non-suit its Burris Track claims in the Fort Worth case when

it received an adverse ruling on its damages.

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 In the Lubbock case, SAW again alleged that the failure of BNSF to allow it to

service customers along the Burris Tracks constituted a breach of the Asset Sale

Agreement. Those Burris Track claims involved the same subject matter as the Fort Worth

case. If the compulsory counterclaim rule was applicable, and we think it was, the trial

court’s summary judgment in that regard was proper. See Compass Exploration, Inc. v.

B-E Drilling Co., 60 S.W.3d 273, 278-79 (Tex. App.–Waco 2001, no pet.).

Both parties had claims in the Fort Worth case concerning SAW’s request for a

surcharge and BNSF’s refusal to give consent. BNSF sought declaratory relief and SAW

sought damages. When its damage testimony was excluded, SAW non-suited its

surcharge counterclaim. BNSF’s surcharge claim was submitted to the jury and it received

a favorable answer. In the Lubbock case, SAW again asserted its surcharge claim that

BNSF unreasonably withheld consent to a surcharge and sought damages for its refusal

to give consent. Once more, this controversy arose out of the same subject matter as that

involved in the Fort Worth case and thus was subject to the compulsory counterclaim rule.

See id.

Both BNSF and SAW asserted claims in the Fort Worth case concerning operations

on Track 9200. BNSF claimed that under the Asset Sale Agreement, it retained all rights

to access and utilize Track 9200 and asked the court to so construe the agreement. SAW

counterclaimed that BNSF violated the Asset Sales Agreement by refusing to recognize

its right to dispatch trains on Track 9200. After it received an unfavorable ruling on its

damages evidence, SAW chose to nonsuit its Track 9200 claim.

In the Lubbock case, SAW again asserted that BNSF failed to comply with its right

to dispatch traffic on Track 9200 and thereby prevented it from providing direct rail service

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to its customers. This was done in language identical to that used by it in its non-suited

counterclaim in the Fort Worth case. It arose out of the same Asset Sale Agreement in

dispute in the Fort Worth case. Relitigation of the question was thus barred by the

compulsory counterclaim rule. See id.

Again, in the Fort Worth case, SAW contended that a dispute existed between

BNSF and SAW concerning the meaning of “billed” as used in the division of revenue

provision in the Asset Sales Agreement and that BNSF breached the agreement by paying

it less than that to which it was entitled. BNSF asked for a declaratory order construing

that provision of the agreement and received a favorable result.

Because that issue was litigated in the Tarrant County trial, it is subject to the

compulsory counterclaim rule and cannot be relitigated in the Lubbock County case.

We have considered SAW’s argument that the compulsory counterclaim rule only applies

to issues that were specifically submitted as jury issues in the prior case and that its right

to non-suit counterclaims in the Fort Worth suit was unqualified and absolute. However,

we believe that the compulsory counterclaim rule is broader than the doctrine of res

judicata, and, in a case such as this one, is applicable. See Weiman v. Addicks-Fairbanks

Road Sand Co., 846 S.W.2d at 421. The first point is overruled.

BNSF Motion for Directed Verdict

In their second point, SAW and SLAL contend the trial court erred in granting

BNSF’s motion for directed verdict on their quest for exemplary damages because the

terms of the Asset Sale Agreements, the relationship between the parties, and the superior

bargaining position of BNSF gave rise to a duty of good faith and fair dealing between them

and BNSF. In considering this point, we recognize the established rule that a plaintiff is

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entitled to a directed verdict when reasonable minds can draw only one conclusion from

the evidence. The task of a reviewing court is to consider all the evidence in a light most

favorable to the party against whom the verdict was instructed, discarding all contrary

evidence and inferences, and determine whether there is any evidence of probative force

to raise fact questions on the material questions presented. Collora v. Navarro, 574

S.W.2d 65, 68 (Tex. 1978).

In support of their point, appellants place considerable weight upon the decision in

the seminal case of Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex.

1987). In that case, the court found there is a duty on the part of insurers to deal fairly and

in good faith with their insured. Id. at 167. In doing so, the court noted that it had declined

to impose an implied covenant of good faith and fair dealing in every contract but, “a duty

of good faith and fair dealing may arise as a result of a special relationship between the

parties governed or created by a contract.” Id. In the course of its discussion and in the

context of insurance contracts, the court specifically noted that an insurance company had

exclusive control over the evaluation and processing and denial of claims and that in such

instances, the nature of insurance contracts gave rise to unequal bargaining power “which

would allow unscrupulous insurers to take advantage of their insureds’ misfortunes in

bargaining for settlement or resolution of claims.” Id.

Appellants contend that provisions in the agreements concerning such matters as

their grant to BNSF of exclusive rate-making authority and the necessity for them to obtain

dispatch authority from BNSF as to when they might use the main track or enter BNSF’s

two yards for interchange of trains to be spotted to customers is sufficient evidence of

unequal bargaining power between the parties similar to that existing between insurance

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companies and their insureds. They argue that BNSF’s control of rate making authority

and use of its track together with its sole dispatch authority over its main line is so similar

to an insurance company’s control of its claim process as to give rise to a duty of good faith

and fair dealing similar to that imposed upon insurance companies by the Arnold court.

However, our Supreme Court has recognized that there is no general duty of good

faith and fair dealing in ordinary arm’s length commercial transactions. See Formosa

Plastics Corp. USA v. Presidio Engineers & Contractors, Inc., 960 S.W.2d 41, 52 (Tex.

1998); see also Wil-Roye Inv. II v. Washington Mut. Banks, F.A., 142 S.W.3d 393, 410

(Tex. App.–El Paso 2004, no pet.) (the duty of good faith and fair dealing does not arise

in ordinary commercial transactions). In Lovell v. Western Nat’l Life Ins. Co, 754 S.W.2d

298 (Tex. App.–Amarillo 1988, writ denied), this court noted the explication in the Arnold

case as holding that the duty of good faith and fair dealing does not exist in Texas unless

intentionally created by express language in a contract or unless a special relationship of

trust and confidence exists between the parties to the contract. Id. at 302-03.

Indeed, in Farah v. Mafrige & Kormanik, 927 S.W.2d 663 (Tex. App.–Houston [1st

Dist.] 1996, no writ), cited by appellants, the court explicated that “[t]he fact that one

businessman trusts another and relies upon another to perform a contract does not rise

to a confidential relationship.” Id. at 675-76. In Adolph Coors Co. v. Rodriguez, 780

S.W.2d 477 (Tex. App.–Corpus Christi 1989, writ denied), although the court recognized

the rule that certain types of contracts might lead to the finding of a special relationship of

such a nature as to give rise to a cause of action in tort, the court cautioned that the special

relationship cause of action did not extend to ordinary commercial relationships. Id. at 481.

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 In English v. Fischer, 660 S.W.2d 521 (Tex. 1983), also cited by appellants, the

Court had occasion to discuss a theory prevalent in California law that in every contract

there was an implied covenant of good faith and fair dealing. In refusing to accept such a

concept, the Court cautioned that to do so, would “let each case be decided upon what

might seem ‘fair and in good faith’ by each fact finder,” which the Court was unwilling to do.

Id. at 522.

Suffice it to say, this record is sufficient to support the trial court’s evident conclusion

that the agreements were the result of arm’s length dealing between the parties and was

not of a nature to demonstrate a “special relationship” sufficient to support a tort duty of

good faith and fair dealing. As appellants recognize, under the Punitive Damages Act, the

term “malice” is defined as a specific intent to cause substantial injury or harm to a plaintiff.

See Tex. Civ. Prac. & Rem. Code Ann. §41.001(7) (Vernon Supp. 2007). Additionally, the

trial court did not reversibly err in concluding the evidence insufficient to support the

submission of exemplary damages to the jury. Appellants’ second issue is overruled.

Specific Performance and Injunctive Relief

In their third issue, appellants contend that the trial court erred in denying their

request for specific performance and injunctive relief. The purpose of specific performance

is to compel a party who is violating a duty under a valid contract to comply with his

obligations. The rationale for that remedy is that the recovery of monetary damages would

be inadequate to compensate the complainant and thus the transgressor should be

compelled to perform that which he had promised in his contract. Estate of Griffin v.

Sumner, 604 S.W.2d 221, 225 (Tex. Civ. App.–San Antonio 1980, writ ref’d n.r.e.). It is a

fundamental rule of equity that specific performance may not be granted unless it is shown

15
there is no adequate remedy at law. American Housing Resources, Inc. v. Slaughter, 597

S.W.2d 13, 15 (Tex. Civ. App.–Dallas 1980, writ ref’d n.r.e.). The burden of invoking the

court’s equity jurisdiction is on the party seeking it and the comparative advantages of the

equitable remedy must be shown to outweigh those of the legal remedy. Among the

factors to be considered are whether long-continued supervision by the court will be

required, whether complete relief can be rendered by the remedy sought, and whether, if

the remedy sought is granted, it can be adequately enforced. Id. A court generally will not

decree a party to perform a continuous series of acts which extend through a long period

of time and require constant supervision by the court. Canteen Corp. v. Republic of Texas

Properties, Inc., 773 S.W.2d 398, 401 (Tex. App.–Dallas 1989, no writ).

In this case, appellant’s quest for specific performance, in its essence, was one

seeking a mandatory injunction. When a trial court grants, or refuses, a permanent

injunction, the standard of review is whether it committed an abuse of discretion. The test

for determining whether a trial court abused its discretion is whether it acted without

reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701

S.W.2d 238, 241-42 (Tex. 1985).

SAW asked that BNSF be ordered to:

1) Interchange to SAW all trains headed to customers on the Burris Tracks owned
by BNSF, not to attempt to relocate any business from customers on the Burris
Tracks owned by BNSF, and refrain from attempting to relocate any of the business
from customers on the Burris Tracks.

2) Interchange all Vulcan Materials’ trains headed to Lubbock, Texas to SAW for
unloading on Track 9200 and refrain from requiring Vulcan Materials to lease or use
any BNSF track in the Lubbock area for unloading operations on trains routed to
SAW; and

3) Refrain from charging two different discriminatory freight rates for trains
destined to Lubbock, Texas.

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 Examination of the Asset Sale Agreement reveals that although it gave SAW title

to the Burris Tracks, it made no specific provision for its operation on BNSF’s mainline to

get there. The record supports the trial judge’s evident conclusion that SAW had not

suffered an irreparable injury and that it did have an adequate remedy at law in the form

of contract damages if a breach of the contract had occurred. Additionally, the record

would support the court in concluding that the grant of a mandatory injunction in a situation

such as was presented to it would require continued onerous judicial supervision. In sum,

this record does not show that the court erred in concluding that SAW did not meet the

prerequisite requirements to justify the equitable remedy it sought in connection with the

Burris Tracks.

Appellants also sought a judicial prohibition preventing BNSF from quoting different

freight rates for trains destined to Lubbock and Slaton, Texas. In doing so, they argued

that they had lost business from Vulcan Materials because BNSF had established different

through rates. However, the record shows that they did not specify or demonstrate the

amount of business they may have lost because of such rates or that they lost Vulcan

Materials or any other entity as a customer. Those losses would have been susceptible

of determination. Thus, under this record, they did not make the showings of a lack of an

adequate remedy at law or irreparable injury requisite to support the equitable relief they

sought.

Additionally, the Asset Sale Agreement specifically provided that BNSF “shall have

authority to establish through routes and offer through freight rates via through routes

involving both [appellants] and [BNSF] with interchange between [appellants] and

[BNSF] . . . .” The Agreements also stated that appellants “automatically concur in all such

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through rates established by [BNSF] . . . so long as [appellants] receive for transporting the

traffic [their] division of revenues . . . .” There are no provisions in the Asset Sale

Agreement preventing BNSF from charging different through rates for traffic interchanged

with appellants, and we find no evidence produced at trial that the parties intended

otherwise. In sum, the trial court could reasonably conclude that the specific performance

sought by appellants in this regard would have compelled conduct inconsistent with the

agreements.

Likewise, the record does not show evidence that appellants suffered imminent

irreparable injury with no remedy at law because of BNSF’s practices in handling Vulcan

Materials’ trains. Indeed, appellants sought and received from the trial jury money

damages tied to BNSF’s diversion of Vulcan Materials’ trains and its refusal to allow Vulcan

Materials to use Track 9200.

Moreover, even though SAW argues that BNSF had locked the switch to Track

9200 which had the effect of denying it the ability to serve Vulcan Materials on that track,

SAW acknowledged at trial that it still had access to Track 9200 when the switch was

locked, and that on the trial date, the switch was no longer locked. Thus, the record does

not show the requisite irreparable injury related to BNSF’s conduct but does demonstrate

that there was an adequate remedy at law in the form of contract damages.

Appellants also contend that BNSF assigned the Vulcan Materials business in the

Asset Sale Agreements. However, perusal of the agreements demonstrates there are no

provisions restraining BNSF from serving customers such as Vulcan Materials on its own

rail line. Thus, appellants did not show any entitlement to specific performance. In sum,

appellants’ third issue is overruled.

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 Damages

In their fourth issue, appellants contend the trial court reversibly erred in granting

BNSF’s motion for judgment n.o.v. regarding appellants’ recovery of damages for the

wrongful diversion of Vulcan trains and the refusal of BNSF to allow SAW to service the

Burris customers.

A trial court may grant a judgment n.o.v. if there is no evidence to support one or

more of the jury’s findings on issues necessary to liability or, conversely, if the evidence

established an issue as a matter of law. Brown v. Bank of Galveston, N. A., 963 S.W.2d

511, 513 (Tex. 1998); John Masek Corp. v. Davis, 848 S.W.2d 170, 173 (Tex.

App.–Houston [1st Dist.] 1992, writ denied).

In responding to appellants’ fourth issue, BNSF argues that although appellants now

argue that they were entitled to “benefit of the bargain” damages, in their pleadings, they

only claimed damages based upon “lost profits” and/or lost revenue. Moreover, during the

course of the trial, appellants continued to argue that they had lost profits and revenues

because of BNSF’s breaches of the Asset Sale Agreements. They did offer a trial

amendment after the close of evidence seeking recovery of benefit of the bargain damages

but the trial judge refused to let them do so. Thus, under this record, they were not entitled

to submission of that theory and we are relegated to the task of determining whether the

testimony they produced was sufficient to support a “lost profits” recovery.

In a breach of contract action such as this one, the measure of damages is just

compensation for the loss or damage actually sustained. Stewart v. Basey, 150 Tex. 666,

245 S.W.2d 484, 486 (1952). The measure of damages for the loss of profit as

consequential damages means net profits. Net profits means what remains in the conduct

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of a business after deducting from its total receipts all of the expenses incurred in carrying

on the business. The lost profits need not be susceptible to exact calculation, but must only

be shown to a reasonable certainty. An award of damages may be based on estimates that

are based upon objective facts, figures or data. Interceramic, Inc. v. South Orient R.R. Co.,

Ltd., 999 S.W.2d 920, 929 (Tex. App.–Texarkana 1999, pet. denied); Turner v. PV Intern.

Corp., 765 S.W.2d 455, 465 (Tex. App.–Dallas 1988, writ denied).

Appellants assert the testimony of Larry Wisener is sufficient to establish their lost

profits. Wisener testified as to the division of revenue that would be received by appellants

on each train in issue and in considerable detail about the amount of fuel cost that would

be used in handling those trains. However, there was no testimony about other necessary

expenses of doing business such as depreciation, payroll expenses, administrative

expenses, equipment expenses, and maintenance expenses. In sum, Wisener’s testimony

falls short of fulfilling the requirement that lost profits be shown with reasonable certainty.

See Atlas Copco Tools, Inc. v. Air Power Tool & Hoist, Inc., 131 S.W.3d 203, 209 (Tex.

App.–Fort Worth 2004, pet. denied). Thus, the trial court did not reversibly err in

disregarding the jury’s answers to questions 2, 4, and 6. Appellants’ fourth issue is

overruled.

BNSF’S Cross-Appeal

In presenting its cross-appeal, BNSF presents three issues for our decision. First,

it asserts the evidence is legally and factually insufficient to support the jury’s answers to

questions 7 and 8. In question 7, the jury was queried whether BNSF failed to comply with

the Asset Sale Agreement by failing to assign the West Texas Industries lease or rent to

SAW. Question 8 was predicated on an affirmative answer to question 7 and inquired as

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to what sum of money would compensate SAW for its damages, if any, resulting from the

failure to assign the West Texas Industries lease. In arriving at its answer, it was instructed

that it might only consider the “amount of rent under the lease from West Texas Industries,

Inc. paid to BNSF after May 1, 2004.” The answer was $12,600.

It is not disputed in the record that: 1) the property covered by the West Texas

Industries lease was within the property description of the land to be conveyed to SAW by

quitclaim deed under the SAW Asset Sale Agreement and that the Asset Sale Agreement

was signed on May 3, 1999; 2) the property covered by that lease was conveyed by BNSF

to a third party by a special warranty deed on June 29, 1999; 3) the quitclaim deed was

executed by BNSF on June 29, 1999, but was not delivered on that date and was held by

BNSF pending closing. The Asset Sale Agreement closed, and the quitclaim deed was

delivered to SAW on July 2, 1999. It is undisputed that the lease was reconveyed to BNSF

by the third party on October 25, 2002.

SAW argues that BNSF was obligated to assign it either the West Texas Industries

lease or the rent generated from the lease. In support of that position, it relies upon section

1(e) which provides:

Seller [BNSF] shall assign to Buyer [SAW] on the day of closing,
subject to all terms and conditions set forth in this agreement, or in any
agreement assigned by Seller to Buyer in accordance with the terms of this
agreement, all assignable rights and obligations of Seller to the extent that
they are related to the rail line and are set forth in any agreement identified
in Exhibit D which is attached hereto . . . . If any contract is related to the rail
line and inadvertently not identified in Exhibit D, it is the intent of Seller and
Buyer that such contract be deemed to have been assigned by Seller to
Buyer in whole or part as appropriate effective the date of closing.

It also relies upon section 12 of the agreement which provides:

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 Prepaid rentals, utilities and other income or fees attributable to the
contracts related to the rail line that are being assigned under ¶ 1 of this
agreement, shall be prorated between Buyer and Seller in such a manner as
to allocate to Seller all income received and all expenses incurred, on or prior
to the date of closing, and to allocate to Buyer all income received, and
expenses incurred after the date of closing.

SAW contends that under the contract BNSF’s obligation was continuing and that

when the property was deeded back to BNSF, it had an obligation to transfer the lease back

to SAW. However, BNSF’s obligation under the contract was only to deliver a quitclaim

deed. While a warranty deed to land conveys property, a quitclaim deed conveys only the

grantor’s right in it, if any. Geodyne Energy Income Prod. P’ship I-E v. Newton Corp., 161

S.W.3d 482, 486 (Tex. 2005). A quitclaim deed conveys upon its face doubts about a

grantor’s interest and a buyer is necessarily put on notice as to those doubts. The record

demonstrates that the quitclaim deed was delivered subsequent to the time that BNSF had

no title to the lease. Consequently, it could not be liable for, and there is no evidence to

support the jury answers to questions 7 and 8.

Additionally, the statute of limitations for a breach of contract is four years. Tex. Civ.

Prac. & Rem. Code Ann. §16.051 (Vernon 1997). The limitations period begins to run when

the cause of action accrues. When the legislature employs the term “accrues” without an

accompanying definition, it is the responsibility of the courts to determine when the cause

of action accrues and thus when the statute of limitations begins to run. Moreno v. Sterling

Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990). An action for damages for breach of a written

contract accrues when the breach occurs or when the claimant has notice of facts sufficient

to place him on notice of the breach. Rose v. Baker & Botts, 816 S.W.2d 805, 810 (Tex.

App.–Houston [1st Dist.] 1991, writ denied). Assuming, arguendo, that BNSF had breached

22
the Asset Sale Agreement by failing to assign the West Texas Industries lease, that breach

occurred on July 2, 1999. If BNSF was required to assign leases in some way other than

by quitclaim deed, on July 2, 1999, when the deal was closed, SAW must have actual

knowledge that there were no lease assignments made. However, SAW did not make its

breach of contract claim until June 1, 2004, some five years later. The claim is barred by

limitations.

Likewise, SAW’s claims relating to the Furr’s Cafeteria and Brite Trucking leases

accrued on the date of the closing of the Asset Sale Agreement, and, like the other claims,

SAW did not make its breach of contract claim in that regard until June 1, 2004, some five

years later. Those claims are also barred by limitations.

SAW additionally contends that it is entitled to receive one-half of all of the rent

payments received by BNSF from the B & R Auto lease. However, it is undisputed that the

land leased to B & R Auto was not included in the description of land to be covered by

quitclaim deed as provided in the Asset Sale Agreement. All that SAW received on that

tract was an easement to operate on tracks crossing the land. It is SAW’s contention that

a landowner is obligated to share rent proceeds with those holding easements on the land.

We disagree. An easement extends to certain persons or entities the right to use the land

of another for the purpose or purposes specified in the easement and does not convey title

to the property. Magnolia Petroleum Co. v. Caswell, 1 S.W.2d 597, 600 (Tex. Comm’n App.

1928, judgm’t adopted); Long Island Owner’s Ass’n v. Davidson, 965 S.W.2d 674, 684

(Tex. App.–Corpus Christi 1998, pet. denied). That being so, SAW would not be entitled

to any portion of rentals owed by B & R Auto for the use of the property.

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 For the reasons we have expressed, the judgment of the trial court is modified to

delete those portions of the judgment awarding $12,600 in damages to SAW with respect

to the West Texas Industries lease, to delete that portion of the judgment awarding

injunctive relief and specific performance to SAW, to delete that portion of the judgment

awarding attorney’s fees to SAW, and to provide that SAW take nothing on those claims.

As modified, the judgment is affirmed. Tex. R. App. P. 43.2.

John Boyd
Senior Justice

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