Opinion Released December 28, 2017

Stanley D. Bujnoch v. Copano Energy, LLC, No. 13-15-00621-CV (Memorandum Opinion by Chief Justice Valdez; Panel Members: Justices Contreras and Benavides)

In this appeal from an order granting the defendants’ motions for summary judgment, the Thirteenth Court of Appeals analyzed whether a series of emails could satisfy the statute of frauds and constitute a binding contract.

The plot of land at issue in this case was owned by Stanley Bujnoch, his family, and several related entities (collectively, the “Bujnochs”). In 2011, the Bujnochs granted an easement to Copano and its related entities (collectively, “Copano”) for a pipeline on the property.

In 2012, the parties began negotiating a second easement for a second pipeline on the property. The parties negotiated through their representatives: Marcus Schwarz for the Bujnochs, and James Sanford for Copano.

Sanford sent two emails in December 2012, stating that Copano “will be buying an additional 20 feet easement contiguous to the first easement for a 2nd 24-inch gas line,” and later clarifying that Copano “will be laying the line generally on the north side of the existing 24-inch line.” Sanford typed his name at the bottom of both emails. Two weeks later, Copano proposed  a plat with the second easement running adjacent to the existing easement.

In January 2013, Copano publicly announced that it would be merging with Kinder Morgan Energy Partners. The next day, Sanford emailed Schwartz and agreed to pay $70 per foot for the second 24-inch line, typing his name at the bottom of the message. Schwartz’s accepted Copano’s offer the same day, and requested notice before Copano began conducting surveys.

In February 2013, Sanford emailed Schwartz and agreed to pay Transportation Equipment, Inc. $88 per foot for the second easement, typing his name below the message and including a signature block. Schwartz’s secretary responded, seeking approval for a formal amendment to the original easement to align with the parties’ emails. The proposed amendment was attached to the email, and Sanford responded, “I am fine with these changes.”

Meanwhile, another Copano representative—Thomas Goolsby—mailed the Bujnochs letters on Copano stationary offering to pay $25 per foot for the second easement. The letter asked the Bujnochs to sign and return the enclosed document if they accepted the offer, with no reference to Sanford’s and Schwartz’s negotiations. The Bujnochs never signed or returned the letters.

In March 2013, as Copano was finalizing its merger with Kinder Morgan, another Copano representative—Brent Eubank—emailed Schwartz. Eubank stated he was sending a proposal letter regarding the second easement, offering $20 to $40 per foot. Schwartz forwarded the email to Sanford, asking in all caps “THIS IS NOT OUR DEAL WHAT IS GOING ON?” Sanford assured Schwartz, “Our deal still stands,” explaining that the “letter went out to all of the attorneys that represent landowners on the pipeline.” He apologized for the confusion and stated he was not sure why Eubank sent Schwartz the letter because Copano knew there was a separate deal with Schwartz’s clients.

Neither Copano nor Kinder Morgan honored the agreement, and the Bujnochs filed suit to enforce the contract created by the emails. The Bujnochs further sued Kinder Morgan for tortious interference with the agreement. Copano and Kinder Morgan both moved for summary judgment. Copano claimed that the emails did not satisfy the statute of frauds as a matter of law, while Kinder Morgan argued that the Bujnochs could not prove the existence of a contract or intentional interference. The trial court granted the motions without specifying the basis for its judgment.

The Bujnochs appealed.

Held: There was a genuine issue of fact as to whether the emails could satisfy the statute of frauds, precluding summary judgment on the breach of contract claim. However, the Bujnochs failed to challenge all bases for the trial court’s summary judgment on the tortious interference claim. The judgment was reversed in part and affirmed in part.

The Thirteenth Court of Appeals first reiterated the standards governing summary judgments. A defendant who moves for summary judgment on an affirmative defense such as the statute of frauds must conclusively establish all elements of the defense to be entitled to judgment. The court must construe all evidence in favor of the non-movant.

Statute of Frauds

The statute of frauds requires certain types of contracts, including easement contracts, to be (1) in writing, and (2) signed by the person to be charged with the agreement or by someone lawfully authorized to sign for him. A series of emails may satisfy the writing requirement on a case-by-case basis, provided the messages include the essential terms of the agreement.

Copano claimed that the statute of frauds was not satisfied because (1) the emails could not be read together to satisfy the writing requirement, and no single email was sufficient; (2) even if the emails were read together, they omitted essential terms such as the identities of the parties and the description of the easement; (3) the emails used future language; and (4) the parties did not agree to contract electronically.

1. The emails could be read together.

The Thirteenth Court first rejected Copano’s argument that the emails could not be read together, instead holding that a written memorandum may consist of multiple signed writings. The emails between Schwartz and Sanford all related to the same transaction. Moreover, electronic signatures are binding in Texas, and Sanford signed each email.

The court noted that there has been much discussion in the case law regarding whether a signature block constitutes a binding electronic signature. In Cunningham v. Zurich American Ins. Co, 352 S.W.3d 519 (Tex. App.—Fort Worth 2011, pet. denied), the Fort Worth court held that a signature block alone did not demonstrate an intent to sign and was binding. Copano urged the court to follow Cunningham. However, this dispute was irrelevant because Sanford manually typed his name at the end of each email—at times including both his manually typed name and his signature block. Furthermore, Sanford’s deposition confirmed that the parties intended to conduct business electronically. Because the emails were all signed by the party to be charged, they did not need to expressly refer to one another to be read together.

2. The emails arguably included the essential terms.

Copano next argued that the emails did not include essential terms including the identity of the sellers and a description of the easement.

Regarding the identity of the sellers, the court first noted that the emails explicitly named Transportation Equipment, Inc. Furthermore, the Bujnochs were identified in the emails as “Schwartz’s clients.” The Texas Supreme Court has held that parol evidence may be used to clarify—but not provide—essential terms. Parol evidence could thus be used to clarify the identity of Schwartz’s clients as the Bujnochs.

Turning to the description of the easement, a description sufficient to afford a means of identifying the land with reasonable certainty was required. Here, the emails included a map and stated the second easement would be an additional 20 feet wide, be contiguous to the first easement, and lay generally on the north side of the existing easement. References to the original easement were permissible, because extrinsic evidence may be used to identify the precise property based on the description in the contract. The language in the emails described the size, shape, and boundaries of the easement. The description was comparable to similar language in BSG-Spencer Highway Joint Venture, G.P. v. Muniba Enters., Inc., No. 01-15-01109-CV, 2017 WL 3261365, at *7–8 (Tex. App.—Houston [1st Dist.] Aug. 1, 2017, no pet. h.) (mem. op.). There, the First Court of Appeals held that language describing an easement for ingress and egress was sufficient when the contract referenced a site map specifying the width and location of the easement, and testimony was offered regarding the easement’s historical use. Similarly here, the map, descriptions, and references to the existing easement were sufficient.

3. The emails’ “futuristic language” did not necessarily prevent them from being binding.

The Thirteenth Court next quickly rejected Copano’s challenge regarding the futuristic language of the emails. Although the Thirteenth Court of Appeals acknowledged that the parties’ emails contemplated a future formal agreement, the language was “nonessential” did not keep the emails from satisfying the statute of frauds because they already contained the essential elements of a contract.

4. The parties’ conduct created a fact issue regarding their intent to conduct business electronically.

Electronic records and signatures are binding in Texas if the parties have agreed to transact their business by electronic means. Although Copano claimed it did not agree to transact business electronically, the Thirteenth Court noted that an express agreement was unnecessary because the parties’ conduct and circumstances indicated the agreement. Sanford admitted at his deposition that he would negotiate via email, and acknowledged that Copano had honored agreements he reached by email. Thus, Copano’s argument did not support summary judgment on the statute of frauds issue.

In summary, the Thirteenth Court held that Copano was not entitled to summary judgment on the breach of contract claim because there were genuine issues of material fact regarding the binding nature of the emails.

Tortious Interference

Turning to the tortious interference claim, Kinder Morgan’s motion for summary judgment challenged (1) the existence of a valid contract between the Bujnochs and Copano, and (2) whether Kinder Morgan willfully and intentionally interfered with the contract. Before the trial court, the Bujnochs claimed they did not have enough time to conduct discovery to produce evidence that Kinder Morgan interfered with the contract. However, the Thirteenth Court noted that the Bujnochs did not file an affidavit or motion for continuance explaining the need for additional discovery. On appeal, the Bujnochs only claimed that summary judgment was improper as to the first challenged element—the existence of a valid contract—but did not address the summary judgment as to the interference element. Thus, the summary judgment was affirmed on the unchallenged ground.

In sum, the Thirteenth Court reversed the trial court’s judgment as to the Bujnochs’ breach of contract claim against Copano, and affirmed the judgment as to the tortious interference claim against Kinder Morgan.

Read the Full Opinion Here