                               UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                               No. 10-1253


PAUL MORRELL, INCORPORATED, d/b/a The Event Source,

                 Plaintiff - Appellee,

           v.

KELLOGG BROWN & ROOT SERVICES, INCORPORATED; KELLOGG BROWN &
ROOT INTERNATIONAL, INCORPORATED; KELLOGG BROWN & ROOT,
INCORPORATED; KELLOGG BROWN & ROOT, LLC,

                 Defendants – Appellants,

           and

KBRI TX-1 NEWCO, INCORPORATED;        KELLOGG ENERGY SERVICES,
INCORPORATED;  KELLOGG  BROWN          &   ROOT   (CALIFORNIA),
INCORPORATED,

                 Defendants.



Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.     Anthony J. Trenga,
District Judge. (1:08-cv-00072-AJT-JFA)


Argued:   September 22, 2011                 Decided:   November 10, 2011


Before NIEMEYER, KING, and AGEE, Circuit Judges.


Affirmed by unpublished per curiam opinion.


ARGUED: Warren W. Harris, BRACEWELL & GIULIANI, LLP, Houston,
Texas, for Appellants.  Mark David Crawford, MCMANUS & DARDEN,
LLP, Washington, D.C., for Appellee.     ON BRIEF: Jeffrey L.
Oldham,   BRACEWELL   &  GIULIANI,  LLP,  Houston,  Texas,  for
Appellants.     Jeanne A. Anderson, MCMANUS & DARDEN, LLP,
Washington, D.C.; Laurence Schor, ASMAR, SCHOR & MCKENNA, PLLC,
Washington, D.C.; Monica Taylor Monday, GENTRY LOCKE RAKES &
MOORE, Roanoke, Virginia, for Appellee.


Unpublished opinions are not binding precedent in this circuit.




                                2
PER CURIAM:

        Plaintiff/Appellee        Paul    Morrell,        Incorporated,         d/b/a   The

Event Source (“TES”) brought suit in the United States District

Court           for   the     Eastern     District          of       Virginia     against

Defendants/Appellants             Kellogg         Brown          &    Root      Services,

Incorporated          and   several     related      entities        (“KBR”),    alleging

various common law claims.                 Prior to trial, a number of the

claims were either dismissed or resolved between the parties.

After       a    multi-week    bench    trial   on    the   remaining        claims,    the

district court ruled against TES on its claims for breach of

contract and tortious interference, 1 but in favor of TES on its

claim for fraudulent inducement, setting forth detailed findings

of fact and conclusions of law in a 47-page written opinion.

The court awarded approximately $12.4 million in fraud damages,

slightly more than $2.5 million in prejudgment interest, and $4

million in punitive damages.

        On appeal, KBR challenges the district court’s judgment on

the fraud claim, as well as the award of both compensatory and

punitive damages.             For the reasons set forth herein, we affirm

the judgment of the district court.




        1
            Those rulings are not at issue in this appeal.



                                            3
                                                  I.

        This     case        arises    out    of         a    contract   and     subsequent

settlement agreement between KBR and TES.                             The district court

determined that KBR made material false statements in order to

induce TES to accept a settlement payment that was approximately

$12.4 million less than what KBR had previously acknowledged it

owed TES.

     The initial contract between KBR and TES was part of the

effort to provide dining facilities and food services (“DFAC

services”) to American troops in Iraq.                              That effort began in

December 2001, when KBR contracted with the federal government

to provide logistical support, including DFAC services, to our

armed     forces        in     Iraq.         On        June   13,    2003,     actual     work

authorization was awarded to KBR through Task Order 59, and KBR

selected TES as a sub-contractor to provide certain of those

services.        TES and KBR entered into a Master Agreement on June

15, 2003, which contained a number of incorporated contractual

documents.        TES, in turn, hired a number of sub-contractors to

perform        various       aspects    of    the        required      work,    setting    up

separate payment arrangements with each of them.                               The time of

performance under Task Order 59 was modified periodically and

additional funding was provided as the need for DFAC services in

Iraq continued.



                                                  4
       Toward the end of 2003, KBR came under scrutiny from the

Defense Contract Audit Agency (“DCAA”), which was investigating

the    DFAC       invoices   KBR     submitted      for    payment   from   its

subcontractors.         One of DCAA’s primary concerns was that some

DFAC invoices, including those from TES, billed for more meals

than were actually served to the troops.                  In early 2004, DCAA

began reviewing its payment of invoices to KBR, and informed KBR

that, pending further discussions, DCAA would withhold payment

on a portion of the invoices. 2              DCAA also instructed KBR to

review all of its DFAC subcontracts.

       KBR conducted the review of its subcontracts, and informed

DCAA       that   its   review   confirmed   that    its    subcontracts    were

reasonably priced and structured, and that outstanding invoices

should be paid in full.            KBR thus told DCAA that it intended to




       2
        DCAA had concluded it was not obligated to pay KBR for
invoiced meals that exceeded the actual number of soldiers
served.    However, that arrangement between DCAA and KBR was
inconsistent with the terms of the competitively-bid subcontract
between TES and KBR.    In the subcontract, KBR agreed that TES
was entitled to charge for a minimum number of meals, regardless
of the number of persons actually served at a site.         This
pricing scheme was considered reasonable by both KBR and TES
since it was intended to allow TES to recover, within the
initial performance period, all of its initial expenditures
(such as capital costs for facilities and equipment) which were
considerable and not likely recoverable on an actual per person
charge rate.     This ability to recoup capital costs was a
substantial inducement by KBR for TES to enter into the
subcontract.



                                        5
pay outstanding invoices to its subcontractors in full and bill

those amounts to the government.

       In response to KBR’s stated intention, DCAA announced in

May 2004 that it would begin to withhold and/or recoup 19.35% of

the    total    payments       made   by    the       government       to    KBR     for     DFAC

invoices because of the discrepancy between the actual number of

meals served and the invoiced meal amounts.                             This “decrement”

caused KBR, in turn, to withhold money from its subcontractors.

Additionally, in response to the imposition of the decrement,

KBR and TES executed Amendment No. 1 to the Master Agreement,

which   reflected        their    agreement          as    to   the    proper       method     to

calculate the amount due and payable to TES, later agreed by

them to be $36,464,644.65.                 Amendment No. 1 also extended the

time for TES to file contract dispute claims with KBR.

       In early 2005, KBR met with the Army Sustainment Command

(“ASC”),       to   discuss        the      government’s          continued              concerns

regarding the alleged overbilling, and they engaged in extensive

renegotiations over the DFAC billing and invoices.                              ASC and KBR

finally        reached     a     negotiated               settlement        (“the         KBR-ASC

Settlement”), in which KBR agreed to a $55 million decrement

from    the     invoice    amounts         it       had    submitted        from    its      DFAC

subcontractors       and       released     the       government       from        all    claims

relating to the DFAC invoices.                      As a result, KBR no longer had

the ability to assert claims on behalf of its subcontractors for

                                                6
any additional payment for DFAC services, and the sole remedy

for TES and other subcontractors was against KBR.                                   KBR did not

consult with TES or its other sub-contractors regarding the KBR-

ASC   Settlement,          nor    did     it    disclose        any     of    the    settlement

details to TES.           In any event, TES never authorized KBR to waive

any     of       TES’    rights     vis    a    vis    the       government          under     its

subcontract with KBR.

      Following the KBR-ASC Settlement, KBR scheduled meetings in

Dubai    with      TES    and     other    subcontractors          in    order      to   resolve

their    outstanding            invoices       which      had    been        subject     to    the

decrement.          During       the    Dubai   meetings,         KBR    convinced       TES    to

accept       a    reduced    payment       from     KBR    on     its    invoiced        amounts

(approximately $24 million, instead of the $36.4 million agreed

to in Amendment No. 1) and to release KBR from any additional

claim for payment.

      TES’ fraud claim was based on the representations made by

KBR before and during the Dubai meetings.                             The dispute over the

fraud    claim      at    trial     focused     primarily         on    whether      the      Dubai

representations by KBR were knowingly false, and whether TES

justifiably relied on those representations when it accepted the

reduced payment from KBR and released it from further claims.

      The district court found that KBR officials made numerous

fraudulent statements to TES in order to induce TES to agree to

the reduced payment and the release.                            These misrepresentations

                                                7
by KBR included: (1) the characterization of the amount KBR was

going      to     pay        TES     as   a     “Government      decision,”            that    was

“calculated           by    the    Government     based     on   a    number      of    factors,

primarily        including            actual     headcount       and        the    period       of

performance”;              (2)    “that   KBR    has   no    ability        to    increase      or

decrease        the    KBR       Holdback,”     defined     as   “that      portion      of    the

amount billed for the Invoiced Work that will not be paid to TES

as determined by the Government”; (3) that KBR had no discretion

to raise or lower the amount offered, which was therefore “non-

negotiable”; and (4) if TES rejected the KBR offer, “TES’ only

legal remedy was to contest the government’s decision by filing

a claim, through KBR, against the government.” (See J.A. 2379-

82.)

       Many of KBR’s fraudulent statements were made orally, but

some were incorporated into a written document, Amendment No. 2

to   the    Master          Agreement.          Significantly,        the    district         court

expressly found that TES asked KBR to sign Amendment No. 2 in

order      to     verify           that   KBR    was   being         truthful      about       its

representations.

        The district court further found that, had KBR not executed

Amendment No. 2, TES would not have agreed to accept the reduced

payment.        Instead, it would have sued and could have recovered

from KBR the full amount KBR had previously acknowledged was

due, the $36.4 million.                   The district court thus found that TES

                                                  8
was    entitled     to     damages      in    the    amount    it    released        in   the

settlement with KBR, i.e., $12,424,387.

       On   appeal,      KBR     assigns      error    to    three    rulings        by   the

district        court:     (1)   the    district      court’s       finding     that      TES

actually and justifiably relied on KBR’s misrepresentations; (2)

the    district     court’s      award       of    compensatory      damages     for      the

fraud; and (3) the district court’s determination that punitive

damages were proper. 3            KBR timely filed its appeal and we have

jurisdiction pursuant to 28 U.S.C. § 1291.



                                             II.

                                              A.

       When a judgment results from a bench trial, it is reviewed

“under      a    mixed     standard     of    review—factual         findings    may       be

reversed only if clearly erroneous, while conclusions of law . .

.     are   examined       de    novo.”           Universal    Furniture       Int’l       v.

Collezione        Europa     USA,      618   F.3d     417,    427    (4th     Cir.     2010)


       3
       Because KBR has not identified as a separate issue on
appeal or offered any argument in support of a claim that the
district court erred in finding that the false statements were
made or that they were material, we deem any such challenges
abandoned. See Fed. R. App. P. 28(a)(9)(A) (“appellant’s brief
must contain . . . appellant’s contentions and the reasons for
them”); Jones v. Liberty Mut. Ins. Co. (In re The Wallace & Gale
Co.), 385 F.3d 820, 835 (4th Cir. 2004) (where a party does not
comply with Rule 28 and fails to address a claim, the claim is
waived).



                                              9
(quoting Roanoke Cement Co. v. Falk Corp., 413 F.3d 431, 433

(4th    Cir.   2005))   (alteration     in    original).       Under   the   clear

error    standard,      the   court   of      appeals   must    affirm   factual

findings if they are “plausible” in light of the entire record,

“even though convinced that had it been sitting as the trier of

fact, it would have weighed the evidence differently.” Walton v.

Johnson, 440 F.3d 160, 173 (4th Cir. 2006).



                                        B.

       In this diversity jurisdiction case, the parties are in

agreement that Texas law governs the common law claims asserted.

Under Texas law,         TES’ fraudulent inducement claim required it

to prove, among other elements, that it justifiably relied on

KBR’s    misrepresentations      when        entering   into    the    settlement

agreement.     Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51

S.W.3d 573, 577 (Tex. 2001).          The district court found that TES

proved its reliance was justifiable.              Specifically, the district

court found:

       TES’ willingness to enter into Amendment No. 2 was
       related directly to KBR’s misrepresentations.    KBR’s
       representation   that   the   government  unilaterally
       determined the amount to be paid to TES and its
       repeated references to the Disputes Clause caused TES
       to conclude that if TES were to seek more than what
       KBR was offering, TES’ only remedy would be against
       the government. For a variety of reasons, TES was not
       willing to litigate against the government . . . .
       [But] TES was fully prepared to pursue KBR, including
       through litigation, if necessary, over its outstanding

                                        10
         DFAC invoices since, among other reasons, KBR had
         already acknowledged the amount that was properly
         payable to TES. TES questioned the accuracy of KBR’s
         representations and, in response, KBR labeled as
         inaccurate    certain    news  reports    concerning    a
         “settlement” with the government.     KBR also provided
         written confirmation of certain of its representations
         in order to dispel any misgivings on TES’ part.       TES
         specifically conditioned its willingness to accept
         KBR’s settlement offer and its willingness to release
         KBR based on receiving those assurances and entered
         into Amendment No. 2 only after receiving KBR’s
         representations through KBR’s legal counsel.        While
         certain of TES’ officers suspected that certain of
         KBR’s representations were untrue (while others, such
         as its general counsel, did not), TES did not, in
         fact, know at the time, and had no means of
         determining, that KBR’s representations were untrue
         and   it   took   reasonable  steps,   because   of   its
         suspicions, to ensure that they were true.

(J.A. 2387-88.)

         The parties dispute the proper standard of review on this

issue.      KBR argues that justifiable reliance in this case is a

legal     issue    that   should   be   reviewed    de    novo.      Citing      Grant

Thornton, LLP v. Prospect High Income Fund, ML CBO IV (Cayman),

Ltd., 314 S.W.3d 913 (Tex. 2010), KBR contends that the issue

should be determined as a matter of law because there were “red

flags” in the case such that TES was alerted to the falsity of

KBR’s       representations,        thereby       rendering        its     reliance

unjustified. See id. at 923 (“a person may not justifiably rely

on   a    representation     if    there    are   red    flags    indicating     such

reliance      is    unwarranted.”)         (internal     quotation       marks     and

citation omitted).         KBR also points to the testimony of some of


                                           11
TES’ agents, involved in the negotiations with KBR, who stated

that     they       had     concerns       about      the     truthfulness         of    the

representations           being    made    to    them.       Because    of      these   “red

flags,”      KBR    argues,       TES’    reliance     was    not   justifiable         as   a

matter of law.            KBR thus urges us to review the determination de

novo.

       While there are cases in which justifiable reliance can be

determined as a matter of law, this is not one of them.                                  See

1001 McKinney Ltd. v. Credit Suisse First Boston Mortg. Capital,

192 S.W.3d 20, 30 (Tex. App. 2005) (collecting authority and

noting       that   Texas     state      and    federal      “courts    have     uniformly

treated the issue of justifiable reliance as a question for the

factfinder”); id. at 35 (Frost, J., concurring and dissenting)

(noting that reliance may be determined as a matter of law, but

also recognizing that “i[f] there is a genuine issue of material

fact    as    to    whether    reliance        was   justifiable       in   a   common-law

fraud case, then, of course, the factfinder should determine

this issue”).         Instead, in this case, there are facts that could

support a conclusion either way.                     Thus, which version of events

to credit here was determined by the district court as a factual

matter based on its first-hand knowledge of the evidence and its

credibility determinations of the witnesses.                        We therefore agree

with TES that the justifiability of its reliance in this case is

a factual finding that we review only for clear error.

                                                12
       The    district       court’s       finding   was     not    clearly      erroneous.

Although KBR argues the existence of any “red flags” should end

the inquiry, the district court concluded that it was precisely

because of the purported “red flags,” i.e., TES’ concerns, that

TES    sought     additional         reassurances      and     particularly        why    it

sought    assurances         from    KBR    in   writing.          The   record   contains

ample    support     for      the    factual       finding    that       TES   justifiably

relied on KBR’s misrepresentations.                        For example, members of

TES’    Dubai    team    testified         regarding    the    importance         of    KBR’s

representations         in    TES’     decision-making        process.           They    also

emphasized that both KBR’s lead negotiator, retired three-star

Army General Paul Cerjan, and KBR’s lawyer, told TES that any

dispute over the payments would be with the government, and that

KBR     did    not   know      how     site-specific         numbers      were    reached.

Additionally, KBR denied it had negotiated with the government

and told TES that media reports to the contrary were inaccurate.

There was also testimony from TES that it would not have settled

without KBR’s written assurances of its representations.

       Particularly in light of the district court’s opportunity

to observe the witnesses and assess credibility, we conclude

that the district court’s finding of reliance here is certainly

“plausible” in light of the entire record.                         Cf. Walton, 440 F.3d

at 173.       Thus, we find no clear error.



                                              13
                                       C.

       KBR’s second assignment of error is that the district court

erred in finding that TES was entitled to damages in the amount

of $12,424,387.       We review the district court’s legal rulings as

to the damages award de novo and its factual finding as to the

amount of damages for clear error.                Universal Furniture Int’l,

618 F.3d at 427.

       In order to recover damages on its fraud claim, TES was

required to prove that KBR’s acts or omissions were a cause-in-

fact of TES’ foreseeable losses.             Prospect High Income Fund, ML

CBO IV (Cayman), Ltd. v. Grant Thornton, LLP, 203 S.W.3d 602,

618 (Tex. App. 2006), rev’d on other grounds, Grant Thornton,

LLP,   supra,   314    S.W.3d   913.        KBR   advances   several   theories

challenging the damages award.         We have reviewed them and do not

find any persuasive.

       KBR’s primary argument is that TES could not have recovered

any more than what it received in exchange for the release, due

to the “pay-when-paid” clause in Paragraph 3.1.4 of the General

Conditions of the Master Agreement:

       Notwithstanding any other provision hereof, payment by
       [the government] to [KBR] is a condition precedent to
       any obligation of [KBR] to make payment hereunder.
       [KBR] shall have no obligation to make payment to
       [TES] for any portion of the Sublet Work for which
       [KBR] has not received payment from [the government].




                                       14
(J.A.    107.)   Additionally,     Amendment   No.   1    to    the   Master

Agreement    between   KBR   and   TES   acknowledged     the    continuing

validity of the pay-when-paid clause.

     It is not entirely clear from the district court’s opinion

whether it was treating the provision merely as a timing of

payment provision or as a condition precedent.           In any event, we

need not decide either (1) whether the provision was a condition

precedent; 4 or (2) if so, whether that condition was satisfied by

the partial payment to KBR pursuant to the KBR-ASC Settlement. 5




     4
        The contract itself describes the provision as a
“condition precedent.” (J.A. 107.)    Additionally, in Amendment
No. 1, the language used is that payment is “conditioned on”
payment to KBR by the government. (J.A. 123.) See Gulf Constr.
Co. v. Self, 676 S.W.2d 624, 627 (Tex. App. 1984) (“While no
particular words are necessary for the existence of a condition,
such terms as ‘if,’ ‘provide that,’ ‘on condition that,’ or some
other phrase that conditions performance usually connote an
intent for a condition rather than a promise.”).
     5
       KBR argues that because it was not paid by the government
for the $12 million that TES now seeks, the condition precedent
was not satisfied. That is, of course, a simplistic view.     As
pointed out by TES, the KBR-ASC Settlement was a global one for
all of KBR’s invoices, and did not dictate that any sub-
contractor be paid any specific amount.      Moreover, TES as a
subcontractor, was not a party to the agreement between KBR and
the government in the KBR-ASC Settlement.          Indeed, KBR’s
internal documents discussing how to negotiate with TES and
other subcontractors clearly recognized that

     [i]f vendors [such as TES] don’t accept the settlement
     and sue for recovery, we will probably have to turn
     over USG documents and the vendors will see the
     different settlement per [Task Order] . . . If they
     prevail, we may have to pay them the ‘over recovery’
(Continued)
                                   15
Even if the pay-when-paid clause was a condition precedent and

it was not satisfied by the partial payment by the government to

KBR,    we   agree      with    the    district      court    that     the   prevention

doctrine would not allow KBR to rely on that condition to avoid

payment to TES of the amounts due.

       The   prevention        doctrine,      an    equitable    principle,     bars    a

party from relying on a condition precedent where that party’s

own wrongful conduct has prevented the condition from being met.

See Sanderson v. Sanderson, 109 S.W.2d 744, 749 (Tex. Comm’n

App. 1937) (referring to the “universal maxim that, where the

obligation of a party depends upon a certain condition being

performed, and the fulfillment of that condition is prevented by

the    act   of   the    other      party,    the    condition    is    considered     as

fulfilled”) (quotation marks and citation omitted).

       As    explained         by     the     district       court,     “the    KBR-ASC

[S]ettlement did not limit TES’ recovery against KBR on its DFAC

invoices given the manner in which KBR chose to enter into that

settlement.”        (J.A. 2399.)        In particular, by entering into the

settlement with ASC, KBR essentially preempted any government

decision     and,    further,         could    not    have    pursued    TES'   claims



       and will have no way to recover it from other vendors
       who haven’t sued us.”

(J.A. 2597.)



                                              16
against the government on TES' behalf.     Despite this, KBR led

TES to believe that a "decision" had been made as to the amounts

payable to TES, even going so far as to reference Section 3.0 in

its letter notifying TES of a government "decision."    (See J.A.

2607.) 6   KBR’s general counsel also testified at trial that the

reference to Section 3.0 in that letter conveyed that any remedy

by TES was against the government, not KBR, and the district

court so found.

     The district court thus reasoned:

     The “pay when paid” provision of the Master Agreement
     was inextricably bound up with TES’ rights against the
     government in the event of a dispute.    KBR’s actions
     eliminated TES’ rights to seek additional payments on
     its outstanding DFAC invoices and now prevent KBR from
     relying on the “pay when paid” provision of the Master
     Agreement.

(J.A. 2400-01.)

     We find no error in the district court’s application of the

prevention doctrine.     That is, KBR acted wrongfully because,

while agreeing the government did not have to pay KBR for the



     6
       Section 3.0 of the Special Conditions, titled “Disputes,”
states that “Notwithstanding any other provision in this
SUBCONTRACT,” any decision of the government is binding on TES
only if KBR notifies TES of the decision and, if requested by
TES, “appeals the decision in accordance with the Disputes
clause of the Prime Contract.”    (J.A. 118.)  According to the
contract documents, in the event of a conflict between contract
provisions, the Special Conditions, where Section 3.0 falls,
"take precedence" over the General Conditions, where the pay-
when-paid clause appears. (J.A. 114.)



                                17
full amount TES invoiced, it also gave away, without notice,

TES’ rights to pursue further payment against the government

through      KBR,    thereby    preventing   occurrence     of   the   condition

precedent.        It then falsely represented to TES that TES had no

remedy against KBR.            As TES succinctly argues: “KBR was not at

liberty      to   fundamentally     alter    the   contractual    disputes    and

payment process and then still rely upon a contractual defense

that       presupposes   the     existence    of   that   process.”    (Br.   of

Appellee at 48.)          Accordingly, KBR’s own conduct prevented it

from relying on the pay-when-paid clause.                 See Moore Bros. Co.

v. Brown & Root, Inc., 207 F.3d 717, 725 (4th Cir. 2000) (where

the        general    contractor’s     wrongful      actions     “‘contributed

materially’ to the non-occurrence of the condition precedent,”

the contractor could not rely on the pay-when-paid defense to

bar the plaintiff’s recovery) (citing Restatement (Second) of

Contracts § 245 (1981) cmt. b); 7 Urban Masonry Corp. v. N&N


       7
       KBR argues that Virginia law, applicable in Moore Bros. is
materially different law, but the prevention doctrine appears
substantially similar in Virginia and Texas. Compare, e.g.,
Moore Bros., 207 F.3d at 725 (setting forth Virginia law and
relying on Restatement (Second) of Contracts § 245) with
Sanderson, 109 S.W.2d at 749 (referring to the “universal maxim
that, where the obligation of a party depends upon a certain
condition being performed, and the fulfillment of that condition
is prevented by the act of the other party, the condition is
considered   as   fulfilled”)  (quotation   marks  and   citation
omitted); Heritage Life Ins. Co. v. Heritage Grp. Holding Corp.,
751 S.W.2d 229, 234 (Tex. App. 1988) (citing Restatement
(Second) of Contracts § 245 for same). Cf. Clear Lake City Water
(Continued)
                                        18
Contractors,    Inc.,     676    A.2d     26,   36     (D.C.      1996)   (in     dispute

between     subcontractor        and    general        contractor,        a     walk-away

settlement     between    the     owner    and       general      contractor      either

satisfied     condition     of     “pay    if        paid”    clause      (because     it

constituted     sufficient       “payment”),          or,    by    settling       without

securing     outstanding        payments       for     the    sub-contractor,         the

general     contractor     willfully       hindered          satisfaction        of   the

condition precedent and could not rely on it).

     Having found that KBR could not rely on the pay-when-paid

clause to bar TES’ recovery, we conclude that the amount of

damages     determined    by     the    district        court      was    not    clearly

erroneous.     The KBR-TES Settlement induced by fraud reduced the

agreed-upon amount KBR owed TES by $12,424,387 and an award in

that amount as compensatory damages was not error.                        We therefore

affirm the district court’s award of damages to TES on its fraud

claim.




Auth. v. Friendswood Dev. Co., 344 S.W.3d 514, 520 (Tex. App.
2011) (noting that Section 245 of the Restatement has not been
adopted by the Texas Supreme Court, but citing the general rule
that “a party who ‘prevents or makes impossible’ the occurrence
of a condition precedent upon which its liability under a
contract depends cannot rely on the nonoccurrence to escape
liability”).


                                          19
                                               D.

      In addition to awarding TES compensatory damages on its

fraud claim, the district court also awarded punitive damages in

the amount of $4 million.               KBR does not challenge the amount of

punitive damages, but instead contends that TES failed to prove

its fraud claim by the stringent “clear and convincing evidence”

standard, as required to award punitive damages under Texas law.

See   Tex.    Civ.       Prac.    &   Rem.     Code    Ann.   §   41.003      (West    2010)

(punitive damages permitted where each element of a plaintiff’s

fraud claim is proved by clear and convincing evidence); Foley

v. Parlier, 68 S.W.3d 870, 879-80 (Tex. App. 2002).                             Clear and

convincing evidence is a “degree of proof that will produce in

the mind of the trier of fact a firm belief or conviction as to

the truth of the allegations sought to be established.”                                Tex.

Civ. Prac. & Rem. Code Ann. § 41.001(2) (West 2003).

      As     an    initial       matter,      we    note   that   the    district      court

applied      the    proper       standard     and     recited     that   it   found    each

element      of    the    fraud       claim    had     been     proven   by    clear    and

convincing evidence.             It also described KBR’s conduct as

      part of a well orchestrated and thought-out plan,
      reviewed by its management before being implemented,
      in order to eliminate KBR’s legal exposure for tens of
      millions of dollars in additional liability . . . .
      Organizationally, KBR devised a scheme that was
      intended to conceal accurate information from TES,
      even to the point of concealing accurate information
      from certain of its own employees who were selected
      because of their professional stature to convey false

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     information to TES. . . . Having made the decision to
     resolve its contractual dispute with the government
     without the knowledge or participation of TES, KBR was
     then not free to misrepresent what had happened in
     order to eliminate its own remaining legal exposure to
     TES.

(J.A. 2403-04.)

     This direct language from the district judge, who observed

the witnesses at trial, shows that the court was not merely

giving lip service to the clear and convincing standard, but in

fact held “a firm belief or conviction” that TES proved its

fraud claim against KBR. Cf. Tex. Civ. Prac. & Rem. Code Ann.

§ 41.001(2).      Accordingly,   the    district   court’s   award   of

punitive damages is affirmed.



                                 III.

     For the foregoing reasons, we affirm the judgment of the

district court.

                                                              AFFIRMED




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