Triton 88, L.P. F/K/A Triton 88, L.L.C and Triton 2000, L.L.C. v. Star Electricity , L.L.C. D/B/A Startex Power , 411 S.W.3d 42 ( 2013 )


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  • Opinion issued August 13, 2013
    In The
    Court of Appeals
    For The
    First District of Texas
    ————————————
    NO. 01-10-00601-CV
    ———————————
    TRITON 88, L.P. F/K/A TRITON 88, L.L.C. AND TRITON 2000,
    L.L.C., Appellants
    V.
    STAR ELECTRICITY, L.L.C. D/B/A STARTEX POWER, Appellee
    On Appeal from the 190th District Court
    Harris County, Texas
    Trial Court Case No. 0958846
    OPINION
    Appellants, Triton 88, L.P. f/k/a Triton 88, L.L.C. and Triton 2000, L.L.C.
    (collectively, “Triton”), appeal the trial court’s grant of summary judgment and a
    receivership order entered in favor of appellee, Star Electricity, L.L.C. d/b/a
    StarTex Power (“StarTex”).       Triton presents fourteen issues for appellate
    consideration. In its first seven issues, Triton argues that (1) the trial court erred in
    granting summary judgment in favor of StarTex on its breach of contract claim
    because (2) the trial court misinterpreted and misapplied the law applicable to the
    claims and defenses asserted by the parties; (3) StarTex’s summary judgment
    evidence did not establish that it was entitled to judgment as a matter of law on its
    breach of contract claim; (4) Triton’s summary judgment evidence raised genuine
    issues of material fact as to one or more elements of StarTex’s breach of contract
    claim; (5) genuine issues of material fact existed as to Triton’s claims for offset
    and credit based on StarTex’s use of improper and incorrect billing and StarTex’s
    use of estimated billing; (6) genuine issues of material fact existed as to StarTex’s
    billing practices and procedures and whether those procedures constituted a breach
    by StarTex of the parties’ contract; and (7) genuine issues of material fact existed
    regarding whether Triton objected to StarTex’s billing practices and procedures
    and to invoices submitted to Triton by StarTex and whether StarTex failed to fulfill
    its legal obligations for handling such complaints.
    Triton further argues that (8) StarTex’s failure to comply with the legal
    requirements for handling complaints concerning retail electric service and
    Triton’s pending complaint against StarTex before the Texas Public Utility
    Commission acted to stay the judgment and enforcement of the judgment. Triton
    attacks the trial court’s damages award, arguing that the trial court erred in
    2
    awarding StarTex (9) liquidated damages pursuant to the early termination
    provisions in the contract because such an award constitutes an impermissible and
    unenforceable penalty; (10) early termination fee damages based on unidentified
    and unproven monthly billings; (11) early termination fee damages based on
    estimated billing and billings for periods outside the term of the contract that
    Triton allegedly terminated early; and (12) attorney’s fees because the fees
    awarded were excessive and unreasonable, were for legal services not proven to be
    necessary, and were not properly proven by the summary judgment evidence.
    Finally, Triton appeals the order of the trial court appointing a receiver, arguing
    that (13) the trial court erred in appointing a receiver and ordering Triton to turn
    over to the receiver confidential records and all proceeds and revenue generated by
    Triton’s businesses and that (14) Triton is entitled to immediate relief from the
    order appointing a receiver and is entitled to recover all records and revenue turned
    over pursuant to the order, including all funds that have been disbursed, paid,
    relinquished, distributed, or in any way disposed of by the receiver.
    We affirm.
    Background
    Texas deregulated its electric utility market beginning in 1999. See TEX.
    UTIL. CODE ANN. § 39.051(a) (Vernon 2007) (“On or before September 1, 2000,
    each electric utility shall separate from its regulated utility activities its customer
    3
    energy services business activities that are otherwise also widely available in the
    competitive market.”); Tex. Indus. Energy Consumers v. CenterPoint Energy
    Houston Elec., LLC, 
    324 S.W.3d 95
    , 97 (Tex. 2010). The Utilities Code provides
    that electric utilities must separate their business activities from one another into
    three units: (1) a power generation company; (2) a retail electric provider; and (3) a
    transmission and distribution utility. TEX. UTIL. CODE ANN. § 39.051(b).
    Retail electric providers, like StarTex, essentially buy electricity from a
    transmission and distribution utility and resell it to Texas consumers. See AEP
    Tex. N. Co. v. Pub. Util. Comm’n of Tex., 
    297 S.W.3d 435
    , 439 (Tex. App.—
    Austin 2009, pet. denied) (citing TEX. UTIL. CODE ANN. § 39.051).                 The
    transmission and distribution utility’s rates are still regulated by the Texas Public
    Utility Commission (“PUC”). Tex. Indus. Energy 
    Consumers, 324 S.W.3d at 97
    .
    Transmission and distribution utilities provide metering services, charge retail
    electric providers for “nonbypassable delivery charges” under rates approved by
    the PUC, and may also bill retail customers directly at the request of the retail
    provider.   
    Id. at 97–98.
         Thus, Texas’s electric utilities have “voluntarily
    interconnected their transmission systems” to form a single grid managed by the
    Electric Reliability Council of Texas (“ERCOT”). Pub. Util. Comm’n of Tex. v.
    City Pub. Serv. Bd. of San Antonio, 
    53 S.W.3d 310
    , 312 (Tex. 2001). Electricity is
    produced by a generating facility, transmitted to a point of interconnection with the
    4
    ERCOT grid, and then distributed to end users who purchase it from retail electric
    providers.
    It is in this context that Triton, as owner of five commercial buildings,
    entered into an Electric Services Agreement (“ESA”) in May 2006 with StarTex, a
    retail electricity provider. StarTex agreed to supply Triton with electricity, and
    Triton agreed to pay at a fixed rate for a term of twelve months. Regarding
    invoicing and payment, the ESA provided that
    [StarTex] shall render to Customer [Triton] on a monthly basis,
    or as mutually agreed by [StarTex] and Customer but not less frequent
    than monthly, an invoice that is due and payable fifteen (15) days
    from the date of the invoice. If the payment of all undisputed amounts
    is not received by the due date, Customer will be charged a late fee
    equal to five percent (5%) of the past due amount. Customer must
    provide to [StarTex] written notice setting forth in particular detail
    any disputed amount, including the calculations with respect to any
    errors or inaccuracies claimed. If it is subsequently determined that
    Customer owes [StarTex] any portion of the disputed amount,
    Customer shall remit to [StarTex] within five (5) business days
    following such resolution the outstanding balance plus interest . . . .
    Any amounts that may have been overpaid or underpaid shall be
    applied to the next monthly invoice.
    The ESA also contained the following language:
    Early Termination Fee. In the event that Customer terminates
    this agreement or Customer defaults as described [below], then an
    Early Termination Fee will be assessed. The Early Termination Fee
    shall be equal to the greater of a) the three months highest bills for
    Customer or b) any mark to market costs. For purposes of this fee the
    mark to market costs shall be calculated by multiplying the difference
    between the initial cost of power procured to satisfy the ESA and the
    final net liquidated value of said power at the time of termination by
    5
    the total amount of power procured from the Customer Location for
    the remainder of the original term of the ESA. . . .
    ....
    Customer Acknowledgments. Customer acknowledges that
    [StarTex’s] ability to invoice Customer is dependent on the
    [transmission and distribution provider (TDSP)]’s or ERCOT’s ability
    to furnish [StarTex] all necessary information including meter
    readings or recorded data, as applicable. In the absence of such
    information from the TDSP or ERCOT, [StarTex] may invoice
    Customer based on estimated meter reading according to the Usage
    Profile. As soon as practical, and after receipt of Customer’s Energy
    Consumption and settlement charges from the TDSP and/or ERCOT,
    [StarTex] will reconcile on the next invoice any difference(s) between
    estimated and actual consumption and settlement charges.
    ....
    Event of Default. An Event of Default occurs upon:
    a.     failure of Customer to pay amounts due under the ESA
    within 5 business days of receipt of written notice of
    payment due;
    b.     failure of either Party to perform a material term of this
    ESA[.]
    ....
    In April 2007, Triton and StarTex extended their agreement, under modified
    terms, for another twelve months (“First Amendment”). Triton elected to replace
    the fixed-rate pricing schedule with the Market Clearing Price of Energy
    (“MCPE”). The First Amendment provided:
    1. PRICE FOR ENERGY: The term for this Amendment shall
    commence upon the Customer’s normal meter read during the month
    of May 2007, and continue through the Customer’s normal meter read
    during the month of May 2008. Customer agrees to purchase
    6
    electricity from STARTEX at a variable rate based on the Electric
    Reliability Council of Texas (“ERCOT”)’s Balancing Energy price
    (“Contract Price”) for the Congestion Zone in which the Customer’s
    location resides. The price calculated by ERCOT in the market for
    Balancing Energy is referred to as the Market Clearing Price for
    Energy (“MCPE”) in the ERCOT protocols. . . .
    2. Except as herein changed and amended, the Agreement
    [ESA] shall remain in full force and effect as written. Any changes
    made in this Amendment that are disputed by Customer will be
    replaced by the original Agreement’s terms and conditions.
    In 2008, the parties again extended their agreement under the MCPE pricing
    terms for a term of thirty-six months (“Second Amendment”).            The Second
    Amendment contained language identical to that in the First Amendment, except
    that the term of the Second Amendment commenced “upon the Customer’s normal
    meter read during the month of May 2008 and continued through the Customer’s
    normal meter read during the month of May 2011.”
    Triton objected to some of StarTex’s billing practices. This eventually led to
    Triton’s terminating its contract with StarTex in October 2008 and seeking
    electricity from a different retail electricity provider.
    On September 14, 2009, StarTex filed suit against Triton alleging breach of
    contract, and, in the alternative, suit on a sworn account and quantum meruit.
    StarTex asserted that Triton owed it $319,094.11, consisting of unpaid utility
    service and contractual fees, interest, and liquidated damages. StarTex also sought
    attorney’s fees under Civil Practice and Remedies Code chapter 38. StarTex
    7
    attached to its petition an affidavit from Robert Verhage, its Collections Manager,
    copies of the ESA and First and Second Amendments, copies of its unpaid
    invoices, and a claim presentment letter from its counsel to Triton demanding
    payment of the unpaid amounts.
    On October 12, 2009, Triton answered. Triton generally denied StarTex’s
    allegations and asserted that the liquidated damages provision was invalid and
    unenforceable and that the attorney’s fees sought were not reasonable and
    necessary.
    Triton also asserted that
    the account on which [StarTex] sues . . . is not just and true, and all
    just and lawful offsets, payments, and credits have not been applied to
    [Triton’s] account. [Triton] does not owe [StarTex] $319,094.11 in
    damages, because [StarTex] seeks to recover $197,323.95 in damages
    based on an invalid liquidated damages provision. Furthermore,
    based on the inaccuracies in [StarTex’s] billing and estimates since
    2007, [Triton] also challenge[s] [StarTex’s] allegation that [it owes]
    $105,034.18 to [StarTex] for services rendered.
    Attached to its answer, Triton provided the affidavit of Bill Bird, who
    averred:
    I am responsible for and have knowledge of Triton’s business
    dealings with Plaintiff [StarTex]. Triton began doing business with
    Plaintiff in 2006. In the summer of 2007, Plaintiff began providing
    usage estimates to Triton, which reflected very high usage. Triton
    brought this issue to Plaintiff’s attention, and the issue was not
    resolved. Triton contests the validity of Plaintiff’s account, and
    denies that it owes $105,034.18 to Plaintiff for services rendered.
    8
    On January 20, 2010, StarTex moved for summary judgment on its breach of
    contract claim. StarTex argued that the parties had a valid contract and that the
    First and Second Amendments of the contract required Triton to pay for the
    electricity received under the MCPE pricing schedule through May 2011. Copies
    of the ESA and First and Second Amendments were attached as summary
    judgment evidence.      StarTex stated that “[t]he MCPE is a variable rate plan
    wherein the price changes every fifteen (15) minutes to reflect the supply and
    demand for power in a particular market.”
    StarTex argued,
    Due to the numerous price changes involved in an MCPE
    contract, StarTex had to customize its purchase to fit the particular
    consumption needs of Triton. Every customer’s consumption needs
    differ, and StarTex must carefully time its purchases so that it has
    sufficient power for the customer during their peak usage hours and so
    that it does not over-purchase during down times. This is referred to
    in the industry as the “shape” of a particular customer, and like a
    fingerprint, no two customers have an identical “shape.” Triton’s
    meters are located at commercial office buildings, and therefore, the
    “shape” of StarTex’s purchase was designed to accommodate heavy
    usage from the hours of 8:00 a.m. to 5:00 p.m., with a slight decrease
    during the lunch hour, and minimal usage for the remaining hours of
    the day. Therefore, in order to service Triton’s Contract, not only did
    StarTex commit to purchase sufficient power to cover the life of the
    Contract, but it also committed to make purchases every fifteen (15)
    minutes that mirror the kWh used by Triton during each fifteen (15)
    minute interval.
    This argument was supported by the affidavit of Stephen Madden, the Senior Vice-
    President of Supply for StarTex.
    9
    StarTex asserted that it provided power to Triton throughout the term of the
    contract and submitted invoices to Triton “based on meter reads performed by
    CenterPoint Energy (“CenterPoint”), the Transmission and/or Distribution Services
    Provider (“TDSP”) for the Houston area.” StarTex further argued that:
    On several occasions, StarTex was required to generate
    [Triton’s] monthly invoice using estimated reads based on historical
    usage. This was a result of CenterPoint being unable to gain access to
    [Triton’s] meters to obtain the actual usage amounts. All such
    estimated reads were reconciled on subsequent invoices once
    CenterPoint obtained access to the meters, such that the final invoice
    reflected only actual usage. All estimated reads and subsequent
    reconciliations were detailed on [Triton’s] monthly invoices.
    StarTex provided invoices and the affidavit of Robert Verhage, the Director
    of Credit and Collections for StarTex, substantiating these arguments. Verhage
    averred that the invoices attached as summary judgment evidence were true and
    correct copies of Triton’s monthly invoices. Verhage testified that, after Triton
    terminated the ESA on approximately October 19, 2008, “StarTex generated one
    final invoice that contained the final, outstanding balance that was reconciled to
    correct all estimated reads.”    The final invoice reflected that Triton owed
    $155,034.18, and Verhage averred that Triton subsequently made $50,000.00 in
    payments, leaving $105,034.18 due and owing. Thus, StarTex argued that Triton
    breached the ESA when it failed to pay for $105,034.18 worth of electricity
    provided under the ESA and subsequent amendments.
    10
    StarTex also asserted that Triton breached the ESA when it terminated the
    ESA early. StarTex stated in its motion, and Madden averred in his affidavit, that
    when StarTex entered into the Second Amendment extending the terms of the ESA
    through May 2011, it contracted with the electricity producer “to purchase enough
    power to service the entire thirty-six (36) month term of the Second Amendment
    and the purchases were tailored to fit Triton’s particular ‘shape’.” Thus, the ESA
    contained a liquidated damages clause for early termination of the contract which
    entitled StarTex to $197,323.95 in liquidated damages after Triton unilaterally
    terminated the contract on October 10, 2008, approximately thirty-one months
    before the contract term was set to expire in May 2011.
    StarTex argued, based on Madden’s statements in his affidavit, that this
    early termination clause was a valid liquidated damages provision because, “[i]n
    the case of an MCPE contract, it is impossible to calculate the total damages that
    stem from an early termination until the term of the breached contract has expired
    and StarTex has been able to complete its attempts at mitigating the damages.”
    StarTex argued that it “must continue to purchase Triton’s power from its supplier
    until May of 2011” and that it was required to “purchase this power in Triton’s
    particular ‘shape’” even though StarTex did not have another customer to sell it to
    because StarTex “would have to find a new customer who not only wants an
    MCPE contract, but has the exact same term and volume requirements and ‘shape’
    11
    as Triton.” StarTex thus calculated its liquidated damages as $197,323.25, based
    on the sum of Triton’s three highest monthly bills because the mark-to-market
    losses were incapable of calculation until May 2011.
    Finally, StarTex argued that it was entitled to attorney’s fees on its breach of
    contract claim. It argued that, under its fee agreement with its counsel, it would
    incur attorney’s fees “in an amount equal to twenty-five percent (25%) of all
    amounts recovered from [Triton],” or $75,589.36, and that this amount was
    reasonable and necessary. The summary judgment motion was accompanied by
    the affidavit of Rodney Drinnon, counsel for StarTex, who averred to the specific
    services provided by his firm and stated that the services described were
    reasonable and necessary and that “twenty-five percent (25%) is a reasonable
    contingency fee for the services provided.”
    On January 28, 2010, Triton amended its answer, adding claims that StarTex
    “materially breached the contract, which was modified by agreement,” that Triton
    “complied with the terms of the modified contract,” that Triton was “discharged
    from performing under the contract after [StarTex] materially breached same,” and
    that StarTex failed “to mitigate its damages as required under applicable law,
    limitation of warranty, limitation of liability, laches, and waiver.” Triton also
    sought a continuance of the summary judgment hearing, which the trial court
    granted.
    12
    On April 5, 2010, Triton responded to StarTex’s summary judgment motion.
    Triton did not contest StarTex’s statements that the ESA and subsequent
    amendments were valid contracts. However, Triton asserted that StarTex “made
    several promises to [Triton] and [orally] modified the terms of the parties’
    agreements.” Triton argued that Michael Gary, Triton’s property manager, “had
    several discussions with John Bejger, a representative of StarTex, relating to
    StarTex’s estimated usage and Triton’s disputes over the StarTex invoices.” As
    supported by Gary’s affidavit in Triton’s summary judgment evidence, Gary
    represented to Bejger that the practice of estimating electricity usage for several
    consecutive months was causing damage to Triton because Triton could not bill its
    tenants based on estimated billing.    Gary also averred that Triton had “done
    everything in its power” to give CenterPoint access to the meters and that Triton
    would not continue the business relationship with StarTex “if the estimations and
    errors in billing continued on a month to month basis.” Gary further averred that
    Bejger represented that the errors would be corrected, that StarTex was attempting
    to resolve the allegations that CenterPoint did not have access to Triton’s meters,
    and “that StarTex’s previous practice of estimating usage of consecutive months
    would not continue.” Gary stated that Triton entered into the Second Amendment
    based on these representations by Bejger. Triton’s response asserted that Gary’s
    13
    affidavit about his discussions with Bejger raised a disputed issue of material fact
    as to whether there was a meeting of the minds in reaching a valid modification.
    Triton also argued that it was excused from performing under the ESA based
    on StarTex’s material breach of the agreements “when it failed to provide [Triton]
    with accurate and correct billings for the electricity that it actually delivered.”
    Triton’s motion referenced the invoices sent by StarTex and provided details
    regarding which specific invoices were based on estimated usage, including several
    instances in which it was invoiced based on estimated usage in consecutive
    months.
    Triton presented Gary’s affidavit, averring that Gary first contacted StarTex
    to resolve the billing problems during the original term of the ESA and that
    StarTex responded by saying that CenterPoint could not access and read the
    electricity meters in Triton’s buildings. Triton included in its summary judgment
    evidence various e-mails between Gary and StarTex in which Gary raised
    questions and disputes over the amounts billed in the invoices and StarTex
    provided information reconciling its charges. Gary’s e-mails did not contain any
    specific calculations or amounts with regard to the alleged errors or inaccuracies.
    StarTex’s e-mail reflects that it sent Triton a spreadsheet demonstrating how
    StarTex reconciled the bills and comparing Triton’s usage and rates. Triton also
    included an e-mail from CenterPoint to StarTex, received in response to StarTex’s
    14
    inquiry regarding the difficulty of getting actual meter readings. The CenterPoint
    representative stated,
    I disagree that CenterPoint is at fault for the estimations. Triton
    does not provide us unencumbered, permanent, ongoing access to our
    meters. The estimation reasons are specific to each address, but on
    some accounts Triton has their meters locked inside a mechanical
    room to which we’re supposed to go track down an employee and a
    key, apparently unsuccessfully at times, perhaps because the right
    employee can’t be found. On other accounts, we’re supposed to enter
    through a locked gate where the gate code we have on record has been
    changed. Triton has a responsibility to keep us updated if access
    arrangements change.
    Triton’s summary judgment evidence also included the affidavit of Jim
    Phillips, the Vice President of IEA Engineering, an energy engineering company.
    Phillips stated that he reviewed StarTex’s billing invoices and Triton’s historical
    electricity usage. He averred that he found
    various and repeated errors and irregularities in the billings for
    the Triton buildings. These errors include, without limitation:
    • several errors in math (multiplication of energy consumption by
    the cost of energy);
    • excessive estimated energy readings;
    • estimated energy readings at one site (meter) while the next site
    (meter) was actually read in the same month, again repeatedly;
    • three meters had a monthly load factor greater than 100%, which is
    an impossibility (LF is the maximum demand used over hours of
    the month—over 100% is more hours than in that month);
    15
    • several examples where the ending energy reading of one month
    did not match the beginning reading of the next month;
    • energy costs are not consistent across meters in the same month;
    • multiple corrections from earlier months’ estimated energy reading
    make analysis difficult; and
    • it is improbable that back to back months would have the same
    exact energy consumption readings and that demand would remain
    the same for several months in a row.
    Phillips provided his opinion about other errors and problems with StarTex’s
    billing practices, without providing specific contested amounts, and concluded:
    In summary, the total value of the errors I analyzed came to
    almost $97,000.00. This is not an inclusive value and with additional
    time to review the invoices and billing, this amount should
    significantly increase. The numbers and values I used assume that
    StarTex’s numbers were correct; however, I found that some of these
    numbers and values were not correct when compared to each other.
    To this amount and the other uncalculated errors, taxes must be added
    since they are a percentage of the energy and [TDSP] charges. The
    error value is therefore compounded.
    Thus, Triton argued that it “created a fact issue on each element of [its]
    affirmative defense” of prior material breach and that it raised a fact issue
    regarding whether StarTex conclusively proved the proper amount of damages.
    Triton further responded to StarTex’s summary judgment motion by arguing
    that StarTex violated the ESA “by estimating Triton’s electricity usage for no
    apparent justifiable reasons” and by estimating Triton’s usage over consecutive
    months.
    16
    Triton also argued that summary judgment on the liquidated damages issue
    was not proper “because (1) a reasonable basis for estimating just compensation in
    an event of default does exist under the circumstances, and (2) there are factual
    issues that must be resolved before the legal question of liquidated damages is
    determined.”    Finally, Triton argued that StarTex was not entitled to recover
    attorney’s fees because it “made an excessive demand on [Triton] before filing its
    lawsuit.”
    Triton also objected to Drinnon’s affidavit, arguing that it “wholly fails to
    describe the time that was required and expended in prosecuting [StarTex’s] claim,
    the hourly rate usually charged by [StarTex’s] counsel, the novelty and difficulty
    of the questions involved in this lawsuit, and the skill required to perform the legal
    service properly under the circumstances.” Triton also objected because Drinnon’s
    affidavit was not supported by any documents other than the engagement letter.
    On April 13, 2010, StarTex replied to Triton’s response. StarTex presented
    the affidavit of John Bejger, contesting Gary’s representations that the parties
    entered into an oral modification of their agreement. StarTex also argued that,
    “because the TDSP [CenterPoint], not StarTex, is solely authorized by the State of
    Texas to provide actual and estimated readings[,] Bejger would not have made”
    any representations regarding discontinuing the use of estimated meter readings in
    the monthly invoices. Finally, StarTex argued that the parties entered into the
    17
    Second Amendment after the alleged oral representations and thus Triton’s
    argument that Texas law allows modification of a written agreement by later oral
    representations was inapplicable.
    StarTex also argued that it did not breach the ESA. Specifically, StarTex
    argued that Phillips, Triton’s energy engineer expert, did not specifically identify
    any breach by StarTex. StarTex argued that it was permitted by the ESA and
    Texas law to bill Triton based on estimated usage; that, under the terms of the
    ESA, it is irrelevant why CenterPoint provided Triton’s estimated usage rather than
    actual usage; and that Triton did not follow the contractual provisions requiring it
    to pay undisputed portions of the invoice and to set forth in detail “calculations
    with respect to any errors or inaccuracies claims.”
    StarTex again argued that the liquidated damages provision was enforceable.
    Finally, StarTex argued that its original demand to Triton was not excessive, and
    thus that ground did not preclude it from recovering attorney’s fees.
    On April 16, 2010, following the summary judgment hearing, Triton filed its
    “Supplemental Response” to StarTex’s summary judgment motion.                StarTex
    objected to the supplemental response and asked the trial court to strike it from
    consideration because it was filed outside the time permitted by Texas Rule of
    Civil Procedure 166a and without leave of the trial court. Triton also objected to
    the affidavit of John Bejger, attached to StarTex’s reply to Triton’s response.
    18
    On April 26, 2010, the trial court granted StarTex’s motion. The trial
    court’s order stated that it considered “the Motion, the response, the pleadings, the
    affidavits, other evidence on file with the Court, and arguments of counsel.” The
    trial court awarded StarTex $105,034.18 “as actual damages for [Triton’s] failure
    to pay for electricity provided by [StarTex].” The trial court awarded StarTex
    $197,323.25 “as liquidated damages for [Triton’s] early termination of the [ESA].”
    Finally, the trial court awarded StarTex $12,000 as reasonable and necessary
    attorney’s fees, as well as additional attorney’s fees conditioned on an unsuccessful
    appeal by Triton.
    On May 12, 2010, StarTex moved for a turnover order.
    On May 25, 2010, Triton moved for reconsideration or a new trial. Triton
    supported this motion with new affidavits from Jim Phillips, Michael Gary, and
    Montague Morgan, attorney for Triton, who attempted to authenticate documents
    attached to Phillips’ affidavit. StarTex objected to and moved to strike these
    affidavits on the ground that Triton did not timely file them and on the ground that
    Gary’s affidavit was not based on his personal knowledge and was made in bad
    faith. The trial court granted StarTex’s motion and struck the affidavits of Phillips,
    Gary, and Morgan that were attached to Triton’s motion for new trial. 1
    1
    StarTex moved this Court to strike the affidavits Triton submitted with its motion
    for reconsideration or new trial from the appellate record. Those affidavits were
    part of Triton’s motion, and “any filing that a party designates to have included in
    19
    On June 21, 2010, the trial court denied Triton’s motion for
    reconsideration/new trial and stated that it did not consider the stricken affidavits.
    On July 6, 2010, the trial court signed a modified order stating:
    On this day, after hearing [Triton’s] Motion for
    Reconsideration/New Trial (“Motion”), the Court, relying solely [on]
    the summary judgment evidence on file, arguments of counsel and
    without considering the stricken, untimely supplement filed by
    [Triton], is of the opinion that [Triton’s] Motion should be, in all
    things, DENIED.
    It is therefore ORDERED, ADJUDGED and DECREED that
    [Triton’s] Motion is denied and that the Court’s order of April 26,
    2010, granting Plaintiff’s Traditional Motion for Summary Judgment
    is hereby, in all things, REAFFIRMED.
    On July 28, 2010, the trial court signed an order granting StarTex’s motion
    for a turnover order and appointing a receiver. On September 9, 2010, the trial
    court signed another order requiring the receiver to pay to StarTex as the judgment
    creditor the balance of the rents collected during his receivership and any rents
    collected in the future until the full amount of the judgment is paid.
    the record” is a proper part of the clerk’s record. TEX. R. APP. P. 34.5(a)(13).
    Therefore, we DENY StarTex’s motion. We note, however, that the affidavits
    attached to Triton’s motion for reconsideration or new trial are not relevant to our
    review of the trial court’s summary judgment. See TEX. R. CIV. P. 166a(c); Marek
    v. Tomoco Equip. Co., 
    738 S.W.2d 710
    , 712 (Tex. App.—Houston [14th Dist]
    1987, no writ) (“The trial court considers the record only as it properly appears
    when the motion for summary judgment is heard.”).
    20
    Summary Judgment
    A.    Standard of Review
    We review the trial court’s summary judgment de novo. Valence Operating
    Co. v. Dorsett, 
    164 S.W.3d 656
    , 661 (Tex. 2005). The movant must establish that
    no material fact issue exists and that it is entitled to judgment as a matter of law.
    M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 
    28 S.W.3d 22
    , 23 (Tex. 2000).
    Thus, for a plaintiff to prevail on its motion for summary judgment, it must show
    that it is entitled to prevail on each element of its cause of action. Hourani v.
    Katzen, 
    305 S.W.3d 239
    , 248 (Tex. App.—Houston [1st Dist.] 2009, pet. denied)
    (citing MMP, Ltd. v. Jones, 
    710 S.W.2d 59
    , 60 (Tex. 1986)). Only if the movant
    conclusively establishes its cause of action does the burden shift to the nonmovant
    to respond to the summary judgment. 
    Willrich, 28 S.W.3d at 23
    . When reviewing
    a motion for summary judgment, we take the nonmovant’s evidence as true,
    indulge every reasonable inference in favor of the nonmovant, and resolve all
    doubts in favor of the nonmovant. 
    Id. In its
    first through seventh issues, Triton argues that the trial court erred in
    granting summary judgment in favor of StarTex on its breach of contract claim.
    The trial court awarded StarTex summary judgment on both grounds of StarTex’s
    breach of contract claim against Triton: that Triton breached (1) by failing to pay
    21
    the invoices for electricity provided and (2) by wrongfully terminating the contract
    early.
    B.       Summary Judgment on StarTex’s Breach of Contract Claim for
    Triton’s Failure to Pay for Invoiced Electricity
    In its first and second issues, Triton argues that the trial court erred in
    granting summary judgment because it misinterpreted and misapplied the law
    applicable to StarTex’s breach of contract claim and to Triton’s defenses. In its
    third issue, Triton argues that StarTex’s summary judgment evidence did not
    establish that it was entitled to judgment as a matter of law.
    To prevail on a breach of contract claim, a plaintiff must prove: (1) the
    existence of a valid contract; (2) the plaintiff’s performance or tender of
    performance; (3) the defendant’s breach of contract; and (4) the plaintiff’s damages
    as a result of the breach. Prime Prod., Inc. v. S.S.I. Plastics, Inc., 
    97 S.W.3d 631
    ,
    636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). The interpretation or
    construction of an unambiguous contract is a matter of law to be determined by the
    court. See Am. Mfrs. Mut. Ins. Co. v. Schaefer, 
    124 S.W.3d 154
    , 157 (Tex. 2003).
    Thus, StarTex had to conclusively establish that a valid contract existed between it
    and Triton, that it performed under that contract, that Triton breached the contract,
    and that StarTex suffered damages as a result of Triton’s breach.
    22
    1.     Evidence Establishing Elements of StarTex’s Claim
    Attached to its summary judgment motion, StarTex included copies of the
    ESA and First and Second Amendments.              Neither party disputes that these
    documents constitute a valid contract between them.
    StarTex also provided summary judgment evidence, including multiple
    invoices and the affidavits of two corporate representatives, that it provided
    electricity to Triton.   Triton does not dispute that StarTex provided it with
    electricity up until Triton terminated the ESA.
    StarTex provided invoices and affidavits demonstrating that Triton owed
    $105,034.18 under the unpaid invoices. The account summary on the final invoice
    showed that Triton owed $155,034.18 as of November 15, 2008.             Verhage’s
    affidavit testimony provided that Triton subsequently made $50,000.00 in
    payments, leaving $105,034.18 due and owing.
    We conclude that StarTex conclusively established its right to recover
    $105,034.18 from Triton for Triton’s breach of contract by failing to pay the
    invoices. Thus, the burden shifted to Triton to respond to the motion for summary
    judgment and present evidence raising a fact issue on at least one of the elements
    of StarTex’s claim or to present a valid defense. See 
    Willrich, 28 S.W.3d at 23
    .
    23
    2.     Triton’s Response
    In its fourth issue, Triton argues that it presented summary judgment
    evidence controverting StarTex’s evidence and raising genuine issues of material
    fact as to one or more elements of StarTex’s breach of contract claim. Triton does
    not dispute that StarTex provided electricity to its buildings throughout the term of
    the contract up until Triton terminated the agreement. Neither does Triton dispute
    that it did not pay amounts invoiced by StarTex for the electricity provided.
    However, Triton disputes (1) the terms of the contract as presented by StarTex,
    alleging that the parties orally modified their agreement; (2) StarTex’s satisfactory
    performance under the contract and its own excuse from performance by StarTex’s
    prior material breach; (3) the sufficiency of StarTex’s evidence to support the
    amount of damages awarded by the trial court; and (4) the trial court’s implicit
    determination that it was not entitled to any offsets or credits.
    (a)    The alleged oral modification of the contract
    Triton argues that, according to Gary’s affidavit testimony, the agreement
    between the parties was orally modified by representations Bejger made prior to
    execution of the Second Amendment that invoices based on estimated usage would
    no longer be used. Gary testified that he represented to Bejger that the practice of
    estimating electricity usage for several consecutive months was causing damage to
    Triton because Triton could not bill its tenants based on estimated billing and that
    24
    Triton would not continue the business relationship with StarTex if it continued to
    use estimations and make errors in the monthly invoices. Gary averred that Bejger
    represented that the errors would be corrected, that StarTex was attempting to
    resolve the allegations that CenterPoint did not have access to Triton’s meters, and
    “that StarTex’s previous practice of estimating usage of consecutive months would
    not continue.” Gary stated that Triton entered into the Second Amendment based
    on these representations by Bejger. Thus, on appeal, Triton argues that it agreed to
    the Second Amendment “only after receiving assurances that the billing errors and
    repeated use of estimated billing would be addressed and corrected by [StarTex].”
    A written agreement not required by law to be in writing may be modified
    by a later oral agreement. Double Diamond, Inc. v. Hilco Elec. Coop., Inc., 
    127 S.W.3d 260
    , 267 (Tex. App.—Waco 2003, no pet.); Mar-Lan Indus., Inc. v.
    Nelson, 
    635 S.W.2d 853
    , 855 (Tex. App.—El Paso 1982, no writ). However, this
    principle does not apply here. The statements Gary related in his affidavit as being
    made by Bejger and orally modifying the contract were made before the parties
    entered into the Second Amendment. Thus, the statements Triton asserts as oral
    modifications are, at most, extraneous evidence of negotiations prior to entering a
    written contract, which constitutes parol evidence. 2
    2
    StarTex also presented Bejger’s affidavit testimony that he did not make the
    representations alleged by Gary. Triton objected to this evidence in the trial court,
    but it is not clear whether Triton is arguing on appeal that Bejger’s affidavit should
    25
    “An unambiguous contract will be enforced as written, and parol evidence
    will not be received for the purpose of creating an ambiguity or to give the contract
    a meaning different from that which its language imports.” David J. Sacks, P.C. v.
    Haden, 
    266 S.W.3d 447
    , 450 (Tex. 2008). Whether a contract is ambiguous is a
    question of law. 
    Id. at 451.
    We may not use extrinsic evidence to contradict or
    vary the meaning of the explicit language of a written contract. Nat’l Union Fire
    Ins. Co. v. CBI Indus., Inc., 
    907 S.W.2d 517
    , 521 (Tex. 1995).
    Here, the Second Amendment expressly provided that, except for the
    extension of the term of the contract and the pricing scheme outlined in paragraph
    one, the ESA “shall remain in full force and effect as written.” This includes the
    “Customer Acknowledgments” section of the ESA, which expressly stated that
    StarTex’s “ability to invoice Customer is dependent on the [TDSP’s] ability to
    furnish . . . meter readings” and that StarTex “may invoice Customer based on
    estimated meter reading.”      As matter of law, we conclude that the Second
    Amendment is not ambiguous. It extended the terms of the ESA, including the
    express provision allowing StarTex to invoice Triton based on estimated meter
    readings, to the new 36-month term.
    Triton failed to establish that the parties orally modified the contract.
    not be considered. However, it is unnecessary for us to consider Bejger’s
    testimony as the terms of the contract are established as a matter of law.
    26
    (b)   Triton’s entitlement to be          excused    from
    performing under the contract
    Triton also argues it was excused from performance under the ESA and the
    subsequent amendments by StarTex’s prior material breach.
    “[T]he contention that a party to a contract is excused from performance
    because of a prior material breach by the other contracting party is an affirmative
    defense. . . .” See City of The Colony v. N. Tex. Mun. Water Dist., 
    272 S.W.3d 699
    , 746 (Tex. App.—Fort Worth 2008, pet. dism’d). The burden of proving an
    affirmative defense is on the party asserting it. See Am. Petrofina, Inc. v. Allen,
    
    887 S.W.2d 829
    , 830 (Tex. 1994). Thus, Triton had to present evidence raising a
    fact question on each element of its defense to defeat StarTex’s motion for
    summary judgment. See 
    id. (holding, where
    “response was in the nature of an
    affirmative defense,” that party asserting defense “could only have defeated
    summary judgment with sufficient evidence to raise a fact question for each of the
    elements” of defense).
    “It is a fundamental principle of contract law that when one party to a
    contract commits a material breach of that contract, the other party is discharged or
    excused from further performance.” Mustang Pipeline Co. v. Driver Pipeline Co.,
    
    134 S.W.3d 195
    , 196 (Tex. 2004). A breach of contract occurs when a party fails
    to perform an act that it has expressly or impliedly promised to perform. Henry v.
    Masson, 
    333 S.W.3d 825
    , 835 (Tex. App.—Houston [1st Dist.] 2010, no pet.).
    27
    The materiality of a breach—the question of whether a party’s breach of a contract
    will render the contract unenforceable—generally presents a dispute for resolution
    by the trier of fact. 
    Id. Here, however,
    because we determine that StarTex’s
    actions did not breach the contract as a matter of law, we need not consider
    whether Triton raised a fact issue on materiality.
    To raise a material fact issue on every element of its affirmative defense,
    Triton had to raise a fact question on StarTex’s prior breach of contract. Triton
    argues that StarTex’s use of estimated billing was not proper under the contract
    because StarTex did not establish that the conditions precedent to using estimated
    billing had occurred because StarTex did not prove that CenterPoint was unable to
    access Triton’s meters.
    The ESA provides:
    Customer Acknowledgments. Customer acknowledges that
    [StarTex’s] ability to invoice Customer is dependent on the
    [transmission and distribution provider (TDSP)]’s or ERCOT’s ability
    to furnish [StarTex] all necessary information including meter
    readings or recorded data, as applicable. In the absence of such
    information from the TDSP or ERCOT, [StarTex] may invoice
    Customer based on estimated meter reading according to the Usage
    Profile. As soon as practical, and after receipt of Customer’s Energy
    Consumption and settlement charges from the TDSP and/or ERCOT,
    [StarTex] will reconcile on the next invoice any difference(s) between
    estimated and actual consumption and settlement charges.
    Thus, the plain, unambiguous language of the ESA provided that StarTex
    could invoice Triton based on estimated usage in the absence of actual meter
    28
    readings or other necessary information from CenterPoint, the TDSP.                This
    contract provision is consistent with the legislatively mandated division of business
    activities in the electric utility market. See TEX. UTIL. CODE ANN. § 39.051(b)
    (providing that electricity utilities must separate their business activities into three
    units—power generation company, retail electric provider, and transmission and
    distribution utility); Tex. Indus. Energy 
    Consumers, 324 S.W.3d at 97
    –98
    (observing that transmission and distribution service providers are responsible for
    providing metering services).
    StarTex provided the affidavit of Robert Verhage, who averred that, on
    several occasions, it had to rely on estimated usage because CenterPoint did not
    provide Triton’s actual meter usage.        The summary judgment evidence also
    contained an e-mail from a CenterPoint representative stating that Triton was to
    blame for CenterPoint’s failure to obtain actual meter readings. This e-mail shows
    that CenterPoint acknowledged that it provided StarTex with estimated usage
    rather than actual readings on several occasions and that StarTex was not at fault
    for CenterPoint’s inability to access and read the meters.
    The ESA expressly permits invoicing based on estimated usage. Triton did
    not present any summary judgment evidence that StarTex used estimates in its
    invoices on occasions when CenterPoint had provided actual meter readings.
    Thus, this argument is without merit.
    29
    Triton also argues that, even if StarTex was permitted to use estimates in
    invoicing Triton for its electricity usage, StarTex was required to reconcile any
    charges based on estimated usage on the next bill. However, the plain language of
    the contract provides that StarTex must reconcile the estimated usage with the
    actual usage “[a]s soon as practical, and after receipt of Customer’s Energy
    Consumption and settlement charges from the TDSP.” Triton’s argument that the
    actual usage was required to be reconciled on the next month’s bill is not supported
    by the plain language of the contract.
    Therefore, we conclude that Triton has not raised a fact issue on any element
    of its claim that StarTex committed a prior material breach of the contract.
    (c)   StarTex’s alleged failure to prove damages
    In its fifth, sixth, and seventh issues, Triton argues that the invoices relied on
    by StarTex in establishing the amount of damages were inadequate estimates and
    were properly objected to and disputed by Triton. Thus, Triton argues that StarTex
    failed to prove its damages as a matter of law.
    StarTex acknowledges that it used estimates in some of its bills, and we have
    already concluded that it was permitted to do so by the plain language of the
    contract. Furthermore, StarTex presented the actual invoices it sent Triton and
    Verhage’s affidavit stating that the final invoice relied on in calculating the amount
    30
    due and owing “contained the final, outstanding balance that was reconciled to
    correct all estimated reads.”
    Triton presented Gary’s affidavit testimony that he disputed several invoices
    and objected to numerous charges.       It also presented e-mail correspondence
    between Gary, Triton’s property manager, and StarTex, in which Gary made
    general objections to several invoices without providing specific amounts or
    portions of the invoices that he believed were inaccurate. Triton also presented an
    expert affidavit pointing out general complaints about the invoices without
    specifying particular amounts in controversy.
    Triton argues that StarTex was legally obligated to address Triton’s
    objections to StarTex’s billing practices before collecting on the unpaid invoices
    and that this evidence raises a fact question regarding the amount Triton owed to
    StarTex.
    The contract provides a method for disputing charges on invoices. The ESA
    provides that the “Customer must provide to [StarTex] written notice setting forth
    in particular detail any disputed amount, including the calculations with respect to
    any errors or inaccuracies claimed.” The record contains no evidence that Triton
    complied with this procedure. Neither Gary’s and Phillips’ affidavit testimony nor
    the e-mails sent to StarTex contain specific amounts or calculations. Triton did not
    31
    produce any evidence that it provided StarTex with written notice articulating the
    particular disputed amount or calculations regarding claimed inaccuracies.
    Thus, Triton failed to present evidence raising a fact issue on the accuracy of
    the invoices StarTex used to support its claim for the unpaid amounts for electricity
    usage.
    (d)    Triton’s entitlement to offsets and credits
    Triton also argues that it was entitled to $97,000 in offsets and credits, based
    on Phillips’ affidavit.
    “The right of offset is an affirmative defense.” Brown v. Am. Transfer &
    Storage Co., 
    601 S.W.2d 931
    , 936 (Tex. 1980). Triton must show its entitlement
    to an offset and the amount. See 
    id. (holding that
    party asserting right of offset
    bears burden of pleading offset and proving facts necessary to support it). Thus,
    Triton must present evidence raising a fact question on its offset defense to defeat
    StarTex’s motion for summary judgment. See Am. 
    Petrofina, 887 S.W.2d at 830
    .
    Triton presented Phillips’ affidavit, in which Phillips, as an electricity
    engineer, stated that the invoices contained errors entitling Triton to offsets and
    credits worth at least $97,000. However, as we have already stated, Triton did not
    provide a proper challenge to any particular charge or invoice.                 Phillip’s
    conclusory statements in his affidavit, by themselves, do not support Triton’s claim
    for offsets and credits. See TEX. R. CIV. P. 166a(f) (providing that supporting
    32
    affidavit must set forth facts that would be admissible in evidence); Wadewitz v.
    Montgomery, 
    951 S.W.2d 464
    , 466 (Tex. 1997) (holding that expert’s testimony
    will support summary judgment only if it is “clear, positive and direct, otherwise
    credible and free from contradictions and inconsistencies, and could have been
    readily controverted” and that conclusory statements by an expert are insufficient
    to support or defeat summary judgment).
    Thus, we conclude that Triton failed to raise a fact issue on any element of
    StarTex’s breach of contract claim against Triton for failure to pay the invoices.
    The trial court did not err in determining that Triton was entitled to summary
    judgment on this issue as a matter of law.
    C.    Summary Judgment on StarTex’s Breach of Contract Claim for
    Triton’s Early Termination of the Contract
    In parts of its first through seventh issues, Triton also argues that the trial
    court erred in granting summary judgment on StarTex’s breach of contract claim
    for Triton’s wrongful early termination of the agreement.
    1.     Evidence Establishing Elements of StarTex’s Claim
    As we have discussed, StarTex established the existence of a valid contract
    between itself and Triton, and it established that it performed under that contract.
    StarTex provided a copy of the Second Amendment, which provided that the
    parties agreed to extend the ESA through May 2011.
    The ESA contained the following early termination provision:
    33
    Early Termination Fee. In the event that Customer terminates
    this agreement or Customer defaults as described [in the ESA], then
    an Early Termination Fee will be assessed. The Early Termination
    Fee shall be equal to the greater of a) the three months highest bills for
    Customer or b) any mark to market costs.
    StarTex presented Verhage’s affidavit testimony that Triton terminated the
    agreement on October 10, 2008, approximately thirty-one months earlier than the
    Second Amendment’s contractual termination date of May 2011, and Triton’s final
    invoice reflecting a termination date in the middle of October 2008.
    StarTex likewise provided Madden’s affidavit testimony that StarTex was
    harmed by Triton’s early termination. Madden averred that when StarTex entered
    into the Second Amendment extending the terms of the ESA through May 2011, it
    contracted with its electricity producer “to purchase enough power to service the
    entire thirty-six (36) month term of the Second Amendment and the purchases
    were tailored to fit Triton’s particular ‘shape’.”         After Triton unilaterally
    terminated the contract on October 10, 2008, StarTex was still obligated to
    continue to purchase power from its supplier through May 2011 “in Triton’s
    particular ‘shape,’” even though StarTex no longer had a customer to whom to sell
    it. Madden testified that it was almost impossible to sell that electricity to another
    customer because StarTex “would have to find a new customer who not only wants
    an MCPE contract, but has the exact same term and volume requirements and
    ‘shape’ as Triton.” According to Madden, these particular characteristics of a
    34
    MCPE payment arrangement made it very difficult to calculate the mark-to-market
    losses because StarTex had no way of knowing what the exact cost of the future
    electricity would be.      StarTex thus calculated its liquidated damages as
    $197,323.25 based on the sum of Triton’s three highest monthly bills.
    2.     Triton’s response
    Triton does not contest that it terminated the contract in October 2008,
    approximately thirty-one months before the termination date provided in the
    Second Amendment. Triton again argues that its early termination was excused by
    StarTex’s prior breach by billing based on estimated usage. We have already
    concluded that StarTex did not breach the ESA when it invoiced Triton based on
    its estimated usage.
    Triton also raises several issues specific to the early termination clause and
    the trial court’s award of liquidated damages. In its ninth issue, Triton argues that
    the early termination fee clause is unenforceable as an impermissible penalty.
    Triton argues in its tenth and eleventh issues that even if the early termination fee
    clause is enforceable as a matter of law, StarTex did not present summary
    judgment evidence establishing the amount of the early termination fee in
    compliance with the contract’s terms.
    35
    (a)    Enforceability of early termination clause
    Triton argues that the early termination fee clause constitutes an
    impermissible penalty.   Triton argues that it is impermissible both under the
    common law standard set out in Phillips v. Phillips, 
    820 S.W.2d 785
    (Tex. 1991),
    and under the Texas Business and Commerce Code.
    Whether a contractual provision is an enforceable liquidated damages
    provision or an unenforceable penalty is a question of law for the court to decide.
    
    Dorsett, 164 S.W.3d at 664
    (citing 
    Phillips, 820 S.W.2d at 788
    ). Valid liquidated
    damages clauses “fix in advance the compensation to a party accruing from the
    failure to perform specified contractual obligations.” 
    Dorsett, 164 S.W.3d at 664
    .
    To enforce a liquidated damages clause, the court must find that (1) the harm
    caused by the breach is incapable or difficult of estimation and (2) the amount of
    liquidated damages called for is a reasonable forecast of just compensation.
    
    Phillips, 820 S.W.2d at 788
    ; GPA Holding, Inc. v. Baylor Health Care Sys., 
    344 S.W.3d 467
    , 475 (Tex. App.—Dallas 2011, pet. denied). The party asserting that
    the provision is unenforceable bears the burden of proof. GPA 
    Holding, 344 S.W.3d at 475
    .
    Triton argues that the harm caused by its breach is not incapable or difficult
    of estimation.    Triton argues that StarTex “could determine the amount of
    electricity that would have been purchased by Triton but for the purported
    36
    breach . . . and determine what the electricity was sold for to an alternate customer
    versus what it would have been sold for to Triton.” However, StarTex’s Senior
    Vice-President of Supply, Stephen Madden, provided affidavit testimony that it is
    almost impossible to know what the cost of Triton’s future energy use would have
    been because of the constantly fluctuating prices involved in the MCPE pricing
    structure. He averred that the price of electricity changes as often as every fifteen
    minutes, that StarTex committed to buy electricity in fifteen minute increments to
    meet its obligation to provide electricity conforming to Triton’s unique “shape” of
    energy consumption, and thus it would be very difficult to find another consumer
    to use that energy. Accordingly, it was not possible to determine, at the time of
    Triton’s early termination, the cost of the energy that would have been purchased
    by Triton but for the breach, and it was also very difficult for StarTex to predict
    whether it would find another consumer to purchase the electricity according to
    Triton’s unique usage pattern, and if so, how much such a consumer would pay.
    Triton did not present any evidence regarding the parties’ ability to estimate
    actual damages when the contract was formed, and it did not controvert Madden’s
    description of the pricing model applicable to the ESA and Second Amendment.
    Thus, we conclude that it was impossible to determine the actual harm that would
    be caused by early termination. See 
    Phillips, 820 S.W.2d at 788
    .
    37
    Triton also appears to argue that the amount of the liquidated damages was
    not a reasonable forecast of StarTex’s actual damages because it was unreasonably
    large. The ESA provided that the early termination fee “shall be equal to the
    greater of a) the three months highest bills for Customer or b) any mark to market
    costs.” In this instance, due to the length of the term remaining on the terminated
    contract and the uncertainties of pricing, the “mark to market costs” could not be
    calculated. Thus, Madden testified that StarTex calculated its damages based on
    Triton’s three highest monthly bills, which totaled $197,323.25.
    Triton did not present any evidence regarding what a reasonable forecast of
    damages would have been at the time the contract was formed, nor did it present
    any evidence of StarTex’s actual damages. Thus, we conclude that, when viewed
    as of the time the contract was executed, the ESA’s method for calculating the
    amount of liquidated damages provided a reasonable forecast of just compensation.
    See 
    id. This same
    reasoning also demonstrates that Triton failed to show that the
    early termination fee violated Business and Commerce Code section 2.718.
    Section 2.718 provides that a liquidated damages clause is unenforceable if (1) the
    agreed amount is unreasonable in light of the anticipated or actual harm caused by
    breach, (2) the proof of actual harm is not difficult, (3) obtaining an adequate
    remedy for breach is not inconvenient or not feasible, or (4) the agreed amount is
    38
    unreasonably large. See TEX. BUS. & COM. CODE ANN. § 2.718 (Vernon 2009). As
    we have already discussed, the proof of actual harm is difficult, and obtaining an
    adequate remedy for breach is not feasible because StarTex could not have
    calculated the future cost of the electricity, nor could it predict the extent to which
    it could mitigate its damages. And, the agreed amount was not unreasonably large
    or unreasonable in light of the anticipated or actual harm. StarTex was obligated to
    buy thirty-one months’ worth of electricity that it had no ability to resell. In that
    light, liquidated damages calculated from Triton’s three highest monthly invoices
    are not unreasonable.
    Triton failed to raise a fact question on its claim that the early termination
    fee clause constituted an impermissible penalty.
    (b)    StarTex’s proof of liquidated damages
    Triton also argues that StarTex failed to prove the amount of liquidated
    damages permitted under the ESA. Several of Triton’s arguments on this issue
    again challenge the accuracy of StarTex’s billing and StarTex’s use of estimates in
    its invoices. However, we have already determined that Triton has failed to raise a
    fact question regarding the accuracy or propriety of StarTex’s invoices. Thus, we
    do not address those arguments again.
    Triton argues that StarTex failed to identify which three invoices it relied on
    in calculating the liquidated damages. It also argues that no three invoices from
    39
    the term of the Second Amendment add up to $197,323.95, and, thus, StarTex
    improperly used invoices dated prior to the execution of the Second Amendment to
    calculate the early termination fee. However, the early termination fee provision
    did not limit the time period from which the three highest bills could be taken, and
    Triton failed to present these arguments to the trial court. See TEX. R. CIV. P.
    166a(c) (“Issues not expressly presented to the trial court by written motion,
    answer or other response shall not be considered on appeal as grounds for
    reversal.”); City of Houston v. Clear Creek Basin Auth., 
    589 S.W.2d 671
    , 678
    (Tex. 1979) (holding that nonmovant could not raise for first time on appeal
    additional fact issue that was not raised in its response).
    We hold that the trial court did not err in granting summary judgment and
    awarding StarTex $105,034.18 on its claim that Triton failed to pay for electricity
    provided under the ESA and $197,323.25 as liquidated damages on its claim for
    Triton’s early termination of the ESA as extended by the Second Amdendment.
    We overrule Triton’s first through seventh, ninth, tenth, and eleventh issues.
    Attorney’s Fees
    In its twelfth issue, Triton argues that the trial court erred in awarding
    StarTex $12,000 in attorney’s fees because that amount was not properly proven
    and was excessive and unreasonable. Triton also argues that StarTex was not
    40
    entitled to recover attorney’s fees because it made an excessive demand prior to
    filing this lawsuit.
    A.     Standard of Review
    The prevailing party in a breach of contract suit is entitled to attorney’s fees.
    TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (Vernon 2008); Haden v. David J.
    Sacks, P.C., 
    332 S.W.3d 503
    , 510 (Tex. App.—Houston [1st Dist.] 2009, pet.
    denied). An award of attorney’s fees must be supported by evidence that the fees
    are reasonable and necessary. See Stewart Title Guar. Co. v Sterling, 
    822 S.W.2d 1
    , 10 (Tex. 1991). A trial court determines the reasonableness of an attorney’s fees
    award by considering the factors enumerated in Arthur Andersen & Co. v. Perry
    Equipment Corp. 
    945 S.W.2d 812
    , 818 (Tex. 1997) (holding that evidence of
    contingency fee agreement alone does not support award of reasonable and
    necessary attorney’s fees and that trial court must still consider other factors). The
    reasonableness of attorney’s fees is generally a fact issue. 
    Haden, 332 S.W.3d at 512
    . We review attorney’s fees awards for an abuse of discretion. Ridge Oil Co.,
    Inc. v. Guinn Invs., Inc., 
    148 S.W.3d 143
    , 163 (Tex. 2004).
    An attorney’s affidavit constitutes expert testimony that will support an
    award of attorney’s fees in a summary judgment proceeding. 
    Haden, 332 S.W.3d at 513
    ; see TEX. R. CIV. P. 166a(c); Gensco, Inc. v. Transformacions Metalurgicias
    Especiales, S.A., 
    666 S.W.2d 549
    , 554 (Tex. App.—Houston [14th Dist.] 1984,
    41
    writ dism’d). Civil Practice and Remedies Code section 38.003 provides that
    “usual and customary attorney’s fees” are presumed to be reasonable. TEX. CIV.
    PRAC. & REM. CODE ANN. § 38.003 (Vernon 2008).              Although the statutory
    presumption that usual and customary fees are reasonable is rebuttable, see 
    id., once triggered
    by an attorney’s supporting affidavit, the presumption of
    reasonableness remains in effect when there is no evidence submitted to challenge
    the affidavit proof of the summary judgment movant. 
    Haden, 332 S.W.3d at 513
    .
    B.    Analysis
    In its motion for summary judgment, StarTex sought $75,589.36 in
    attorney’s fees, and its attorney, Rodney Drinnon, submitted an affidavit in support
    of an award for attorney’s fees.      Drinnon averred that the contingency fee
    agreement awarding twenty-five percent of damages recovered from any
    successful trial award constituted usual and customary attorney’s fees; he provided
    a list of specific tasks he and his law practice undertook during the course of
    representing StarTex; and he stated that his fee was supported by several, listed
    Arthur Andersen factors. Drinnon’s description was “‘clear, positive, and direct,
    otherwise credible’ and [was] neither internally inconsistent nor [contradictory]”
    and could have been readily controverted by Triton. See 
    id. at 514.
    Based on
    Drinnon’s affidavit, submitted as evidence in support of the request for attorney’s
    fees, StarTex was entitled to the statutory presumption that its attorney’s usual and
    42
    customary fees were reasonable.        See TEX. CIV. PRAC. & REM. CODE ANN.
    § 38.003; see also 
    Haden, 332 S.W.3d at 514
    (holding attorney’s affidavit
    sufficient to warrant summary judgment when it (1) contained recitals establishing
    attorney’s competency to swear to facts stated and other requirements of Rule of
    Civil Procedure 166a(f), (2) described work encompassed by the fees sought, and
    (3) specified factors that formed basis of his statement that amount claimed was
    reasonable and necessary, tracking seven of eight Arthur Andersen factors).
    Triton filed a written objection to Drinnon’s affidavit, arguing that it failed
    to describe the time required to prosecute StarTex’s claim, to provide counsel’s
    hourly rate, and to discuss two of the Arthur Andersen factors. We have already
    concluded that Drinnon’s affidavit was sufficient to support StarTex’s claim for
    attorney’s fees. See 
    Haden, 332 S.W.3d at 514
    . Triton did not file a controverting
    affidavit or any other evidence disputing Drinnon’s evidence. Because Triton did
    not present any controverting evidence, Triton cannot overcome the presumption
    of reasonableness accorded to Drinnon’s affidavit in support of an award of
    attorney’s fees. See 
    id. at 514–16
    (holding that because nonmovant “did not
    controvert [attorney’s] affidavit or otherwise dispute the law firm’s evidence, the
    law firm was . . . entitled to the statutory presumption that the requested amount
    was both reasonable and necessary”).
    43
    Triton also argues that StarTex is not entitled to attorney’s fees on the basis
    of its affirmative defense that StarTex made an excessive demand on Triton prior
    to filing suit. See Kurtz v. Kurtz, 
    158 S.W.3d 12
    , 21 (Tex. App.—Houston [14th
    Dist.] 2004, pet. denied). When a claimant makes an “excessive” demand and will
    not accept a lesser amount, the claimant is not entitled to attorney’s fees expended
    in litigation thereafter, even if it prevails on its breach of contract claim. See, e.g.,
    McMillin v. State Farm Lloyds, 
    180 S.W.3d 183
    , 209 (Tex. App.—Austin 2005,
    pet. denied) (citing Findlay v. Cave, 
    611 S.W.2d 57
    , 58 (Tex. 1981)). Demand is
    not excessive simply because it is greater than the amount eventually awarded. See
    
    Findlay, 611 S.W.2d at 58
    . The dispositive question is whether the claimant acted
    unreasonably or in bad faith in making the demand. See Standard Constructors,
    Inc. v. Chevron Chem. Co., 
    101 S.W.3d 619
    , 627–28 (Tex. App.—Houston [1st
    Dist.] 2003, pet. denied).
    StarTex’s demand letter requested $105,034.18 as principal on the unpaid
    invoices, $14,290.98 in interest and fees, $197,323.95 in liquidated damages, and
    $68,329.82 in attorney’s fees. It stated that Triton should pay the listed amounts
    within thirty days or make arrangements to satisfy the debt. Thus, the amounts
    demanded by StarTex prior to filing suit were not so much greater than the amount
    it was eventually awarded as to be “excessive” or to indicate that the demand was
    made in bad faith. Triton presented no evidence that StarTex would have refused
    44
    tender of the $314,358.13 awarded by the trial court. Triton has failed to establish
    that this exception to StarTex’s statutory right to attorney’s fees is met. See
    
    Findlay, 611 S.W.2d at 58
    ; 
    McMillin, 180 S.W.3d at 209
    .
    We hold that the trial court did not err in awarding StarTex $12,000 in
    attorney’s fees.
    We overrule Triton’s twelfth point of error.
    Other Issues
    A.    PUC Rules and Procedures for Disputed Charges
    In its eighth issue, Triton argues that its pending claim against StarTex
    before the PUC acted to stay the judgment and enforcement of the judgment. In its
    brief, Triton also argues that StarTex failed to properly investigate Triton’s
    complaints according to the PUC’s rules and procedures. However, Triton did not
    present these arguments to the trial court. Furthermore, the only indication before
    this Court that Triton actually filed a complaint with the PUC is Triton’s statement
    in its appellate brief. We conclude that these complaints are not properly presented
    for our review. See TEX. R. CIV. P. 166a(c); Marek v. Tomoco Equip. Co., 
    738 S.W.2d 710
    , 712 (Tex. App.—Houston [14th Dist] 1987, no writ) (“The trial court
    considers the record only as it properly appears when the motion for summary
    judgment is heard.”); see also TEX. R. APP. P. 33.1(a) (providing that, “[a]s a
    prerequisite to presenting a complaint for appellate review, the record must show
    45
    that . . . the complaint was made to the trial court by a timely request, objection or
    motion”).
    We overrule Triton’s eighth issue.
    B.    Receivership and Turnover Order
    In its thirteenth and fourteenth issues, Triton argues that, because the trial
    court erred in granting summary judgment, the trial court also erred in appointing a
    receiver and in ordering Triton to turn over to the receiver confidential records and
    all proceeds and revenues generated by its businesses. Thus, Triton argues that it
    is entitled to immediate relief from the order appointing a receiver and the turnover
    order, including return of all records and revenues turned over to or seized by the
    receiver. We have already concluded that the trial court did not err in granting
    summary judgment. Therefore, this argument fails.
    We overrule Triton’s thirteenth and fourteenth issues.
    Conclusion
    We affirm the judgment of the trial court.
    Evelyn V. Keyes
    Justice
    Panel consists of Justices Keyes, Sharp, and Huddle. Justice Sharp concurring in
    the judgment only.
    46
    

Document Info

Docket Number: 01-10-00601-CV

Citation Numbers: 411 S.W.3d 42

Filed Date: 8/13/2013

Precedential Status: Precedential

Modified Date: 1/12/2023

Authorities (29)

MMP, Ltd. v. Jones , 710 S.W.2d 59 ( 1986 )

Findlay v. Cave , 611 S.W.2d 57 ( 1981 )

American Petrofina, Inc. v. Allen , 887 S.W.2d 829 ( 1994 )

National Union Fire Insurance Co. of Pittsburgh v. CBI ... , 907 S.W.2d 517 ( 1995 )

Arthur Andersen & Co. v. Perry Equipment Corp. , 945 S.W.2d 812 ( 1997 )

David J. Sacks, P.C. v. Haden , 266 S.W.3d 447 ( 2008 )

Valence Operating Co. v. Dorsett , 164 S.W.3d 656 ( 2005 )

American Mfrs. Mut. Ins. Co. v. Schaefer , 124 S.W.3d 154 ( 2003 )

Mustang Pipeline Co. v. Driver Pipeline Co. , 134 S.W.3d 195 ( 2004 )

Ridge Oil Co., Inc. v. Guinn Investments, Inc. , 148 S.W.3d 143 ( 2004 )

M.D. Anderson Hospital & Tumor Institute v. Willrich , 28 S.W.3d 22 ( 2000 )

Brown v. American Transfer & Storage Co. , 601 S.W.2d 931 ( 1980 )

Public Util. Com'n v. CITY PUBLIC SER. BD. , 53 S.W.3d 310 ( 2001 )

Wadewitz v. Montgomery , 951 S.W.2d 464 ( 1997 )

Haden v. David J. Sacks, P.C. , 332 S.W.3d 503 ( 2009 )

Kurtz v. Kurtz , 158 S.W.3d 12 ( 2005 )

Prime Products, Inc. v. S.S.I. Plastics, Inc. , 97 S.W.3d 631 ( 2002 )

Double Diamond, Inc. v. Hilco Electric Cooperative, Inc. , 127 S.W.3d 260 ( 2003 )

Marek v. Tomoco Equipment Co. , 738 S.W.2d 710 ( 1987 )

City of Houston v. Clear Creek Basin Authority , 589 S.W.2d 671 ( 1979 )

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