United States Court of Appeals,
Fifth Circuit.
No. 94-20500.
OLIVER RESOURCES PLC and Oliver Resources, (Argentina) SA,
Plaintiffs-Appellants,
v.
INTERNATIONAL FINANCE CORPORATION, Defendant-Appellee.
Aug. 30, 1995.
Appeals from the United States District Court for the Southern
District of Texas.
Before WISDOM, DUHÉ and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
This appeal concerns both tort and contract actions brought by
a putative assignee against one of the original parties to a joint
venture. Because we find that the tort claims are barred by the
statute of limitations and the putative assignee does not have
standing under Texas law to bring a contract claim, we affirm the
district court's granting of summary judgment against the putative
assignee.
FACTS AND PROCEDURAL HISTORY
On June 6, 1988, Defendant-Appellee International Finance
Corporation ("IFC") became a partner in a joint venture with
several companies, including Santa Fe Energy Company of Argentina
("Santa Fe") and Nomeco Argentina Oil Company ("Nomeco"), in an oil
and gas exploration project in Argentina. The partners were
parties to a Joint Operating Agreement ("JOA"). Article 12.2 of
the JOA specifically provides that all partners must consent before
any partner may assign all or any part of its interest to a
non-affiliated company, and that such consent may not be withheld
unreasonably.
On December 21, 1988 and May 25, 1990, Plaintiffs-Appellants
Oliver Resources PLC and Oliver Resources (Argentina) S.A.
(collectively "Oliver") entered into agreements with Santa Fe and
Nomeco, respectively, to obtain all or a portion of the interests
of Santa Fe and Nomeco in the partnership. Accordingly, Santa Fe
and Nomeco each requested the other JOA parties to approve the
assignments. Pursuant to such request, IFC began investigating
Oliver's ability to pay for such a large commitment and requested
financial information on Oliver. According to IFC, however, the
information was not forthcoming and any information that was
eventually released was either old or failed to satisfy IFC. IFC
decided not to approve the assignments.1
The agreements between Santa Fe/Oliver and Nomeco/Oliver
contemplated that approval might not be forthcoming, and provided
that, if consent was not obtained, the Santa Fe and Nomeco
interests would be held in trust for the benefit of Oliver.
Although Santa Fe and Nomeco would still maintain legal ownership,
Oliver would receive the benefits and make all the payments due.
Oliver paid cash-calls to Santa Fe and Nomeco and eventually paid
directly to the operator of the partnership. Oliver also
indirectly participated in partnership matters, as Santa Fe and
Nomeco voted pursuant to Oliver's direction. Eventually, Oliver
1
According to Oliver, the other partners consented to the
assignment.
2
could not meet its financial obligations in the agreements with
Santa Fe and Nomeco and defaulted. Oliver brought suit.
Oliver sued IFC based on tort and contract law, claiming that
IFC's wrongful failure to approve or disapprove the proposed
assignments to Oliver prevented Oliver from being able to finance
its obligations. The district court entered summary judgment in
favor of IFC. It is undisputed that the law of Texas is the
applicable law as to all claims brought by Oliver.
Standard of Review
Appellate courts review summary judgments de novo, applying
the same standard as the district court. Bodenheimer v. PPG
Industries, Inc., 5 F.3d 955, 956 (5th Cir.1993). Summary judgment
shall be rendered if there is no genuine issue of material fact and
if the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c). In making its determination, the court must
draw all justifiable inferences in favor of the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505,
2513-14, 91 L.Ed.2d 202 (1986).
I. Tort Claims
The district court found that Oliver's tort claims2 accrued
no later than March 22, 1991, the date on which Oliver's counsel
2
In the district court, Oliver alleged the following tort
causes of action: intentional interference with contract
relations; negligent interference with contract relations;
negligence and gross negligence; interference with a prospective
advantage or opportunity; and interference with lawful business.
Oliver's appellate brief addresses only the application of the
two-year ban to its intentional interference with contract and
prospective business relations claims.
3
warned IFC that its refusal to consent to the assignment "caused
prejudice to our clients." Accordingly, since Oliver's claims were
not filed until March 25, 1993, the district court held that the
Texas two-year statute of limitations barred Oliver's tort action.
Oliver disagrees, arguing that Texas law requires actual damage or
harm before an intentional interference with contract or
prospective business relations claim may be brought. Thus, Oliver
claims that its tortious interference claims, which stem from IFC's
refusal to consent, did not accrue until November, 1991 when Oliver
breached its contracts with Santa Fe and Nomeco.
While Oliver may have suffered additional damages in November,
1991 when it defaulted on the Santa Fe and Nomeco contracts, the
statements on March 22, 1991 by Oliver's counsel warning IFC that
its refusal to consent to the assignment "caused prejudice to our
clients" is conclusive evidence that Oliver had suffered damages at
the date of the letter. Hence, we agree with the district court in
its determination that the tort causes of action accrued on March
22, 1991 at the latest.3 Because Oliver filed its action on March
3
Oliver's reliance on Fury Imports, Inc. v. Shakespeare Co.,
631 F.2d 1189 (5th Cir.1980), cert. denied, 450 U.S. 921, 101
S.Ct. 1369, 67 L.Ed.2d 349 (1981), Arabian Shield Development Co.
v. Hunt, 808 S.W.2d 577 (Tex.App.—Dallas 1991, writ denied), and
Bauman v. Centex Corp., 611 F.2d 1115 (5th Cir.1980), is
misplaced. Fury applied New York law. Arabian Shield focused on
the Discovery Rule, which involves situations in which the
plaintiff does not even realize that the injury has occurred.
Arabian Shield, 808 S.W.2d at 583-85. Here, the warning from
Oliver's counsel on March 22, 1991 clearly indicates Oliver's
knowledge of the injury. Finally, the Bauman court held that, in
determining the limitations period for the tort of
misrepresentation, misrepresentation by itself is not enough to
establish harm because it is still possible for the plaintiff to
earn a profit after the misrepresentation. Bauman, 611 F.2d at
4
25, 1993, the tort claims are barred by the statute of
limitations.4
II. Contract Claims
The magistrate found that Oliver had no action in contract
because there was no privity of contract between Oliver and IFC.
Oliver presents three theories to overcome the lack of privity.
1. Waiver and Equitable Estoppel.—Oliver argues that IFC
waived or is equitably estopped from asserting non-consent to the
assignments because it engaged in a calculated course of conduct to
keep Oliver contributing to the venture while denying Oliver its
full rights. According to Oliver, IFC misled Oliver about its
reasons for withholding consent—IFC's stated reasons were financial
while its true reasons were to block Oliver from control—and
thereby led Oliver to make contributions to the venture in the
false hope that IFC would eventually be satisfied by Oliver's
financial performance and would consent to the assignments. Oliver
then argues that such circumstances would allow Oliver to be a
party to the JOA who may assert claims for the breach of Article
12.2 and for IFC's breach of the duty of good faith and fair
dealing.
1119. Thus, the court held that the claim did not accrue until
the stock was forfeited, rather than when the misrepresentation
was discovered. Id. Here, Oliver had clearly suffered harm as
of March 22, 1991, when its counsel warned IFC that its denial of
consent caused prejudice to Oliver's interests.
4
Because all the tort claims are barred by the statute of
limitations, we do not reach Oliver's claim with respect to the
alternate grounds found by the district court to support its
summary judgment denying Oliver's tort claims.
5
It is a well-established principle in Texas that "contract
rights cannot be created by estoppel [but estoppel can] prevent a
party's conduct and actions from operating as a denial of the right
of enforcement of a contractual obligation already created."
Roberts v. California-Western States Life Ins. Co., 470 S.W.2d 719,
726 (Tex.Civ.App.—Amarillo 1971) (citation omitted). Because it is
conceded that no contract existed between Oliver and IFC, equitable
estoppel is inapplicable to this case.5
2. Oliver's Rights as the Wronged Assignee Under Article 12.2
of the JOA.—Oliver next argues that Oliver may sue IFC for
unreasonably withholding consent to the assignments under Article
12.2 of the JOA as the wronged assignee, whether there is privity
or not.
The contract law of Texas allows actions by plaintiffs not
party to the original contract only if the original parties to the
contract intended the contract to benefit the third-party
plaintiffs.
5
On appeal, Oliver cites Knight v. Chicago Corp., 183 S.W.2d
666 (Tex.Civ.App.—San Antonio 1944), aff'd, 188 S.W.2d 564
(Tex.1945), as invoking the doctrine of waiver and estoppel to
validate an assignment of a lease despite a lack of consent.
Oliver also cites Wheeler v. White, 398 S.W.2d 93 (Tex.1965),
which recognized that reliance on promissory estoppel to overcome
an otherwise fatal defect of indefiniteness in a contract was not
an offensive use of the doctrine.
Oliver, however, has not cited a case contravening the
basic principle that estoppel does not affirmatively create
contract rights. Knight involved a preexisting contract
between the parties. Knight, 183 S.W.2d at 672. Wheeler
involved a contract between the parties that was later found
defective. Wheeler, 398 S.W.2d at 94-96. Further, Wheeler
concerned the doctrine of promissory estoppel, id. at 96,
not equitable estoppel.
6
The intention of the contracting parties is of
controlling significance to a determination that a third party
may enforce the contract provision.... In deriving intent, we
must begin with the presumption that parties contract for
themselves, and a contract will not be construed as having
been made for the benefit of third parties unless it clearly
appears that such was the intention of the contracting
parties.
Corpus Christi Bank & Trust v. Smith, 525 S.W.2d 501, 503-04
(Tex.1975) (citation omitted). Article 12.2 of the JOA states that
"no Party shall assign all or any part of its Participation
Interest under the Contract or this Agreement without the prior
approval of all Parties (which approval shall not be arbitrarily,
capriciously or otherwise unreasonably withheld)." There is no
suggestion anywhere in the language of this provision that third
parties, much less Oliver specifically, were intended to be
beneficiaries of this provision. The provision was made for the
mutual benefits of the parties to the agreement and not Oliver.
Oliver concedes that no Texas court has allowed a putative
assignee to bring a claim on a contract against one of the original
parties. Nonetheless, Oliver points to B.M.B. Corp. v. McMahan's
Valley Stores, 869 F.2d 865 (5th Cir.1989), which it contends
implies that a putative assignee has such a right. Such an
implication is indeed a weak one. Although the B.M.B. court did
hold that the lessor was obligated to consent to the assignment
under a provision requiring consent if reasonable, the court never
held that the assignee had standing to bring suit. B.M.B., 869
F.2d at 868-69. Rather, the B.M.B. court made such a holding to
determine that the plaintiff-lessor had suffered no damages from
7
its tort claim against an actual assignee of the lessee.6
Moreover, the defendant in B.M.B. was not a putative assignee but
had stepped into the shoes of the original lessee when the
plaintiff acceded to the assignment. In short, B.M.B. did not
involve the question of a putative assignee's standing to bring
suit. Nothing in our reading of B.M.B. convinces us that Texas
would allow a putative assignee such as Oliver to bring suit on a
contract.
Neither are we convinced by Reynolds v. McCullough, 739 S.W.2d
424 (Tex.App.—San Antonio 1987, writ denied), which stated in
dicta: "A lessor may contract, by provision in the lease, not to
unreasonably withhold his consent to an assignment or sublease of
the premises. This type of provision is in the nature of a promise
or covenant which, if breached, could be grounds for an action for
damages." Id. The Reynolds court did not state that a putative
assignee could bring suit on such a provision; in fact, the case
which the court cites in support of its statement, Mitchell's, Inc.
v. Nelms, 454 S.W.2d 809, 813 (Tex.Civ.App.—Dallas 1970, writ ref'd
n.r.e.), involved a suit brought by the lessee, not the putative
assignee. Further, the Reynolds court held that, because the
assignees were not "parties to the original lease transaction, they
may not seek to enforce the lease." Reynolds, 739 S.W.2d at 427.
6
In B.M.B., the lessor sued the assignee claiming
misrepresentations were made to obtain its consent to an
assignment. The court reasoned that the misrepresentations did
not harm the lessor because the lessor was obligated to give
consent to the assignee in any event under a provision requiring
consent to the assignment if not unreasonable. B.M.B., 869 F.2d
at 868-69.
8
Because it does not clearly appear from the contract that
provision 12.2 of the JOA was intended to benefit Oliver, Oliver
may not sue on the contract.
3. IFC's Representations Created a Separate Contract.—Oliver
also contends that privity to the JOA was not required, arguing
that IFC's representations that it would approve Oliver upon a
sufficient financial showing constituted a separate contract to
apply financial standards in reasonable fashion, which IFC breached
by denying consent even though Oliver met industry standards of
financial worthiness. Oliver contends that, here, not only was
there substantial reliance to support a promissory estoppel claim,
but also Oliver's payments benefitted IFC by preserving an
enterprise in which IFC had an interest, thus also providing
consideration for a contract.
We reject this claim because Oliver has not demonstrated that
IFC made a promise or representation to Oliver. Although IFC may
have made representations to Santa Fe and Nomeco, there is no
evidence showing that IFC made any to Oliver. Oliver does not
contest the factual finding of the district court that
Plaintiff has provided no evidence that Defendant made a
promise to it. As previously discussed, communications
concerning the disapproval of the assignments to Plaintiff
were made directly between the ... contract parties.... Dr.
Oliver Waldron, the Chairman of Plaintiff, Oliver Resources,
admits that he "never saw any of the correspondence between
[Defendant] and the parties.... Santa Fe made me aware of the
fact that [Defendant] was somewhat reluctant." ... In
addition, Plaintiff never asked to see copies of
correspondence between Defendant and the other ... contract
parties.
Likewise, if no promise was made, then certainly no separate offer
9
was made by IFC to Oliver for an independent contract. We thereby
find Oliver's final claim to be meritless.
III. Leave To Amend
Oliver also complains that the district court erred in denying
its motion to amend its pleadings to add a misrepresentation claim.
We find this contention to be without merit. Oliver's motion was
filed three months after the deadline set in the Docket Control
Order. The Fifth Circuit has "often ... affirmed denials of
motions to amend when the motions have been untimely filed."
Avatar Exploration, Inc. v. Chevron, U.S.A., Inc., 933 F.2d 314,
321 (5th Cir.1991). Under the circumstances presented here, we
find no abuse of discretion in the district court's decision to
deny Oliver's motion to amend its pleadings.
CONCLUSION
For the foregoing reasons, the judgment of the district court
is AFFIRMED.
10