     Case: 12-50230    Document: 00512269523       Page: 1   Date Filed: 06/11/2013




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                 Fifth Circuit

                                                                    FILED
                                                                   June 11, 2013

                                    No. 12-50230                   Lyle W. Cayce
                                                                        Clerk

X TECHNOLOGIES, INCORPORATED,

             Plaintiff - Appellee

v.

MARVIN TEST SYSTEMS, INCORPORATED, doing business as Marvin
Geotest,

             Defendant - Appellant


                Appeal from the United States District Court
                     for the Western District of Texas


Before KING, HIGGINBOTHAM, and CLEMENT, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
      This appeal arises from a breach of contract action. X Technologies (“X
Tech”) alleged that Marvin Test Systems (“Geotest”) breached an exclusive
teaming agreement to submit a teamed bid on a United States Air Force
(“USAF”) solicitation for testing equipment by teaming with another partner,
Raytheon, on a competing bid. X Tech contended that this Geotest-Raytheon
submission, which USAF selected as the winning bid, prevented X Tech from
securing the government contract with its bid. The case went to trial, and the
jury found that Geotest breached an agreement with X Tech to “exclusively team
to jointly pursue” the USAF solicitation. Based on the verdict, the district court
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                                 No. 12-50230

entered judgment in favor of X Tech in the amount of $336,000, plus attorney’s
fees. Geotest challenges the district court’s resolution of both parties’ motions
for directed verdict on certain issues at the close of evidence and the jury’s
finding that Geotest breached its contract with X Tech. We AFFIRM the district
court’s judgment.
            FACTUAL AND PROCEDURAL BACKGROUND
      USAF maintains its arsenal of laser-guided Paveway II bombs at Hill Air
Force Base in Utah.      As the base’s sole Paveway II tester was old and
increasingly unreliable, USAF decided to upgrade to a new testing system, the
TS-217, manufactured by Geotest.       USAF’s procurement group, or Source
Selection Authority, issued a solicitation for the upgrade project, numbered
FA8224-09-R-0104. This initial solicitation was reserved for small businesses.
X Tech, a small-business government contractor with experience in developing
test programs for weapons systems, elected to put together a bid.
      A functional tester would consist of the TS-217 hardware with modified
software and data for the Paveway II’s laser guidance system, which was owned
by Raytheon, the Paveway II’s manufacturer. Thus, in order to bid, X Tech had
to secure the hardware and gain access to the software and data. X Tech decided
to reverse engineer the Raytheon data. It contacted Geotest and negotiated a
teaming agreement for the hardware and access to the software (as well as the
rights to modify it). After X Tech and Geotest agreed orally, Geotest confirmed
the agreement in writing. The relevant portion of this agreement provides:
      This is an exclusive agreement between X-Tech and Geotest. X-Tech
      will submit Geotest’s workshare as part of X-Tech’s proposal as a
      response to this RFP. Geotest will not team up with any other
      company for solicitation FA8224-09-R-0104 except that Geotest may
      provide prices for the TS-217 tester only (without any software
      licenses, support or training) to other potential bidders.




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Pursuant to the agreement, X Tech submitted a bid of $3.2 million with Geotest
as a critical subcontractor. X Tech also submitted an alternate, nonconforming
bid (using a different tester than the TS-217 specified in the solicitation) on its
own.
       X Tech was the only bidder at the close of the solicitation period. USAF
rejected X Tech’s nonconforming bid and, because its cost estimate for the project
was substantially lower than X Tech’s conforming bid, amended the solicitation
to “full and open” to open it up to all bidders.1 In response to this amended
solicitation, X Tech resubmitted its teamed bid with Geotest. Geotest also
submitted a bid separately from X Tech for $2.4 million. USAF awarded Geotest
the contract.
       After Geotest won the contract, X Tech sued the company in state court,
alleging several causes of action, including breach of contract.              Its claims
centered on its contention that Geotest had teamed with Raytheon in its
separate bid, violating Geotest’s agreement with X Tech. Geotest disputed this
characterization of its separate bid and the nature of its relationship with
Raytheon. It argued that it was a mere licensee of Raytheon’s data, not a
teammate with the company itself.               Thus, Geotest contended, it merely
submitted its own independent bid, which did not breach the agreement.
Geotest also raised the affirmative defense that any breach on its part was
excused by X Tech’s submission of its own independent bid, which Geotest
alleged was a prior material breach.
       Geotest removed the case to federal court on the basis of diversity and
moved to transfer venue from the Western District of Texas to the Central
District of California, claiming that its “Terms and Conditions,” incorporated
into the agreement, contained a forum selection clause for that venue. The

       1
          USAF had originally estimated that the project would cost $1.1 million. It later
realized that this estimate was too low.

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                                 No. 12-50230

district court found that the forum selection clause did not apply and denied the
motion.
      The case was tried to a jury. The jury heard evidence for and against X
Tech’s claim that Geotest teamed with Raytheon. This evidence included
documents in Geotest’s bid to USAF that characterized the Geotest-Raytheon
relationship as a team and internal Raytheon emails reflecting the same
understanding. It also included documents, such as Geotest’s purchase order to
Raytheon, which suggested that Geotest was merely licensing Raytheon’s data.
      The parties also proffered evidence on the issue of whether Geotest’s
conduct caused X Tech injury. X Tech submitted evidence that the testing
system was a defense priority; that, had Geotest not bid, X Tech would have
been the only bidder in the full and open solicitation; and that X Tech’s bid and
its confidence rating met USAF’s requirements. X Tech also invited Michael
Garner, the USAF contract negotiator, to speculate that if X Tech had been the
sole bidder, USAF may have negotiated with X Tech to come to an agreement,
which he did. In addition, X Tech provided evidence that USAF did not realize
that X Tech’s bid included USAF ownership of the reverse-engineered Raytheon
data and argued that the jury could infer that USAF may have paid $3.2 for both
the testing system and the Raytheon data. Geotest, for its part, presented
Garner’s personal knowledge that “[USAF] would not pay $3.2 million. The
[Selection Authority] agreed we would not pay 3.2 million.”
      At the close of evidence, Geotest filed a motion for directed verdict,
arguing, among other things, that the causation element of X Tech’s breach of
contract claim failed as a matter of law. Geotest did not move the court to enter
a directed verdict that there was insufficient evidence to support a jury finding




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                                      No. 12-50230

that Geotest breached the agreement. X Tech countered with its own motion for
directed verdict on Geotest’s affirmative defense of prior material breach.2
       With respect to Geotest’s motion for directed verdict on causation, as well
as other claims, the district court merely noted that “[f]act issues, however,
remain for the jury on the remaining claims and accordingly the remainder of
Defendants motion is denied.” The district court, however, orally granted X
Tech’s motion for directed verdict on Geotest’s prior material breach defense.
       The jury found for X Tech on the breach of contract claims. It made three
specific findings relevant to the issue. The completed verdict form read:
       QUESTION NO. 1
       Did Geotest and X Technologies agree to exclusively team to jointly
       pursue the Solicitation?
       Answer “Yes” or “No.”
       Answer: YES
       ....
       QUESTION NO. 2
       Did Geotest fail to comply with the agreement?
       Answer “Yes” or “No.”
       Answer: YES
       ....
       QUESTION NO. 3
       What sum of mon[e]y, if any, if paid now in cash, would fairly and
       reasonably compensate X Technologies for its damages, if any, that
       resulted from Geotest’s failure to comply with the Teaming
       Agreement?
       ....
       Answer: $336,000 + Atty. Fees + court costs.
Geotest filed a renewed motion for judgment as a matter of law on causation and
prior material breach, which the district court denied. The district court then
entered final judgment in favor of X Tech and awarded it $336,000 in damages,
as well as attorney’s fees. Geotest appeals.

       2
           As the parties have titled their motions on these issues as motions for directed
verdict, we use their term, rather than referring to them as motions for judgment as a matter
of law, as they are now known under Federal Rule of Civil Procedure 50.

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                                   No. 12-50230

                           STANDARD OF REVIEW
      The court reviews de novo a motion for directed verdict, applying the same
standard as the district court. Arthur J. Gallagher & Co. v. Babcock, 703 F.3d
284, 292-93 (5th Cir. 2012). “If the facts and inferences point so strongly and
overwhelmingly in favor of one party that the Court believes that reasonable
men could not arrive at a contrary verdict, granting of the motion[ ] is proper.”
Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969) (en banc), overruled on
other grounds by Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331 (5th Cir.
1997) (en banc). But “if reasonable persons could differ in their interpretations
of the evidence,” a determination of the issue is for the jury. Bryant v. Compass
Grp. USA Inc., 413 F.3d 471, 475 (5th Cir. 2005) (citation and quotation marks
omitted). The facts are viewed, and inferences made, in the light most favorable
to the nonmovant. Babcock, 703 F.3d at 293. “Thus, although the court should
review the record as a whole, it must disregard all evidence favorable to the
moving party that the jury is not required to believe.” Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 151 (2000). In other words, “the court
should give credence to the evidence favoring the nonmovant as well as that
evidence supporting the moving party that is uncontradicted and unimpeached,
at least to the extent that that evidence comes from disinterested witnesses.” Id.
(citations and quotation marks omitted). If the motion presents the district
court with a pure question of law, we review the district court’s resolution of that
question de novo. Ran-Nan Inc. v. Gen. Accident Ins. Co. of Am., 252 F.3d 738,
739 (5th Cir. 2001).
      If, at the conclusion of the evidence, a party fails to file for judgment as a
matter of law on an issue, this court “review[s] for plain error only, and . . . will
not reverse the district court unless there is no evidence to support the jury’s
verdict.” Md. Cas. Co. v. Acceptance Indem. Ins. Co., 639 F.3d 701, 708 (5th Cir.
2011).

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                                       No. 12-50230

                                      DISCUSSION
       Geotest raises three issues on appeal. It challenges the district court’s
decisions to deny its motion for directed verdict on the issue of causation and to
grant X Tech’s motion for directed verdict on Geotest’s affirmative defense of
prior material breach. Geotest also disputes the jury’s finding that Geotest
breached its agreement with X Tech.3
       Causation
       Geotest contends that the evidence, taken in the light most favorable to X
Tech, is legally insufficient to establish the causation element of X Tech’s breach
of contract claim.       In a breach of contract case, “the absence of a causal
connection between the alleged breach and the damages sought will preclude
recovery.” S. Elec. Servs., Inc. v. City of Houston, 355 S.W.3d 319, 324 (Tex.
App.—Houston [1st Dist.] 2011, no pet.). The plaintiff must show that its “loss
is the natural, probable, and foreseeable consequence of the defendant’s
conduct.” Mead v. Johnson Grp., Inc., 615 S.W.2d 685, 687 (Tex. 1981). This
“question of causation (foreseeability) which controls liability should be
determined from the facts and circumstances of each particular case, and except
where reasonable minds cannot differ, the issue is one for the jury.” Strakos v.
Gehring, 360 S.W.2d 787, 792 (Tex. 1962).



       3
          Geotest’s opening brief concludes with a one-half page argument that the panel
should direct the district court on remand to transfer the case to the Central District of
California. It does not include this issue in its statement of issues, FED. R. APP. P. 28(a)(5),
supply a statement of the applicable standard under which the court reviews this claim, FED.
R. APP. P. 28(a)(9)(B), or provide any supporting authority or record citations, other than to
its motion to dismiss for improper venue, which the district court denied, FED. R. APP. P.
28(a)(9)(A). And Geotest does not mention this argument in its reply. Therefore, Geotest has
waived the issue. See Yohey v. Collins, 985 F.2d 222, 225 (5th Cir. 1993) (“[O]nly the issues
presented and argued in the brief are addressed.”); see also United States v. Posada-Rios, 158
F.3d 832, 867 (5th Cir. 1998) (holding that arguments that do not satisfy Federal Rule of
Appellate Procedure 28 because they “merely refer[] to briefing filed with the district court”
are waived).

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          According to Geotest, the USAF contract negotiator, Michael Garner, as
a disinterested witness, gave uncontradicted and unimpeached testimony from
personal knowledge at trial that precluded the jury from finding causation as a
matter of law. Thus, Geotest argued that it was entitled to a directed verdict.
X Tech challenges Geotest’s characterization of Garner’s testimony and its legal
effect.
          Geotest’s counsel asked Garner: “Was $3.2 million within the range that
you know the government would or would not pay for this project?” Garner
responded: “The team would not pay $3.2 million. The [Selection Authority]
agreed we would not pay 3.2 million.”             Geotest contends that Garner’s
statements “foreclose any inference that X Tech would have received the
contract.” In order to establish causation – that X Tech was damaged by
Geotest’s breach – the jury had to find that, if Geotest had not teamed with
Raytheon, USAF would have awarded the contract to X Tech. Geotest argues
that Garner’s testimony precludes reasonable jurors from making such a finding,
because USAF would not have accepted a bid at X Tech’s price.
          X Tech challenges Garner’s testimony on three grounds. First, it suggests
he was inexperienced and low-level. Second, X Tech argues that Garner was not
disinterested, because Geotest paid for his travel to trial, he discussed his
testimony with Geotest’s counsel, and he “perhaps [had a] desire to justify the
decisions of his employer.” These first two arguments are without merit.
Garner did not testify as an expert; he testified from personal knowledge. Being
new to procurement and “serv[ing] primarily as the Air Force’s point of contact
for bidders” does not preclude personal knowledge. And having one’s expenses
compensated and discussing testimony with the party for whom one is a witness
does not make a witness interested (particularly as it is unlikely that he will
have the opportunity to make serving as a witness a recurring occasion).



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Moreover, it is unclear what USAF decision X Tech believes Garner was
attempting to justify – choosing the most cost-effective bid?
      X Tech does offer a third argument for why Garner’s testimony was not
binding on the district court when it considered Geotest’s motion for directed
verdict: it contends that Garner was impeached. X Tech points out that, on
cross-examination at trial, Garner said that he expected X Tech to provide cost
and pricing information after its first bid, even though the solicitation was going
to be competitively bid again to a full and open group. X Tech’s counsel then
showed Garner a copy of his deposition transcript, where Garner said that he did
not expect X Tech to provide the data under such circumstances. X Tech argues
that this exchange was sufficient to impeach Garner.
      X Tech also contends that, even if the district court was required to take
Garner’s testimony as true, there was still enough evidence to support the
court’s conclusion that a reasonable jury could find that Geotest’s breach caused
X Tech to lose the contract. First, the jury heard evidence that the testing
system was important to national defense priorities. Second, it heard that
absent Geotest’s bid, X Tech would have been the only bidder in the largest
possible pool of bidders (full and open). Third, it was told that X Tech’s proposal
met the solicitation’s technical requirements, and USAF gave the company a
Satisfactory Confidence rating, indicating it believed X Tech could fulfill the
contract. Fourth, Garner speculated that if USAF had not accepted Geotest’s
bid, it might have decided to go into formal discussions with bidders, and, if it
had decided to do that, it would have negotiated with X Tech. According to X
Tech, the jury could infer that these negotiations would be successful and USAF
would eventually award X Tech the contract. Finally, the jury heard evidence
that USAF did not realize that X Tech’s bid included ownership of the reverse-
engineered Raytheon data, and, X Tech argues, the jury could infer that USAF



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                                  No. 12-50230
might have been willing to pay $3.2 million if it had received both the new
testing system and the Raytheon data.
      This evidence, taken in the light most favorable to X Tech, along with X
Tech’s impeachment of Garner, creates an issue of fact concerning causation.
There are sufficient facts for the jury to infer that, had Geotest not submitted
the winning bid with Raytheon, X Tech (1) would have been awarded the
contract at its bid price of $3.2 million – if it either disbelieves Garner because
he was impeached or believes that USAF would have paid the bid price for both
the testing system and the reverse-engineered data – or (2) would have taken
the $3.2 million bid as a starting-off point and successfully negotiated the
contract. Therefore, the district court properly denied Geotest’s motion for
directed verdict on the issue of causation.
      Prior material breach
      Geotest argues that the district court erred in determining that X Tech did
not commit a prior material breach of the agreement by submitting its separate
bid. If X Tech had committed such a breach, Geotest would not be liable for its
breach, because “when one party to a contract commits a material breach of that
contract, the other party is discharged or excused from any obligation to
perform.” Hernandez v. Gulf Grp. Lloyds, 875 S.W.2d 691, 692 (Tex. 1994).
“Whether a party has breached a contract is a question of law for the court.”
Meek v. Bishop Peterson & Sharp, P.C., 919 S.W.2d 805, 808 (Tex.
App.—Houston [14th Dist.] 1996, writ denied). “The court determines what
conduct is required by the parties,” and, to the extent the parties dispute
whether or not they have performed that conduct, the court submits that factual
dispute to the jury. Id. “Conversely, when facts are undisputed or conclusively
established, there is no need to submit issues thereon to the jury.” Id. Whether
a breach is material is a question of fact. See, e.g., STR Constructors, Ltd. v.



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                                   No. 12-50230
Newman Tile, Inc., — S.W.3d — , 2013 WL 632969 at *2 (Tex. App.—El Paso
Feb. 20, 2013, no pet. h.).
      Here, the parties do not dispute X Tech’s conduct. They only dispute
whether that conduct constitutes a breach of their agreement, and whether such
a breach is material. Whether X Tech committed a prior breach is a question of
law, which the court addresses de novo. Although the agreement requires
Geotest, not X Tech, to refrain from “team[ing] up with any other company for
[the] solicitation,” it also provides that “X-Tech will submit Geotest’s workshare
as part of X-Tech’s proposal as a response to [the solicitation].” According to
Geotest, under the plain language of this provision, X Tech promised to submit
only one bid, a bid that would include Geotest’s workshare. As X Tech submitted
two bids, one of which did not include Geotest’s workshare, Geotest argues that
X Tech breached the agreement. Geotest maintains that it regarded X Tech’s
exclusivity as the agreement’s “key benefit,” contending that there was no other
incentive for Geotest to grant X Tech exclusivity.
      X Tech counters that the unambiguous language of the agreement limits
Geotest’s ability to team, but places no such explicit limit on X Tech. Under X
Tech’s interpretation, the agreement merely required X Tech to submit Geotest’s
workshare as “a response” to the solicitation. As long as X Tech submitted
Geotest’s workshare in one of its responses to the solicitation – which it did – it
satisfied the agreement, even if it submitted other responses that did not include
Geotest’s workshare. X Tech points out that, notwithstanding Geotest’s claim
that it had no incentive to grant X Tech exclusivity unless such exclusivity was
mutual, when the two companies entered the agreement, the only way Geotest
could participate was to partner with a small business. The ability to bid was
an incentive for Geotest to promise unilateral exclusivity.
      We agree with X Tech. The agreement, by its terms, limits only Geotest’s
ability to team. The fact that it explicitly restricts one party’s ability to team but

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                                        No. 12-50230
is silent as to the converse ability of the other party suggests that the restriction
is unilateral. And, as Geotest itself notes, had Geotest not negotiated the
agreement, including its teaming limitation, it would have been “sidelined by the
small business set-aside” from bidding for the contract. It thus had an incentive
to exchange unilateral exclusivity for the opportunity to be part of the bid.
       The agreement does require X Tech to submit Geotest’s workshare. But
it does not specify that X Tech must submit this workshare to “any” or “every”
or even “its” response to USAF’s solicitation. X Tech is bound to submit
Geotest’s workshare only in “a” response to the solicitation. X Tech fulfilled its
obligation. Therefore, X Tech did not breach the agreement, and the district
court did not err in granting X Tech’s motion for a directed verdict on this issue.
       Breach
       Geotest contends that there was no evidence to support the jury’s finding
that, by its conduct, Geotest failed to comply with the agreement. The question
of whether Geotest’s conduct breached the agreement is a question of fact for the
jury. See Meek, 919 S.W.2d at 808. Because Geotest did not file a motion for
directed verdict on this issue at the conclusion of evidence, the jury’s finding
stands unless there is no evidence to support it.
       Geotest argues that the bid it submitted without X Tech was not submitted
with Raytheon.4        It claims that it contracted with Raytheon to purchase
Raytheon’s data; it did not team with Raytheon. According to Geotest, Raytheon
was a licensor, not a teammate.


       4
             Geotest also argues, for the first time on appeal, that government regulations
preclude contractual restrictions on bidding. This argument, in addition to being waived,
Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d 864, 877 (5th Cir. 2009), is incorrect. The
regulations prohibit only agreements that restrict “sales by . . . subcontractors directly to the
Government.” 48 C.F.R. § 52.203-6 (emphasis added). Geotest’s ability, as a subcontractor,
to sell its equipment to the government is specifically reserved in the agreement: “Geotest may
provide prices for the TS-217 tester only (without any software licenses, support or training)
to other potential bidders.”

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       However, the jury was presented with evidence that Geotest teamed with
Raytheon, including Geotest’s use of the term “team” in its technical proposal to
USAF to describe its relationship with Raytheon, as well as internal Raytheon
emails in which Raytheon characterizes its affiliation with Geotest on the bid as
teaming.5 This evidence is more than no evidence and is thus sufficient to
support the jury’s finding. The district court properly entered final judgment in
favor of X Tech based on the jury’s verdict.
                                    CONCLUSION
       The district court properly disposed of the parties’ motions for directed
verdict, and the evidence proffered at trial was sufficient to support the jury’s
findings. We AFFIRM the judgment of the district court in full and REMAND
to allow the district court to adjudge and award appellate attorney’s fees. X
Tech’s opposed motion to file a supplemental reply brief and Geotest’s motion to
file a supplemental brief in response to X Tech’s supplemental brief, both carried
with the case, are DENIED as moot.




       5
          X Tech also cited oral testimony that it alleges provides evidence of teaming. This
evidence is substantially more tenuous than the documentary evidence supporting teaming
and is not needed to meet the “any evidence” standard.

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