                                                       United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
                 UNITED STATES COURT OF APPEALS
                                                             August 16, 2007
                      FOR THE FIFTH CIRCUIT
                                                         Charles R. Fulbruge III
                                                                 Clerk


                            No. 06-10747



     GWTP INVESTMENTS, L.P.

                                       Plaintiff-Appellant,

                                 v.

     SES AMERICOM, INC.

                                           Defendant-Appellee.




          Appeal from the United States District Court
            for the Northern District of Texas, Dallas



Before SMITH, BENAVIDES and DENNIS, Circuit Judges.

BENAVIDES, Circuit Judge:


     GWTP Investments (“GWTP”)1 brought this suit against SES

Americom (“SES”) for breach of contract, fraud, and breach of

fiduciary duty. It claims that SES agreed to purchase teleports on

its behalf at a bankruptcy auction, but after SES won the auction


     1
       Immediately prior to the auction, Mission Holdings formed a
partnership with a third party to create GWTP. Some of the events
described herein occurred with Mission Holdings acting as
representative of GWTP, but neither party attributes any
significance to this distinction so we refer only to GWTP.

                                 1
and attained the rights to the teleports, it refused to transfer

them to GWTP.   Finding that there was no binding contract and that

the fraud claim was just a repackaged contract claim, the district

court dismissed the contract and fraud claims.     It subsequently

granted summary judgment on the fiduciary duty claim.

     We REVERSE the district court’s judgment concerning the fraud

claim and REMAND for further proceedings.    We AFFIRM the judgment

in all other respects.

                              I.   FACTS

     On March 30, 2004, Verastar, Inc.’s assets were sold in a

bankruptcy auction.      Verastar was in the business of operating

teleports, which provide access to communications satellites and

other long-distance media.    In total, eight teleports were up for

bid at the auction.       There were two potential phases of the

auction: first, a select few corporations would be allowed to bid

on all eight teleports combined (“Asset Pool 1”), and second, bids

for each of the eight teleports would be accepted individually

(“Asset Pools 2-9”), presumably to gauge which method of sale would

yield the greatest profit from the most viable bidders.         The

auction ended after the first phase of bidding and the second phase

never took place.

     SES was one of three companies allowed to bid during the first

phase on Asset Pool 1, but GWTP was not.     GWTP learned that SES

only wanted six of the eight teleports, while GWTP was primarily

interested in the remaining two, located in Cedar Hill, Texas and

                                   2
Brewster, Washington.        On March 29, the day before the auction,

GWTP and SES discussed a strategy whereby they would coordinate

their bids to increase the likelihood that each would get its

desired teleports.        To that end, they drafted a “Memorandum of

Understanding” (“MOU”), stating that they “agree to discuss bidding

strategy and tactics in order to present the most attractive offer

to the Verestar auctioneers.”           Slightly different versions of the

MOU were signed by each party, but each version stated that “under

no   circumstances       would   this    MOU   be    legally   binding    on   or

enforceable against either party.”

       When phase 1 of the bidding started, SES and GWTP devised a

formula to determine what percentage of SES’s overall bid GWTP

would contribute for the Cedar Hill and Brewster teleports. As the

auction progressed, SES’s representatives repeatedly collaborated

with GWTP’s representative, Jeffery Wateska, in determining their

bid.    When the total bid on Asset Pool 1 reached $13 million, and

GWTP’s expected contribution under the devised formula was $1.35

million, Wateska informed SES representatives that GWTP would have

to cap its potential contribution at $1.5 million “regardless of

what the SES bid was ultimately going to be.”

       SES   won   the     auction.          Brent   Bruun,    SES’s     primary

representative at the auction, quickly sent e-mail messages (“Bruun

e-mails”) to SES’s parent company and its CFO announcing that it

won the auction.     The e-mail then listed the “Significant terms of

the deal,” which included that “[SES] signed an MOU with [GWTP] in

                                         3
which    [GWTP]    agreed   to    acquire    the    Cedar   Hill    and   Brewster

Teleports for $1.5 million at closing.”2            Bruun also called Wateska

and a GWTP executive, stating that “we’ve won the auction” and

thanking    GWTP     for    its    cooperation.         There      were   further

communications between SES and GWTP, but all involved rather vague

assurances of “moving forward.”

     It    quickly    became      apparent   that    SES    was    interested   in

retaining the Brewster teleport. Two days after the auction ended,

an SES executive sent the following e-mail to Bruun:

     Can we talk about [GWTP]? They are not warming to the
     idea of taking only Cedar Hill. I have removed their
     suspicion that we were cutting another deal on the side
     for Brewster, but they make the following point[]:

     They entered into an agreement with us because we stated
     during the auction (or before?) that the two assets we
     did not want were the exact two assets that [GWTP] did
     want—Brewster and Cedar Hill . . . .

     SES continued to review and consider the profitability of the

Cedar Hill and Brewster teleports in the following weeks, and

eventually decided to retain them. It informed GWTP that it viewed

their previous discussions as providing for only “an understanding”

rather than a legal obligation.             GWTP expressed its disagreement

and this lawsuit followed.

     GWTP asserted three claims against SES in its complaint: (1)

breach of contract, (2) fraud, and (3) breach of fiduciary duty as


     2
       The two e-mails varied slightly, as the one to the CFO
stated that SES “agreed to sell” the teleports to GWTP, as opposed
to the “agreed to acquire” language.

                                        4
its agent.     The district court summarily dismissed the first two

claims on a 12(b)(6) motion, finding that the Statute of Frauds

barred the contract claim and the fraud claim, as it was merely a

repackaged version of the contract claim.              More than seven months

after the deadline to amend pleadings passed, GWTP moved to amend

its pleadings on the contract and fraud claims to include an

argument that the Bruun e-mails satisfied the Statute of Frauds.

The    district   court    denied      GWTP’s   motion.    Subsequently,   the

district court granted SES’s motion for summary judgment on the

remaining agency claim.

                                 II.    DISCUSSION

       In turn, we consider (1) the dismissal of the contract claim,

(2) the dismissal of the fraud claim, and (3) the summary judgment

on the agency claim.       These are all claims based on state law and

it    is   uncontested    that   Texas    law   is   applicable.   We   review

dispositive motions such as dismissals and summary judgments de

novo.      Kennedy v. Tangipahoa Parish Library Bd. of Control, 224

F.3d 359, 364 (5th Cir. 2000).

A.    The Breach of Contract Claim and the Statute of Frauds

       In Texas, a contract for the sale of real estate “is not

enforceable unless the promise or agreement, or a memorandum of it,

is (1) in writing; and (2) signed by the person to be charged with

the promise or agreement or by someone lawfully authorized to sign

for him.”     TEX. BUS. & COM. CODE § 26.01(a), (b)(4).        The Cedar Hill


                                          5
and Brewster teleports are completely terrestrial and are built

along 127 acres of real estate.             The district court dismissed

GWTP’s contract claim, finding it was barred by the Texas Statute

of Frauds because “the sale of the Teleports necessarily involves

the sale of real estate.”

     GWTP    does    not   suggest   that   there   is   any   writing   that

sufficiently memorialized its agreement with SES, because the MOU

was explicitly non-binding in all of its versions.3            Instead, they

argue that the “primary purpose” exception to the Statute of Frauds

applies,    making   the   alleged   oral   contract     enforceable.     The

“primary purpose” or “main purpose” exception to the Statute of

Frauds usually arises when either (1) a promise to pay the debt of

a third party is made for the primary benefit of the promisor, see

Cooper Petroleum Co. v. LaGloria Oil & Gas Co., 436 S.W.2d 889

(Tex. 1969), or (2) a contract involving the sale of goods is

predominantly for the sale of services.             See Propulsion Techs.,

Inc. v. Attwood Corp., 369 F.3d 896, 900-01 (5th Cir. 2004).



     3
       Very late in the proceedings, GWTP moved to amend its
complaint in order to include an argument that the Bruun e-mails
satisfied the Statute of Frauds, but the district court denied that
motion. Given that the motion to amend was filed more than seven
months after the filing deadline and nearly six months after GWTP
acquired the relevant e-mails, and GWTP’s failure to point to any
legitimate explanation for its delay in moving to amend, the
district court was well within its discretion in denying that
motion. We therefore do not address the argument that the Bruun e-
mails satisfied the Statute of Frauds, and limit our consideration
to GWTP’s argument that the Statute of Frauds is inapplicable to
this transaction.

                                      6
      GWTP argues that the dominant purpose of this contract was to

convey customer networks, service areas, and other intangibles that

flow with the purchase of teleports.            GWTP basically attempts to

expand   the   “primary    purpose”    test     to    apply    to   real   estate

transactions when the real estate’s commercial viability forms the

basis of the underlying transaction.           This is a novel argument and

there are no Texas cases directly rejecting it, but the caselaw

strongly weighs against it in these circumstances.

      GWTP relies predominantly on Hydrocarbon Horizons, Inc. v.

Pecos Dev. Corp., 797 S.W.2d 265 (Tex. App.—Corpus Christi 1990),

writ denied, 803 S.W.2d 266 (Tex. 1991).                  In that case, the

plaintiff agreed to show two oil and gas prospects, which it did

not own, to the defendant.       The parties agreed that the plaintiff

would receive a finder’s fee if defendant chose to purchase the

prospects from a third party within two years.                 In finding that

this contract was outside the Statute of Frauds, the court found

that “[t]he contract alleged by Hydrocarbon was not one for the

sale of real estate . . . . [rather] the main purpose of the

contract is for the sale of geological information, and the statute

of   frauds    is   not   implicated       merely    because   a    real   estate

transaction may be incidentally involved.”              Id. at 267.

      GWTP’s reliance on Hydrocarbon is misplaced.              In Hydrocarbon,

as opposed to this case, the alleged contract was not for the sale

of real estate at all.      It was a “finder’s fee” contract containing


                                       7
an obligation triggered by a completely independent real estate

transaction.   The contract was for a finder’s fee, but it was only

due if the defendant purchased the acreage from a third party.   It

was not a real estate transaction, even if it was triggered by one.

     In this case, the alleged contract is undeniably for the

transfer of real estate (teleports), and GWTP’s argument that the

teleports are incidental to the primary purpose of obtaining

customer networks drastically extends Hydrocarbon’s rationale.4

Because the Statute of Frauds serves an important gate-keeping

function in keeping litigation costs to a minimum in cases like

this, we will not cavalierly apply Texas’s narrow “primary purpose”

exception so liberally as GWTP requests.

     As SES points out, “GWTP cites no case that actually applies

such a test to enforce an oral contract to sell real property.”

Indeed, we have found none.   Given the plain language of Texas’s

Statute of Frauds and lacking an applicable exception, we find that


     4
       Because the facts of Hydrocarbon are somewhat complex,
consider a scenario where two entrepreneurial friends agree that
whoever is last to purchase a new house will clean the other’s pool
for a year. Under Hydrocarbon’s rationale, that agreement is not
subject to the Statute of Frauds.      It is a contract for pool-
cleaning services and it is not brought within the Statute of
Frauds merely because an independent real estate transaction
triggers the underlying obligation.
     GWTP’s reasoning would apply that theory to a case where an
individual is buying a house, but claims that he is not so
interested in the physical house as he is the wonderful view, the
neighbors, the nearby schools, the airspace, etc. That rationale
extends Hydrocarbon’s rationale past the breaking point and would
render the Statute of Frauds a virtual nullity in real estate
cases.

                                 8
Texas’s Statute of Frauds bars the alleged oral contract.

B.   The Fraud Claim and Reliance Damages

     The district court dismissed GWTP’s fraud claim finding that

it was just a repackaging of its contract claim and barred by the

Statute of Frauds.          It stated that “SES’s alleged fraudulent

misrepresentations      [were]    not   separate   from   the   alleged    oral

promise to transfer the Teleports and thus [were] promissory,

rather than factual.”         The district court erred because GWTP

alleged   that   SES   made   misrepresentations      separate    from    those

supporting its contract claim, sought only reliance damages, and

otherwise properly pled all the required elements of a fraud claim.

     To establish actionable fraud, the plaintiff must prove that

the defendant made “a material misrepresentation, which was false,

and which was either known to be false when made or was asserted

without knowledge of the truth, which was intended to be acted

upon, which was relied upon, and which caused injury.” DeSantis v.

Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990).               GWTP properly

alleged each element of its fraud claim, stating that SES knowingly

made material misrepresentations both before and in the weeks

following the auction, and that it incurred substantial reliance

damages in preparing to staff and operate the teleports.

     GWTP    specifically        referred   to     misrepresentations       SES

executives made on April 8 and April 23, assuring GWTP that it had

undertaken   steps     to   finalize    their   earlier   agreement.       GWTP


                                        9
provided evidence that these factual misrepresentations were known

to be false, as an SES executive’s e-mail to Bruun on April 2

stated, “I have removed [SES’s] suspicion that we were cutting

another deal on the side for Brewster.”               That language at least

suggests that SES was in fact cutting a deal with a third party,

and merely removed GWTP’s well-founded suspicion as to that fact.

The fraud claim is distinct from the breach of contract claim as

these post-auction misrepresentations did not form the basis of the

contract that GWTP alleges was made before and during the auction.

     Moreover,      even    if   GWTP’s   fraud     claim   relied      purely   on

contractual or promissory statements, it is not a repackaging of

its contract claim because GWTP’s fraud claim seeks only reliance

damages.       GWTP only sought the out-of-pocket damages incurred in

preparing to operate the teleports.           SES correctly points out that

fraud claims cannot be used to circumvent the Statute of Frauds,

but that is only true insofar as the plaintiff seeks the benefit of

the contractual bargain.          “The essential inquiry in determining

whether    a    plaintiff   is   attempting    to    use    a   fraud    claim   to

circumvent the Statute of Frauds is to examine the nature of the

injury that he alleges.”         Leach v. Conoco, Inc., 892 S.W.2d 954,

960 (Tex. App.—Houston 1995); see also Jim Walter Homes, Inc. v.

Reed, 711 S.W.2d 617, 618 (Tex. 1986) (“The nature of the injury

most often determines which duty or duties are breached.”).

     The Texas Supreme Court has held that “the Statute of Frauds


                                      10
bars a fraud claim to the extent the plaintiff seeks to recover as

damages the benefit of a bargain that cannot otherwise be enforced

because it fails to comply with the Statute of Frauds.”          Haase v.

Glazner, 62 S.W.3d 795, 799 (Tex. 2001) (emphasis added). However,

such a claim “may not contravene the Statute of Frauds to the

extent that [it] seeks out-of-pocket damages incurred in relying

upon” the alleged misrepresentations. Id. The Texas Supreme Court

recently clarified that “[t]he statute of frauds does not bar the

recovery of out-of-pocket damages for fraud . . . .         The viability

of [a] fraud claim depends upon the nature of the damages [one]

seeks to recover.” Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636

(Tex. 2007).

     The Statute of Frauds does not bar GWTP’s fraud claim insofar

as it seeks only reliance damages, and the district court erred

when it dismissed the claim.

C.   The Agency Claim

     GWTP’s final claim is that SES was its agent in bidding on the

Verastar teleports and SES’s actions constituted a breach of

fiduciary duty.     This claim is meritless and the district court

properly granted summary judgment.

     “Under Texas law, agency is a legal relationship created by

the express    or   implied   agreement   between   the   parties,   or   by

operation of law, under which the agent is authorized to act for

and on behalf of the principal, and subject to the principal’s


                                   11
control.”     Lubbock Feed Lots, Inc. v. Iowa Beef Processors, Inc.,

630 F.2d 250, 269 (5th Cir. 1980).         Texas courts have adopted the

rule that a party “who contracts to acquire property from a third

person and convey it to another is the agent of the other only if

it is agreed that he is to act primarily for the benefit of the

other and not for himself.”        Id. at 270 (citing RESTATEMENT (SECOND)

OF   AGENCY § 14(k)).   Factors that indicate a party is not acting as

an agent of another include, (1) that he is to receive a fixed

price for the property; (2) that he acts in his own name and takes

title of the property before transferring it; and (3) that he has

an independent business buying and selling the property.              Id.

       This is not a close question.      SES was bidding collectively on

eight teleports and paid approximately $20 million for the lot. It

defies     logic   to   suggest   that    GWTP’s   proposed    $1.5   million

contribution to the massive collective bid somehow controlled SES’s

bidding activity.        It is similarly inconceivable that SES was

bidding in a way so as to primarily benefit GWTP, as an agency

relationship requires.      That GWTP was to pay a fixed price for the

teleports also strongly supports the conclusion that SES was not

acting as its agent.        RESTATEMENT (SECOND)   OF   AGENCY § 14(k) cmt. a

(providing “[t]his is the most important” factor in determining

whether an agency relationship exists).

       The district court properly granted SES’s motion for summary

judgment as GWTP has not presented a genuine issue of material fact


                                     12
suggesting that SES was ever acting as its agent.

                         III.   CONCLUSION

     The district court erred when it dismissed GWTP’s fraud claim,

and we REVERSE that dismissal and REMAND for further proceedings

consistent with this opinion.    As to the breach of contract and

agency claims, the district court’s rulings are AFFIRMED.




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