BEAUMONT – In June 2017, a Jefferson County jury recently handed down a $122 million verdict in a breach of contract lawsuit brought by Signature Industrial Services of Beaumont against the International Paper Company.
On April 13, the 13th Court of Appeals gutted the judgment, trimming the award to less than $15 million in damages.
Alleging it was not fully compensated for work performed, Signature Industrial Services of Beaumont filed a complaint against Tennessee-based International Paper, Greg Bennett and Alliance Engineers & Project Consultants of Beaumont on Aug. 8, 2014 in Jefferson County District Court.
At trial, jurors found that International Paper and Signature agreed that Signature would provide labor and services for payment and that International Paper failed to comply with the agreements in place.
The jury awarded Signature more than $2.4 million in compensation owed and more than $56 million for damages to its company as a result.
Jurors also awarded Signature a total of $63 million in mental anguish damages, plus $2.8 million for damages that were a natural and probable consequence of International Paper’s purported fraud.
On appeal, International Paper argued the evidence was legally insufficient to prove breach of contract, fraud and promissory estoppel claims and was also insufficient to support to support the consequential damages award.
Furthermore, International Paper contended a new trial should be granted because the jury awarded excessive actual damages to Signature.
The 13th court held there is legally insufficient evidence to support a consequential damages award of $42 million for loss of sale opportunity and $1.8 million in IRS penalties.
Justices did, however, affirm the consequential damages relating to the owner’s lost equity in the amount of $12.4 million.
Justices sustained International Paper’s issues related to Signature’s claims for breach of contract and fraud, reversing any awards under those causes of action.
Case background
Prior to the trial, Signature and International Paper battled over discovery issues, as Signature sought to discover bonuses and compensation paid to International Paper’s managers, speculating that the managers were motivated to deny payment to Signature in order to increase their bonuses.
According to the original petition, Signature was approached by International Paper and Alliance Engineers representatives and asked to bid on work to a machine known as "the Slaker."
International Paper allegedly asked that the work be started even before the bid process was complete. Signature says it was assured it would be fully compensated for all work on the project.
Signature asserts International Paper promised a speedy bid and contracting process but, instead, took a week longer than expected and failed to include more than $78,000 worth of initial costs in the agreement. Two weeks into the job, Signature claims it warned International Paper that the project was going to quickly surpass the bid amount. International Paper apparently acknowledged the increased costs and agreed for the work to continue.
Signature says International Paper failed to provide drawings and materials necessary to complete the project, causing additional delays. International Paper and its representatives were "admittedly overwhelmed with the enormity of the project and the obstacles," the suit states
By April 2014, Signature says Bennett had been assigned by International Paper to work directly with the Slaker project. Bennett allegedly told Signature to continue any necessary work and submit all change orders after the project was completed rather than alert the company to budget overages while the work was under way.
In addition to problems with project costs, Signature says it raised concerns with International Paper about allegedly lax safety standards and negligence that the company says allowed caustic chemicals to spill into the work site. Signature says the chemicals caused significant damage to its property.
In its original petition, Signature also alleges Bennett publicly made a number of "slanderous and disparaging statements" accusing the company of "stealing from the mill", "lying from their bill" and "inflating invoices."
At the completion of the project, Signature says International Paper alleged the scope of work "was not substantially complete" and allegedly refused to compensate Signature as initially agreed upon.
Attorneys Glen W. Morgan and John Werner of Reaud, Morgan & Quinn in Beaumont represent Signature.
International Paper is represented in part by Shaw Cowart attorney Ethan Shaw.
Judge Justin Sanderson, 60th District Court, presided over the trial.
Trial case No. E-195964
Appeals case No. 13-18-00186-CV