BEAUMONT - The Court of Appeals for the Ninth District of Texas on Mar. 19 upheld a trial court’s verdict that Huntsman International Petrochemical Co. was harmed by an employee who allegedly misused his influence in a conflict of interest for profit.
“Evidence in the trial allowed the trial court to conclude Sims knew a conflict of interest existed when his job as turnaround manager required him to manage Critical Path’s work,” the court brief noted.
According to the court document, in August of 2013, Huntsman hired Joseph Sims (the appellant) as its turnaround manager, a revamp advisor. Sims’s job required that he manage turnarounds Huntsman wanted to conduct at its chemical plant in Port Neches, Texas.
Sims hired Critical Path Resources (CPR), an oil field service company, to work on the turnarounds and also hired JV Industrial Companies (JV) to do similar work.
JV Industrial contracted with Titan 360 Industrial Services LLC (Titan) to supply JV Industrial with several employees for the turnaround. JV Industrial then charged Huntsman for the Titan employees that Titan was charging to the turnaround in its bills.
The brief said that Sims knew an individual named Alvin Cormier before he became Huntsman’s turnaround manager. Sims allegedly told Cormier before Huntsman hired him that he intended to apply for the job of turnaround manager with Huntsman, and that if successful, he would use his influence to get Huntsman to send Critical Path work.
“The evidence shows Sims and Cormierwere not just merely acquainted with each other, as the two men were the co-owners of a pipeline construction business, Action Field Services, Inc., when Sims applied with Huntsman for the position of turnaround manager,” the court document explained. “Cormier owns Critical Path. In the trial, Cormier testified that Critical Path had been trying to get work from Huntsman long before Sims went to work there. Before Sims took the job as Huntsman’s turnaround manager, Huntsman had never sent Critical Path any work.”
Simms allegedly used his position to influence Huntsman in its choice about whether to use Critical Path for turnaround work and within a few months of becoming Huntsman’s turnaround manager, Huntsman hired Critical Path.
Critical Path reportedly billed Huntsman approximately $1.1 million for work it claimed to have performed on the turnarounds.
The court opinion said evidence before the trial jury convinced jurors that Sims had used his position to influence JV Industrial to hire Titan, which then supplied JV Industrial with employees for the turnaround work.
In 2014 officials at Huntsman began to get suspicious of the arrangements and assigned an employee to investigate. Based on his report bills were put on hold and Critical Path sued Huntsman in August 2015 for $2 million it claimed it was owed.
Huntsman then sued Critical Path.
In October 2017 the case went to trial and a jury found Simms had violated his fiduciary duty and breached a contract. Huntsman had allegedly suffered $851,000 in its dealings with Titan and $167,000 because of Sims’ breach.
The verdict decided Critical Path knowingly participated with Sims in the breach and both were liable.
“Huntsman recovered $851,000 in the judgment,” the brief reported. “The judgment also requires that Sims disgorge $300,000 in profit the jury found Sims obtained while working as Huntsman’s turnaround manager.”
In July 2019 Sims and Critical Path appealed the judgement.
“Sims argued that he derived no benefit from the recommendation he made to Huntsman suggesting Critical Path was qualified to perform work on a turnaround,” the brief read. “But when Sims testified, he acknowledged it benefited him to acquire Cormier’s stock.
Sims benefited from the transactions by being paid a salary by Huntsman that required him to place Huntsman’s interest over his own,” the document added.
The court opinion said testimony before the jury allowed reasonable jurors to decide Sims had violated the fiduciary obligation he owed Huntsman in the dealings involving Critical Path and a finding could be made that Sims profited from his breach.
The Appeals Court ruled that the appellants (Critical Path, Sims) arguments were without merit and upheld the trial court’s judgement.