Midcontinent Express Pipeline, LLC v. Man Industries (INDIA), Ltd, Prime Pipe International, Inc., and the Bank of Tokyo-Mitsubishi UFJ, Ltd ( 2013 )


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  • Affirmed as Modified in Part, and Reversed and Remanded in Part, and
    Opinion and Concurring Opinion filed May 9, 2013.
    
    
    
    
                                    In The
    
                    Fourteenth Court of Appeals
    
                             NO. 14-11-00791-CV
    
                 MAN INDUSTRIES (INDIA), LTD., Appellant
                                      V.
    
          MIDCONTINENT EXPRESS PIPELINE, LLC, PRIME PIPE
      INTERNATIONAL, INC., AND THE BANK OF TOKYO-MITSUBISHI
                         UFJ, LTD., Appellees
    
                             NO. 14-11-00892-CV
    
         MIDCONTINENT EXPRESS PIPELINE, LLC, Cross-Appellant
                                      V.
    
    MAN INDUSTRIES (INDIA), LTD., PRIME PIPE INTERNATIONAL, INC.,
     AND THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., Cross-Appellees
    
                    On Appeal from the 133rd District Court
                             Harris County, Texas
                       Trial Court Cause No. 2008-56539
                                      OPINION
    
          This is an appeal from the judgment rendered after a nonjury trial in which
    the parties asserted claims for declaratory judgment, wrongful dishonor of a letter
    of credit, breach of contract, and breach of fiduciary duty. The claims at issue
    arose after a pipeline company contracted with a pipe manufacturer and the
    manufacturer‘s agent to buy steel pipe and secured the obligation with a standby
    letter of credit issued by a bank. After the manufacturer failed to timely produce
    the pipe, the purchase agreement was modified several times to reduce the size of
    the order and increase the price; the manufacturer nevertheless attempted to draw
    down the full amount secured by the standby letter of credit and collect amounts
    that were not due. We have consolidated the cross-appeals of the manufacturer
    and the purchaser.
    
          In connection with the claims associated with the standby letter of credit, we
    hold that the trial court did not err in ordering the manufacturer to pay the bank‘s
    indemnitor for the attorneys‘ fees the bank incurred in its Texas declaratory-
    judgment action. Although an award of attorneys‘ fees is not authorized under
    New York‘s version of the Uniform Commercial Code that governs the
    construction of the standby letter of credit, such an award is authorized under
    Texas declaratory-judgment law. The trial court also did not err in ordering the
    manufacturer to pay the purchaser‘s expenses of litigation, because such an award
    is permissible under the Texas version of the UCC. Moreover, the evidence is
    legally sufficient to support an award to the purchaser of damages for the fees and
    finance charges the purchaser was required to pay as a result of the manufacturer‘s
    failure to timely return a duplicate letter of credit and its willful misconduct in
    making a materially fraudulent presentation of another letter of credit.
    
    
    
                                              2
           As for the remaining claims of breach of contract and breach of fiduciary
    duty, we hold that because the manufacturer and its agent agreed that the agent
    would be paid a sales commission on products shipped, the trial court erred in
    awarding the agent a commission on pipe that was not produced or sold, and thus,
    was not shipped. The trial court did not err in failing to find that the agent
    breached a fiduciary duty to the manufacturer or in ordering the manufacturer to
    pay the purchaser ―cover‖ damages for its purchase of replacement goods when the
    manufacturer failed to meet its contractual obligations. Finally, we hold that the
    trial court did not err in enforcing a contract modification to which the purchaser
    agreed, or in concluding that the purchaser‘s obligation to pay for pipes that it
    accepted was not excused by the manufacturer‘s tardiness in delivering the goods.
    Thus, we affirm in part, affirm as modified in part, and remand the case for
    recalculation of interest1 and offsets and for rendition of judgment in accordance
    with this opinion.
    
                         I. FACTUAL AND PROCEDURAL BACKGROUND
    
           Midcontinent Express Pipeline, LLC (―Midcontinent‖) was established to
    build and operate a 500-mile natural-gas pipeline from Oklahoma to Alabama.
    Man Industries (India), Ltd. (―Man‖) is a pipe manufacturer based in Mumbai,
    India. Prime Pipe International, Inc. (―Prime Pipe‖) is a broker of pipe for use in
    pipeline projects, and acted as Man‘s agent and sales representative in the United
    States.
    
           1
              In the final judgment, prejudgment interest recoverable by the manufacturer‘s agent was
    calculated on different dates for different parts of the judgment, and prejudgment interest on
    amounts due to the purchaser began on a third date, both for its own claims and for amounts it
    was awarded as the bank‘s indemnitor. The trial court further ordered that amounts paid into the
    registry of the court were to be paid to the purchaser, with the interest on that amount being paid
    to the agent in partial satisfaction of its judgment against the manufacturer. Under the
    circumstances, the trial court is in the best position to determine which amounts are to be offset
    against one another and to recalculate the prejudgment interest on the reduced amounts at issue.
    
                                                    3
    A.    Agency Agreement
    
          Man and Prime Pipe entered into an Agency Agreement in which Prime Pipe
    agreed to negotiate and enter into contracts in the United States on Man‘s behalf
    for the sale of Man‘s products. In that capacity, Prime Pipe brokered a contract
    under which Man agreed to supply pipe for construction of Midcontinent‘s
    pipeline. The Agency Agreement served as the master agreement between Prime
    Pipe and Man, but they modified the commission schedule applicable to the sales
    to Midcontinent. We refer to the latter commission schedule as the ―Midcontinent
    Commission Agreement.‖         In sending the signed payment schedule of the
    Midcontinent Commission Agreement to Prime Pipe, Man wrote that it
    conditioned its approval on several considerations, one of which is as follows:
    
          In the event of any changes in scope of supplies such as change in
          itemized quantities, el[i]mination of coating work etc. which shall
          have impact on the Contract Price, the commis[s]ions shall be subject
          to requisite adjustments arrived by logical re-calculations, which shall
          very [sic] much in line with the basic agreement.
    B.    Purchase Order Agreement
    
          Midcontinent‘s contract with Man took the form of a Purchase Order. Under
    the agreement‘s terms, Man and Prime Pipe (defined collectively as ―Supplier‖ in
    the agreement) were to supply Midcontinent with four kinds of coated pipe in a
    total quantity of more than 1.3 million feet. Man was to be paid a fixed price per
    foot of pipe, and the contract specified that the prices were ―not subject to
    escalation.‖ Midcontinent had the right to decrease the order quantity by as much
    as ten percent. The parties agreed that Midcontinent would have a certain amount
    of time to finalize the quantities of pipe ordered.
    
          Because Midcontinent had to complete the pipeline by a certain time, it
    repeatedly stressed that time was of the essence, and the parties agreed to a
    
                                               4
    production schedule. They agreed that Man would dedicate two specific mills to
    producing pipe for Midcontinent and would begin production by September 30,
    2007 and deliver the last of the pipe no later than August 31, 2008. Midcontinent
    advanced Man approximately $21.6 million to secure a portion of the raw
    materials. The parties agreed that Midcontinent could terminate the contract, in
    whole or in part, if Man and Prime Pipe failed to timely perform their obligations
    or failed to provide Midcontinent reasonable assurance of future performance on
    terms acceptable to Midcontinent.
    
          In finalizing its order, Midcontinent decided that the pipes should be double-
    jointed before being coated; that is, pairs of 40-foot pipes would be welded
    together to make units 80 feet long. Man does not double-joint pipe and could not
    have transported such pipe from its plant to the port. Moreover, Midcontinent
    decided that the pipe should be coated in the United States, and Man has no
    facilities in this country. Man knew that Prime Pipe planned to bid on the contract
    and subcontract the work. Man had no objections to this; Man wanted Prime Pipe
    to win the contract, and one of Man‘s representatives even visited the coating
    facility. Midcontinent did award the contract to Prime Pipe.
    
    C.    First Cover
    
          Man fell behind schedule almost immediately. In September 2007, one of
    the mills that was to have been dedicated to this contract was still being used to
    produce pipe to fill a prior order for a different customer; the other mill was not yet
    at full production. Midcontinent refused Man‘s request to extend the time for
    performance by one month. Because Midcontinent requested but failed to receive
    adequate assurance that Man would make up the production deficit in a timely
    manner, Midcontinent informed Man in November 2007 that it had contracted with
    a third party to produce ten percent of the quantity of one type of pipe called for
    
                                              5
    under the Purchase Order. Midcontinent‘s net cost to cover this reduction was
    $3,720,800.66. This was the least expensive pipe that could be delivered by the
    deadline, and it is undisputed that the price was fair market.
    
    D.    Deficit in Man’s Steel Supply
    
          At a meeting between the parties on or about March 12, 2008, Man told
    Midcontinent that it would run out of steel before completing production.
    According to Man, various suppliers had agreed to allocate part of their schedules
    to producing steel to sell to Man at a stated price, but because the price of steel had
    increased, the suppliers were not honoring those agreements.              Man asked
    Midcontinent to pay an additional $16 million as a result of the increased steel
    prices, and Midcontinent refused.
    
          On April 1, 2008, Man informed Midcontinent that three mills had agreed to
    allocate slots in their respective production schedules to producing steel for Man to
    use in finishing the contract. Three-quarters of the steel would have to be shipped
    from China, and some of it could not be received in time for Man to complete
    production as scheduled. Man also told Midcontinent that securing this steel
    would have ―commercial implications‖ that it wished to ―resolve suitably so as to
    ensure the larger interest of successful completion of the project.‖ Man also asked
    for the production schedule to be extended by three weeks. On April 10, 2008,
    Man wrote to Midcontinent that obtaining the steel necessary to complete the order
    would have a ―huge financial impact‖ on Man and stated that if Man and
    Midcontinent did not meet ―to resolve this and other matters the forward
    movement will get adversely affected.‖
    
    E.    Letter Agreement and Second Cover
    
          The parties met on April 15, 2008 and negotiated a Letter Agreement
    
    
                                               6
    modifying the Purchase Order. At the meeting, Man stated that it would run out of
    steel in a few days, but that it could obtain 28,000 metric tons of steel in time for it
    to produce a reduced quantity of pipes in June and July. Of the approximately
    39,000 metric tons of steel needed to complete the order, Man acknowledged that it
    could not obtain 11,000 metric tons in time to produce the pipes before the end of
    the production schedule. Midcontinent refused to extend the production schedule
    by an additional three weeks as Man requested, and Man acknowledged that to
    meet the schedule, Midcontinent must reduce its order from Man by an additional
    ten percent and cover the shortage in the pipe market. All parties reserved their
    rights to contest the extent to which Midcontinent was entitled to an award of
    damages for this cover. Midcontinent ultimately covered the deficit by purchasing
    double-jointed coated pipe from a company in the United States at a net cost of
    $17,090,745.67. Man does not dispute that Midcontinent paid a fair market price.
    
          Although Man needed less steel to complete the contract as amended, it
    faced a total estimated price increase of about $12.5 million to obtain the 28,000
    metric tons of steel, of which Midcontinent agreed to contribute $4.4 million. As
    consideration for Midcontinent‘s contribution in excess of the amount
    contemplated in the Purchase Order, Man agreed to have issued to Midcontinent a
    standby letter of credit for $15 million. Under the terms of the standby letter of
    credit, Midcontinent would be able to draw funds by certifying to the issuer that
    Man had breached the Purchase Order as amended, and could then apply the funds
    to its damages. Representatives of Midcontinent, Man, and Prime Pipe each signed
    the Letter Agreement.
    
          Despite these modifications, Man did not deliver the reduced quantities of
    pipe until September and October 2008. Midcontinent accordingly presented the
    letter of credit to the issuer and received $15 million to apply to its damages.
    
                                               7
    Midcontinent paid into the registry of the court the $4.4 million it had agreed in the
    Letter Agreement to pay Man.
    
    F.    JPMorgan Chase Standby Letter of Credit
    
          In the original Purchase Order Agreement, the parties agreed that
    Midcontinent would provide Man with a commercial letter of credit that it could
    draw upon as payments became due. In negotiating for Man to receive a large
    advance payment, however, the parties modified this part of their agreement so that
    Midcontinent would provide a standby letter of credit for more than $33 million.
    Man could draw against the standby letter of credit if invoices became past due.
    Midcontinent initially provided a standby letter of credit from JPMorgan Chase,
    but later changed its credit facility and provided Man with a standby letter of credit
    from the Bank of Tokyo-Mitsubishi UFJ, Ltd. (―the Bank‖).               Midcontinent
    submitted the replacement standby letter of credit to Man in May 2008, and Man
    acknowledged receipt on June 25, 2008. Man then wrote to the State Bank of India
    to return the JPMorgan Chase standby letter of credit to the issuer. The issuer
    received it on August 25, 2008.         Between June 25 and August 25, 2008,
    Midcontinent incurred $30,523.85 in bank fees to keep the JPMorgan Chase
    standby letter of credit open, even though Man had a standby letter of credit from
    the Bank throughout this time that covered the same obligation.
    
    G.    The Bank’s Standby Letter of Credit
    
          When the parties switched from using a commercial letter of credit to using
    standby letters of credit, they agreed that when a shipment left India, Man would
    invoice Midcontinent for 80% of the shipment price. Midcontinent would pay the
    invoice within seven days after receiving the original invoice and original shipping
    documents. Man would send an invoice for the remaining 20% of the shipment
    price to be paid by Midcontinent within seven days after the pipe was discharged at
                                              8
    the Port of Houston. The Purchase Order provided that the time for payment
    commenced upon the latest of (1) Midcontinent‘s actual receipt of the invoice and
    supporting documents, (2) its inspection and acceptance of the pipe, (3) Man‘s
    compliance with all requirements of the Purchase Order, or (4) the date a corrected
    invoice was received.
    
             In obtaining a standby letter of credit from the Bank, Midcontinent and the
    Bank agreed that New York law would govern their contract and that Midcontinent
    would pay all of the Bank‘s reasonable expenses incurred in connection with any
    letter of credit or any demand for payment or failure to pay under any letter of
    credit. The standby letter of credit had an expiration date of September 30, 2008.
    
             On September 23, 2008, Man attempted to draw the entire $33,298,751.48
    covered by the standby letter of credit. At that time, Midcontinent‘s maximum
    remaining future payment obligation to Man was approximately $19 million.
    Because the presentation documents were not presented at the Bank‘s offices in
    New York, the Bank refused the presentation.
    
             Two days later, Midcontinent filed this suit seeking a temporary restraining
    order and temporary injunction to prevent Man and Prime Pipe from presenting the
    standby letter of credit and to allow the Bank to rely on the temporary restraining
    order as authority to refuse payment. On the same day, the trial court granted the
    requested relief and Man and the Bank were notified of the temporary restraining
    order.
    
             The next morning, Man caused the standby letter of credit to be presented at
    the Bank‘s New York office, but failed to present a signed beneficiary statement as
    required under the instrument‘s terms. The Bank again refused payment, and a few
    days later, the standby letter of credit expired.
    
    
                                                9
    H.    The Claims at Issue
    
          In addition to the claims for injunctive relief described above and other
    claims not at issue in this appeal, Midcontinent and Prime Pipe sued Man for
    breach of contract; Man sued Prime Pipe for breach of fiduciary duty; Man sued
    the Bank for wrongful dishonor of the standby letter of credit; and the Bank sued
    Man for declaratory judgment.2 Midcontinent, the Bank, and Prime Pipe each
    prevailed at least in part in their claims against Man, and Man partially prevailed in
    its breach-of-contract claims against Midcontinent.
    
          Before offsets, the trial court awarded Midcontinent damages of
    $26,740,381.85 on its claims against Man, which included (1) $30,523.84 in
    banking fees for keeping the JPMorgan Chase standby letter of credit open while
    Man was in possession of the Bank‘s standby letter of credit; (2) $425,058.66 for
    keeping the Bank‘s standby letter of credit ―open‖ after its expiration date as a
    result of this litigation; (3) $2,818,581.75 for attorneys‘ fees incurred by the Bank
    and paid by Midcontinent pursuant to its indemnity agreement with the Bank;
    (4) $3,720,800.66 for covering Man‘s first production deficit in November 2007;
    and (5) $17,090,745.67 for covering Man‘s second deficit in April 2008.3 The trial
    court additionally awarded Midcontinent $64,476.10 as ―expenses of litigation,‖
    and attorneys‘ fees of more than $1.6 million through the date of judgment.
    
          Man prevailed in its claim that Midcontinent breached the Letter Agreement
    by failing to pay Man the additional $4.4 million called for in that document. The
    trial court offset those and other damages awarded to Man against the damages
    
          2
            The trial court denied Man‘s special appearance, and we affirmed that decision. See
    Man Ind. (India) Ltd. v. Bank of Tokyo-Mitsubishi UFJ, Ltd., 
    309 S.W.3d 589
     (Tex. App.—
    Houston [14th Dist.] 2010, no pet.).
          3
            These amounts do not account for all of the damages awarded, but we do not address
    the damages that are not at issue in this appeal.
    
                                                10
    awarded to Midcontinent, leaving a net damage award to Midcontinent in the
    amount of $4,927,143.85. The trial court also found that Man incurred attorneys‘
    fees of $429,749.13 in connection with its breach-of-contract claim against
    Midcontinent, and reduced the award of Midcontinent‘s attorneys‘ fees by that
    amount.
    
           The trial court‘s award to Prime Pipe included $1,022,146.22 for unpaid
    commissions based on the two ten-percent reductions in Midcontinent‘s pipe order
    in November 2007 and April 2008.4 The trial court also awarded Prime Pipe
    $540,000 for attorneys‘ fees through the date of judgment.
    
           Finally, the trial court made the declarations requested by the Bank, and
    ordered Man to pay the Bank‘s attorneys‘ fees to Midcontinent. The trial court
    also awarded Midcontinent, the Bank, and Prime Pipe additional attorneys‘ fees in
    the event that Man pursues an unsuccessful appeal.
    
           The trial court made extensive findings of fact and conclusions of law and
    issued additional findings and conclusions at the parties‘ requests.              Man and
    Midcontinent each appealed the judgment, and we consolidated their cross-appeals.
    
                                            II. ISSUES
    
           In its first issue, Man argues that the trial court erred in awarding
    Midcontinent damages that compensated it for (a) charges paid in connection with
    the various letters of credit; and (b) attorneys‘ fees incurred by the Bank as a result
    of Man‘s claims regarding the standby letter of credit, and which Midcontinent was
    required to pay under its indemnification contract with the Bank. In the same
    issue, Man challenges the trial court‘s award of Midcontinent‘s expenses of
    
           4
             The total amount of actual damages awarded to Prime Pipe was $1,509,548.21, which
    included some unpaid commissions that are not disputed, as well as amounts that Man agreed to
    pay for damaged pipe.
    
                                                 11
    litigation. In its second issue, Man contends that the trial court erred in awarding
    Prime Pipe a sales commission on pipe that was eliminated from the Purchase
    Order by the Letter Agreement modifying the parties‘ contract. Man asserts in its
    third issue that the trial court erred in failing to find that Prime Pipe breached its
    fiduciary duty to Man. In its fourth issue, Man challenges the factual sufficiency
    of the evidence supporting the trial court‘s award to Midcontinent of $20.8 million
    in cover damages.
    
          In its cross-appeal, Midcontinent lists five issues concerning the trial court‘s
    enforcement of the Letter Agreement modifying the parties‘ contract. In its first
    three issues, Midcontinent argues that Man‘s commercial bad faith rendered the
    contract modification ineffective.     In its remaining two issues, Midcontinent
    contends that its obligation to pay Man the additional $4.4 million specified in the
    Letter Agreement was excused by Man‘s prior material breach.
    
                                III. STANDARD OF REVIEW
    
          In an appeal from the judgment rendered after a nonjury trial, we review the
    trial court‘s findings using the same standards of review that apply to a jury‘s
    verdict. MBM Fin. Corp. v. Woodlands Operating Co., L.P., 
    292 S.W.3d 660
    , 663
    n.3 (Tex. 2009) (citing Catalina v. Blasdel, 
    881 S.W.2d 295
    , 297 (Tex. 1994)). If
    one or more elements of a ground of recovery or defense have been found by the
    trial court, then omitted unrequested elements, when supported by the evidence,
    are supplied by presumption in support of the judgment. TEX. R. CIV. P. 299. To
    analyze the legal sufficiency of the evidence supporting an express or implied
    finding, we review the record in the light most favorable to the factual findings,
    crediting favorable evidence if a reasonable factfinder could and disregarding
    contrary evidence unless a reasonable factfinder could not. See City of Keller v.
    Wilson, 
    168 S.W.3d 802
    , 827 (Tex. 2005). Evidence is legally sufficient if it ―rises
    
                                             12
    to a level that would enable reasonable and fair-minded people to differ in their
    conclusions.‖ Ford Motor Co. v. Ridgway, 
    135 S.W.3d 598
    , 601 (Tex. 2004).
    Evidence is legally insufficient only if (a) there is a complete absence of evidence
    of a vital fact, (b) the court is barred by rules of law or evidence from giving
    weight to the only evidence offered to prove a vital fact, (c) the evidence offered to
    prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively
    establishes the opposite of the vital fact. City of Keller, 168 S.W.3d at 810. On the
    other hand, a factfinder ―may not simply speculate that a particular inference arises
    from the evidence.‖ Serv. Corp. Int’l v. Guerra, 
    348 S.W.3d 221
    , 228 (Tex. 2011).
    If the evidence does no more than give rise to mere surmise or suspicion, then it is
    legally insufficient. Id.
    
          In evaluating a factual-sufficiency challenge to express or implied findings,
    we consider and weigh all of the evidence in a neutral light and set aside the
    finding only if the evidence is so weak or the finding is so against the great weight
    and preponderance of the evidence that it is clearly wrong and unjust. See Dow
    Chem. Co. v. Francis, 
    46 S.W.3d 237
    , 242 (Tex. 2001). We defer to a trial court‘s
    factual findings if they are supported by evidence. Perry Homes v. Cull, 
    258 S.W.3d 580
    , 598 (Tex. 2008). We may not pass upon the witnesses‘ credibility or
    substitute our judgment for that of the factfinder, even if the evidence clearly
    would support a different result. Maritime Overseas Corp. v. Ellis, 
    971 S.W.2d 402
    , 407 (Tex. 1998).
    
          We review a trial court‘s conclusions of law de novo to determine if the trial
    court drew the correct legal conclusions from the facts. BMC Software Belg., N.V.
    v. Marchand, 
    83 S.W.3d 789
    , 794 (Tex. 2002). If the trial court rendered the
    proper judgment, we will not reverse it even if the trial court‘s conclusions of law
    are incorrect. Id. The trial court‘s decision regarding which state‘s law applies to
    
                                             13
    an issue also is a question of law subject to de novo review. See Torrington Co. v.
    Stutzman, 
    46 S.W.3d 829
    , 848 (Tex. 2000).
    
                                     IV. MAN’S APPEAL
    
    A.    Claims Associated with the Standby Letter of Credit
    
          In its first issue, Man contends that the trial court erred by awarding
    Midcontinent damages regarding the standby letter of credit. These include awards
    to Midcontinent of attorneys‘ fees incurred by the Bank, Midcontinent‘s expenses
    of litigation, finance charges incurred by Midcontinent to maintain two standby
    letters of credit at the same time, and finance charges that the Bank charged to
    Midcontinent to keep the letter of credit ―open‖ after its expiration date. We
    address each separately.
    
          1.     Bank’s Attorneys’ Fees
    
          Man asserts that the trial court erred in awarding Midcontinent the amounts
    it paid to indemnify the Bank for its attorneys‘ fees incurred in its litigation with
    Man about the standby letter of credit. The trial court concluded that the fee award
    was proper (a) under the Texas version of the Uniform Declaratory Judgments Act
    (―the UDJA‖), and (b) as damages for Man‘s breach of the Purchase Order.
    Because we conclude that the fee award was authorized by the UDJA, we do not
    address the trial court‘s alternative basis for the award.
    
          Man argues that the trial court could not rely on the UDJA as support for an
    award of attorneys‘ fees because the standby letter of credit is governed by New
    York law. This argument turns on the difference between matters of substantive
    law and matters of procedure.        Even if a contract contains a choice-of-law
    provision in which the parties have agreed to apply the law of a different state, ―we
    as the forum will apply our own law to matters of remedy and procedure.‖
    
                                               14
    Autonation Direct.com, Inc. v. Thomas A. Morehead, Inc. 
    278 S.W.3d 470
    , 472
    (Tex. App.—Houston [14th Dist.] 2009, no pet.) Man contends that the ability to
    recover attorneys‘ fees is a substantive issue, and that the trial court therefore
    should have applied the law that governs the substantive issues connected with the
    letter of credit. Man then points out that although the Texas version of the UCC
    provision concerning letters of credit provides that ―[r]easonable attorney‘s fees
    and other expenses of litigation may be awarded to the prevailing party in an action
    in which a remedy is sought under this chapter,‖ the analogous section of New
    York‘s version of the UCC does not contain this provision. Compare TEX. BUS. &
    COM. CODE ANN. § 5.111(e) (West 2011) with N.Y. U.C.C. Law § 5-111
    (McKinney 2001).        Man argues that because all of the Bank‘s requests for
    declaratory judgment required the trial court to construe the Bank‘s standby letter
    of credit with Midcontinent or to determine the parties‘ rights under it, the trial
    court should have applied New York law in determining whether to award
    attorneys‘ fees.
    
           The cases on which Man relies, however, concern fee awards to the
    prevailing party in a suit on a contract. See TEX. CIV. PRAC. & REM. CODE ANN.
    38.001(8) (West 2008) (―A person may recover reasonable attorney‘s fees from an
    individual or corporation, in addition to the amount of a valid claim and costs, if
    the claim is for . . . an oral or written contract.‖); Midwest Med. Supply Co., L.L.C.
    v. Wingert, 
    317 S.W.3d 530
    , 537 (Tex. App.—Dallas 2010, no pet.) (―[T]he
    recovery of attorneys‘ fees for breach of a contract is a substantive, not a
    procedural, issue and will be governed by the law governing the substantive
    issues.‖) (emphasis added);5 Fairmont Supply Co. v. Hooks Indus., Inc., 177
    
           5
              In Midwest Medical Supply, Midwest moved for attorneys‘ fees under Texas Civil
    Practice and Remedies Code section 38.001, under which attorneys‘ fees are recoverable by the
    prevailing party in a contract action, and Wingert moved for attorneys‘ fees under the Texas
                                                 
    15 S.W.3d 529
    , 535–36 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (because
    the plaintiff sought attorneys‘ fees in connection with the successful prosecution of
    its breach-of-contract claim and the contract contained a choice-of-law provision
    specifying that Pennsylvania law applied, the plaintiff could not recover attorneys‘
    fees because they were not available under Pennsylvania law); Rapp Collins
    Worldwide, Inc. v. Mohr, 
    982 S.W.2d 478
    , 487–88 (Tex. App.—Dallas 1998, no
    pet.) (holding, in a breach-of-contract action, that an award of attorneys‘ fees is a
    substantive right, and is governed by the law of the state governing the substantive
    issues).
    
           Awards of attorneys‘ fees in a declaratory-judgment action are governed by
    a different statute. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (West 2008)
    (―In any proceeding under [the UDJA], the court may award costs and reasonable
    and necessary attorney‘s fees as are equitable and just.‖).            The body of law
    concerning a mandatory award of attorneys‘ fees in a suit on a contract does not
    necessarily apply to a discretionary award of attorneys‘ fees in a declaratory-
    judgment action. We have found only one other published Texas case in which the
    reviewing court considered whether our UDJA applies to the declaration of rights
    under a contract governed by the substantive law of another jurisdiction. Faced
    with this question, the Thirteenth Court of Appeals held that ―because [the Act] is
    procedural in nature, its application is appropriate even when applying the
    substantive law of another jurisdiction.‖         Creative Thinking Sources, Inc. v.
    Creative Thinking, Inc., 
    74 S.W.3d 504
    , 513 (Tex. App.—Corpus Christi 2002, no
    pet.). In support of this conclusion, the court cited Texas Association of Business
    v. Texas Air Control Board, 
    852 S.W.2d 440
    , 444 (Tex. 1993), in which the Act is
    
    Uniform Declaratory Judgments Act. The trial court denied both fee requests. Because Midwest
    appealed from the judgment but Wingert did not, the appellate court addressed only the trial
    court‘s denial of attorneys‘ fees under section 38.001.
    
                                                16
    described as ―merely a procedural device for deciding cases already within a
    court‘s jurisdiction.‖         The Supreme Court of Texas has repeated this
    pronouncement many times. See, e.g., Tex Parks & Wildlife Dep’t v. Sawyer
    Trust, 
    354 S.W.3d 384
    , 388 (Tex. 2011) (same); Tex. Dep’t of Transp. v. Sefzik,
    
    355 S.W.3d 618
    , 622 (Tex. 2011) (per curiam) (same); Chenault v. Phillips, 
    914 S.W.2d 140
    , 141 (Tex. 1996) (per curiam) (same); State v. Morales, 
    869 S.W.2d 941
    , 947 (Tex. 1994) (same).6
    
           We also consider it significant that, by its terms, the UDJA must be ―so
    interpreted and construed as to effectuate its general purpose to make uniform the
    law of those states that enact it and to harmonize, as far as possible, with federal
    laws and regulations on the subject of declaratory judgments and decrees.‖ TEX.
    CIV. PRAC. & REM. CODE ANN. § 37.002 (West 2008). Treating the provisions of
    the UDJA as procedural rather than substantive is consistent with the treatment
    afforded to federal declaratory-judgment law and the law of the states enacting
    various versions of the Uniform Declaratory Judgments Act.7                        We therefore
    
    
           6
             On appeal, Man additionally argues that attorneys‘ fees are not recoverable under New
    York‘s declaratory-judgment law; however, this was a proceeding under Texas‘s declaratory-
    judgment statute, which does permit the recovery of attorneys‘ fees, and Man did not plead and
    prove in the trial court that New York‘s declaratory-judgment law both applies and differs from
    Texas law. See Pittsburgh Corning Corp. v. Walters, 
    1 S.W.3d 759
    , 769 (Tex. App.—Corpus
    Christi 1999, pet. denied) (where party requesting judicial notice fails to provide adequate proof
    of the law‘s content, the court will presume that the law of the other jurisdiction is the same as
    Texas law).
           7
             See, e.g., Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S 667, 671, 
    70 S. Ct. 876
    , 879,
    
    94 L. Ed. 1194
     (1950) (―‗The operation of the Declaratory Judgment Act is procedural only.‘‖
    (quoting Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 
    300 U.S. 227
    , 240, 
    57 S. Ct. 461
    ,
    463, 
    81 L. Ed. 617
     (1937))); Jefferson v. Asplund, 
    458 P.2d 995
    , 997 (Alaska 1969) (―In regard
    to the federal prototype of Alaska‘s Declaratory Judgments Act, judicial precedent has
    established the federal Declaratory Judgment Act is both remedial and procedural in nature,
    creating no substantive rights or duties.‖); Am. Family Mut. Ins. Co. v. Bowser, 
    779 P.2d 1376
    ,
    1380 (Colo. Ct. App. 1989) (stating that a declaratory judgment provides ―a procedural, not a
    substantive, remedy‖); Wilson v. Kelley, 
    224 Conn. 110
    , 116, 
    617 A.2d 433
     (1992) (rejecting
    implication that ―the declaratory judgment statute and rules created substantive rights that did not
                                                    17
    conclude that the trial court did not err in applying Texas law as set forth in our
    version of the UDJA.
    
           Under the Texas act, the trial court was permitted to award reasonable and
    necessary attorneys‘ fees ―as are equitable and just.‖ TEX. CIV. PRAC. & REM.
    CODE § 37.009. Man does not contend that the fees awarded were not reasonable
    and necessary, or that in ordering Man to pay the Bank‘s attorneys‘ fees to
    Midcontinent as the Bank‘s indemnitor, the trial court reached a result that was not
    equitable and just. See also TEX. BUS. & COM. CODE ANN. § 1.305 (West. 2009)
    (―[N]either consequential or special damages nor penal damages may be had
    except as specifically provided in this title or by other rule of law.‖) (emphasis
    added).
    
    
    otherwise exist‖); Acevedo v. Kim, 
    284 Ga. 629
    , 633, 
    669 S.E.2d 127
    , 130 (2008) (―The sole
    question is whether a declaratory judgment action is the proper procedural vehicle for resolving
    the dispute.‖) (emphasis added); Beahringer v. Page, 
    204 Ill. 2d 363
    , 373, 
    789 N.E.2d 1216
    ,
    1223–24 (2003) (―A declaratory judgment action is strictly remedial. The statute does not create
    substantive rights or duties, but merely affords a new, additional, and cumulative procedural
    method for the judicial determination of the parties‘ rights.‖); Giroir v. Dumesnil, 
    248 La. 1037
    ,
    1057, 
    184 So. 2d 1
    , 8 (1966) (―The declaratory judgment statute merely creates a procedural
    device whereby the courts may make a declaration of rights without the executory or coercive
    relief embodied in a conventional judgment.‖); Fleischmann v. Mercantile Trust Co. of Balt., 
    192 Md. 680
    , 685, 
    65 A.2d 182
    , 184 (1949) (―[The Uniform Declaratory Judgments Act] does not
    create new substantive rights.‖); Father Flanagan’s Boys’ Home v. Graybill, 
    178 Neb. 79
    , 84,
    
    132 N.W.2d 304
    , 308 (1964) (―The Uniform Declaratory Judgements [sic] Act is a procedural
    act.‖); In re Envtl. Ins. Declaratory Judgment Actions, 
    149 N.J. 278
    , 302, 
    693 A.2d 844
    , 855
    (1997) (―A declaratory judgment act merely provides a procedural device to accelerate the
    resolution of a dispute; the procedural device does not alter the substance of the dispute. . . .
    Declaratory judgment actions do not change any substantive rights . . . .‖); Travelers Indem. Co.
    v. Cochrane, 
    155 Ohio St. 305
    , 312, 
    98 N.E.2d 840
     (1951) (―The purpose of the Uniform
    Declaratory Judgments Act is to provide procedural means to settle controversies and to afford
    relief from uncertainty with respect to rights, status and other legal relations.‖); Felts v. Richland
    County, 
    299 S.C. 214
    , 216, 
    383 S.E.2d 261
    , 262–63 (S.C. Ct. App. 1989) (―The Uniform
    Declaratory Judgments Act which has been adopted by most state jurisdictions is remedial and
    procedural in nature and does not create substantive rights or duties. This is also true of the
    Federal Declaratory Judgment Act.‖), aff’d, 
    303 S.C. 354
    , 
    400 S.E.2d 781
     (1991); Agar Sch.
    Dist. No. 58-1 Bd. of Educ., Agar, S.D. v. McGee, 
    527 N.W.2d 282
    , 289 (S.D. 1995) (―A
    declaratory judgment statute does not create or change any substantive rights . . . .‖).
    
                                                     18
          We accordingly overrule this part of Man‘s first issue and affirm this part of
    the judgment.
    
          2.     Midcontinent’s Expenses of Litigation
    
          Man next asserts that the trial court erred in awarding Midcontinent
    $64,476.10 as ―expenses of litigation‖ under Texas law rather than applying New
    York law. Under Texas Business and Commerce Code section 1.301(a),
    
          [W]hen a transaction bears a reasonable relation to this state and also
          to another state or nation the parties may agree that the law either of
          this state or of such other state or nation shall govern their rights and
          duties. Failing such agreement this title applies to transactions
          bearing an appropriate relation to this state.
    TEX. BUS. & COM. CODE ANN. § (West 2009). It is stated in comment 3 to this
    provision that ―[w]here a transaction has significant contacts with a state which has
    enacted the [UCC] and also with other jurisdictions, the question what relation is
    ‗appropriate‘ is left to judicial decision. In deciding that question, the court is not
    strictly bound by precedents established in other contexts.‖ Id. cmt. 3.
    
          Man does not address this provision, but simply points out that the standby
    letter of credit is governed by New York law, and New York‘s version of the UCC
    does not authorize recovery of the expenses of litigation. See N.Y. U.C.C. Law
    § 5-111. Midcontinent, however, contends that the trial court properly applied
    Texas law because the parties agreed that the Purchase Order is governed by Texas
    law. Under Texas‘s version of article 5.111 of the Uniform Commercial Code,
    expenses of litigation may be awarded to the prevailing party in an action in which
    a party seeks a remedy under the UCC provisions concerning letters of credit.
    TEX. BUS. & COM. CODE ANN. § 5.111. It is stated in comment 6 that this
    provision applies ―even when the remedy might be an injunction under Section 5-
    109 or when the claimed remedy is otherwise outside of Section 5-111.‖ Id.
    
                                              19
    § 5.111 cmt. 6.
    
             Here, Midcontinent sought an injunction under Texas Business and
    Commerce Code section 5.109(b). Section 5.109 applies ―[i]f a presentation is
    made that appears on its face strictly to comply with the terms and conditions of
    the letter of credit.‖ TEX. BUS. & COM. CODE ANN. § 5.109(b) (West 2011). More
    specifically, subsection 5.109(b) of the Texas statute applies if an applicant such as
    Midcontinent ―claims that a required document is forged or materially fraudulent
    or that the honor of the presentation would facilitate a material fraud by the
    beneficiary on the issuer or applicant . . . .‖ Id. § 5.109(b). The trial court found
    that ―[b]y pleading a claim under UCC Article 5, [Midcontinent] pled a claim for
    the expenses of litigation awarded under UCC Article 5.111(e) & cmt 6.‖ We
    agree.
    
             As Midcontinent stated in its pleadings, ―The Letter of Credit specifically
    states that for the [B]ank to honor presentment, Man must submit a statement
    certifying, among other things, ‗that such funds are due us [Man] as there has been
    a payment default of obligations by [Midcontinent] under‘ the Purchase Order.‖
    To determine whether Man submitted a materially fraudulent document to the
    Bank by certifying that Midcontinent was in default, the trial court had to refer to
    the terms of the Purchase Order and its amendments to determine when payment
    was due. See Sun Marine Terminals, Inc. v. Artoc Bank & Trust, Ltd., 
    797 S.W.2d 7
    , 11 (Tex. 1990).8 Midcontinent, Man, and Prime Pipe agreed in the Purchase
    Order that ―the laws of Texas (without giving effect to Texas choice of law rules)
             8
                 There, the Texas Supreme Court explained,
             One cannot ascertain by looking solely to the terms of the letter of credit whether
             Uni actually owed Sun for services rendered because the letter of credit does not
             state what services Sun was to perform or how and when Uni was to pay. One
             must refer instead to the agreement which does set out Sun‘s and Uni‘s
             obligations to one another.
    
                                                     20
    shall govern any interpretation or construction of the Purchase Order and/or the
    parties‘ rights, remedies and obligations in connection herewith.‖ Because the
    Purchase Order is a contract for the sale of goods and is subject to the Texas UCC,
    that law bears both a ―reasonable‖ and an ―appropriate‖ relation to Man‘s
    representation to the Bank that Midcontinent was in default of its contractual
    obligations under the Purchase Order. Moreover, because nothing in the Purchase
    Order indicated that letters of credit issued to Man would be subject to a different
    choice-of-law provision; the choice of law governing the letter of credit was
    instead the result of an agreement between Midcontinent and the Bank, not the
    contract between Midcontinent and Man. Thus, the application of Texas law also
    appears to be consonant with the parties‘ expectations,
    
          Finding no error in the trial court‘s application of Texas law, we overrule
    this part of Man‘s first issue and affirm this portion of the judgment.
    
          3.     Fees Midcontinent Incurred to Maintain Two Letters of Credit
    
          As relevant to the next award, the trial court found that ―Midcontinent
    incurred $30,523.85 in additional bank fees to keep the JPMorgan Chase Letter of
    Credit open while Man had possession‖ of standby letters of credit both from that
    issuer and from the Bank. The trial court further found, ―Had Man kept only one
    letter of credit (as required by the parties‘ agreement) and promptly returned the
    JPMorgan [Chase] letter of credit, [Midcontinent] would not have incurred these
    damages.‖ Man argues that there is no contractual basis for the award, and that the
    award additionally is barred by a provision in the Purchase Order prohibiting
    consequential damages. We disagree.
    
          The record shows that Midcontinent first caused a standby letter of credit to
    be issued to Man from JPMorgan Chase. Man was told in 2007 that the original
    standby letter of credit would expire in August 2008, but that Midcontinent would
                                              21
    have its own credit facility in place in December 2007. Midcontinent then would
    replace the first letter of credit with a standby letter of credit having an expiration
    date of September 30, 2008. The record shows that the replacement standby letter
    of credit was issued on or about May 12, 2008. A witness from Prime Pipe
    testified that Man promised it would return the original letter of credit within a
    couple of days, but the witness could not recall when that statement was made. A
    witness from Man, however, admitted that Man had known since 2007 that the
    original standby letter of credit would be replaced; that Midcontinent asked Man to
    return the JPMorgan Chase standby letter of credit when the replacement standby
    letter of credit was issued; and that the replacement letter was issued in mid-2008.
    Thus, the evidence supports the trial court‘s implied finding that Man agreed to
    return the JPMorgan Chase standby letter of credit within a reasonable time after
    the replacement standby letter of credit was issued.
    
          Despite this agreement, JPMorgan Chase did not receive the original standby
    letter of credit until August 25, 2008—less than a week before it expired, but more
    than three months after the replacement letter was issued. The trial court found
    that ―Man failed to release the JPMorgan letter of credit in a timely manner.‖
    Significantly, Man does not challenge the trial court‘s factual finding, and the
    finding supports the trial court‘s conclusion that Man breached its agreement.
    
          This leaves only the question of damages. Man asserts that these fees are
    consequential damages and that the Purchase Order expressly bars awards of
    consequential damages. We need not characterize the damage award, however,
    because Man acknowledges that under the actual terms of the Purchase Order, the
    parties agreed that ―[n]otwithstanding any provision to the contrary, neither party
    shall be liable to the other for any consequential, punitive or exemplary damages of
    any type . . . except . . . resulting from gross negligence or willful misconduct.‖
    
                                              22
    (emphasis added). If, as Man asserts, the damages are properly characterized as
    consequential damages, then we must presume the trial court found that in failing
    to timely return the original standby letter of credit, Man engaged in gross
    negligence or willful misconduct. See TEX. R. CIV. P. 299. Man nevertheless has
    not challenged such an implied finding.9
    
           We overrule this part of Man‘s first issue and sustain this portion of the
    damage award.
    
           4.      Fees Midcontinent Incurred to Keep the Standby Letter of Credit
                   “Open” After its Expiration
           Among the damages awarded to Midcontinent, the trial court included
    $425,058.66 to reimburse Midcontinent for banking fees it paid to keep the Bank‘s
    standby letter of credit ―open‖ after the temporary restraining order was issued and
    the letter of credit expired. According to Midcontinent, the Bank charged these
    fees because it considered the standby letter of credit to remain ―outstanding‖ for
    as long as Man continued to assert that the Bank had wrongfully dishonored the
    letter of credit.
    
           Man contends that the trial court erred in awarding Midcontinent these
    damages because (a) Man‘s presentation of the standby letter of credit was not a
    breach of the Purchase Order, and (b) the Purchase Order bars awards of
    consequential damages. We need not address Man‘s first argument because under
    the terms of the Purchase Order, one party can be held liable for another‘s
    
           9
              The record contains legally sufficient evidence supporting such an inference of gross
    negligence or willful misconduct. Man was well aware of the substantial charges associated with
    letters of credit—so much so, in fact, that it arranged at the start of the contract to shift some of
    the charges to Midcontinent for letters of credit that Man needed to provide to its own steel
    suppliers. Man did not acknowledge receipt of the replacement letter of credit until June 25,
    2008, more than six weeks after the replacement was issued, and a further two months passed
    before the original standby letter of credit was received by JPMorgan Chase. The record
    contains no explanation for these delays.
    
                                                     23
    consequential damages for conduct other than a breach of contract. As previously
    mentioned, the parties agreed that ―[n]otwithstanding any provision to the contrary,
    neither party shall be liable to the other for any consequential . . . damages of any
    type . . . except . . . resulting from gross negligence or willful misconduct.‖ The
    trial court found that Man‘s presentation of the standby letter of credit to the Bank
    was materially fraudulent and that Midcontinent paid these charges ―because of
    Man‘s presentation and continued pursuit‖ of payment under that instrument.
    
          Although Man was entitled to payment under the standby letter of credit
    only if an invoice was not timely paid, Man attempted to draw the entire amount of
    the standby letter of credit—an amount exceeding $33 million—even though Man
    knew that Midcontinent was not in default of any past payment obligations, and the
    maximum amount of Midcontinent‘s future payment obligations was less than
    $19.4 million. Tellingly, Man first presented the letter of credit the day after
    Midcontinent presented the $15 million letter of credit that Man had provided to
    Midcontinent as an advance payment to be applied to Midcontinent‘s damages in
    the event that Man breached the amended Purchase Order. The record therefore
    supports an implied finding that Man engaged in its materially fraudulent conduct
    to retaliate against Midcontinent for drawing against Man‘s letter of credit, even
    though Midcontinent was entitled to do so. And because Man asserted in this suit
    that the Bank wrongfully dishonored the letter of credit, the Bank could not ―close
    the books‖ until this matter was resolved, and continued to charge fees to
    Midcontinent for maintaining the letter of credit.
    
          The Purchase Order does not prohibit an award of consequential damages
    for such willful misconduct. We therefore overrule this part of Man‘s first issue
    and sustain this portion of the damage award.
    
    
    
                                             24
    B.     Man’s Breach-of-Fiduciary-Duty Claim Against Prime Pipe
    
           Man also asserts that the trial court erred in failing to find that Prime Pipe
    breached its fiduciary duty to Man by excluding Man from Prime Pipe‘s coating
    contract with Midcontinent.10 We conclude, however, that Prime Pipe did not
    breach its fiduciary duty to Man by bidding on work to be performed in the United
    States or by hiring subcontractors in the United States to execute the contracts,
    because these tasks were outside the scope of its fiduciary duty.
    
           An agent has a fiduciary duty ―to act primarily for the benefit of another in
    matters connected with his undertaking.‖ Johnson v. Brewer & Pritchard, P.C., 
    73 S.W.3d 193
    , 200 (Tex. 2002) (quoting RESTATEMENT (SECOND) OF AGENCY § 387,
    cmt. a (1958)). When determining the scope of an agent‘s fiduciary duty, courts
    must consider ―not only the nature and purpose of the relationship, but also
    agreements between the agent and principal.‖ Nat’l Plan Administrators, Inc. v.
    Nat’l Health Ins. Co., 
    235 S.W.3d 695
    , 700 (Tex. 2007).
    
           Here, Prime Pipe represented Man in negotiating and entering into contracts
    for the sale of Man‘s products. As defined in the Agency Agreement, Man‘s
    ―[p]roducts are those manufactured by Man.‖11                 Prime Pipe did not agree to
    represent Man in obtaining contracts for work to be performed by other companies.
    The parties did agree, however, that they would ―decide over the involvement of
    each other on a case-to-case basis.‖ As the trial court found,
    
           Prime Pipe fully disclosed to Man that it intended to submit a bid to
           Midcontinent for the coating work in the United States;
    
           10
               Although Man included in its statement of this issue that it also was challenging the
    trial court‘s failure to find that Prime Pipe breached its fiduciary duty to Man by failing to make
    insurance claims on Man‘s behalf, Man did not brief this point. This argument accordingly is
    waived. See TEX. R. APP. P. 38.1(i).
           11
                Capitalization normalized.
    
                                                    25
          Man approved of Prime Pipe‘s intention to bid on the Midcontinent
          coating work in the United States;
          Man never objected to Prime Pipe performing the coating work; and
          Man was aware of and acquiesced in the bidding on and performance
          of the coating contract by Prime Pipe.
          Considering the terms of the Agency Agreement and these unchallenged
    findings of fact, we conclude that the trial court did not err in failing to hold that
    Prime Pipe breached a fiduciary duty to Man. We accordingly overrule this issue
    and affirm this part of the judgment.
    
    C.    Prime Pipe’s Commission Claim Against Man
    
          The trial court awarded Prime Pipe $1,022,146.22 for commissions that
    Prime Pipe was not paid because Midcontinent twice reduced the pipe order by ten
    percent. On appeal, Man does not challenge the trial court‘s award of $511,073.11
    in connection with the first ten-percent reduction of Midcontinent‘s order in
    November 2007. Man does contend, however, that Prime Pipe was not entitled to
    recover a similar sum for the second ten-percent reduction of the order in April
    2008 because, unlike the first reduction, Prime Pipe agreed to it. We agree.
    
          In the Agency Agreement between Man and Prime Pipe, the parties agreed
    as follows:
    
          Article 4 (Responsibility of MAN):
          1)      MAN shall supply their products and related services in
                  accordance with the specifications and requirements of the end
                  customer received through PRIME PIPE.
                                             ...
          4)      MAN shall perform according to the schedules mutually agreed
                  with PRIME PIPE including but not limited to the review of
                  specifications, preparation of procedures and control
                  documents, manufacturing, delivery of finished products and
                  final documentation.
                                             26
           5)     MAN shall pay the sales commission to PRIME PIPE in
                  accordance with the provisions of Article 5.
                                                 ...
           Article 5 (Commission Expenses and Remittances)
                  Commissions:
           For the contracts for the supply of MAN products secured by the
           involvement and efforts of PRIME PIPE from the clients located in
           the [United States], MAN shall pay the Sales Commission to PRIME
           PIPE as per the following slabs based on the total quantum of
           contracts/orders secured in a calendar year:
                                                 ...
           c)     Above 10000 MT – 1.00% (One Percent) of FOB12 Value of
                  shipped goods.
                                                 ...
           Unless otherwise agreed on [a] case-to-case basis, the commissions by
           MAN to PRIME PIPE shall be payable after the completion of
           supplies and receipt of payment by MAN according to the agreed
           payment schedule. Payments to PRIME PIPE shall not be withheld
           pending resolution of issue[s] pertaining to the products produced by
           MAN within the scope of contractual specifications.
           Based on this language, Prime Pipe presented two theories of recovery.
    First, it argued that it was entitled to commission based on the ―total quantum‖ of
    the Midcontinent Purchase Order as originally issued, and should not lose part of
    its commission after the size of the order was reduced as a result of Man‘s conduct.
    Second, Prime Pipe asserted that it was entitled to the commission as damages for
    Man‘s breach of the Agency Agreement by failing to supply products in
    accordance with Midcontinent‘s requirements and to perform according to the
    agreed-upon schedules.
    
           12
              ―F.O.B.‖ means ―free on board.‖ TEX. BUS. & COM. CODE ANN. § 2.319(a) (West
    2009). This signifies that the seller is required ―to deliver the goods without expense to the
    buyer at the place and time mentioned, where title passes.‖ Gessmann v. Stephens, 
    51 S.W.3d 329
    , 338 n.6 (Tex. App.—Tyler 2001, no pet.).
    
                                                 27
           Man contends that Prime Pipe‘s arguments rest on an erroneous
    interpretation of the Agency Agreement and ignore the fact that Prime Pipe agreed
    to a 10% reduction in the size of Midcontinent‘s order. We agree.
    
           Under the Agency Agreement‘s terms, Prime Pipe earns a commission from
    ―the contracts for the supply of Man products secured by the involvement and
    efforts of Prime Pipe,‖13 but this does language does not specify how the
    commission is measured. In specifying that amount, the parties expressly agreed
    that Prime Pipe‘s commission was to be a particular percentage, of a particular
    kind of value, ―of shipped goods.‖ In the Midcontinent Commission Agreement,
    the parties changed the percentage and value but did not change the term of
    "shipped goods" to anything else. See Grynberg v. Grey Wolf Drilling Co., 
    296 S.W.3d 132
    , 137 & n.17 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (―To the
    extent of any conflict, specific provisions control over more general ones.‖ (citing
    Forbau v. Aetna Life Ins. Co., 
    876 S.W.2d 132
    , 133–34 (Tex. 1994))).
    
           Prime Pipe asserts that under the Midcontinent Commission Agreement, the
    payment schedule ―says nothing about the pipe having to be ‗shipped‘ in order for
    [Prime Pipe‘s] commission to be due.‖ This is incorrect. The signed Commission
    Schedule attached to the Midcontinent Commission Agreement provided that part
    of the commission was to be paid ―date of shipment net 7 days,‖ and part was to be
    paid ―port of discharge net 7 days.‖14 The Agency Agreement similarly provides
    that commissions ―shall be payable after the completion of supplies and receipt of
    payment by [Man] according to the agreed payment schedule.‖ (emphasis added).
    Under Man‘s agreed payment schedule with Midcontinent, Man was to invoice
    
    
           13
                Capitalization normalized.
           14
               According to the evidence presented at trial, ―[d]ischarge is complete when all the pipe
    is off the vessel and unhooked.‖
    
                                                    28
    Midcontinent 80% of the price when each month‘s quota was shipped, and
    payment was due net seven days from the date of the invoice. The remaining 20%
    of the price of each shipment was invoiced when the pipes were discharged from
    the vessel at the Port of Houston, and payment was due net seven days after
    discharge of the vessel. Thus, the Commission Schedule under the Midcontinent
    Commission Agreement is consistent with the Agency Agreement‘s requirement
    that commissions ―shall be payable after the completion of supplies and receipt of
    payment by [Man] according to the agreed payment schedule.‖
    
          Prime Pipe also contends that the Agency Agreement prohibits Man from
    withholding Prime Pipe‘s commission ―pending the resolution of any dispute with
    the customer.‖ (emphasis added). But that statement is broader than the language
    of the Agency Agreement. The parties actually agreed that commissions would not
    be withheld ―pending resolution of issue[s] pertaining to the products produced by
    [Man] within the scope of contractual specifications.‖ Pipe that Man originally
    agreed but failed to produce are not ―products produced by [Man] within the scope
    of contractual specifications.‖
    
          Prime Pipe further argues that ―Texas law includes a long-standing
    common-law principle that a broker is entitled to a commission at the time he
    procures a buyer ready, willing, and able to make an enforceable contract to
    purchase the seller‘s property on terms acceptable to him, unless the broker and
    seller agree otherwise.‖ (emphasis added). Here, however, the broker and the
    seller did expressly agree otherwise.
    
          In sending the signed payment schedule of the Midcontinent Commission
    Agreement to Prime Pipe, Man wrote that it conditioned its approval on several
    considerations, one of which is as follows: ―In the event of any changes in scope of
    supplies such as change in itemized quantities, el[i]mination of coating work etc.
    
                                            29
    which shall have impact on the Contract Price, the commis[s]ions shall be subject
    to requisite adjustments arrived by logical re-calculations, which shall [sic] very
    much in line with the basic agreement.‖ The evidence shows that in the Letter
    Agreement of April 16, 2008, Prime Pipe did agree to a reduction in the quantity of
    pipe to be supplied, and thus, in a reduction of its commission.
    
          The Letter Agreement provides that ―[w]hen fully executed by the parties,
    this letter agreement . . . will amend the Purchase Order with respect to the
    production schedule for the months of June and July, 2008.‖ The only right that
    Prime Pipe reserved in the Letter Agreement was the right to contest whether
    Midcontinent was owed any ―damages for any shortfall in the production of the
    total quantity of pipe under the Purchase Order, including the shortfall in the
    original order under the Purchase Order.‖ The Letter Agreement concluded, ―If
    this Letter Agreement reflects your understanding and agreement of the matters set
    forth herein, please sign in the space provided . . . .‖ Above the spaces provided
    for the signatures of Man‘s and Prime Pipe‘s representatives were the words
    ―Agreed and accepted.‖ Prime Pipe‘s project director signed the letter.
    
          By executing the Letter Agreement, Prime Pipe agreed with Man and
    Midcontinent that a certain quantity of pipe would not be produced or sold, which
    necessarily meant that Prime Pipe agreed that this quantity would not be shipped.
    Because Prime Pipe‘s commission was equal to a portion of the value of shipped
    goods, Prime Pipe effectively agreed to a reduction in its commission.
    
          We accordingly sustain this issue. We modify the award of actual damages
    to Prime Pipe to reduce it by $511,073.11. As modified, the total actual damages
    assessed against Man for Prime Pipe‘s claims is $998,475.10.
    
    
    
    
                                             30
    D.    Midcontinent’s Cover Damages
    
          Under the UCC, when a seller fails to make delivery, then ―the buyer may
    cancel and whether or not he has done so may . . . ‗cover‘ and have damages . . . as
    to all the goods affected whether or not they have been identified to the
    contract . . . .‖ TEX. BUS. & COM. CODE § 2.711(a)(1) (West 2009). A buyer
    covers the nondelivery ―by making in good faith and without unreasonable delay
    any reasonable purchase of or contract to purchase goods in substitution for those
    due from the seller.‖ Id. § 2.712(a). Although Man does not dispute that it
    breached the contract and that Midcontinent paid a fair market price to cover the
    shortfalls, Man contends that the evidence is factually insufficient to show that
    Midcontinent‘s decision to cover was both reasonable and in good faith.
    According to Man, Midcontinent could not reasonably and in good faith require
    Man to adhere to the production schedule because Midcontinent could have waived
    strict compliance with the production deadline without delaying the project.
    
          This argument is without merit. Breach-of-contract remedies are available
    to a buyer when the seller fails to make any delivery. Ellis v. Precision Engine
    Rebuilders, Inc., 
    68 S.W.3d 894
    , 896 (Tex. App.—Houston [1st Dist.] 2002, no
    pet.) (citing Sw. Bell Tel. Co. v. FDP Corp., 
    811 S.W.2d 572
    , 576 (Tex. 1991) (op.
    on reh‘g)); W. B. Dunavant & Co. v. Southmost Growers, Inc., 
    561 S.W.2d 578
    ,
    583 (Tex. Civ. App.—Corpus Christi 1978, writ ref‘d n.r.e.). As Midcontinent
    correctly points out, ―the test of whether Midcontinent rightly decided to cover is
    whether Man ‗failed to make delivery.‘‖ See TEX. BUS. & COM. CODE ANN.
    § 2.711(a).
    
          It is undisputed that Man failed to make delivery in the time specified in the
    contract and that Midcontinent repeatedly insisted on adherence to agreed
    production schedules because ―time was of the essence.‖ Man accordingly agreed
    
                                            31
    in the Purchase Order that Midcontinent could terminate the contract, in whole or
    in part, if Man failed to timely perform its obligations or failed to give adequate
    assurance of its future performance on terms acceptable to Midcontinent.
    
          Midcontinent additionally produced evidence that at that time it decided to
    cover the deficits, it did not believe that other factors would cause delays in the
    pipeline‘s construction during which Man could make up its own reduced
    production. The trial court was not required to determine whether, in hindsight,
    Midcontinent was correct or whether it instead could have waived Man‘s failure to
    comply with this material term of the contract without increasing the risk that the
    pipeline would have been delayed. See TEX. BUS. & COM. CODE ANN. § 2.712,
    cmt. 2 (―The test of proper cover is whether at the time and place the buyer acted
    in good faith and in a reasonable manner, and it is immaterial that hindsight may
    later prove that the method of cover used was not the cheapest or most effective.‖);
    TrueStar Petroleum Corp. v. Eagle Oil & Gas Co., 
    323 S.W.3d 316
    , 320 (Tex.
    App.—Dallas 2010, no pet.) (explaining that, where the contract provided that
    ―time is of the essence,‖ failure to comply with the delivery deadline was a
    material breach that entitled the other party to exercise contractual remedies, even
    if that party would not have been damaged by excusing the late delivery). The
    obligation to act in good faith did not require Midcontinent to extend to Man
    another opportunity to produce the pipe. See Deep Nines, Inc. v. McAfee, Inc., 
    246 S.W.3d 842
    , 848 (Tex. App.—Dallas 2008, no pet.) (―Once a party breaches a
    contract, giving rise to a cause of action, the rights of the non-breaching party are
    not affected by the breaching party‘s later offer to perform.‖ (citing Carrico v.
    Kondos, 
    111 S.W.3d 582
    , 588 (Tex. App.—Fort Worth 2003, pet. denied))).
    
          We overrule this issue and affirm this portion of the damage award.
    
    
    
                                             32
                          V. MIDCONTINENT’S CROSS-APPEAL
    
          In five issues, Midcontinent contends that the trial court erred in enforcing
    the Letter Agreement in which Midcontinent agreed to pay Man an additional $4.4
    million. In its first three issues, Midcontinent argues that the modification was
    ineffective because Man lacked good faith.        In its fourth and fifth issues,
    Midcontinent argues that even if the modification was effective, Midcontinent did
    not breach the contract by paying $4.4 million into the registry of the court rather
    than directly to Man because Midcontinent‘s obligation to pay was excused by
    Man‘s prior material breach.
    
    A.    Effectiveness of the Modification
    
          Midcontinent contends that the Letter Agreement did not effectively modify
    Midcontinent‘s contract with Man because Man obtained the modification in bad
    faith. Under the UCC, every contract or duty ―imposes an obligation of good faith
    in its performance and enforcement.‖ TEX. BUS. & COM. CODE ANN. § 1.304
    (West 2009). Modifications in a contract for the sale of goods therefore must meet
    the UCC‘s test of good faith.       Id. § 2.209 cmt. 2.     As used here, ―good
    faith . . . means honesty in fact and the observance of reasonable commercial
    standards of fair dealing.‖     Id. § 1.201(b)(20).   The trial court found that
    Midcontinent breached its enforceable agreement to pay Man $4.4 million; thus, all
    omitted unrequested findings necessary to support the judgment are supplied by
    presumption if supported by the record. TEX. R. CIV. P. 299. We therefore
    presume that the trial court found that Man sought the contract modification in
    good faith. More specifically, we presume that the trial court found that Man‘s
    decision to seek the modification was consistent with the ―observance of
    reasonable commercial standards of fair dealing‖ and that Man acted with ―honesty
    in fact.‖ See TEX. BUS. & COM. CODE ANN. § 1.201(b)(20).
    
                                            33
          1.     The Good-Faith Standard for a Modification
    
          In disputing the presence or absence of Man‘s good faith, both parties have
    relied on Roth Steel Products v Sharon Steel Corp., 
    705 F.2d 134
     (6th Cir. 1983).
    Roth was cited with approval in El Paso Natural Gas Co. v. Minco Oil & Gas Co.,
    
    958 S.W.2d 889
    , 901 & n.11 (Tex. App.—Amarillo 1997, pet. granted),
    republished at 
    964 S.W.2d 54
    , 67 & n.11, (Tex. App.—Amarillo 1997, pet.
    granted), rev’d, 
    8 S.W.3d 309
     (Tex. 1999). The Supreme Court of Texas reversed
    on the ground that the UCC‘s duty of good faith did not apply at all to the releases
    of liability at issue in that case. 8 S.W.3d at 313. Roth has not been cited again by
    a Texas court. We decline to follow all of the reasoning of Roth.
    
          In Roth, Sharon, the seller, produced sheet steel; Roth, the buyer, purchased
    the steel and used it to produce tubing. Roth, 705 F.2d at 137. In early 1973, a
    number of factors caused the domestic steel supply to decrease sharply at the same
    time that both demand and costs increased. Id. at 138. Sharon notified Roth in
    March 1973 that it was withdrawing all price concessions and offered to sell steel
    in the second half of 1973 at prices that were higher than those to which the parties
    initially agreed, but lower than Sharon‘s published prices. Id. Sharon ―clearly
    indicated‖ to Roth that after June 30, 1973, Sharon would ―sell no steel . . . except
    at modified prices.‖ Id. Because it was otherwise unable to meet its production
    requirements, Roth agreed to the modification. Id. Throughout the second half of
    1973 and most of 1974, Sharon experienced difficulties in filling orders in a timely
    fashion and refused to accept Roth‘s orders in October and December 1973. Id. at
    138–38. Roth sued Sharon for breach of contract and to recover its expenses in
    ―covering‖ the shortages. Id at 140. Sharon responded that the contract had been
    modified. Id. The district court found that Sharon acted in bad faith in seeking the
    modification. Id. at 146.
    
                                             34
          The Roth court stated that good faith involves two inquiries. First, the court
    must determine whether the party‘s conduct was ―consistent with ‗reasonable
    commercial standards of fair dealing in the trade.‘‖ Id. at 145–46 (quoting U.S. for
    Use & Benefit of Crane Co. v. Progressive Enters., 
    418 F. Supp. 662
    , 664 n.1
    (E.D. Va. 1976)). To satisfy this portion of the test, ―the party asserting the
    modification must demonstrate that his decision to seek modification was the result
    of a factor, such as increased costs, which would cause an ordinary merchant to
    seek a modification of the contract.‖ Id. at 146. We agree that this portion of the
    Roth case comports with Texas law. See TEX. BUS. & COM. CODE ANN. § 2.209
    cmt. 2 (―The test of ‗good faith‘ between merchants . . . includes ‗observance of
    reasonable commercial standards of fair dealing in the trade‘ . . . and may in some
    situations require an objectively demonstrable reason for seeking a modification.‖).
    
          However, the Roth court went on to note that the single most important
    factor in determining whether a modification is justified is whether, because of
    change in the market or other unforeseeable conditions, performance of the
    contract has come to involve a loss. Id. at 147. We do not agree that a party must
    show that the change in market price was unforeseeable to meet the reasonable
    commercial standard of fair dealing. Nothing in the language of section 2.209,
    comment 2 incorporates the requirement of unforeseeability into that standard, nor
    has any Texas court adopted such a requirement.
    
          Imposing such a requirement would mean that a party essentially would
    have to prove that performance is commercially impracticable because of
    unforeseen supervening circumstances.         This is the standard set out in Texas
    Business and Commerce Code section 2.615, which concerns excuse. Yet the
    comment to 2.209 clearly states that a party does not need to meet that requirement
    for a modification: ―But such matters as a market shift which makes performance
    
                                             35
    come to involve a loss may provide such a reason even though there is no such
    unforeseen difficulty as would make out a legal excuse from performance under
    Sections 2-615 and 2-616.‖      TEX. BUS. & COM. CODE ANN. § 2.209 cmt. 2
    (emphasis added).
    
          The Roth court also looked at whether the requirement of subjective
    ―honesty in fact‖ is satisfied. Roth, 705 F.2d at 146. The court did this by
    analyzing ―whether the parties were in fact motivated to seek modification by an
    honest desire to compensate for commercial exigencies.‖          Id. (citing Ralston
    Purina Co. v. McNabb, 
    381 F. Supp. 181
    , 183 (W.D. Tenn. 1974)). This language
    also would be a correct statement of Texas law.
    
          In Roth, the court concluded that Sharon failed to establish the subjective
    element of honesty in fact. The trial court found that Sharon used its position as
    Roth‘s chief supplier to extract the price modification by threatening to stop selling
    steel to Roth after June 1973. Id. at 148. The reviewing court explained that such
    ―coercive conduct‖ is evidence of bad faith.
    
          Relying primarily on the discussion in Roth of the subjective and objective
    components of good faith, Midcontinent argues that the parties‘ modification of the
    contract in their Letter Agreement is ineffective because Man obtained it in bad
    faith. Midcontinent has framed this argument in different ways, complaining both
    that there is legally insufficient evidence of good faith and that the trial court‘s
    findings do not support its conclusion that the contract modification is enforceable.
    Because these challenges are reviewed differently, we discuss them separately.
    
          2.     Legal-Sufficiency Challenge
    
                 a.     The observance of reasonable commercial standards of fair
                        dealing: objective good faith.
          Midcontinent asserts that a party seeking to modify a contract acts in
    
                                             36
    objective good faith only if it faces a loss as the result of conditions beyond that
    party‘s control that were unforeseen at the time it entered the contract. As stated
    above, the requirement that the change of conditions must be unforeseen is not
    Texas law.
    
          Midcontinent also contends that the record conclusively establishes that Man
    faced only a reduction in its profits rather than a loss on the project, and thus, the
    absence of objective good faith is established as a matter of law.          Although
    Midcontinent relies heavily on Roth in making this argument, the Roth court
    specifically disclaimed any intent ―to imply that the desire to avoid a loss is the
    only permissible reason for seeking a modification of an existing agreement‖ and
    explained that it referred to this reason in its opinion only because it was ―the
    primary justification offered in this instance.‖ Id. at 146 n.25. Moreover, courts
    have held that a party can act in good faith by seeking a modification in response
    to precipitous market changes, even if the party is not attempting to avoid a loss
    but instead is attempting to obtain greater profits. See Weisberg v. Handy &
    Harman, 
    747 F.2d 416
    , 420–21 (7th Cir. 1984) (―[a] precipitous change in market
    price satisfies the requirement of good faith found in § 2.209‖). The facts are
    undisputed that the prices rose dramatically during the course of the contract.
    
          We conclude that under the applicable standard of review, the evidence is
    legally sufficient to support the trial court‘s implied finding that Man observed
    reasonable commercial standards of fair dealing, and thus, acted with objective
    good faith.
    
                  b.   Honesty in fact: subjective good faith
    
          Midcontinent‘s challenge to this element is really not a legal-sufficiency
    challenge but instead focuses on what it sees as a conflict between the trial court‘s
    express findings and its implied finding of good faith. This will be discussed
                                             37
    below.
    
           3.     Conflict Between the Trial Court’s Express and Implied Findings
           The judgment rendered after a nonjury trial must conform to the findings of
    fact. See TEX. R. CIV. P. 300. Although Midcontinent argues that the trial court‘s
    ―findings‖ do not support its conclusions or establish the contrary proposition as a
    matter of law,15 Midcontinent has focused on the trial court‘s express findings, not
    on its implied findings. By asserting that the trial court‘s express findings do not
    support the trial court‘s conclusions, Midcontinent in effect contends that the trial
    court‘s express and implied findings conflict.
    
           Midcontinent never objected to the trial court about this conflict. Assuming
    without deciding that no complaint was needed in the trial court to preserve this
    argument, we conclude that the trial court‘s express findings do not fatally conflict
    with its implied findings. In reaching this conclusion, we have applied the same
    analysis that is used in evaluating complaints that jury findings fatally conflict.
    We will not set aside a judgment because of conflicting findings of fact if the
    conflict can be reconciled. Morton v. Hung Nguyen, 
    369 S.W.3d 659
    , 675 (Tex.
    App.—Houston [14th Dist.] 2012, pet. filed) (sub. op.). When attempting to
    reconcile jury findings, we apply a de novo standard of review. See Bender v. S.
    Pac. Transp. Co., 
    600 S.W.2d 257
    , 260 (Tex. 1980). The threshold question is
    whether the findings address the same material fact. Id.
    
                  a.     The observance of reasonable commercial standards of fair
                         dealing: objective good faith
           To establish objective good faith, the party asserting the modification must
    
    
           15
              Midcontinent frames this argument in language such as the following: ―The trial
    court‘s findings of fact establish objective bad faith . . . .‖ ―These findings prove Man‘s
    subjective bad faith as a matter of law.‖ ―[T]hose findings cannot be reconciled with its legal
    conclusion that [Midcontinent‘s] agreement to pay an additional $4.4 million was enforceable.‖
    
                                                  38
    demonstrate that the decision to seek modification was the result of a factor, such
    as increased costs, that would cause an ordinary merchant to seek a modification of
    the contract. TEX. BUS. & COM. CODE ANN. § 2.209 cmt. 2. Midcontinent focused
    on a number of trial court findings that it characterizes as findings that Man could
    have foreseen the rise in prices. As discussed above, Texas law does not require
    that Man‘s decision to seek modification was the result of unforeseen price
    increases. Thus, there are no conflicts in the findings.
    
                 b.    Honesty in fact: subjective good faith
    
          Midcontinent contends that the trial court‘s finding of fraud and the findings
    below are inconsistent with an implied finding of honesty in fact:
    
          During negotiation of the parties‘ contract for steel pipe,
          [Midcontinent] stressed to Man and [Prime Pipe] the importance of
          maintaining its construction and completion schedule for the pipeline,
          and the corresponding importance of maintaining the production and
          delivery schedule of the pipe to be supplied by Man and [Prime Pipe].
          At various times throughout the term of the contract, Man proposed
          and [Midcontinent] rejected amended schedules that did not include
          the completion of production by the end of July 2008.
          The Purchase Order stated that time was of the essence.
          [T]he parties altered the [Purchase Order] and agreed that
          (1) [Midcontinent] would provide Man with an advance payment of
          $21,672,640.32 to allow Man to place its initial order for the steel
          necessary to produce [Midcontinent‘s] pipe, and (2) that
          [Midcontinent] would pay Man approximately $1,763,328.00.
          [Midcontinent] agreed to this [to] reimburse Man for the finance
          charges it would incur as a result of having to place letters of credit to
          third parties to secure further steel orders . . . .
          On several occasions throughout the term of the Purchase Order,
          [Midcontinent] asked Man whether it had secured the raw steel
          necessary to supply all of the pipe Man was required to manufacture.
          In 2007, Man represented to [Midcontinent] on several occasions that
    
                                              39
          it had secured all necessary steel to complete the order. By December
          2007, both [Midcontinent] and Prime Pipe believed that Man had
          secured all steel necessary to complete the order.
          Man failed to inform [Midcontinent] that it did not secure all
          necessary steel to complete [Midcontinent‘s] order until March 2008.
          Although Man had reserved a production slot at various steel mills, it
          had not obligated or financially committed the steel mills to produce
          steel. Man knew these facts, knew that [Midcontinent] was unaware
          of these facts, and knew [Midcontinent] did not have an equal
          opportunity to discover the facts. Man deliberately sat silent about
          these facts.
          Man intended to induce [Midcontinent] to act to [Midcontinent‘s]
          detriment by failing to disclose that it did not secure all necessary
          steel to complete [Midcontinent‘s] order until March 2008 and that it
          had not obligated or financially committed the steel mills to produce
          steel. [Midcontinent] justifiably relied on Man‘s non-disclosure and
          was injured as a result of acting without knowledge of these facts.
          In March and April 2007 [sic], Man told [Midcontinent] that if it did
          not pay additional monies above the agreed contract price in order to
          purchase the remaining steel, Man could not complete the Purchase
          Order even though it had failed to avail itself of opportunities to
          purchase steel at lower prices in the [f]all of 2007.
          Man, not [Midcontinent], controlled the timing in which it purchased
          the raw steel necessary for pipe production, and thus Man, not
          [Midcontinent], controlled the price at which it purchased the steel.
          The increase or rise in steel prices was reasonably foreseeable to Man
          at the time of the Letter Agreement [that modified the parties‘
          contract].
    Midcontinent compares the circumstances described above to the ―coercive
    conduct‖ described in Roth. It is stated in Texas Business and Commerce Code
    section 2.209, comment 2 that the ―extortion of a ‗modification‘ without legitimate
    commercial reason is ineffective.‖
    
          The trial court‘s findings do not support either a coercion finding or an
    extortion finding. To extort is to ―obtain from a person by force, intimidation, or
    
                                            40
    undue or illegal power.‖ WEBSTER‘S NINTH NEW COLLEGIATE DICTIONARY 440
    (1991). ―Coercion exists when a party by the unlawful conduct of another, is
    induced to enter into a contract which deprives him of the exercise of his free
    will.‖ Metro-Goldwyn-Mayer Distrib. Corp. v Cocke, 
    56 S.W.2d 489
    , 491 (Tex.
    Civ. App.—Amarillo 1933, no writ). In Texas, the term ―duress‖ rather than
    ―coercion‖ is generally used when parties are seeking to avoid a contract. ―A
    common element of duress in all its forms (whether called duress, implied duress,
    business compulsion, economic duress or duress of property) is improper or
    unlawful conduct or threat of improper or unlawful conduct that is intended to and
    does interfere with another person‘s exercise of free will and judgment.‖ Dall.
    Cnty. Cmty. Coll. Dist. v Bolton, 
    185 S.W.3d 868
    , 878 (Tex. 2005). The trial court
    findings do not rise to the level of extortion, coercion, or duress.
    
          The trial court‘s findings do not even rise to the level of fraudulent
    inducement to enter into the modification. The trial court also found that ―[o]n or
    about March 11, 2008, Man informed [Midcontinent] that Man had failed to
    purchase and secure the final 40,000 metric tons of raw steel needed to complete
    the job‖ and that the parties entered into the Letter Agreement on April 16, 2008;
    thus, when Midcontinent agreed to the contract modification, it had been aware of
    the true state of affairs for more than a month.             This negates fraudulent
    inducement.     See In re FirstMerit Bank, 
    52 S.W.3d 749
    , 758 (Tex. 2001)
    (explaining that a fraudulent-inducement claim requires proof of reliance on a false
    representation); cf. Williams v. Dardenne, 
    345 S.W.3d 118
    , 126 (Tex. App.—
    Houston [1st Dist.] 2011 pet. denied) (―[A] party who has actual knowledge of
    specific facts cannot have relied on a misrepresentation of the same facts.‖).
    
          None of the trial court‘s express findings conflict with an implied finding of
    honesty in fact. We accordingly conclude that the trial court‘s express and implied
    
                                               41
    findings do not conflict, and that the trial court‘s conclusions of law and the
    judgment itself are consistent with both. We overrule Midcontinent‘s first three
    issues.
    
          B.    Effect of Prior Material Breach
    
          Midcontinent points out that after the parties executed the Letter Agreement
    modifying the contract, Man failed to deliver the pipe according to the agreed-upon
    schedule. According to Midcontinent, this was a material breach that excused
    Midcontinent from its duty to pay for the pipe. In support of this argument,
    Midcontinent relies on the fundamental principle of contract law that when one
    party to a contract commits a material breach of that contract, the nonbreaching
    party is discharged or excused from further performance. See Mustang Pipeline
    Co., Inc. v. Driver Pipeline Co., Inc., 
    134 S.W.3d 195
    , 196 (Tex. 2004) (per
    curiam).
    
          But another equally fundamental principle also applies here: when one party
    materially breaches a contract, the nonbreaching party must choose whether to
    treat the contract as terminated or as continuing. See Kennedy Ship & Repair, L.P.
    v. Pham, 
    210 S.W.3d 11
    , 25 (Tex. App.—Houston [14th Dist.] 2006, no pet.). A
    nonbreaching party who treats the contract as continuing ―‗deprives himself of any
    excuse for ceasing performance on his own part.‘‖ Long Trusts v. Griffin, 
    222 S.W.3d 412
    , 415 (Tex. 2006) (per curiam) (quoting Hanks v. GAB Bus. Servs.,
    Inc., 
    644 S.W.2d 707
    , 708 (Tex. 1982)).         Moreover, a nonbreaching party
    conclusively chooses to treat the contract as continuing if it seeks to benefit from
    the contract after the other party‘s material breach. See Henry v. Masson, 
    333 S.W.3d 825
    , 841 (Tex. App.—Houston [1st Dist.] 2010, no pet.).
    
          Here, Midcontinent treated the contract as continuing by accepting the
    belated delivery. See TEX. BUS. & COM. CODE ANN. § 2.601 cmt. 2 (West 2009)
                                            42
    (―Acceptance [of a non-conforming tender] made with the knowledge of the other
    party is final.‖). It also sought to and did benefit from the modified contract by
    drawing on the standby letter of credit that Man provided in accordance with the
    Letter Agreement. Because it chose by these actions to treat its contract with Man
    as continuing, Midcontinent cannot rely on Man‘s prior material breach as an
    excuse for its own nonperformance.
    
          We overrule Midcontinent‘s fourth and fifth issues and affirm the portion of
    the judgment offsetting the damages awarded to Midcontinent by $4.4 million,
    representing the increased amount that Midcontinent agreed but failed to pay to
    Man under the terms of the Letter Agreement.
    
                                    VI. CONCLUSION
    
          With regard to Man‘s appeal of amounts awarded to Midcontinent, we
    conclude that the trial court properly applied Texas law and that the evidence
    supports Man‘s liability for the damages awarded.
    
          As for Man‘s appeal of the claims by and against Prime Pipe, we agree that
    the trial court erred in including in Prime Pipe‘s damage award $511,073.11 as
    commission on the sale of pipes that were not actually sold, but that instead were
    eliminated from the Purchase Order in April 2008 with Prime Pipe‘s consent. The
    trial court did not err, however, in failing to conclude that Prime Pipe breached a
    fiduciary duty to Man.
    
          Finally, we conclude that the trial court did not err in concluding that the
    Letter Agreement was an enforceable modification of the Purchase Order, or in
    concluding that Midcontinent breached that agreement.
    
          We accordingly
    
                modify the award of actual damages to Prime Pipe to reduce it by
    
                                            43
                 $511,073.11, bringing its total award of actual damages to
                 $998,475.10;
                 affirm the remaining damage awards; and
                 remand the case to the trial court for recalculation of offsets and
                 prejudgment interest, and for rendition of judgment in accordance
                 with this opinion.
    
    
    
                                           /s/    Tracy Christopher
                                                  Justice
    
    
    
    Panel consists of Justices Frost, Christopher, and Jamison (Frost, J., concurring).
    
    
    
    
                                             44