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SOUTHEAST TEXAS RECORD

Saturday, November 23, 2024

$6.1 million judgment against American Midstream affirmed on appeal

State Court
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HOUSTON - The First Court of Appeals today affirmed a judgment of more than $6.1 million against American Midstream in a breach of contract lawsuit brought by Rainbow Energy Marketing. 

Court records show that following a bench trial a trial court found in favor of Rainbow, rendering a judgment of $6,145,215.89 in actual damages. 

According to the First Court’s opinion, the lawsuit arises out of a contract between Rainbow, a natural gas trading company, and AMID, a natural gas transportation company that owns the Magnolia pipeline. The parties refer to the contract as the MAG-0005. 

Rainbow sued for breach of contract, repudiation, fraud, and negligent misrepresentation relating to the natural gas transportation contract. AMID counter-sued for breach of contract.

On appeal, AMID argued that the evidence was insufficient to support the trial court’s findings on Rainbow’s breach of contract and repudiation claims. Rainbow, conversely, argued that the trial court erred in denying its request for attorney’s fees.

The First Court concluded that the evidence was sufficient to support the trial court’s findings on the breach of contract claim and award of damages. Justices also found that the trial court did not err in denying Rainbow’s claim for attorney’s fees. 

“We conclude that the trial court’s findings that AMID breached and repudiated the MAG-0005 and the findings of $6,145,215.89 in lost profit, benefit of-the-bargain damages (plus $449,097.42 in prejudgment interest) were supported by sufficient evidence,” the opinion states. “We likewise conclude that the trial court correctly determined that AMID take nothing on its own breach of contract claim, and it properly denied Rainbow’s claim for attorney’s fees. 

“Accordingly, we affirm the trial court’s judgment.”

Justice April Farris dissented, concluding “that the trial court misconstrued a key provision of the parties’ unambiguous MAG-0005 agreement by inserting limiting qualifiers that changed the terms of the parties’ bargain.”

Case No. 01-20-00055-CV

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