TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-20-00431-CV
Scientific Machine & Welding, Inc., Appellant
v.
FlashParking, Inc., Appellee
FROM THE 459TH DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-19-003816, THE HONORABLE TIM SULAK, JUDGE PRESIDING
OPINION
Appellant Scientific Machine & Welding, Inc. sued appellee FlashParking, Inc. for
breach of contract, and alternatively, if no valid contract was found to exist, for recovery under
quantum meruit. FlashParking moved for summary judgment, arguing that Scientific had
repudiated the parties’ contract, that Scientific cannot recover under quantum meruit because the
parties had an express contract, and that there is no evidence of damages. The trial court granted
a take-nothing summary judgment disposing of all claims in favor of FlashParking. Because we
conclude that a valid contract existed between the parties and FlashParking established as a matter
of law that Scientific repudiated the parties’ express contract, we affirm.
BACKGROUND
Scientific is a manufacturing company that makes specialty machine parts.
FlashParking (formerly known as KleverLogic, Inc.) sells software and hardware to assist its
customers with parking solutions. In 2016, Scientific began manufacturing parking-payment
kiosks (“SmartStations”) for FlashParking. Both FlashParking, as applicant, and Scientific, as
manufacturer, entered into separate contracts (the Applicant Contract and the Factory Contract,
respectively) with MET Laboratories, Inc. (“METLabs”) to certify the Underwriters Laboratories
(UL) compliance of the SmartStations.
UL compliance is a safety certification required for most electrical products, and
the evidence is undisputed that the SmartStations are unmarketable without the UL-compliance
mark. FlashParking’s expert attested that UL is a not-for-profit organization that sets safety
standards for different products, including information-technology equipment to be installed
outdoors. Certification of UL compliance requires a third-party inspector or auditor, such as
METLabs, to confirm that the product is manufactured and tested in a way that meets industry
safety standards. After METLabs authorized Scientific to apply the METLabs certification mark
denoting UL compliance (“MET Mark”) to FlashParking’s SmartStations in 2016, FlashParking
required all SmartStations to be UL compliant in both components and manufacturing process.
This contract dispute arose when FlashParking canceled its contract with Scientific in 2018,
asserting that Scientific had repudiated the contract by refusing to take the necessary steps to
maintain its certification to produce UL-compliant SmartStations.
Factual background
In 2016, FlashParking agreed to purchase 500 certified UL-compliant
SmartStations from Scientific in installments. That agreement was finalized and reduced to
writing in a document titled “Letter of Intent-Turnkey production of products,” which was
executed in January 2017. In connection with this agreement, FlashParking issued a purchase
order in December 2016 (“2016 Purchase Order”) for 500 SmartStations, in the amount of
2
approximately $1.5 million, with 250 to be delivered in three installments by April 2017 and the
remainder to be scheduled for delivery at a later time.
Scientific was authorized to apply the MET Mark to SmartStations, as long as
Scientific complied with the terms of the August 22, 2016 Factory Contract. 1 The 2016 Factory
Contract allowed METLabs to conduct unannounced inspections of Scientific’s factory and
required Scientific to comply with “very basic quality requirements” to allow METLabs the
capability to perform factory inspections. The 2016 Factory Contract further provided that
“[u]pon demand made by MET[Labs], the Factory shall immediately terminate application of the
MET Mark to any product(s) stipulated at any time by MET[Labs] to be ineligible.” (Emphasis
added.) When METLabs conducted an inspection of Scientific’s factory on August 31, 2017,
Scientific was found to be in compliance.
In early May 2018, Kevin Rose, one of Scientific’s employees, went to work for
FlashParking. FlashParking’s Vice President of Operations, Wes Vinecombe, attested that
Scientific’s president and sole shareholder, Alan Basta, became very angry when FlashParking
hired Rose. 2 Vinecombe further averred, and Scientific has not disputed, that Basta refused (1) to
deliver any additional SmartStations, including 165 SmartStations that were still owed and due
from the 2016 Purchase Order and that had already been completed and were awaiting delivery;
(2) to return the consigned parts that Scientific was holding, which belonged to FlashParking and
1 The 2016 Factory Contract provided for automatic renewal for periods of one year from
the anniversary date, unless otherwise terminated for cause or if any party gave 30 days’ prior
written notice of its intent to terminate.
2 Scientific sued Rose on August 29, 2018. The trial court granted Rose’s summary-
judgment motion, and Scientific has appealed that judgment to this Court in
Cause No. 03-20-00564-CV.
3
were worth $360,000; and (3) to return the $84,465 that FlashParking had paid as a deposit on the
completed SmartStations—unless and until FlashParking fired Rose.
Vinecombe attested that when FlashParking refused to comply with Scientific’s
demand that it fire Rose, Basta stated that the only other way that Scientific would continue to do
business with FlashParking would be if FlashParking (1) placed an additional purchase order for
400 SmartStations at a cost of approximately $1.2 million and (2) paid Scientific an additional
$99,000 for the remaining 165 SmartStations that had not yet been delivered under the 2016
Purchase Order. 3 According to Vinecombe, Basta promised that this additional $99,000 would be
returned to FlashParking once they took delivery of the 400 units that he was requiring
FlashParking to buy. Vinecombe testified in his deposition that Basta’s withholding of inventory
was a “major business disruption” for FlashParking, causing it to have “no clear way to fulfill [its]
obligations” both to its investors and its customers. Vinecombe averred that FlashParking agreed
to the proposal because it had imminent deadlines to fill customer orders and no other source for
the SmartStations. On May 22, 2018, FlashParking issued a purchase order for an additional 400
SmartStations (“2018 Purchase Order”).
The 2018 Purchase Order required that all SmartStations be “UL compliant in both
components and manufacturing process.” The 2018 Purchase Order also provided that the 400
SmartStations would be delivered in installments, with the first installment of 100 units to be
delivered on October 15, 2018, and the balance to be delivered “subject to a release schedule.”
FlashParking began to take delivery of some of the 165 SmartStations that were already completed
under the 2016 Purchase Order, and it paid $49,200 of the $99,000 additional payment. On
3 This payment was described by FlashParking as a “duress premium” and by Scientific
as a “Cancellation Credit.”
4
July 26, 2018, Scientific issued an invoice for the 50% deposit for the first 100 units that were to
be delivered on October 15, 2018. However, soon after the invoice was issued, FlashParking
received notice that Scientific had failed an unannounced July 25 inspection by METLabs of its
manufacturing facility and that METLabs would not allow Scientific to use its MET Mark on
SmartStations until the compliance issues were corrected.
To remedy some of the compliance issues, METLabs required that Scientific
“submit, as soon as possible,” a completed Project Amendment Request form with its new
manufacturing facility’s address, the name change from KleverLogic to FlashParking, and the new
FlashParking logo design. 4 Vinecombe testified that after the failed inspection, FlashParking’s
METLabs representative emailed him a new Factory Contract (“2018 Factory Contract”) to
forward to Scientific to sign. On August 8, 2018, Vinecombe emailed the new 2018 Factory
Contract to Basta for Scientific to execute. Vinecombe explained to Basta that it was the same
Factory Contract document that Scientific executed in 2016 as part of the initial UL-compliance
certification. Vinecombe informed Basta that METLabs was requiring the new 2018 Factory
Contract to be signed because of Scientific’s move of the SmartStation assembly location and
because of FlashParking’s name change. Vinecombe further explained that FlashParking had filed
application paperwork in 2017 with METLabs to change its name and Scientific’s location and
that FlashParking had completed part of the application process by executing a proposal and
4 Scientific had moved its manufacturing facility for SmartStations to a new location in
2017. The 2016 Factory Contract stated that for purposes of the contract, “a ‘Factory’ is defined
as a location in which main assembly and/or certification critical testing and/or application of
certification labeling is performed,” and that “[o]nly the product(s) designed and engineered by
the Applicant [FlashParking] and/or manufactured by the Factory [Scientific] at the Factory at the
above address, which have been authorized by MET[Labs] to bear the appropriate MET
certification . . . are covered by this Contract.” (Emphasis added.) Scientific’s address on the
2016 Factory Contract was its original facility’s address.
5
issuing a purchase order. However, midway through the process, METLabs changed account
executives on the FlashParking account, and FlashParking was not made aware until after the failed
inspection that these changes required the execution of new Factory and Applicant Contracts.
Vinecombe further stated:
I know they attempted to perform a surprise factory inspection and as a result of
their failure to guide us through the process have issued FlashParking a notice of
serious non-compliance and de-authorized us from applying the METLabs mark
from our equipment.
They have acknowledged their failure in this and have assured me that as soon as
they receive the executed (Factory and Applicant) contracts back they will expedite
the file modification process and re-authorize the use [o]f the MET mark.
(Emphasis added.)
On August 9, Sean McCain, Scientific’s controller, returned the 2018 Factory
Contract to FlashParking. It was signed but with handwritten amendments, including striking the
provision requiring Scientific’s agreement to unannounced factory inspections, the provision
prohibiting Scientific’s application of the MET Mark to unauthorized products, and the provision
requiring Scientific to indemnify and hold harmless METLabs from any claims arising from such
unauthorized action. Vinecombe called the METLabs representative to find out if METLabs
would accept changes to the Factory Contract document, and she told him that it would not. He
then emailed McCain to let him know that METLabs would not accept modifications to the
contract and asked McCain to advise whether Basta would execute the 2018 Factory Contract
without modification. On August 10—only two months before Scientific was supposed to deliver
100 UL-compliant SmartStations to FlashParking—McCain emailed Vinecombe to inform him
that Scientific had reviewed the contract both internally and with outside counsel and that
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Scientific “cannot sign the Factory Contract with the hold harmless and indemnify wording. There
is too much potential exposure for [Scientific].”
On August 28, 2018, with the October 15 delivery deadline rapidly approaching,
FlashParking’s CEO, Juan Rodriguez, sent a letter to Basta, recounting the facts surrounding
METLabs’ requirement that Scientific enter into a successor contract after the failed inspection
and explaining that “METLabs obviously will not certify the SmartStations as UL compliant as
Scientific is not in compliance with the existing MetLabs contract and has informed us of its
business decision not to enter into a successor contract with MetLabs.” Rodriguez further
explained that Scientific’s “refusal to contract with METLabs is a repudiation of the critical
requirement in the May 2018 Purchase Order that specifically stipulates that the SmartStations will
be UL compliant,” and accordingly, FlashParking was terminating its relationship with Scientific,
canceling the pending 2018 Purchase Order, and shifting its production of SmartStations to an
alternative, UL-compliant source.
Basta responded by email on September 7, asserting that this was the first time that
Scientific had been told about a negative UL inspection, that “all of the major real issues were
actually [FlashParking] issues,” that Scientific had executed a copy of the 2018 Factory Contract,
and that it had not been “given any real opportunity to cure any perceived issue” but “every UL
issue was/is easily resolvable.” 5 Basta stated that Scientific wanted to manufacture SmartStations
for FlashParking and that the parties should “get our heads together and figure out how [Scientific]
can still manufacture for [FlashParking].” He did not, however, indicate a willingness to sign the
5 In his affidavit, Basta attested that he never received the METLabs inspection report
before September 4, 2018, although he acknowledges receiving Vinecombe’s August 8, 2018
email requesting the execution of the new 2018 Factory Contract and explicitly stating that
METLabs had de-authorized use of its UL mark because of the factory inspection.
7
METLabs 2018 Factory Contract without modifications or suggest that Scientific had procured
another third-party company to enable it to produce UL-compliant SmartStations. Nor did Basta
describe any steps taken by Scientific to remedy the non-compliance issues preventing it from
shipping UL-compliant SmartStations.
Rodriguez responded by email on September 11 that there were three areas that
FlashParking needed to better understand. In particular, “[r]egarding the factory contract: we
thought that [Scientific] rejected some of MET[Lab’]s standard contract language and made the
ultimate decision that [Scientific] couldn[’]t accept the liability required by the factory contract.”
In addition, regarding the UL inspection, Rodriguez explained that FlashParking thought that the
inspection report had been delivered to Scientific’s personnel in July “and that the restriction on
shipping product was not resolved.” Rodriguez also stated that FlashParking was looking forward
to receiving an account reconciliation from McCain and would like to meet with Basta and McCain
“to discuss these three issues, clear up any misunderstandings, and work on resolving the issues
between our firms in a mutually-agreeable framework, including the potential for a renewed
relationship between our firms.” The record does not reflect any further communications between
the parties before Scientific sued FlashParking the next year in July 2019.
Procedural background
FlashParking moved for summary judgment on three grounds. First, it asserted its
affirmative defense of repudiation to Scientific’s breach-of-contract claim, contending that
Scientific repudiated the contract by failing to maintain the certification necessary to deliver UL-
compliant goods, thus allowing FlashParking to cancel its obligation to purchase SmartStations
from Scientific. Second, FlashParking asserted that Scientific could not recover on its alternative
8
quantum meruit claim because there was an express contract governing the goods at issue. Third,
FlashParking moved for no-evidence summary judgment on the damages element of Scientific’s
breach-of-contract claim. FlashParking submitted summary-judgment evidence with its motion,
and Scientific likewise submitted summary-judgment evidence with its response. The trial court
overruled Scientific’s objections to FlashParking’s summary-judgment evidence, but it granted
some of FlashParking’s objections to Scientific’s summary-judgment evidence. The trial court
granted FlashParking’s summary-judgment motion without stating the basis for its order. This
appeal followed.
ANALYSIS
On appeal, Scientific asserts in its first issue that the trial court erred in granting
FlashParking’s summary-judgment motion. In four sub-issues, it contends that (1) FlashParking
failed to carry its burden of showing that it was entitled to judgment as a matter of law on
Scientific’s breach-of-contract claim; (2) even if the burden shifted to Scientific to raise fact issues,
it did so; (3) the trial court erred by granting summary judgment on Scientific’s quantum meruit
claim; and (4) Scientific presented sufficient evidence of damages to defeat FlashParking’s no-
evidence motion. Scientific asserts in its second issue that the trial court abused its discretion by
striking certain affidavit testimony on the additional $99,000 payment that was part of the 2018
Purchase Order.
Summary-judgment standard of review
We review the trial court’s decision to grant summary judgment de novo. Valence
Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). To prevail on a summary-judgment
motion, the movant must demonstrate that there are no genuine issues of material fact and that it
9
is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); KMS Retail Rowlett, LP v. City
of Rowlett, 593 S.W.3d 175, 181 (Tex. 2019). A defendant seeking summary judgment on an
affirmative defense has the burden to conclusively establish that defense. See Draughon
v. Johnson, No. 20-0158, ___ S.W.3d ___, 2021 WL 2387430, at *3–4 (Tex. June 11, 2021). Once
the defendant has established a right to summary judgment on an affirmative defense, the burden
shifts to the plaintiff to present controverting proof that precludes summary judgment. See
Huckabee v. Time Warner Entm’t Co., L.P., 19 S.W.3d 413, 420 (Tex. 2000). When reviewing a
summary judgment, we take as true all evidence favorable to the nonmovant, and we indulge every
reasonable inference and resolve any doubts in the nonmovant’s favor. Provident Life & Accident
Ins. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). When the trial court does not specify the grounds
for granting the motion, we must uphold the judgment if any ground asserted in the motion and
preserved for appellate review is meritorious. Id. at 216.
I. Anticipatory repudiation
Because the dispositive issue in this case is whether FlashParking conclusively
established its affirmative defense of repudiation to defeat Scientific’s breach-of-contract claim,
we turn first to that issue. In its summary-judgment motion, FlashParking argued that Scientific
repudiated the contract by failing to maintain the certification necessary to deliver UL-compliant
SmartStations, which occurred when it refused to sign the 2018 Factory Contract required by
METLabs and failed to make arrangements with another UL-approved inspector. On appeal,
Scientific argues in its first two sub-issues that FlashParking failed to carry its burden to show, or
alternatively, that Scientific raised a fact issue on, whether (1) Scientific’s refusal to sign the 2018
Factory Contract required by METLabs constituted an unequivocal or unconditional intention not
10
to perform under the FlashParking contract; (2) a new METLabs contract was required for
Scientific to be authorized to ship certified UL-compliant SmartStations; (3) Scientific would be
unable to produce certified UL-compliant SmartStations, even if it were unable to use its new
facility for manufacturing; (4) the alleged repudiation was “without just excuse”; (5) FlashParking
was damaged by it; and (6) FlashParking seized an opportunity to breach. In response,
FlashParking contends that the evidence showed that Scientific’s refusal to sign the METLabs
contract (1) rendered Scientific’s performance impossible by rejecting its continuing obligation to
remain certified to ship UL-compliant SmartStations or (2) demonstrated a clear determination not
to continue with performance. See Tex. Bus. & Com. Code § 2.610 cmt. 1, 2. FlashParking asserts
that because the Uniform Commercial Code (UCC) applies in this case, it must only prove one of
these prongs, and acting without just excuse and damages are not elements of its anticipatory-
repudiation affirmative defense.
A. Applicable law
The essential elements of Scientific’s breach-of-contract claim are: (1) the
existence of a valid contract; (2) performance or tendered performance by Scientific; (3) breach of
the contract by FlashParking; and (4) damages sustained by Scientific as a result of the breach. 6
See, e.g., USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 502 n.21 (Tex. 2018). Because
6 “To prove the first element (the existence of a valid contract), the plaintiff must establish
that (1) an offer was made; (2) the other party accepted in strict compliance with the terms of the
offer; (3) the parties had a meeting of the minds on the essential terms of the contract (mutual
assent); (4) each party consented to those terms; and (5) the parties executed and delivered the
contract with the intent that it be mutual and binding.” USAA Tex. Lloyds Co. v. Menchaca,
545 S.W.3d 479, 502 (Tex. 2018). Neither party challenges the validity of the contract on appeal.
Based on our review of the record, we conclude that a valid contract exists.
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FlashParking asserted repudiation as an affirmative defense, it had the burden of proving that
Scientific unequivocally refused to perform the contract. See, e.g., New York Party Shuttle, LLC
v. Bilello, 414 S.W.3d 206, 216 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) (“Repudiation
or anticipatory breach is an unconditional refusal to perform the contract in the future, which can
be expressed either before performance is due or after partial performance.”).
The parties dispute whether FlashParking was required to establish as a matter of
law the common-law elements of (1) the lack of just excuse for Scientific’s alleged repudiation
and (2) damage to FlashParking. 7 FlashParking contends that this case is governed by the UCC,
and thus those elements are not applicable here, while Scientific argues that because the UCC does
not define “repudiation,” the common-law elements do not conflict with the guidance provided in
the UCC’s comments. See Amplify Fed. Credit Union v. Garcia, No. 03-17-00161-CV,
2017 WL 6757001, at *2 n.1 (Tex. App.—Austin Dec. 19, 2017, no pet.) (mem. op.) (“Although
the Official UCC Comments following the code provisions are not law, they are persuasive
authority concerning the interpretation of the statutory language.” (citing Lockhart Sav. & Loan
Ass’n v. RepublicBank Austin, 720 S.W.2d 193, 195 (Tex. App.—Austin 1986, writ ref’d n.r.e.))).
We agree that Scientific and FlashParking’s agreement for the sale of UL-compliant
SmartStations was a contract for the sale of goods governed by the UCC. See Courey Int’l
v. Designer Floors of Tex., Inc., No. 03-09-00059-CV, 2010 WL 143420, *3 (Tex. App.—Austin
7 The elements of a common-law claim for anticipatory breach are the following: (1) the
allegedly repudiating party has absolutely refused to perform the contract according to its terms,
(2) without just excuse for the nonperformance, and (3) damaged the nonrepudiating party. See,
e.g., Taylor Publ’g Co. v. Systems Mktg. Inc., 686 S.W.2d 213, 217 (Tex. App.—Dallas 1984, writ
ref’d n.r.e.); but see also Tendeka, Inc. v. Nine Energy Serv. LLC, No. 14-18-00018-CV,
2019 WL 6872942, at *5 (Tex. App.—Houston [14th Dist.] Dec. 17, 2019, no pet.) (mem. op.)
(stating that party who allegedly repudiated contract bore burden of proof on just excuse).
12
Jan. 15, 2010, no pet.) (mem. op.) (citing Tex. Bus. & Com. Code § 2.102; SelecTouch Corp.
v. Perfect Starch, Inc., 111 S.W.3d 830, 834 (Tex. App.—Dallas 2003, no pet.) (“Contracts
relating to the sale of goods are governed by article two of the [UCC], adopted in Texas as chapter
two of the business and commerce code.”)); see also Tex. Bus. & Com. Code § 2.105 (defining
“goods” as “all things (including specially manufactured goods) which are movable at the time of
identification to the contract for sale other than the money in which the price is to be paid,
investment securities (Chapter 8) and things in action”). Texas courts apply the UCC to contracts
for the sale of goods even if the parties characterize the claim as a common-law breach-of-contract
case. Omni USA, Inc. v. Parker-Hannifin Corp., 964 F. Supp. 2d 805, 840 (S.D. Tex. 2013) (citing
Courey Int’l, 2010 WL 143420 at *3; Tex. Bus. & Com. Code § 2.102; SelecTouch, 111 S.W.3d
at 834). “Where the Uniform Commercial Code applies, common law rules regarding breach of
contract do not apply. To the extent they do not conflict with the Uniform Commercial Code’s
provisions, common law principles complement the Uniform Commercial Code.” Plano Lincoln
Mercury, Inc. v. Roberts, 167 S.W.3d 616, 624 (Tex. App.—Dallas 2005, no pet.) (citations
omitted). The UCC itself provides that “unless displaced by the particular provisions of this title,”
common-law principles “shall supplement its provisions.” Tex. Bus. & Com. Code § 1.103(b);
see also id. § 1.103 cmt. 2 (“Therefore, while principles of common law and equity may
supplement provisions of the Uniform Commercial Code, they may not be used to supplant its
provisions, or the purposes and policies those provisions reflect, unless a specific provision of the
Uniform Commercial Code provides otherwise. In the absence of such a provision, the Uniform
Commercial Code preempts principles of common law and equity that are inconsistent with either
its provisions or its purposes and policies.”).
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Under the doctrine of repudiation or anticipatory breach, “an injured party is
discharged from its remaining duties to perform under a contract where the other party repudiates
its contractual duty before the time for performance.” Cook Composites, Inc. v. Westlake Styrene
Corp., 15 S.W.3d 124, 139 (Tex. App.—Houston [14th Dist.] 2000, no pet.). Traditionally,
“repudiation occurs when the promissor unequivocally disavows any intention to perform in the
future.” Id. Under the UCC, if either party repudiates a contract with respect to performance not
yet due, the loss of which will substantially impair the value of the contract to the nonrepudiating
party, the aggrieved party may either: (1) await performance by the repudiating party for a
commercially reasonable time or (2) resort to any remedy for breach provided in Sections 2.703
or 2.711, even if the nonrepudiating party has notified the repudiating party that it would await the
latter’s performance and has urged retraction. See Tex. Bus. & Com. Code § 2.610. In either case,
the nonrepudiating party may suspend its own performance. Id. Thus, if the seller repudiates, the
buyer may cancel the contract and recover so much of the price as has been paid, in addition to its
other remedies. See id. § 2.711.
The comments to Section 2.610 provide guidance on when anticipatory repudiation
occurs under the UCC: “[A]nticipatory repudiation centers upon an overt communication of
intention or an action which renders performance impossible or demonstrates a clear determination
not to continue with performance.” Id. § 2.610 cmt. 1. Furthermore, “[i]t is not necessary for
repudiation that performance be made literally and utterly impossible. Repudiation can result from
action which reasonably indicates a rejection of the continuing obligation.” Id. § 2.610 cmt. 2. In
addition, a repudiation automatically results under Section 2.609 “when a party fails to provide
adequate assurance of due future performance within thirty days after a justifiable demand therefor
has been made.” Id. Although the repudiating party may retract its repudiation under some
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circumstances, it cannot do so if the aggrieved party “has since the repudiation cancelled or
materially changed his position or otherwise indicated that he considers the repudiation final.”
Id. § 2.611(a).
We need not determine whether lack of just excuse must be shown by the aggrieved
party in a UCC case, because here, as explained below, the summary-judgment evidence
conclusively establishes that Scientific’s repudiation was not based on a mistake or
misunderstanding and that it lacked just excuse. We address below how the UCC affects the
element of damages in this case.
B. Scientific’s refusal to sign the 2018 Factory Contract
To support its argument that its refusal to sign the METLabs 2018 Factory Contract
in the required form was not an intentional and unequivocal repudiation of its agreement with
FlashParking without just excuse, Scientific argues that the summary-judgment evidence did not
establish, or alternatively, it raised a fact issue on, whether METLabs required it to sign a new
contract to maintain its UL certification and whether it would have been able to produce
SmartStations at its original location. 8 We first consider whether Scientific’s refusal to sign was
an intentional and unequivocal repudiation before turning to Scientific’s arguments that (1) its
misunderstanding about whether METLabs required a new contract for Scientific to maintain its
certification of UL compliance provided it with just excuse for its repudiation, (2) FlashParking
did not establish that it was damaged by the repudiation, and (3) FlashParking seized an
opportunity to breach.
8 Scientific still maintained an office and produced metal framing for the SmartStations at
its original location.
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1. Scientific’s repudiation was intentional and unequivocal
Initially, we note that the common-law definition of intentional and unequivocal
repudiation upon which Scientific urges us to rely is incorporated into the UCC comment’s
definition of repudiation, which requires “an overt communication of intention or an action” that
either renders performance impossible or demonstrates clear (i.e., unequivocal) intention not to
perform. Compare Tex. Bus. & Com. Code § 2.610 cmt. 1, with Oler v. B-A Homes, Inc.,
No. 03-99-00714-CV, 2000 WL 1508502, at *4 (Tex. App.—Austin Oct. 12, 2000, no pet.) (not
designated for publication) (explaining that repudiation “is conduct that shows a fixed intention to
abandon, renounce and refuse to perform the contract.” (citing Group Life & Health Ins. Co.
v. Turner, 620 S.W.2d 670, 673 (Tex. App.—Dallas 1981, no writ))). Although repudiation can
be difficult to establish in the summary-judgment context, on the facts of this case, reviewed below,
we conclude that Scientific’s refusal to sign the 2018 Factory Contract was an overt
communication of and an action that demonstrated a clear and unequivocal intention not to perform
under Scientific’s agreement with FlashParking.
The timeline of events is relevant to this determination. Therefore, we provide this
summary of key events:
• 2016: Scientific begins manufacturing SmartStations
• Q4 2016: After signing contracts with METLabs, Scientific and FlashParking
receive UL-compliance certification for SmartStations
manufactured at Scientific’s original facility
• December 2016: FlashParking issues 2016 Purchase Order to Scientific for 500
SmartStations
• January 2017: Scientific and FlashParking execute Letter of Intent
16
• February 2017: Scientific leases new location and subsequently moves
manufacturing of SmartStations there
• April 2017: 250 SmartStations are delivered by this date
• August 31, 2017: METLabs conducts inspection and does not note any
noncompliance
• Early May 2018: Scientific’s former employee Rose begins working for FlashParking
• May 22, 2018: FlashParking issues 2018 Purchase Order for 400 additional
SmartStations, which includes an additional $99,000 to be paid on
remaining 2016 Purchase Order SmartStations that were not yet
delivered
• Late May 2018: FlashParking begins taking delivery of remaining SmartStations
completed under 2016 Purchase Order and pays approximately half
of the $99,000 additional payment
• July 25, 2018: Scientific fails unannounced factory inspection by METLabs, and
METLabs prohibits it from shipping SmartStations with the MET
Mark certifying UL compliance
• July 26, 2018: Scientific issues invoice for 50% deposit for the first 100
SmartStations to be delivered under 2018 Purchase Order
(according to Purchase Order terms, 50% deposit due two weeks
before quarter’s start, i.e., mid-September)
• August 8, 2018: FlashParking emails 2018 Factory Contract for Scientific to execute
(with explanation that METLabs was requiring a new contract after
the July 25 inspection because of Scientific’s move of the
manufacturing facility and FlashParking’s name change, and further
explaining that METLabs would expedite reauthorization of the
parties’ use of the MET Mark once Scientific executed the Factory
Contract)
• August 9, 2018: Scientific returns the executed Factory Contract with provisions
struck that (1) allowed unannounced factory inspections,
(2) prohibited Scientific’s use of the MET Mark on unauthorized
products, and (3) would indemnify METLabs from claims arising
from any unauthorized use of the MET Mark by Scientific
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• August 9, 2018: FlashParking confirms that METLabs will not accept modifications
to Factory Contract and asks Scientific to advise whether it will
execute the 2018 Factory Contract without modification
• August 10, 2018: Scientific informs FlashParking that Scientific will not sign the 2018
Factory Contract without modification
• August 28, 2018: FlashParking informs Scientific that its refusal to contract with
METLabs is a repudiation of the critical requirement in the May
2018 Purchase Order that the SmartStations be UL compliant, and
thus, FlashParking is terminating the parties’ relationship,
canceling the pending 2018 Purchase Order, and shifting its
production of SmartStations to an alternative, UL-compliant source
• August 29, 2018: Scientific sues Rose
• September 7, 2018: Basta responds to FlashParking’s letter, professing no awareness of
the negative July 25 inspection and asserting that the UL issues are
“easily resolvable” without indicating a willingness to sign the 2018
Factory Contract without modifications or to procure UL-
compliance certification from another inspector
• September 11, 2018: FlashParking responds with a willingness to meet to clear up any
misunderstandings and discuss the potential for a renewed
relationship, noting that its understanding was that Scientific had
rejected METLabs’ standard contract language and ultimately
determined Scientific could not accept the liability required by the
Factory Contract and that the restriction on shipping product had not
been resolved
• October 15, 2018: First 100 SmartStations were due to be delivered from Scientific
• July 3, 2019: Scientific sues FlashParking
We take as true Scientific’s statements that it did not receive a copy of the July
2018 inspection report before September 4 or 5, 2018, and that it was unaware of any inspection
failures before it received FlashParking’s August 28, 2018 letter. See Provident Life & Accident
Ins., 128 S.W.3d at 215. However, on August 8, FlashParking informed Scientific that after
METLabs’ surprise factory inspection, and as part of “Scientific moving assembly locations,”
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METLabs was requiring Scientific to sign a new Factory Contract before it would “re-authorize
the use [o]f the MET mark” and lift the “notice of serious non-compliance.” In response, Scientific
refused to sign the new Factory Contract (which was identical to the 2016 Factory Contract except
for the changes to the factory address and FlashParking’s name) without material amendments to
the contract language that METLabs was unwilling to accept. Scientific’s response when
FlashParking asked whether it would sign the Factory Contract without amendments was
unequivocal: Scientific “cannot sign the Factory Contract with the hold harmless and indemnify
wording. There is too much potential exposure for [Scientific].” On August 10, when Scientific
refused to sign the Factory Contract in the form required by METLabs, it knew it was unable to
apply the MET Mark to the SmartStations and thus that it could not comply with a material term
of its agreement with FlashParking—that all SmartStations be UL compliant in both components
and manufacturing process. This evidence of Scientific’s unequivocal refusal to sign the
METLabs 2018 Factory Contract conclusively establishes that Scientific rejected its obligation to
perform under the FlashParking contract to produce UL-compliant SmartStations, thus satisfying
FlashParking’s burden to show on summary judgment Scientific’s overt communication of, and
action that demonstrated, its clear and unequivocal intention not to perform.
Scientific did not present controverting evidence demonstrating any action that it
took after refusing to sign the 2018 Factory Contract that would show its intent to continue its
performance. There is no evidence of any inquiry from Scientific about the notice of serious
non-compliance after FlashParking informed Scientific on August 8 of the notice and of the need
to sign a new contract to be re-authorized to use the MET Mark. There is no evidence of any
actions that Scientific took or planned to take to produce UL-compliant SmartStations. Even in
Scientific’s September 7 response email—with the October 15 deadline to deliver UL-compliant
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SmartStations looming—while Scientific professed that FlashParking’s August 28 termination
letter was “the first [Scientific] has been told about a negative UL audit,” Scientific neither
represented that it would sign the 2018 Factory Contract in the form required by METLabs nor
indicated that it was procuring UL-compliance certification with a different inspector. There is
also no evidence in the record of any response from Scientific to FlashParking’s September 11 email.
Although Scientific asserts that its September 7 email in response to FlashParking’s
August 28 termination letter is evidence that Scientific did not intend to repudiate the 2018
Purchase Order because Scientific indicated its surprise about the July inspection results and stated
that Scientific wanted to fulfill the FlashParking contract, the September 7 email was sent 28 days
after Scientific refused to sign the 2018 Factory Contract in the form required by METLabs and it
still did not indicate a willingness to sign the required METLabs contract. While the UCC does
allow in some circumstances for a repudiating party to retract its repudiation before its next
performance is due, it cannot do so if “the aggrieved party has since the repudiation cancelled or
materially changed his position or otherwise indicated that he considers the repudiation final.”
Tex. Bus. & Com. Code § 2.611(a). Moreover, a retraction “must include any assurance justifiably
demanded under the provisions of this chapter (Section 2.609).” Id. § 2.611(b).
And even though Scientific also argues that its repudiation did not render its
performance impossible because it could have converted its manufacturing to its original location
for which the 2016 Factory Contract was executed, “[i]t is not necessary for repudiation that
performance be made literally and utterly impossible. Repudiation can result from action which
reasonably indicates a rejection of the continuing obligation.” Id. § 2.610 cmt. 2. In this case,
Scientific did not present evidence that it suggested to FlashParking that moving its manufacturing
operations back to its original facility was a possibility or that it contacted METLabs to find out
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whether METLabs would re-authorize use of the MET Mark if Scientific moved the manufacturing
back to its original facility. We conclude that FlashParking conclusively established that Scientific
intentionally and unequivocally repudiated the FlashParking contract when it refused to execute
the 2018 Factory Contract in the form required by METLabs for Scientific to produce UL-
compliant SmartStations and that Scientific failed to raise a fact issue when the summary-judgment
burden shifted to it to controvert its repudiation.
2. Scientific’s repudiation was not the result of a mistake or
misunderstanding, nor did it establish a just excuse for its repudiation
Scientific also contends that FlashParking failed to establish that METLabs actually
required a new Factory Contract, and argues alternatively, even if METLabs required the new
contract, Scientific’s refusal to sign was based on a genuine mistake or misunderstanding about
the need for the new METLabs contract, and thus it had a “just excuse” for refusing to sign.
Scientific argues that the evidence raised a fact issue on the necessity of the new contract because
the July 2018 inspection report only required it to submit a Project Amendment Request form to
METLabs, not a new Factory Contract. It asserts that summary judgment was improper because
the only evidence supporting FlashParking’s contention that METLabs required a new Factory
Contract came from FlashParking’s August email and the interested testimony of Vinecombe and
Scientific’s expert, and that evidence was controverted by the July 2018 inspection report.
To the extent that Scientific is challenging whether METLabs in fact required it to
sign the 2018 Factory Contract to re-authorize its use of the MET Mark, Vinecombe’s “testimonial
evidence is clear, positive and direct, otherwise credible and free from contradictions and
inconsistencies, and could have been readily controverted.” Tex. R. Civ. P. 166a(c) (allowing
summary judgment to be based on such testimony). Vinecombe testified that he contacted
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FlashParking’s METLabs representative after he learned of the failed inspection and the
de-authorization to use the MET Mark. The METLabs representative explained the need for new
Applicant and Factory Contracts and asked him to forward the 2018 Factory Contract to Scientific
to execute. Vinecombe’s gathering of additional information from METLabs and learning that
METLabs was requiring new Applicant and Factory Contracts is not inconsistent with the July
2018 inspection report. The fact that the July 2018 inspection report indicated that Scientific
needed to submit a Project Amendment Request form with its new facility’s address and the
FlashParking name does not reasonably exclude the possibility that METLabs would also require
new contracts. The terms of the 2016 Factory Contract gave METLabs the authority to require
Scientific to “immediately terminate its application of the MET Mark to any product(s) stipulated
at any time by MET to be ineligible” and to terminate the Factory Contract “at MET’s discretion”
if Scientific violated the Contract requirements and failed “to cure any such violation within 10
business days.” The Factory Contract places no limitations on what actions METLabs could
require Scientific to take to cure violations. Furthermore, if METLabs did not in fact require a
new Factory Contract, Scientific could have obtained that information through discovery from
METLabs, but no such evidence is part of the summary-judgment record. We conclude that the
summary-judgment evidence conclusively establishes that METLabs required Scientific to sign a
new Factory Contract after it de-authorized the parties from using the MET Mark to certify the UL
compliance of the SmartStations and that Scientific did not raise a fact issue to the contrary when
the summary-judgment burden shifted to it.
Scientific further contends that even if METLabs required Scientific to sign the new
Factory Contract to restore its ability to produce certified UL-compliant SmartStations, Basta’s
testimony raises a fact issue on whether Scientific’s refusal to sign the new Factory Contract
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resulted from a mistake or misunderstanding about the necessity for a new contract, or in other
words, whether there was just excuse for Scientific’s refusal to sign. See Englehart v. Volunteer
State Life Ins. Co., 195 S.W.2d 798, 802 (Tex. App.—Eastland 1946, writ ref’d n.r.e.) (holding
that trial court properly concluded that defendant insurance company’s failure to make policy
payments was based on good-faith belief that insured plaintiff was no longer disabled and thus was
not anticipatory breach because it was based on misunderstanding as to matters of fact). In
response, FlashParking asserts that because this case is governed by the UCC, it is not required to
establish that Scientific lacked just excuse for its repudiation, but as noted above, we need not
decide what effect the UCC has, because here the summary-judgment evidence conclusively
establishes that Scientific’s repudiation was not based on a mistake or misunderstanding and that
it lacked just excuse.
In his affidavit, Basta attested that he “was surprised and confused after the receipt
of the August 28 letter. Although I did not understand the need for a 2018 Factory Contract in
light of the 2016 Factory Contract, I did in fact sign a 2018 version in good faith.” He further
averred: “I never intended to repudiate the contracts on behalf of Scientific and Scientific was
ready, willing and able to cooperate with any necessary inspection issues to resolve UL
compliance. In light of the fact that the 2016 Factory Contract was in force and Metlabs had just
recently completed the July 25, 2018 audit, I did not understand the need to sign a 2nd
Factory Contract.”
Scientific’s correspondence with FlashParking at the time Scientific refused to sign
the new Factory Contract without Scientific’s requested modifications controverts this
interested-witness testimony and conclusively establishes that Scientific’s refusal to sign was not
based on a good-faith misunderstanding. See Tex. R. Civ. P. 166a(c). FlashParking informed
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Scientific on August 8 that after the July 2018 inspection, because of Scientific’s move of the
SmartStation assembly process to its new facility, METLabs was requiring the new Factory
Contract to be signed before it would re-authorize the use of the MET Mark to certify the
SmartStations as UL compliant. Neither Basta nor McCain expressed confusion then over why
Scientific needed to sign a second Factory Contract. Instead, Scientific refused to sign the new
Factory Contract unless it could strike the provision allowing METLabs to conduct unannounced
factory inspections and the hold-harmless provision requiring it to indemnify METLabs if
Scientific used MET’s certification mark in an unauthorized manner—even though the same terms
were contained in the 2016 Factory Contract under which it claimed it was still performing. After
FlashParking informed Scientific that METLabs would not accept amendments to the Factory
Contract, and later, that FlashParking was terminating their relationship because of Scientific’s
repudiation of the material requirement of UL compliance, Basta continued to profess that
Scientific’s execution of the amended Factory Contract should be sufficient and raised no question
about whether or why a new contract was needed. Scientific’s obstreperous insistence on changing
METLabs’ standard contract language, which the parties had operated under for the past two years,
especially coming after Scientific failed an unannounced inspection, belies Basta’s purported
confusion. Therefore, we conclude that the parties’ contemporaneous correspondence
conclusively establishes that Scientific did not refuse in good faith to sign the 2018 Factory
Contract because of a misunderstanding about whether METLabs was requiring the new Factory
Contract, why METLabs was requiring it, or the consequence of failing to sign it, and we further
conclude that Scientific failed to produce controverting proof that raises a fact issue on its lack of
just excuse.
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3. FlashParking established that Scientific’s repudiation substantially
impaired the value of the contract to FlashParking, which is all that the
UCC requires
Scientific asserts that the trial court erred by granting summary judgment because
FlashParking failed to allege or prove it was damaged by Scientific’s repudiation. We disagree.
The UCC does not require the nonrepudiating party to allege or prove damages. Instead, it requires
only that the loss of the repudiating party’s performance “will substantially impair the value of the
contract to the other party” to enable the aggrieved party to suspend its own performance and either
await performance for a commercially reasonable time or resort to its remedies for breach.
Tex. Bus. & Com. Code § 2.610. FlashParking conclusively established through testimony from
Vinecombe and its expert that the SmartStations were unmarketable if they were not UL compliant
and thus that Scientific’s repudiation would substantially impair the value of the contract.
Scientific further argues that the summary-judgment evidence established that
FlashParking was not damaged because it had found an alternate source to assemble the
SmartStations at the time it sent the August 28 letter to Scientific terminating the parties’
agreement. We disagree that this evidence raises a fact issue as to whether FlashParking was
damaged by Scientific’s repudiation. UCC Section 2.610 provides that the aggrieved party may
proceed with the remedies available to it at any time after repudiation occurs. See id. § 2.610 &
cmt. 4. FlashParking’s exercise of its available remedies after repudiation does not negate the fact
that Scientific’s refusal to maintain its certification to produce UL-compliant SmartStations would
substantially impair the value of the contract. We conclude that FlashParking conclusively
established that the repudiation substantially impaired the value of the parties’ contract, which is
all that the UCC requires it to do, and that Scientific did not raise a fact issue to the contrary.
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4. FlashParking’s dissatisfaction with the 2018 Purchase Order’s terms does
not create a fact issue on whether Scientific repudiated
Scientific also argues that FlashParking’s ability to shift the assembly of
SmartStations to a different source establishes that FlashParking was preparing to breach the
parties’ contract and that FlashParking used Scientific’s refusal to sign the METLabs 2018 Factory
Contract as a pretext to get out of the 2018 Purchase Order. Scientific contends that FlashParking’s
finding a new source for assembly, as well as the difference in tone between what it characterizes
as the “apologetic tone” of FlashParking’s August 8 email and the August 24 termination letter
asserting that Scientific’s refusal to sign the METLabs 2018 Factory Contract was a repudiation,
at a minimum create a fact issue on whether Scientific repudiated or FlashParking seized an
opportunity to breach without consequences. Viewing the evidence in the light most favorable to
Scientific, FlashParking admittedly considered the 2018 Purchase Order unfair, and Vinecombe
acknowledged that FlashParking began to reconsider its heavy reliance on Scientific for
SmartStation assembly after Scientific withheld its inventory before the parties agreed on the terms
of the 2018 Purchase Order. Nevertheless, the summary-judgment evidence conclusively
establishes that Scientific knew when it refused to sign the 2018 Factory Contract in the form
required by METLabs that it would no longer be authorized to deliver UL-compliant SmartStations
as required by the 2018 Purchase Order. Scientific’s decision to refuse was not controlled by
FlashParking. Once Scientific made the decision to repudiate, FlashParking was entitled to
exercise its remedies under the UCC. FlashParking’s decision to exercise its available remedies
does not somehow negate Scientific’s repudiation.
To summarize, the summary-judgment evidence, viewed in the light most favorable
to Scientific, establishes as a matter of law that (1) the requirement that the SmartStations be UL
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compliant was a material term of the parties’ express contract; (2) the SmartStations are
unmarketable if they are not certified UL compliant; (3) the certification from METLabs enabled
Scientific to produce UL-compliant SmartStations; (4) after the July 2018 inspection, METLabs
had required Scientific to terminate its application of the MET Mark on SmartStations based on
Scientific’s non-compliance with the 2016 Factory Contract; (5) METLabs was requiring
Scientific to execute the 2018 Factory Contract as a precondition to reauthorizing Scientific to use
the MET Mark; (6) Scientific refused to sign the 2018 Factory Contract without modifications
knowing that METLabs would not reauthorize it to use the MET Mark without a new contract;
and (7) Scientific offered no assurances to FlashParking that it would re-establish and maintain its
certification to produce UL-compliant SmartStations. Under the facts presented in this case,
Scientific’s refusal to sign the 2018 Factory Contract in the form required by METLabs constitutes
“a rejection of [its] continuing obligation” under its contract with FlashParking. Id. § 2.610 cmt. 2.
Therefore, on this record, we conclude that FlashParking conclusively established its affirmative
defense of repudiation and Scientific failed to raise a material fact issue precluding summary
judgment against its breach-of-contract claim.
II. Scientific’s other issues challenging summary judgment
Having concluded that summary judgment was proper on the ground of repudiation,
we need not consider Scientific’s other two sub-issues challenging summary judgment. See Tex.
R. App. P. 47.1. Scientific asserted its quantum meruit claim in the alternative to its breach-of-
contract claim, seeking compensation for “valuable services which [FlashParking] accepted.” 9
9 Even though Scientific alleges there is a valid contract, it argues that because
FlashParking raised duress as an affirmative defense, and because that defense would invalidate
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“Quantum meruit is an equitable remedy ‘based upon the promise implied by law to pay for
beneficial services rendered and knowingly accepted.’” In re Kellogg Brown & Root, Inc.,
166 S.W.3d 732, 740 (Tex. 2005) (orig. proceeding) (quoting Vortt Exploration Co., Inc.
v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex.1990)). The common-law doctrine’s purpose
is to prevent unjust enrichment by a party who retains the benefits of the performance without
payment in return. Hill v. Shamoun & Norman, LLP, 544 S.W.3d 724, 732 (Tex. 2018). A party
generally cannot recover in quantum meruit when there is a valid express contract covering the
services or materials furnished. Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988) (explaining that
plaintiff who breached contract could not recover in quantum meruit for his partial performance).
Thus, because we have concluded that there was a valid express contract that Scientific
anticipatorily breached, meaning that the trial court properly granted summary judgment on
FlashParking’s affirmative defense to Scientific’s breach-of-contract claim, we need not also
consider whether the trial court erred by granting summary judgment on Scientific’s alternative
claim for quantum meruit. See Provident Life & Accident Ins., 128 S.W.3d at 216 (requiring
appellate courts to uphold summary judgment on any ground asserted in motion and preserved for
appellate review when trial court does not specify grounds for granting summary-judgment
motion). Similarly, we need not reach Scientific’s other sub-issue contending that it rebutted
FlashParking’s no-evidence motion by providing sufficient evidence of the damages element of
its breach-of-contract claim. See id.; see also Tex. R. App. P. 47.1.
the parties’ contract if FlashParking prevailed on it at trial, FlashParking failed to prove as a matter
of law that Scientific could not prevail on its quantum meruit claim.
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III. Scientific’s challenge to the trial court’s evidentiary ruling
In its second issue, Scientific contends that the trial court abused its discretion by
striking certain affidavit testimony about the additional $99,000 payment that was part of the 2018
Purchase Order. This affidavit testimony has no bearing on the resolution of FlashParking’s
affirmative defense of repudiation. Accordingly, we need not reach this issue because we have
concluded that the trial court properly granted summary judgment based on that affirmative
defense. See Tex. R. App. P. 47.1.
CONCLUSION
Having concluded that FlashParking established its affirmative defense of
repudiation as a matter of law, we affirm the trial court’s take-nothing summary judgment
against Scientific.
__________________________________________
Gisela D. Triana, Justice
Before Justices Goodwin, Triana, and Kelly
Dissenting Opinion by Justice Goodwin
Affirmed
Filed: November 12, 2021
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