E-mails
(Here multiple e-mails)
Contracts - Conclusion
Statute of Frauds
(Here an easement, so an interest in real estate)
Enforceable Written Contract Satisfying the Statute
of Frauds?
Contract Drafting
Texas Law
As happens all the time in modern business, the
parties to this contract dispute sent each other many e-mails prior to the
anticipated signing of a formal written agreement. Though no formal written
agreement was ever executed, the plaintiffs claimed the various e-mails, taken
together, amount to an enforceable written contract satisfying the statute of
frauds. See TEX. BUS. & COM. CODE §§ 26.01–.02 (Texas’s primary
statute of frauds). They sued for breach of that alleged contract and for
tortious interference with it. The defendants argued the statute of frauds bars
the claims, and the trial court granted summary judgment for the defendants on
all claims. The court of appeals affirmed summary judgment on the tortious
interference claim but reversed as to the breach of contract claim. The court
of appeals concluded that the e-mails, taken together, satisfy the statute of
frauds and amount to a contract enforceable against the defendants.
We disagree. The e-mails containing many of the
alleged deal’s principal terms are part of a forward-looking request to
negotiate a contract. Neither those e-mails nor any other writing evidences the
defendant’s agreement to the particular terms stated in the e-mails. As a
result, there is no “written memorandum which is complete within itself in
every material detail,” as required by the statute of frauds. Cohen v.
McCutchin, 565 S.W.2d 230, 232 (Tex. 1978). The court of appeals’ judgment
on the contract claim is reversed, and judgment is rendered that the plaintiffs
take nothing on all their claims.
On December 6, Debbie Bujnoch, who was
Schwartz’s secretary, e-mailed Sanford and informed him that Schwartz was
available for a meeting on December 11 or 13. Sanford responded to Bujnoch by
e-mail, suggesting December 11 for the meeting. On December 7, Bujnoch and
Sanford exchanged several more e-mails. Bujnoch e-mailed Sanford: “In
preparation for the meeting on the 11th, Mr. Schwartz needs to know the size of
the NGL line Copano is proposing to put in. He needs it for valuation and
discussion with our clients.” Sanford responded:
It will be a 24 inch gas line. We will preserve
the 2nd line right we purchased for condensate. I will be asking for an
additional 20 feet of new right of way. We will be laying the line generally on
the North side of the existing 24 inch line (temporary workspace side). I will
be asking for an additional 20 feet of temporary workspace. James
Bujnoch responded: “dry gas or liquid?” Sanford
responded: “Rich gas.” Bujnoch responded: “By that do you mean NGL?” Sanford
finally responded:
When we purchased the original easement for the
24 inch line we purchased the rights for a second 12 inch liquid line. We will
be buying an additional 20 foot easement contiguous to the first easement for a
2nd 24 inch gas line. The rights to lay the 12 inch liquid line will be
unchanged. James
All of Sanford’s e-mails on December 7 use the
subject line “Meeting with Schwartz.” None of the December 6 and 7 e-mails from
Sanford to Bujnoch copied Schwartz. No writing indicates whether the
anticipated December 11 meeting took place or, if it did, what Sanford and
Schwartz discussed or agreed at the meeting.
On January 30, 2013, Sanford and Schwartz
exchanged e-mails for the first time. Sanford wrote to Schwartz and Bill Caraway,
another attorney for the Landowners, stating:
Mark/Bill,
Pursuant to our conversation earlier, Copano
agrees to pay your clients $70.00 per foot for the second 24 inch line it
proposes to build. In addition to this amount Copano agrees to address and
correct the damages to your client’s property caused due to the construction of
the first 24 inch line.
Please confirm that Copano has access to your
client’s property for survey and environmental.
Thanks, James
James Sanford,
Director, Right-of-Way Services Copano Energy
Director, Right-of-Way Services Copano Energy
Schwartz responded to Sanford: “James: In
reliance on this representation we accept your offer and will tell our client
you are authorized to proceed with the survey on their property. We would
appreciate you letting them know a reasonable time before going on their
property. mfs/bbc.”
On February 12, 2013, Sanford sent an e-mail to
Schwartz concerning one of the Landowners, Transportation Equipment, Inc. The
e-mail states: “Copano agrees that it will pay Transportation, Inc. $88.00 per
foot for the easement for the new 24 inch line. Copano will also pay damages
from the first 24 inch line in the total of $73,003.00. Give me a call if you
have any questions. Thanks, James.” While Sanford offered $88 per foot to
Transportation Equipment in this e-mail, Goolsby’s February 22 letter to
Transportation Equipment offered only $15 per foot. There are no writings
indicating that Transportation Equipment accepted either offer.
On February 13, Debbie Bujnoch e-mailed Sanford,
copying Caraway: “Please find revisions made to the amendment of row agreement
for execution by our clients. If this is satisfactory please let us know and we
will have our clients execute the amendments. Debbie Bujnoch, Secretary to Marcus
F. Schwartz.” This e-mail attached an amendment providing that the parties
desired to extend the existing easement by an additional 20 feet to accommodate
a second pipeline. The amendment references a new easement “described on
Exhibit ‘A’ and shown and depicted on Exhibit ‘B,’” but these attachments are
not included in the summary judgment record. The amendment relates to one of
the properties subject to the original easement, namely a tract held by
Landowners Stanley Bujnoch, Betty A. Bujnoch, Susan K. McDowell, Shelly E.
Summers, and Sandra Kay Coe. Sanford responded to this e-mail with an e-mail
addressed to Bujnoch and copying Caraway: “I am fine with these changes.”
Mr. Schwartz,
My name is Brent Eubank and I am sending this landowner compensation proposal on behalf of Copano Pipelines/South, L.P. and James Sanford. Attached you will find a landowner compensation proposal letter. Please review this letter to better understand why we are offering your clients the amount we have. These amounts reflect what Copano is willing to pay for each scenario that we have encountered with the original agreements between Copano and your clients along this pipeline.
Although we realize that Mr. Sanford has had prior contact with you on this matter, in efforts to keep compensation as fair as possible, we have provided the same letter to all attorneys representing landowners on this project.
Thank you for your time,
Thomas Goolsby
Project Manager | Percheron Field Services ....
Brent Eubank
Lead Agent | Percheron Field Services
The e-mail copied Thomas Goolsby, James Sanford,
and Michael Quinn (another Percheron employee). There are no writings accepting
any of these proposals.
I know that this is not our deal. I believe that we have most of the plats. I think that we can start closing easements no later than the end of March (I want to be done by the end of April). Our deal still stands. Copano does not want to go to court with any of your clients. The letter went out to all of the attorneys that represent landowners on the pipeline. I am not sure why Percheron chose to send you and Mark this letter. They know that we already had a deal for your clients. I am sorry for the confusion.
James
The second pipeline was never built. In February
2014, the Landowners sued Copano for breach of contract, alleging a contract to
sell an easement to the Landowners for $70 per foot and to Transportation
Equipment for $88 per foot. The Landowners sued defendant Kinder Morgan for
breach of contract on the theory that Kinder Morgan assumed Copano’s contract
obligations when it merged with Copano. They also sued Kinder Morgan for
tortious interference with contract. The defendants moved for summary judgment,
arguing in part that the statute of frauds barred the contract claim.
Certain agreements, including “a contract for
the sale of real estate,” are “not enforceable unless the promise or agreement,
or a memorandum of it” is “in writing” and “signed by the person to be charged
with the promise or agreement or by someone legally authorized to sign for
him.” TEX. BUS. & COM. CODE § 26.01(a), (b)(4). This requirement is
commonly called the statute of frauds. Because an easement is an interest in
real estate, a contract for the sale of an easement is subject to the statute
of frauds. Pick v. Bartel, 659 S.W.2d 636, 637 (Tex. 1983).
The required written memorandum need not always be a single document, however. “A court may determine, as a matter of law, that multiple documents comprise a written contract.” City of Houston v. Williams, 353 S.W.3d 128, 137 (Tex. 2011) (quoting Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000)). Indeed, multiple writings may comprise a contract “even if the parties executed the instruments at different times and the instruments do not expressly refer to each other.” Fort Worth Indep. Sch. Dist., 22 S.W.3d at 840. When considering multiple writings proffered as a single contract, it remains the rule that the “essential elements of the agreement” must be evident “from the writings” themselves, “without resorting to oral testimony.” Cohen, 565 S.W.2d at 232.
The writings described above and relied upon by the Landowners, even when considered together, do not satisfy the statute of frauds.
The Landowners claim their contract with Copano arose on January 30, 2013. On that date, Sanford e-mailed Schwartz, “Pursuant to our conversation earlier, Copano agrees to pay your clients $70.00 per foot for the second 24 inch line it proposes to build.” Schwartz responded 25 minutes later, “In reliance on this representation we accept your offer . . . .” The January 30 e-mails surely contain an offer and an acceptance. But just as surely, they do not say what is being offered and accepted. Other than the price per foot and the pipeline’s size, the January 30 e-mails contain none of the “essential elements of the agreement.” Sanford’s January 30 e-mail indicates that other terms of the deal may have been discussed in “our conversation earlier.” But none of the writings tell us anything about that conversation.
The Landowners acknowledge that the January 30 e-mails do not satisfy the statute of frauds on their own. Instead, they claim to find most of the alleged agreement’s other essential terms—such as the easement’s location and size—in the December 7 e-mails from Sanford to Bujnoch. As the Landowners see it, the easement terms described in Sanford’s December 7 e- mails are what was offered and accepted at $70 per foot on January 30. One of Sanford’s December 7 e-mails to Bujnoch states, in relevant part:
It will be a 24 inch gas line. We will preserve the 2nd line right we purchased for condensate. I will be asking for an additional 20 feet of new right of way. We will be laying the line generally on the North side of the existing 24 inch line (temporary workspace side). I will be asking for an additional 20 feet of temporary workspace.
Later the same day, Sanford also wrote to Bujnoch: “We will be buying an additional 20 foot easement contiguous to the first easement for a 2nd 24 inch gas line.” These e-mails from Sanford to Bujnoch are the contract terms offered and accepted at $70 per foot on January 30, the Landowners contend.
For two reasons, Sanford’s December 7 e-mails do not supply the missing essential terms required to satisfy the statute of frauds. First, the December 7 e-mails themselves reflect no agreement to be bound by the terms they describe. Second, no later writing evidences an agreement to be bound by the terms stated in the December 7 e-mails.
To begin with, Sanford’s December 7 e-mails reflect no agreement to be bound by the easement terms they describe. E-mail is a ubiquitous feature of modern life. It is used by nearly everyone for nearly every type of communication, from the flippantly inconsequential to the bindingly formal. When it is alleged that an e-mail amounts to a contract binding on the sender, the e-mail’s context must be carefully examined to determine whether it truly evidences the grave intent to be legally bound. Here, neither the context of Sanford’s December 7 e-mails nor their verbiage reflects an intent to bind Copano to the easement terms stated in those e-mails.
Considered in their context, the December 7 e-mails are part of Sanford’s request that Bujnoch, Schwartz’s assistant, arrange a meeting on December 11 at which Sanford and Schwartz would discuss a new easement deal. Sanford is not offering easement terms to Schwartz in the December 7 e-mails. Schwartz himself is not even copied on the December 7 e-mails. Instead, Sanford is describing for Bujnoch, Schwartz’s assistant, what Sanford intends to offer to Schwartz at a later in-person meeting Sanford hopes for on December 11. Indeed, Sanford’s first December 7 e-mail is in response to Bujnoch’s e-mail asking for more information “in preparation for the meeting on the 11th.” The entire e-mail thread anticipates a future, in-person meeting at which the terms Sanford’s e-mails describe might or might not actually be offered. Viewed in their context, the December 7 e-mails are nothing more than a request to negotiate at a later meeting. They describe the terms Sanford anticipates offering at the anticipated meeting, but they do not offer those terms. Such “a writing that contemplates a contract to be made in the future does not satisfy the requirements of the statute of frauds.” Southmark Corp. v. Life Inv’rs, Inc., 851 F.2d 763, 767 (5th Cir. 1988) (applying Texas law).
(…) See Hugh Symons Grp., plc v. Motorola, Inc., 292 F.3d 466, 470 (5th Cir. 2002) (holding that “an overture to further joint discussion or ongoing negotiations” is not a “binding agreement”); Columbia/HCA of Houston, Inc. v. Tea Cake French Bakery & Tea Room, 8 S.W.3d 18, 21 (Tex. App.—Houston [14th] 1999, pet. denied) (holding that a letter constituting the “initial starting point for the negotiations” could not “constitute a binding written agreement”).
The future-tense phrasing of the December 7 e-mails further confirms the absence of an agreement to be bound by the terms stated therein. Sanford twice writes that Copano “will be asking for” various terms. He also writes that Copano “will be buying” an additional easement, “will be laying the line generally on the North side,” and “it will be a 24 inch gas line.” This future-tense language confirms what is already evident from the e-mails’ context: Sanford’s description of the proposed easement is not a present-tense offer of contract terms. It is a description of the terms he “will be asking for” when he later meets with Schwartz. Courts applying Texas law have confirmed that such writings couched in futuristic language contemplating later negotiations do not satisfy the statute of frauds. E.g., Hartford Fire Ins. Co. v. C. Springs 300, Ltd., 287 S.W.3d 771, 778–79 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (holding that a writing containing “futuristic” language only contemplating “a contract or promise to be made in the future does not satisfy the requirement of the statute of frauds”).
(…) Thus, forward-looking writings like the December 7 e-mails could conceivably be used to supply essential terms if another writing confirmed that the parties later agreed to the terms stated in the forward-looking writing.
(…) The court of appeals identified one set of writings containing many essential terms (the December 7 e-mails) and another set of writings evidencing an agreement (the January 30 offer and acceptance). It correctly observed that the statute of frauds permits these writings to be “read together” because they “relate to the same transaction.” 581 S.W.3d at 271. But it did not require any of the writings to evidence the lynchpin of the Landowners’ alleged contract—Copano’s agreement to be bound by the terms stated in the December 7 e-mails. As explained above, the December 7 e-mails themselves reflect no such intent to be bound by their terms. As explained below, nor does any other writing proffered by the Landowners.
On January 30, 2013, Sanford wrote to Schwartz: “Pursuant to our conversation earlier, Copano agrees to pay your clients $70.00 per foot for the second 24 inch line.” Schwartz responded immediately, “In reliance on this representation we accept your offer . . . .” The Landowners attempt to portray these e-mails as an offer and acceptance of the terms described in Sanford’s December 7 e-mails. Nothing in the January 30 e-mails, however, reflects an agreement to the terms described in the December 7 e-mails. To the contrary, Sanford offered $70 per foot to Schwartz’s clients “pursuant to our conversation earlier.” He did not offer $70 per foot “pursuant to my December 7 e-mails.” The writings reflect nothing about “our conversation earlier.” They do not tell us whether the planned December 11 meeting took place or whether any other meetings or conversations occurred. The January 30 e-mails suggest there was a “conversation earlier,” but no writing indicates what was discussed in that conversation or what easement terms Sanford had in mind when he used the words, “Pursuant to our conversation earlier.” There is simply no way of knowing from the writings whether the parties agreed in “our conversation earlier”—and therefore in the January 30 e-mails—to the easement terms described in the December 7 e-mails.
To satisfy the statute of frauds, the writing or writings “must contain the essential terms of a contract, expressed with such certainty and clarity that it may be understood without recourse to parol evidence to show the intention of the parties.” Wilson, 188 S.W.2d at 152 (emphasis added). Tellingly, the Landowners point for support to Schwartz’s affidavit, in which he states that Sanford offered the alleged easement terms both through e-mail and at an in-person conversation. The need for witness testimony to explain that “our conversation earlier” recapitulated the easement terms contained in December 7 e-mails demonstrates that the proffered writings do not “contain the essential terms of the contract . . . without recourse to parol evidence to show the intention of the parties.” Id. The December 7 and January 30 e-mails do not show with certainty and clarity that the acceptance of the $70 price on January 30 also included acceptance of the terms described in the December 7 e-mails.
(…) There is no way for a court, on this record, to piece together with certainty and clarity a collection of writings showing the essential terms of an easement contract and the parties’ agreement to be bound by those terms. As a result, under the statute of frauds, the Landowners’ proffered contract “is not enforceable,” TEX. BUS. & COM. CODE § 26.01(a), and Copano cannot be liable for breach of it. The trial court’s summary judgment for Copano on the breach of contract claim was proper.
(Supreme Court of Texas, January 31, 2020,
Copano Energy, LLC v. Stanley Bujnoch, Life Estate, Docket No. 18-0044, Justice
Blacklock)
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