HOUSTON – The Texas First District Court of Appeals upheld a lower court’s decision allowing a lawsuit over the sale of sand used in fracking to proceed.
SP Silica Sales LLC sued Keane Frac LP for breach of contract, fraud, and fraudulent inducement over a contract to purchase sand.
The contract called for the sand to be delivered from SP Silica’s Monahans Plant, which was under development. If the plant did not open in time, Keane would buy sand on the "spot market” and present invoices to SP Silica for the difference between the contract price and the spot price.
Keane eventually cancelled the contract, citing eight unfilled sand orders. SP Silica sued. Among SP Silica’s claims was that Keane submitted false invoices for sand purchased on the spot market.
Keane filed a motion to dismiss the suit, claiming the invoices were protected by free speech under the Texas Citizens Participation Act (TCPA).
SP Silica argued, however, that Keane's “claims arose out of a private commercial transaction between two parties and did not implicate a ‘matter of public concern’ as that phrase is defined in the TCPA.”
A trial judge agreed with SP Silica and so did a panel of the Court of Appeals.
“We conclude that the communications forming the basis of SP Silica’s amended breach of contract claim and fraud claims do not implicate a matter of public concern and, therefore, Keane did not meet its burden to establish by a preponderance of the evidence that SP Silica’s claims were based on, related to, or were in response to an exercise of Keane’s right to free speech,” the Appeals Court ruled on Aug. 11.
The Appeals Court panel, however, did reverse the lower’s court’s holding that Keane’s motion to dismiss under TCPA was frivolous and that SP Silica was therefore entitled to attorney fees for the cost of defending it.
“Keane argues that there was at least a colorable basis in law and fact for its TCPA motion,” the Appeals Court said. “Based on the unclear state of the law at the time Keane filed its motion to dismiss in June 2019, we agree.”
Keane Frac, LP, v. SP Silica Sales, LLC, Texas Court of Appeals, First District, 01-19-00847-CV