A Chinese-American equipment supplier to the oil and gas industry was able to reverse a $1.5 million breach of contract jury award at the First Court of Appeals in Houston.
Represented by the law firms Kirkland & Ellis, Locke Lord and Mayer Brown, American Jereh International Corporation was given a reversal and remand from claims brought by a consultant who claimed to be instrumental in a $25.6 million sale to an oil and gas fracking company.
The plaintiff, Ronald Clarke, claimed that in 2017 he helped break the ice between American Jereh and Houston-based BJ Energy Solutions LLC, a company that was refusing to do business with American Jereh. Clarke alleged he was asked by an official with Yantai Jereh Petroleum Equipment & Technologies Co. Ltd., a Chinese-based company affiliated with American Jereh, to assist in making contact with BJ Energy and promised Clarke a 5% commission on sales.
Clarke’s discussions were with Chengcheng Yu, Yantai Jereh’s regional director for North America.
As recounted in the opinion written by Justice Julie Countiss, Clarke had been in talks with Jereh Group, the parent company, as early as 2013. He arranged a meeting between the companies and alleged the subsequent sales were a direct result of his consultant services.
Before a jury in Harris County 61st District Court, Clarke testified he began his efforts based on an oral agreement, but despite his repeated efforts he was never able to obtain a signed contract for his services, despite having the written terms of a draft cooperation agreement going back to 2014.
The sale to which Clarke referred took place in November 2019. He believed he was owed $1.26 million but was never paid.
The jury found in favor of Clarke on breach of contract, promissory estoppel, and quantum meruit claims and awarded $1,367,500 in damages and $257,584 in attorney fees.
On final judgment, the trial court limited damages to the breach of contract claim and awarded $1.28 million in damages, plus the jury’s figure for attorney fees.
In finding for American Jereh, the appeals court said a contract must be sufficiently definite in its terms to be legally binding. The oral agreement “lacks clear, certain, and definite terms,” Countiss said.
“Notably, the ‘only thing’ that Clarke and Yu discussed after the Feb. 8, 2017 dinner was whether she would agree to a 5% commission of ‘sales.’ Absent from the purported Feb. 8, 2017 oral agreement was, among other things, a ‘definition of sales,’ a timeline for payments to Clarke, Clarke’s duties and obligations under the agreement, the duration and scope of the agreement, and who the parties to the agreement were,” Countiss stated.
Clarked testified that he viewed the 2014 cooperation agreement as a “template” for his later agreements with Jereh entities, but he also testified the “template” would need to be amended, the court said.
“Thus, by his own testimony, Clarke conceded that the 2014 cooperation agreement could not supply the missing essential terms,” Countiss wrote.
Although the appeals court entered judgment that Clarke take nothing on his breach of contract claim and his request for attorney fees, the First District said Clarke may be entitled to seek judgment on his alternative quantum meruit claim and remanded the case to the trial court for consideration.
Jury damages on the quantum meruit portion were $87,500.
American Jereh is represented by Kirkland & Ellis attorneys George Hicks Jr. and Philip Cooper of the Washington, D.C., and Chicago offices, respectively; by Christopher Dove of Locke Lord, Houston; and Brandon Renken of Mayer Brown, Houston.
Clarke is represented by Melvin Houston of Houston Law Group in Houston, who did not respond to a request for comment.
