                                                                             ACCEPTED
                                                                         12-16-00092-CV
                                                            TWELFTH COURT OF APPEALS
                                                                          TYLER, TEXAS
                                                                    9/19/2016 2:38:29 PM
                                                                               Pam Estes
                                                                                  CLERK




           ORAL ARGUMENT REQUESTED                        FILED IN
                                                   12th COURT OF APPEALS
                                                        TYLER, TEXAS
                  NO. 12-16-00092-CV
                                                   9/19/2016 2:38:29 PM
                                                          PAM ESTES
                                                            Clerk
            IN THE COURT OF APPEALS
FOR THE TWELFTH DISTRICT OF TEXAS AT TYLER, TEXAS


            PERMIAN POWER TONG, INC.,
                    Appellant,
                           v.
              DIAMONDBACK E&P, LLC,
                    Appellee.


         On Appeal from the 441st District Court
       Midland, County, Texas, Cause No. CV-49854
             (Hon. Rodney W. Satterwhite)


            REPLY BRIEF OF APPELLANT

                         Respectfully submitted,
                         R BRENT COOPER
                         brent.cooper@cooperscully.com
                         Texas Bar No. 04783250
                         DIANA L. FAUST
                         diana.faust@cooperscully.com
                         Texas Bar No. 00793717
                         KYLE M. BURKE
                         kyle.burke@cooperscully.com
                         Texas Bar No. 24073089
                         COOPER & SCULLY, P.C.
                         900 Jackson Street, Suite 100
                         Dallas, Texas 75202
                         TEL: (214) 712-9500
                         FAX: (214) 712-9540
                         ATTORNEYS FOR APPELLANT
                                        TABLE OF CONTENTS

                                                                                                                  Page

TABLE OF CONTENTS........................................................................................2

TABLE OF AUTHORITIES ..................................................................................4

ARGUMENT AND AUTHORITES IN REPLY ....................................................8

I.       No Legally Sufficient Evidence Permian Breached the MSA .......................8

         A.       No Direct or Circumstantial Evidence that Permian Breached
                  MSA ...................................................................................................9

         B.       No Competent Expert Testimony That Permian Breached the
                  MSA .................................................................................................14

         C.       Diamondback’s Complaint About Legal Sufficiency Review
                  Misses the Mark................................................................................16

         D.       Diamondback Relies on Speculation and Inference-Stacking............18

         E.       Equal Inference Rule ........................................................................19

II.     Factually Insufficient Evidence to Support Verdict on Breach ....................20

III.    No Legally or Factually Sufficient Evidence that Breach Caused
        Damages .....................................................................................................22

IV.     Evidence Showed that Diamondback’s Actions Damaged the Pipe.............27

V.      Evidence Overwhelmingly Showed that Diamondback Failed To
        Mitigate Its Damages ..................................................................................29

VI.     Admission of Exhibit 60A Was an Abuse of Discretion..............................30

VII. Damage Awards Not Supported by Legally or Factually Sufficient
     Evidence .....................................................................................................33

VIII. Attorney’s Fees Awards Are Not Supported by Legally or Factually
      Sufficient Evidence.....................................................................................34


                                                           2
CONCLUSION AND PRAYER...........................................................................39

CERTIFICATE OF COMPLIANCE ....................................................................40

CERTIFICATE OF SERVICE..............................................................................41

APPENDIX TO REPLY BRIEF OF APPELLANT..............................................42




                                                  3
                                  TABLE OF AUTHORITIES

Case                                                                                              Page(s)

Argo Data Res. Corp. v. Shagrithaya,
  380 S.W.3d 249 (Tex. App.—Dallas 2012, pet. denied) .................................. 34

Black Lake Pipeline Co. v. Union Construction Co.,
  538 S.W.2d 80 (Tex. 1976).............................................................................. 32

Blankenship v. Mirick,
  984 S.W.2d 771 (Tex. App.—Waco 1999, pet. denied) ................................... 26

Cammack the Cook, L.L.C. v. Eastburn,
  296 S.W.3d 884 (Tex. App.—Texarkana 2009, pet. denied) ............................ 35

City of Keller v. Wilson,
  168 S.W.3d 802 (Tex. 2005) ....................................................................... 15-18

Coastal Terminal Operators v. Essex Crane Rental Corp.,
  No. 14-02-00627-CV, 2004 WL 1795355
  (Tex. App.—Houston [14th Dist.] Aug. 12, 2004, pet. denied) ........................ 38

Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp.,
  136 S.W.3d 227 (Tex. 2004) ............................................................................ 25

Dawson v. Briggs,
  107 S.W.3d 739 (Tex. App.—Fort Worth 2003, no pet.).................................. 26

El Apple I, Ltd. v. Olivas,
  370 S.W.3d 757 (Tex. 2012) ............................................................................ 37

Feldman v. KPMG LLP,
  438 S.W.3d 678 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ..................... 37

Five Star Int’l Holdings, Inc. v. Thomson, Inc.,
  324 S.W.3d 160 (Tex. App.—El Paso 2010, pet. denied)................................. 37

Ford Motor Co. v. Castillo,
  444 S.W.3d 616 (Tex. 2014) ................................................. 8, 11, 13, 14, 19, 20



                                                     4
Ford Motor Co. v. Ridgway,
  135 S.W.3d 598 (Tex. 2004) .......................................................................19, 20

Frost Nat'l Bank v. Heafner,
  12 S.W.3d 104 (Tex. App.—Houston [1st Dist.] 1999, pet. denied)................. 23

Garcia v. Gomez,
  319 S.W.3d 638 (Tex. 2010) ....................................................................... 34-36

Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch,
  443 S.W.3d 820 (Tex. 2014) ....................................................................... 15-17

In re E.A.K.,
   192 S.W.3d 133 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) ............ 31

Interstate Northborough P’ship v. State,
   66 S.W.3d 213 (Tex. 2001).............................................................................. 32

Jamshed v. McLane Exp. Inc.,
  449 S.W.3d 871 (Tex. App.—El Paso 2014, no pet.) ....................................... 38

Kindred v. Con/Chem, Inc.,
  650 S.W.2d 61 (Tex. 1983).....................................................................9, 13, 14

Marathon Corp. v. Pitzner,
 106 S. W.3d 724 (Tex. 2003) ...................................................... 9, 11, 15, 19, 25

McGalliard v. Kuhlmann,
 722 S.W.2d 694 (Tex. 1986) ............................................................................ 34

Pegasus Energy Grp. v. Cheyenne Pet. Co.,
  3 S.W.3d 112 (Tex. App.—Corpus Christi 1999, pet. denied).......................... 34

Powell v. Vavro, McDonald & Assoc., L.L.C.,
  136 S.W.3d 762 (Tex. App.—Dallas 2004, no pet) .......................................... 31

Sentinel Integrity Sols., Inc. v. Mistras Grp., Inc.,
  414 S.W.3d 911 (Tex. App.—Houston [1st Dist.] 2013, pet. denied)..........37, 38

State Farm Lloyds v. Fitzgerald,
  No. 03-99-00177-CV, 2000 WL 1125217
  (Tex. App.—Austin Aug. 10, 2000, no pet.) .................................................... 23

                                                     5
Sterner v. Marathon Oil Co.,
  767 S.W.2d 686 (Tex. 1989) ............................................................................ 32

Tenaska Energy, Inc. v. Ponderosa Pine Energy, LLC,
  437 S.W.3d 518 (Tex. 2014) ............................................................................ 34

Tony Gullo Motors I, L.P. v. Chapa,
  212 S.W.3d 299 (Tex. 2006) ............................................................................ 36

Torrington Co. v. Stutzman,
  46 S.W.3d 829 (Tex. 2000).............................................................................. 38

Varner v. Cardenas,
  218 S.W.3d 68 (Tex. 2007).............................................................................. 37




                                                     6
                                   NO. 12-16-00092-CV


                 IN THE COURT OF APPEALS
     FOR THE TWELFTH DISTRICT OF TEXAS AT TYLER, TEXAS


                           PERMIAN POWER TONG, INC.,
                                   Appellant,

                                                v.

                             DIAMONDBACK E&P, LLC,
                                   Appellee.


                     On Appeal from the 441st District Court
                   Midland, County, Texas, Cause No. CV-49854
                         (Hon. Rodney W. Satterwhite)


                           REPLY BRIEF OF APPELLANT


TO THE HONORABLE JUSTICES OF THE TWELFTH COURT OF
APPEALS:

       Appellant Permian Power Tong, Inc. (“Permian” or “Appellant”) submits

this Reply Brief of Appellant, in accordance with rules 9.4 and 38 of the Texas

Rules of Appellate Procedure and all local rules of this Court. In reply to the Brief

of Appellee1 Diamondback E&P, LLC (“Diamondback” or “Appellee”), Appellant

respectfully states as follows:2


1
       Appellant will cite to its Brief of Appellant as “Br.” and the Brief of Appellee as “Resp.”
2
       Appellant stands on the arguments and legal authority presented in its opening brief.
Thus, to the extent Appellant may not reply herein to a particular assertion or argument or
                                                7
                  ARGUMENT AND AUTHORITES IN REPLY

I.     No Legally Sufficient Evidence Permian Breached the MSA

       Diamondback failed to produce legally sufficient evidence that Permian

breached the MSA. A legal sufficiency challenge will be sustained when the

record confirms either: (a) a complete absence of a vital fact; (b) the court is barred

by rules of law or of evidence from giving weight to the only evidence offered to

prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a

mere scintilla; or (d) the evidence conclusively establishes the opposite of the vital

fact. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014). In a legal

sufficiency review, the court views the evidence in the light most favorable to the

verdict. Id.

       When reviewing all of the evidence in a light favorable to the verdict, courts

assume jurors made all inferences in favor of their verdict if reasonable minds

could, and disregard all other inferences in their legal sufficiency review. Id. at

620-21. When reviewing circumstantial evidence that favors the verdict, courts

must “view each piece of circumstantial evidence, not in isolation, but in light of

all the known circumstances.” Id.




citation by Appellee, this should not be construed as acquiescence by Appellant in any of
Appellee’s arguments or waiver by Appellant of any argument made in its Brief of Appellant or
in this Reply Brief.


                                             8
       If circumstantial evidence, when viewed in light of all the known

circumstances, is equally consistent with either of two facts, neither fact may be

inferred. Id. Where the circumstantial evidence is not equally consistent with

either of two facts, and the inference drawn by the jury is within the “zone of

reasonable disagreement,” a reviewing court cannot substitute its judgment for that

of the trier-of-fact. Id.

       When the evidence offered to prove a vital fact is so weak as to do no more

than create a mere surmise or suspicion of its existence, the evidence is no more

than a scintilla and, in legal effect, no evidence of the vital fact. E.g., Kindred v.

Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). An inference stacked only upon

other inferences, rather than upon direct evidence, is not legally sufficient

evidence. E.g., Marathon Corp. v. Pitzner, 106 S. W.3d 724, 728 (Tex. 2003).

       A.     No Direct or Circumstantial Evidence that Permian Breached
              MSA

       None of the testimony or documents Diamondback points to is legally

sufficient evidence that Permian breached the MSA. (Resp. at 19-22).

       Diamondback’s “evidence” that Permian breached paragraph 11(a)(ii) of the

MSA (regarding “utmost skill” and “good and workmanlike performance”) is

nothing more than speculation or surmise.          The third-party pipe inspection

referenced by Diamondback ignores that company man Jesus Villasana admitted

he only observed inspection of about the first ten pieces. (4RR181-82). Hollis did


                                          9
not see the inspection. (3RR224). Diamondback never went back and checked

with the pipe vendor to verify the casing. (4RR18). Diamondback assumed

Permian damaged the pipe.

      There was no “concession” by Permian that the pipe was not damaged when

under its control and lowered downhole. Aaron Caine simply testified he did not

remember there being a deformation or defect of the pipe. (4RR118). This is no

evidence the interior of the pipe was free from damage because Caine did not

testify he viewed the pipe interior; Hollis testified that the damage shown from the

caliper logs was the interior of the pipe (4RR61-62), and Grace testified that

exterior damage would not necessarily have been noticeable. (5RR165-66).

      Moreover, the caliper logs showed damage at places above and below the

location of Permian’s slips, and showed damage areas shorter and longer than

Permian’s slips. (5RR129-131). Diamondback’s expert could not explain how the

slip could cause different lengths of damage. (4RR242).

      Next, Diamondback’s “evidence” that Permian failed to comply with the

MSA’s requirement that Permian’s tools and equipment be free from defect falls

apart under the terms of the MSA. Diamondback relies on its assertion that

Permian did not keep records of the use/maintenance of tools used on the Baron

14-11 job. (Resp. at 20-22).

      Nowhere does the MSA require that Permian keep such records. (CR 20).

Diamondback does not and cannot point to any provision of the MSA requiring
                                        10
Permian to document the maintenance and testing of its equipment, what

equipment would be used on this well, or the serial numbers for such. (See id.).

Any purported failure to document the equipment used or its maintenance cannot

form the basis of a breach of the MSA. Diamondback points to no evidence that

Diamondback required Permian document the use, testing, or maintenance of its

tools or equipment. Permian cannot have breached a nonexistent provision of the

MSA.

          Diamondback’s “evidence” is nothing more than an assumption: i.e.,

because no documentation exists, we assume the incorrect equipment was used

and/or it was not adequately maintained and tested. This is no evidence that

Permian breached the MSA.3 Castillo, 444 S.W.3d at 620-21; Marathon Corp.,

106 S.W.3d at 728.

          Diamondback points to no evidence that Permian’s crew was not suitably

trained or sufficiently experienced. (Resp. at 21-22). Diamondback nakedly asserts

that Permian “failed to provide formal training” or “supply training manuals.” (Br.

at 21).

          Nowhere does the MSA require that Permian provide “formal” training or

training manuals.     (See CR17-27).       The MSA simply requires that Permian’s

3
        That Permian may have sent the wrong equipment to a previous job is no evidence that
wrong equipment was sent or used on this job. Even if the wrong equipment were sent out, it
could not possibly have been used due to the physical characteristics of the pipe and the
slips/dies. (5RR69-72, 102-03).


                                            11
employees are “sufficiently experienced and suitably trained to perform the Work.”

(CR20).

      Regarding training, Diamondback’s assertion that use of the term “worm”

meant Permian’s employees were inexperienced is false and a gross

mischaracterization of the testimony. (E.g., Resp. at 4, 21-22). Caine actually said

that he started as a “worm” back in 2002—eleven years before this incident—and

through training and experience progressed through the ranks to become a crew

hauler around 2012. (4RR98-100).

      Caine did not admit that his crew members were “inexperienced.” (Resp. at

21-22). Caine testified that even someone called a “worm” might have 4-5 years’

experience. (4RR125-28). Caine testified that Mills, Holman, and Key had at least

six years, five years, and a year experience, respectively, that Caine had worked

with each of his crew members many times and they were experienced, and that he

had no concerns—“not even a little bit”—that any of them couldn’t do the job they

were assigned. (4RR125-28).

      Clearly, Caine did not testify that his crew members were “inexperienced.”

That the four crew members had never all worked together on the same job is no

evidence they weren’t each suitably trained and experienced.

      Further, Diamondback’s reliance on its expert testimony is misplaced, as

Britton admitted he had no idea how Permian’s crew was trained:

      A. . . . I have no idea how the Permian men were trained.
                                        12
      Q. But yet you're willing to say that they were inadequately trained?

      A. Because of the problems we had on this well, I have to assume
      something was done wrong. And if they were trained properly, we
      wouldn't have had these problems.

(4RR249). Castillo, 444 S.W.3d at 620-21; Kindred, 650 S.W.2d at 63.

      Diamondback’s assertion that Villasana “personally witnessed these same

inexperienced ‘worms’ taking on crew chief responsibilities and operating tong

equipment that only skilled crew members should operate” again mischaracterizes

the record. (Resp. at 22). Villasana said that near the end of the casing run, “a

younger man was running the tongs.” (4RR170). Villasana did not testify that this

person was a “worm” or “inexperienced”; he testified that someone else (not from

Permian) referred to him as a worm. (4RR171-72). Villasana did not testify to the

identity of this “younger man.” (See id.). Villasana testified he did not know the

members of the Permian crew, or how much experience they each had. (4RR176).

Villasana testified that he didn’t know if the three other members of Caine’s crew

were capable of running the tongs, but if someone had three or four years’

experience, they would be capable. (4RR176-77).

      Ultimately, the “evidence” Diamondback points to is no evidence that

Permian’s employees were not sufficiently experienced or suitably trained to

perform the work, as the MSA required. Castillo, 444 S.W.3d at 620-21; Kindred,

650 S.W.2d at 63.



                                        13
      B.     No Competent Expert Testimony That Permian Breached the
             MSA

      Diamondback urges that testimony by its expert, Britton, supports that

Permian breached the MSA.         (Resp. at 22-24).    But Britton’s testimony is

irrelevant and based on assumptions and Britton’s lack of the facts.

      Britton’s testimony about the need for “formal” training is irrelevant and

cannot form the basis of a breach of the MSA, which does not require “formal”

training or manuals. All it requires is that employees are “suitably trained” and

“sufficiently experienced.” (CR20) (emphasis supplied). Further, Britton admitted

that most casing crews get their training on the job. (4RR248-49).

      Britton’s testimony that Permian’s crew was not adequately trained lacked a

factual basis. Britton admitted that “I have no idea how the Permian men were

trained” and assumed they weren’t adequately trained.          (4RR249).   Britton

admitted he gave his opinion without hearing Caine’s testimony about the

experience level of Caine’s crew. (4RR248). Yet, this house of cards is the basis

for Diamondback’s assertion that Permian’s crew was inadequately trained.

Castillo, 444 S.W.3d at 620-21; Kindred, 650 S.W.2d at 63.

      Britton’s testimony about the MSA’s tool and equipment requirements is

irrelevant, speculative, and lacked a factual basis. Again, the MSA did not require

that Permian keep records of the tools and equipment used on the Diamondback

job or documentation on the maintenance or testing of its equipment. (CR20).


                                         14
       Britton’s speculative opinion is: because there is no documentation of tool

maintenance, we can infer it did not happen, then infer this must mean the

equipment was faulty, and finally infer that this purportedly faulty equipment

caused the problem. See Marathon Corp., 106 S.W.3d at 729-30. This testimony

lacks any factual basis because Lemons, Caine, and Bownds all testified at length

on the inspection and maintenance that occurs with every piece of equipment.

(4RR108, 113, 129-30, 5RR14-25, 64-69). See Houston Unlimited, Inc. Metal

Processing v. Mel Acres Ranch, 443 S.W.3d 820, 832–33 (Tex. 2014) (if expert's

opinion is “based on assumed facts that vary from the actual facts,” the opinion “is

not probative evidence . . . if the record contains no evidence supporting an expert's

material factual assumptions, or if such assumptions are contrary to conclusively

proven facts, opinion testimony founded on those assumptions is not competent

evidence.”); City of Keller v. Wilson, 168 S.W.3d 802, 813 (Tex. 2005). Similarly,

there is no evidence the wrong equipment was sent to the job. Britton admitted he

was not testifying that Permian brought the wrong equipment. (4RR244).4


4
       Diamondback’s statements that Permian failed to follow industry protocol are misplaced.
(Resp. at 20, 23). Diamondback attempts to convert this case into a negligence case, asserting
“industry protocol” like standard of care. But Diamondback dropped its negligence suit and
proceeded only on breach of contract. (5RR8). The MSA does not require daily cleaning,
weekly inspection, bi-annual teardown, and annual x-ray tests on the slips. (See CR17-35).
Regardless, Diamondback ignores all the evidence by Caine, Lemons, and Bownds that the
equipment is cleaned, inspected, “miked,” and repaired every time before and after a job.
(4RR108, 113, 129-30, 5RR14-25, 64-69).




                                             15
      Similarly, such testimony could not support that Permian breached a

requirement to perform work with utmost skill and in a good and workmanlike

manner. (Resp. at 23). Britton’s conclusion that the caliper logs showed that

Permian’s equipment caused damage was wholly speculative. Britton could only

assume that the slips caused damage because of his belief the pipe was good when

it went into the well. (4RR204-05). Britton’s opinion that Permian used small

slips did not account for Caine’s testimony that slips were color-coded, and

checked for size and interior integrity. (4RR231-32). Britton originally opined

that the slips were too small, but there was no testimony of wrong slips or die size.

(4RR235-36). Then, Britton stated there must have been some malfunction inside

the slip. (Id.). But he did not know this because he could not examine such. (Id.).

Britton had no explanation for the different length of damage on different sections

of the pipe. (4RR241-42). He did not dispute Caine’s testimony that the pipe was

made up to optimum torque. (4RR247-48).

      Ultimately, Britton’s testimony was nothing more than surmise, speculation,

and assumption, untethered from the actual facts.     See Houston Unlimited, Inc.,

443 S.W.3d at 832–33; City of Keller, 168 S.W.3d at 813.

      C.     Diamondback’s Complaint About Legal Sufficiency Review
             Misses the Mark

      Diamondback’s assertion that Permian misapplied the no-evidence challenge

is misplaced.    (Resp. at 24-25).    The portions of Permian’s brief cited by


                                         16
Diamondback primarily detail the lack of evidence Diamondback produced at trial.

Piece by piece, Permian demonstrated that evidence was speculative, irrelevant,

and without a factual basis. (See Br. at 30-34, 39-41, 48-49). Diamondback’s

complaint seems directed at those portions of the brief explaining that

Diamondback’s expert Britton’s opinions were without factual basis where they

did not consider the controverting evidence. (See Br. at 34-35, 42-43).

      Reviewing courts cannot disregard contextual evidence, competency

evidence, circumstantial equal evidence, and conclusive evidence. City of Keller,

168 S.W.3d at 810-18. Further, courts must “rigorously examine the validity of the

facts and assumptions on which [expert] testimony is based[.]”            Houston

Unlimited, 443 S.W.3d at 832–33. If an expert's opinion is unreliable because it is

“based on assumed facts that vary from the actual facts,” the opinion “is not

probative evidence.” Id. “[I]f the record contains no evidence supporting an

expert's material factual assumptions, or if such assumptions are contrary to

conclusively proven facts, opinion testimony founded on those assumptions is not

competent evidence.” Id. at 833. “[I]f an expert's opinion is based on certain

assumptions about the facts, we cannot disregard evidence showing those

assumptions were unfounded.” City of Keller, 168 S.W.3d at 813. An appellate

court conducting a no-evidence review cannot consider only an expert's bare

opinion, but must also consider contrary evidence showing it has no scientific

basis. Id.
                                        17
      And the reviewing court does not disregard contrary evidence when

reasonable jurors could not. City of Keller, 168 S.W.3d at 827. Further, evidence

that conclusively establishes the opposite of a vital fact is part of a legal

sufficiency review. Id. at 814-15. Diamondback’s complaint about Permian’s

legal sufficiency challenge is lacking.

      D.     Diamondback Relies on Speculation and Inference-Stacking

      Diamondback indeed piles speculation and inferences on one another.

(Resp. at 25-26). While Diamondback contends that the record here differs from

Marathon Corp., as explained, all of Diamondback’s “evidence” does not say what

Diamondback claims, and its expert’s opinions are based on assumptions,

speculation, and inferences.

      Again, neither Hollis, nor Bernard, nor Villasana could offer testimony that

Permian did not perform the work in a good and workmanlike manner; they had no

knowledge. (See Br. at 31-32). Diamondback’s assertion that Permian’s witnesses

testified to such is unfounded. Hollis and Villasana had no personal knowledge

that the wrong or defective tools or equipment were used; Hollis could only

“assume” the wrong slips were used. (Br. at 40). Neither Hollis nor Villasana had

knowledge on whether Permian’s crew was sufficiently trained. (Br. at 48-49).

Diamondback’s      assertion   that   Permian’s   witnesses   testified   otherwise

mischaracterizes the testimony.



                                          18
      That only leaves Diamondback’s expert Britton, who stacked assumptions

and inferences to conclude that Permian breached the MSA. Marathon Corp., 106

S.W.3d at 729-30. Britton testified he didn’t know how Permian’s employees were

trained, yet he assumed they were not adequately trained. (4RR249). Britton

testified he hadn’t seen documentation of the maintenance and inspection of tools

and equipment, so he assumed it didn’t happen (despite his acknowledgment he

didn’t hear Caine’s testimony regarding inspections and maintenance). (4RR231).

Britton could only “assume” the slips caused damage, after Permian shot down

Britton’s theories about overtorquing and small slips. He couldn’t explain how the

slips caused inconsistent damage. (Br. at 32-33).

      Diamondback’s evidence is indeed like that in Marathon Corp. It is nothing

more than assumptions, speculation, and inference stacking. See Marathon Corp.,

106 S.W.3d at 729-30.

      E.    Equal Inference Rule

      While Diamondback urges the equal inference rule does not apply (Resp. at

27-29), the evidence in support of Diamondback’s theory that Permian damaged

the pipe is so meager that no reasonable inference can be drawn in support of the

verdict. See Ford Motor Co. v. Castillo, 444 S.W.3d 616, 621 (Tex. 2014); Ford

Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004).

      As explained, there is no direct or competent lay or expert testimony that

Permian breached the MSA. Damage to the pipe when the collars were bucked on
                                        19
at the manufacturer was equally consistent with Diamondback’s assertion that the

pipe was without defect and that Permian damaged it. (5RR133-35). The caliper

logs did not “prove” that the slips damaged the pipe; they only showed damage to

the interior of the pipe. (See 6RR 226-33; 4RR61-62). If there had been something

defective with Permian’s slips themselves, one would expect uniform damage

along the entire casing string. This was not the case. Further, the lowest 2650’ of

pipe had no damage. (4RR256-57). Britton guessed that the additional weight

above 2650’ must have contributed to the damage, but could offer no explanation

why. (4RR257-58). Is just as consistent with pipe that was defective and could

not withstand the additional weight below it, even though Permian’s slips were the

right size and functioning properly. It also equally consistent with the pipe being

damaged or defective prior to use on the well, or that the damage was caused by

the driller. (See 4RR240). Thus, the jury could not reasonably infer that Permian

breached the MSA. See Castillo, 444 S.W.3d at 621; Ridgway, 135 S.W.3d at 601.

II.    Factually Insufficient Evidence to Support Verdict on Breach

       Even if Diamondback produced legally sufficient evidence of breach—and it

did not—Diamondback did not produce factually sufficient evidence of breach; the

overwhelming weight of the evidence showed that Permian did not breach the

MSA.

       Diamondback produced no evidence that Permian’s employees were not

trained; Diamondback’s expert admitted he had no idea how they were trained
                                        20
(4RR249), and admitted that casing crews receive on-the-job training. (4RR248-

49). The MSA did not require “formal” training. Nor did Permian’s crew chief

say that two of the crew members were “worms” in the sense of being

inexperienced; all members were experienced and sufficiently trained, and the

crew hauler Caine had worked with them many times before and had no

reservations about their abilities. (4RR125-28; Br. at 51-53). Even Villasana said

that when he saw someone different using the tongs to make up the joints, it looked

like the operator “knew what he was doing,” the joints “were being appropriately

made up,” and Villasana didn’t see anything that caused him concern on how the

tong was being operated. (4RR179). The only actual evidence of the level of

training was that Permian’s employees were more than sufficiently trained and

experienced. (See Br. at 51-53).

      Diamondback’s evidence that Permian failed to perform the work in a good

and workmanlike manner was speculative and based on assumptions. Permian

produced overwhelming evidence that its employees used the correct tools and

equipment, that the crew could not have used the wrong slips, that no issues were

encountered during the 14-11 well casing job, and that there was no way the slips

could have caused the damage shown in the caliper logs.            (Br. at 36-39).




                                        21
Diamondback’s witnesses could only “assume” the slips caused the damage.

(3RR229-30; 4RR204-05).5

       The great weight of the evidence showed that Permian complied with the

MSA’s tool and equipment maintenance requirements.                       (Br. at 43-47).

Diamondback’s reliance on some non-existent records-keeping requirement is

misplaced. The overwhelming weight of the evidence showed how Permian’s

tools and equipment were of the best quality and free from defect. (Br. at 43-47).

Diamondback produced no evidence that wrong or defective tools were used on the

job.

       The jury had no choice but to conclude that Diamondback did not meet its

burden to show that Permian breached the MSA.

III.   No Legally or Factually Sufficient Evidence that Breach Caused
       Damages

       The evidence is legally and factually insufficient to support a jury verdict

that Permian’s alleged breach caused Diamondback damage. (Br. at 53-58).

       Diamondback’s suggestion that the “resulted from” language in the charge

created a different causation standard is incorrect. (Resp. at 33-34). The “resulted

from” language mirrors Texas Pattern Jury Charge 115.3 for breach of contract

5
        Diamondback’s assertion that the caliper logs “proved uniform damage” is demonstrably
false. (See 4RR241-42, 5RR127-31; Compare 6RR226 with 6RR228). Even Diamondback’s
expert admitted the damage was not uniform. (4RR241-42).




                                             22
cases. See Comm. On Pattern Jury Charges, State Bar of Tex., TEXAS PATTERN

JURY CHARGES: BUSINESS, CONSUMER, INSURANCE, & EMPLOYMENT, PJC 115.3

(2014). This language requires the same causation analysis in breach of contract

cases: whether the damages “are the natural, probable, and foreseeable

consequence of the defendant’s conduct.” See State Farm Lloyds v. Fitzgerald,

No. 03-99-00177-CV, 2000 WL 1125217, at *4-*5 (Tex. App.—Austin Aug. 10,

2000, no pet.) (analyzing causation under “natural, probable, and foreseeable

consequence” standard where jury charge used “resulted from” language); see also

Frost Nat'l Bank v. Heafner, 12 S.W.3d 104, 108-11 (Tex. App.—Houston [1st

Dist.] 1999, pet. denied). Diamondback points to no authority supporting that

“resulted from” language creates a different causation standard.

      Diamondback’s evidence of causation was speculative and less than a mere

scintilla, even considering meager circumstantial evidence. No one could confirm

whether the third-party inspector actually inspected all 127 pieces of casing;

Villasana only witnessed approximately ten joints being inspected. (4RR181-82).

Diamondback’s assertion that Villasana “personally inspected the pipe before PPT

began its work and confirmed the pipe contained no defects” is incorrect. (Resp. at

36) (See 4RR175).      The most he could say was that, “to the best of [his]

knowledge” the pipe was in “good and adequate condition.” (4RR175). Caine

could only testify he didn’t remember there being a deformation of the pipe when

it was being lifted and lowered to go in the hole (4RR118), and Lemons merely
                                        23
said that a dented pipe would be seen with the naked eye and he wouldn’t expect

the crew to put visibly damaged pipe in the hole. (5RR49-50, 56). But Grace

testified that such damage would not necessarily have been visible in the field,

given the dark pipe. (5RR165-66).6

      Diamondback’s assertion that the pipe deformations were “uniform” and at

the “exact location” where the slips gripped each joint is not accurate. (Resp. at

36, 38). The evidence showed the damage was wildly inconsistent, at different

areas below the collar, and varied in length from inches to feet. (6RR226-33;

5RR128-33; 4RR241-42).

      Bownds didn’t concede Permian “caused the pipe damage.” (Resp. at 36).

Hollis said Bownds gave him the “impression” that Permian overtorqued the pipe.

(4RR79). But prior to meeting with Diamondback about the well problems,

Diamondback’s superintendent Leonard Bernard told Bownds that Permian

overtorqued the pipe (5RR84-85), that Diamondback’s people were mad at

Permian and thought it was their fault the casing was messed up, and urged

Bownds to bring some discounted invoices as an accommodation. (5RR84-88).

Bownds was ambushed at the meeting with the drilling logs (which he had no

experience reading), and felt intimidated. (5RR88-89). Diamondback was trying




6
      It was dark and rainy the night Permian ran the casing. (4RR151).


                                             24
to get him to agree that Permian overtorqued the pipe. (5RR91-92). But Bownds

did not believe Permian did anything wrong to cause the damage. (5RR 90-92).

      While Diamondback points to Britton’s testimony as evidence of causation,

that testimony was wholly unsupportable, speculative, and conclusory. (See Br. at

55-58). Britton could only assume that the slips caused damage because of his

belief the pipe was good when it went into the well. (4RR204-05). He admitted he

did not know what the problem with slips was that he assumed occurred; he

admitted there was no testimony that someone put the wrong size slips/dies in.

(4RR235). He speculated and guessed that there was a malfunction in the slip

area, but did not explain the malfunction. (4RR236, 238). He admitted that he

could not explain why a slip that is about two feet in length could cause different

lengths of damage—some longer than, some shorter than, the slip—on the pipe.

(4RR242). He even conceded that if the slips were pinching the pipe, you would

see similar damage down the string, depending on the problem. (4RR234-35). See

Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232

(Tex. 2004) (conclusory or speculative opinion testimony is no evidence);

Marathon Corp., 106 S.W.3d at 729-30.

      Expert Grace explained that the damage did not happen while the casing was

being run by Permian. (5RR157-58). The slips could not have caused the damage.

(5RR127-30). Britton admitted the casing could have been damaged due to the

driller (i.e., not Permian). (4RR240). Grace explained there was no way Permian
                                        25
could have caused this damage, he was certain there was something wrong with the

pipe before it went in the hole. (5RR157). His testimony about casing damaged

from the manufacturer was based on his general experience with overseas casing

and the fact that Permian could not have caused this damage. (5RR155-58). And

again, he said any pre-existing damage would not necessarily have been visible to

the crew. (5RR165-66).7

       Even if, as Diamondback asserts, Hollis (or Bownds) may have initially

believed the pipe was overtorqued, Hollis admitted he had no direct evidence the

pipe was overtorqued (4RR14-15), and admitted this was the first caliper log he’d

interpreted to indicate overtorquing. (4RR60). Britton explained that the caliper

logs would not really tell you if the pipe were overtorqued; you’d have to

physically look at the pipe. (4RR212-13). Regardless, both experts affirmatively

stated that overtorquing, even if an issue, did not cause the failure/damage.

(4RR214; 5RR136).8


7
       Diamondback’s assertion that Grace’s credibility was undermined by his testimony about
environmental concerns is misleading. (Resp. at 39 n.13). Grace actually explained that
Diamondback’s purported concerns about neighborhood groundwater were unfounded because
the groundwater was already protected behind surface casing and cement. (5RR161-62).
8
        The causation analysis in Dawson v. Briggs, 107 S.W.3d 739 (Tex. App.—Fort Worth
2003, no pet.) and Blankenship v. Mirick, 984 S.W.2d 771 (Tex. App.—Waco 1999, pet.
denied)—both personal injury cases—does not aid Diamondback. (Resp. at 34). In both cases
the event sued upon had been established by default or admission, leaving plaintiffs to prove the
connection between the event sued upon and the injury. Here, Diamondback cannot even
establish the event sued upon, i.e., how Permian breached the MSA. But even under the
causation standard in those cases, neither lay testimony nor expert testimony established a causal
nexus here, where the evidence showed wildly varying pipe damage (which Britton could not
                                               26
       Diamondback produced no legally or factually sufficient evidence tying any

purported breach of the MSA by Permian to damages.

IV.    Evidence Showed that Diamondback’s Actions Damaged the Pipe

       Hollis admitted that Diamondback’s actions removed metal from the pipe

and caused damage.          (3RR146-59, 4RR27-28, 6RR429)). Yet, Diamondback

claims that all the damage was caused by Permian’s alleged breach. (Resp. at 41-

44).

       Diamondback asserts that only “outside forces” caused the pipe damage.

(Resp. at 41). This ignores Hollis’s own testimony about the bits and string mills

Diamondback used to shear away metal from the interior-side of the casing.

(3RR116-18, 123-24). It also ignores Hollis’s testimony that Diamondback’s use

of the string mills could have cut the holes in the intermediate casing. (3RR146-

59; 4RR27-28). Hollis stated: “Looks like we wore holes in the casing where the

pinched in spots were.” (6RR429). Expert Grace testified that the 120-foot long

string mill assembly Diamondback used was guaranteed to cut holes in the casing.

(5RR137-38).




explain), no witness testified seeing Permian use the wrong or defective slips (or do anything
else wrong during the casing run), Britton could only assume the slips caused damage because of
his belief the pipe was good when it went into the well, and where no one witnessed the entirety
of the pipe inspection.




                                              27
       Further, there was no uniformity to the damage to a depth of 2,700 feet.

(Resp. at 42) (4RR241-42; see 6RR226-33; 5RR128-33). Even if Diamondback

had not reamed past 900 feet, Diamondback’s clumsy efforts damaged and

compromised the casing such that alternative remedial efforts were now not viable.

(5RR30-33).9

       While Diamondback disputes that it could have used swages or rollers to

remediate any problem (Resp. at 43), the fact remains Diamondback didn’t, and

instead used the string mills, which assured grinding and reaming of metal and

holes in the casing. (5RR137-38). It does not change that Diamondback’s actions

could have and did damage the casing. Alternative techniques would not have

undermined the casing’s integrity and were less expensive than Diamondback

asserts. (5RR138-46). Even Hollis admitted that rollers are not abrasive and do not

grind pipe, they’re potentially less aggressive than mills. (3RR204-07).

       Diamondback’s failure to cut and pull the casing, or allow Permian to do it,

caused Diamondback’s damages. (Br. at 60-62). The MSA contemplated that

Permian would have the opportunity to remedy problems, but Diamondback did

not give Permian that chance before grinding the pipe interior or plugging and


9
       Diamondback relies on the pressure test as indicative that Diamondback did not cause a
hole. (Resp. at 42). It begs the question: if the casing held pressure, why did Diamondback
abandon it? Its concerns about the pipe’s integrity were unfounded.




                                             28
abandoning the well. (Id.; see CR 20). Both Lemons and Grace testified that

cutting and pulling the casing was easy, feasible (at least before the milling

operations), and less expensive. (See Br. at 60-61). The evidence showed that

Diamondback caused or exacerbated its damages.

V.    Evidence Overwhelmingly Showed that Diamondback Failed To
      Mitigate Its Damages

      Diamondback failed to mitigate its damages.             (See Br. at 62-65).

Diamondback used aggressive string mills, shearing away pipe and cutting holes in

it, instead of using swages, rollers, or smaller tools, and failed to try cutting and

pulling the casing or give Permian the opportunity to do so. (Id.).

      Diamondback suggests it gave Permian an opportunity to fix the issue, and

cites testimony by Hollis claiming that the company man—Villasana—called

Bownds sometime after Diamondback could not get down the well. (3RR156-57).

But Villasana expressly testified that he did not. (4RR175). Bownds testified that

sometime after Diamondback had run the reamer, Leonard Bernard called him and

said there was a problem and Diamondback was running reamers, but did not ask

Permian to do anything. (5RR83-84). This disproves that Diamondback did not

get a response for 3-4 days as it claims; instead it proves Diamondback did not

wait to discuss alternative measures, but immediately began its aggressive milling.

Hollis testified Diamondback did not discuss with Permian the possibility of

cutting and pulling the casing. (3RR165).


                                         29
       Britton’s testimony that Diamondback didn’t cause any damage by using the

string mills conflicts with Hollis’s admissions. ((6RR429; 3RR146-59; 4RR27-

28). Britton had no basis for asserting that Permian couldn’t cut and pull the

casing where Lemons testified he had performed this countless times. (5RR30-33,

46-47).

       Grace did not “approve[] of milling as an appropriate remedial measure

under the circumstances.” (Resp. at 45).          Grace said that milling would be the

“very last resort” here. (5RR160). Grace offered more reasonable alternatives that

should have been tried first: rollers, swages, smaller tools, and cutting/pulling the

casing. (See 5RR138-46). Finally, testimony from Lemons and Grace showed that

cutting and pulling the casing was easy, safe, and less expensive than plugging and

abandoning the well. (5RR30-33, 140-48).

       The great weight and preponderance of the evidence proved that

Diamondback failed to mitigate its damages.

VI.    Admission of Exhibit 60A Was an Abuse of Discretion

       The trial court abused its discretion in admitting Exhibit 60A, where

Diamondback failed to lay the proper predicate for the admission of the invoices

under the business records exception to the hearsay rule.10


10
       Diamondback’s assertion that Permian’s objection on appeal varies from that at trial is
incorrect. (Resp. at 46 n.15). The context makes clear that Permian objected that Diamondback
had not established the foundation for the documents to come in under the business records
exception to the hearsay rule. (3RR183-97; 4RR7-9). Even Diamondback’s counsel tried to
                                             30
       Hollis did not lay a proper foundation for admitting Exhibit 60A. Permian’s

counsel challenged Hollis to show his personal knowledge of who created the

invoices, whether the work in each invoice was actually performed or who

performed it, what information was used to prepare the invoices, and whether they

had been paid. (3RR195-97). Hollis could not show such knowledge. (Id.).

Diamondback’s attempt to clean up Hollis’s testimony did not rectify the problem;

Hollis offered conclusory answers that the invoices were kept in the course of

Diamondback’s business, and stated that if the invoice was in the binder it had

been paid. (4RR6-8).

       Hollis had no personal knowledge of the invoices’ accuracy, and thus, failed

to demonstrate their accuracy or that Diamondback’s keeping of the invoices

created by others were done in the regular course of business. (Br. at 68-69); see

In re E.A.K., 192 S.W.3d 133, 142-43 (Tex. App.—Houston [14th Dist.] 2006, pet.

denied); Powell v. Vavro, McDonald & Assoc., L.L.C., 136 S.W.3d 762, 765 (Tex.

App.—Dallas 2004, no pet).

       Exhibit 61 was merely a summary of the invoices.                  (9RR928-35).       A

summary of business records may be admitted into evidence upon proof (1) that

the records are voluminous, (2) they have been made available to the opponent for

a reasonable period of time to afford inspection and an opportunity for cross-

establish the exception by asking questions of Hollis on the elements of Rule 803(6). (3RR192-
94; 4RR7).


                                             31
examination, and (3) the supporting documents are themselves admissible in

evidence. See Black Lake Pipeline Co. v. Union Construction Co., 538 S.W.2d 80,

92-94 (Tex. 1976), overruled on other grounds, Sterner v. Marathon Oil Co., 767

S.W.2d 686 (Tex. 1989). A summary is no more admissible than the underlying

records. Id. Here the underlying invoices were not admissible; the Exhibit 61

summary was no evidence of damages. See id.

         Hollis’s testimony was based on estimates demonstrated to be unreliable,

and his testimony about costs to remediate and replace the 14-11 well was

conclusory where he offered no detail as to the individual activities and associated

costs.    (See Br. at 70 n.8).   Britton’s testimony about the reasonableness of

Diamondback’s estimates of remedial and replacement damages is no evidence of

the actual costs, where Britton merely based his statement on a review of the same

invoices and similarly had no foundation for such. (4RR203).

         The invoices were the only evidence attempting to demonstrate the amount

of damages. Because they were not cumulative of any other evidence, and the

judgment turned on this evidence, the erroneous admission of Exhibit 60A led to

the rendition of an improper judgment. See Interstate Northborough P’ship v.

State, 66 S.W.3d 213, 220 (Tex. 2001).




                                         32
VII. Damage Awards Not Supported by Legally or Factually Sufficient
     Evidence

      As discussed and incorporated here, the damages awards by the jury for

remedial and replacement damages are not supported by legally or factually

sufficient evidence, and are excessive. (Br. at 71-72). Permian did not cause the

damage, and even if it had, Diamondback exacerbated that damage and failed to

remediate. (Id.).

      While Diamondback asserts its replacement well costs extended through

September 30, 2013, the daily drilling reports showed that the intermediate casing

on the replacement well was cemented into place on September 27-28, 2013.

(6RR529).    Exhibit 61 confirmed this, showing an entry for the cementing

company (O-Tex Pumping) on September 27, 2013. (9RR934).11 The drilling

reports also showed that, at the latest, Diamondback moved from the intermediate

casing to production casing on September 29, 2013. (6RR534). Thus, in addition

to the fact the evidence is legally and factually insufficient to support any damages

awarded by the jury, the amounts of damages awarded are excessive because they

awarded costs past the point Diamondback could attempt to get in the hole on the

replacement well.




11
      Permian does not concede that Exhibit 61 was admissible or proved damages.


                                            33
VIII. Attorney’s Fees Awards Are Not Supported by Legally or Factually
      Sufficient Evidence

      Diamondback’s evidence of attorney’s fees is legally and factually

insufficient to support the trial court findings of fact/conclusions of law numbers

11-17 (CR644-46) and findings of act Order numbers 6-9 (CR641-42) and

judgment. (Br. at 73-79).

      Findings of fact are not binding if there is no evidence to support the finding

or the contrary is established as a matter of law.         Tenaska Energy, Inc. v.

Ponderosa Pine Energy, LLC, 437 S.W.3d 518, 523 (Tex. 2014); McGalliard v.

Kuhlmann, 722 S.W.2d 694, 696–97 (Tex. 1986). In determining what the law is

and applying the law to the facts, a trial court has no discretion. Tenaska Energy,

437 S.W.3d at 523. The legal conclusions of the trial court are not binding on

appellate courts. Argo Data Res. Corp. v. Shagrithaya, 380 S.W.3d 249, 264 (Tex.

App.—Dallas 2012, pet. denied) (citing Pegasus Energy Grp. v. Cheyenne Pet.

Co., 3 S.W.3d 112, 121 (Tex. App.—Corpus Christi 1999, pet. denied)).

      Generally, the determination of reasonable attorney's fees is a question of

fact and “‘the testimony of an interested witness, such as a party to the suit, though

not contradicted, does no more than raise a fact issue to be determined by the

jury.’”   Garcia v. Gomez, 319 S.W.3d 638, 642 (Tex. 2010).                But even

uncontradicted affidavits are assailable when they are not clear, direct and positive,

and not free from contradiction, inaccuracies, and circumstances tending to cast


                                         34
suspicion thereon. Id. Uncontradicted affidavits are certainly not conclusive. Id.

An uncontroverted affidavit is generally sufficient to support an award of

attorney’s fees only when it sets forth the affiant’s qualifications, his opinion

regarding reasonable attorney's fees, and the basis for his opinion.” Cammack the

Cook, L.L.C. v. Eastburn, 296 S.W.3d 884, 894 (Tex. App.—Texarkana 2009, pet.

denied) (emphasis added).

      The affidavits and attachments Diamondback submitted to support

attorney’s fees failed to provide evidence to support the findings of

fact/conclusions of law. (CR269-70). While the affidavit provides a listing of the

attorneys involved in the case and their rates, it says nothing about the experience,

reputation, or ability of each lawyer performing the services (only Bill Caraway’s

resume is attached). (CR268-74). The assertion that “The fees charged in this case

are customarily charged in this area for the same or similar services for attorneys

with similar levels of experience, reputation, and ability, considering the nature

and complexity of the matters in controversy, the time limitations imposed, and the

results obtained” does not fill this gap. (CR273). Similarly, there is no basis to

support fees by the legal assistants, where the affidavit makes only conclusory

statements. (CR270; Br. at 76).

      Diamondback’s affidavit did not establish fees as a matter of law where it

was not clear, direct, and positive, and not free from contradiction, inaccuracies,

and circumstances tending to cast suspicion thereon, especially where Caraway
                                         35
provided no basis for much of his opinions. Even if it were some evidence of a

reasonable fee, which is not conceded, it is certainly not conclusive. Garcia, 319

S.W.3d at 642.

      And parties are indeed required to segregate recoverable attorney’s fees:

      [I]f any attorney's fees relate solely to a claim for which such fees are
      unrecoverable, a claimant must segregate recoverable from
      unrecoverable fees . . . it is only when discrete legal services advance
      both a recoverable and unrecoverable claim that they are so
      intertwined that they need not be segregated.

Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313–14 (Tex. 2006). The

court does not look at the legal work as a whole, but parses the work into

component tasks to determine which tasks relate to recoverable claims. See id.

      Contrary to Diamondback’s assertions (Resp. at 53), its exhibits are rife with

entries regarding insurance work that are unrecoverable, e.g.: “research on direct

insurance claims in Texas,” “research regarding reservation of rights letter,”

“research regarding additional insured status,” “review primary insurance policy

for claims.” (CR 592-96). Caraway’s affidavit does not state or explain why such

insurance research and work is solely part of the breach of contract action; he

makes conclusory statements that he “believes” that none of the fees relate solely

to claims for which attorneys’ fees are unrecoverable.          (CR 273).     It was




                                         36
Diamondback’s burden to segregate and prove recoverability of attorney’s fees; it

failed to do so. See Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007).12

       Diamondback failed to provide legally or factually sufficient evidence of

conditional appellate attorney’s fees. (Br. at 77-78). While Diamondback relies on

Caraway’s affidavit to establish such fees, that affidavit is without factual basis and

wholly conclusory where Caraway offered only generalized estimates of $150,000

for an appeal to the court of appeals, $50,000 for a petition for review, and $25,000

for oral argument. (CR271). Caraway provided no opinion on the “complex

factual and legal issues” or the “significant labor” that would be involved in an

appeal. (CR271-72). Evidence of conditional appellate fees requires more than

generalized estimates of fees. Sentinel Integrity Sols., Inc. v. Mistras Grp., Inc.,

414 S.W.3d 911, 930 (Tex. App.—Houston [1st Dist.] 2013, pet. denied).

       The El Apple13 analysis is entirely appropriate. Diamondback undertook the

lodestar method to attempt to prove its attorney’s fees, by asserting the hourly fee

for various attorneys and then claiming the fees based on the time expended on the

litigation based, and employed this method in attempting to estimate appellate


12
        Feldman v. KPMG LLP, 438 S.W.3d 678, 688 (Tex. App.—Houston [1st Dist.] 2014, no
pet.) provides no support; the attorney affirmatively stated that 100% of his time was spent on
recoverable claims). And in contrast to Five Star Int’l Holdings, Inc. v. Thomson, Inc., 324
S.W.3d 160, 171 (Tex. App.—El Paso 2010, pet. denied), Diamondback’s exhibit indicates the
expenses at issue were performed in pursuit of claims or defenses outside of the breach of
contract claims. (See CR 592-96).
13
       El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 761 (Tex. 2012).


                                              37
attorneys’ fees. (See CR271). While the lodestar method might not be required in

breach of contract cases, as Diamondback asserts, that is the method Diamondback

pursued and proposed lodestar findings of fact and conclusions of law to support

the award that the trial court ultimately signed. (See CR644-66; Appx. Tab A).14

It cannot now run from it after failing to prove up the fees.15 Further, El Apple’s

requirements apply to conditional appellate fees for estimated future work. See

Sentinel Integrity Sols., 414 S.W.3d at 930. That none of the work had been

performed does not excuse the requirements. See id. Caraway’s affidavit failed to

provide legally sufficient evidence of appellate attorney’s fees.




14
        Permian requested that Diamondback’s proposed findings of fact and conclusions of law
be included in the clerk’s record (CR653), but they were omitted. They are attached here as
Appendix A. Permian has requested that the clerk supplement the record. Regardless, it is clear
the trial judge edited then signed Diamondback’s proposed findings and conclusions. (CR644-
66).
15
       Diamondback’s assertion that Permian did not raise a specific objection regarding El
Apple is misplaced. (Resp. at 55). Permian objected to all evidence and affidavits submitted to
support the attorney’s fees award, and challenged the legal and factual sufficiency of the
attorney’s fees in post-trial motions (CR427-33, 566-67, 585-90, 623-24, 632). An attorney fee
award must be supported by competent evidence. Jamshed v. McLane Exp. Inc., 449 S.W.3d
871, 883 (Tex. App.—El Paso 2014, no pet.) (citing Torrington Co. v. Stutzman, 46 S.W.3d 829,
852 (Tex. 2000)). And if an affidavit speaks in generalities, it is no evidence of conditional
appellate fees. See Sentinel Integrity Sols., 414 S.W.3d at 930; see also Coastal Terminal
Operators v. Essex Crane Rental Corp., No. 14-02-00627-CV, 2004 WL 1795355, at *8 (Tex.
App.—Houston [14th Dist.] Aug. 12, 2004, pet. denied) (conclusory statements regarding
appellate fees constituted no evidence to support the reasonableness of fees). Because
Diamondback failed to submit legally sufficient evidence of appellate attorney’s fees, a judgment
awarding such fees cannot stand. Sentinel Integrity Sols., 414 S.W.3d at 930; Cf. Jamshed, 449
S.W.3d at 884.




                                               38
      Ultimately, Diamondback did not produce legally or factually sufficient

evidence to support the attorney’s fees awards. (See Br. at 73-78).

                          CONCLUSION AND PRAYER

      THEREFORE, Appellant Permian Power Tong, Inc. respectfully prays this

Court sustain its issues on appeal, reverse the trial court’s December 10, 2015 Final

Judgment, render a judgment that Diamondback takes nothing on its claims,

dismiss all of Diamondback’s claims with prejudice, and remand for consideration

and determination of Permian’s attorney’s fees recoverable under the MSA, tax

Permian’s costs against Diamondback, and grant Permian such other and further

relief as this Court deems just. Alternatively, based on the factual insufficiency of

the evidence, this Court should reverse the Final Judgment and remand for new

trial, or suggest a significant remittitur of damages, or, further, reverse the award of

attorney’s fees and remand that issue for further proceedings.




                                          39
                                     Respectfully submitted,

                                     COOPER & SCULLY, P.C.



                                     By: /s/Diana L. Faust
                                          R. BRENT COOPER
                                          brent.cooper@cooperscully.com
                                          Texas Bar No. 04783250
                                          DIANA L. FAUST
                                          diana.faust@cooperscully.com
                                          Texas Bar No. 00793717
                                          KYLE M. BURKE
                                          kyle.burke@cooperscully.com
                                          Texas Bar No. 24073089

                                     900 Jackson Street, Suite 100
                                     Dallas, Texas 75202
                                     TEL: (214) 712-9500
                                     FAX: (214) 712-9540

                                     COUNSEL FOR APPELLANT
                                     PERMIAN POWER TONG, INC.



                     CERTIFICATE OF COMPLIANCE

      I hereby certify that this Reply Brief of Appellant was prepared using

Microsoft Word 2010, which indicated that the total word count (exclusive of those

items listed in rule 9.4(i)(1) of the Texas Rules of Appellate Procedure, as

amended) is 7,495 words.



                                      /s/Diana L. Faust
                                     DIANA L. FAUST


                                       40
                        CERTIFICATE OF SERVICE

     I hereby certify that I served a true and correct copy of this Reply Brief of
Appellant upon on all counsel of record, via efile, on this the 19th day of
September, 2016.

Mr. David E. Keltner                                                 VIA EFILE
david.keltner@kellyhart.com
Ms. Marianne M. Auld
marianne.auld@kellyhart.com
Mr. Matthew D. Stayton
matt.stayton@kellyhard.com
Kelly Hart & Hallman, L.L.P.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Counsel for Appellee

Mr. Bill B. Caraway                                                  VIA EFILE
bill.caraway@kellyhart.com
Kelly Hart & Hallman, L.L.P.
508 W. Wall Street, Suite 444
Midland, Texas 75202
Counsel for Appellee



                                      /s/Diana L. Faust
                                     DIANA L. FAUST




                                       41
                        ORAL ARGUMENT REQUESTED
                                NO. 12-16-00092-CV


                 IN THE COURT OF APPEALS
     FOR THE TWELFTH DISTRICT OF TEXAS AT TYLER, TEXAS


                         PERMIAN POWER TONG, INC.,
                                 Appellant,
                                         v.
                           DIAMONDBACK E&P, LLC,
                                 Appellee.


                      On Appeal from the 441st District Court
                    Midland, County, Texas, Cause No. CV-49854
                          (Hon. Rodney W. Satterwhite)


                   APPENDIX TO REPLY BRIEF OF APPELLANT

      In compliance with rule 38.1(j) of the Texas Rules of Appellate Procedure,

Appellant Permian Power Tong, Inc. submits this Appendix to its Reply Brief of

Appellant containing the following items:

      Tab A:          February 1, 2016 Plaintiff’s Proposed Findings of Fact and
                      Conclusions of Law


      D/950986v5




                                         42
APPENDIX TAB “A”
                              CAUSE NO. CV 49854



DIAMONDBACK E&P LLC,                   § IN THE DISTRICT COURT OF

             Plaintiff,

VS.                                    § MIDLAND COUNTY, TEXAS

PERMIAN POWER TONG, INC., §

             Defendant.                §     441ST JUDICIAL DISTRICT



            FINDINGS OF FACT AND CONCLUSIONS OF LAW

       Pursuant to the Texas Rules of Civil Procedure, the Court hereby makes the

following findings of fact and conclusions of law:


1.   The parties stipulated and agreed that all awards of attorneys' fees and costs
would be submitted to the Court, by affidavit, following the jury trial.

2.     Section 25 of the Master Service Contract ("MSC") between Diamondback
E&P, LLC's predecessor in interest and Permian Power Tong, Inc. states that if
either party files suit to enforce any rights under the MSC, the prevailing party
shall be entitled to recovery of reasonable attorney's fees and costs.

3.     Diamondback E&P, LLC ("Diamondback") filed suit to enforce certain
rights under the MSC, including breach of contract claims, and sought damages.

4.     Diamondback is the prevailing party. Diamondback was awarded damages
totaling $824,137.97.

5.    Diamondback is entitled to recover its reasonable attorneys' fees and costs
under the MSC.

6.    Diamondback is entitled to recover its reasonable attorneys' fees and costs
under section 38.001(8) of the Texas Civil Practice and Remedies Code.

7.   On November 11, 2015, Diamondback submitted the following evidence in
support of its claim for reasonable and necessary attorneys' fees and costs: (i) the
2090183_1
 Affidavit and resume of attorney Bill B. Caraway, (ii) relevant billing invoices and
 timecards for legal services rendered in this case, and (iii) summary charts of the
 attorneys' fees and costs incurred for legal services rendered in this case.

8.     Following objections by Permian Power Tong to redacted invoices and
alleged block billing, on November 19, 2015, Diamondback submitted the
following supplemental evidence in support of its claim for reasonable and
necessary attorneys' fees and costs: (i) the Supplemental Affidavit of Bill B.
Caraway, and (ii) complete and unredacted billing invoices and timecards for legal
services rendered in this case.

9.     On December 2, 2015, Permian Power Tong raised additional objections and
moved to strike the supplemental evidence submitted by Diamondback, Permian
Power Tong offered no evidence to contradict or dispute any evidence or
supplemental evidence proffered by Diamondback in support of an award of
attorneys' fees and costs.

11. The hourly rates charged by Diamondback's attorneys and legal assistants
are consistent with those rates customarily charged in Midland County, Texas, and
are reasonable and necessary based on each attorney's experience, reputation and
ability.

12. The fees charged by Diamondback's attorneys and legal assistants are
reasonable and necessary considering the complexity of the matters in controversy,
the skill required, the time spent, the time limitations imposed, the results obtained,
the nature and length of the relationship with the client, and the preclusion of
accepting other representations while working on this case.

13. All attorneys' fees and court costs sought by Diamondback in this case are
reasonable and necessary. All attorneys' fees and court costs sought by
Diamondback in this case are supported by sufficient evidence. It is equitable and
just for Diamondback to recover its attorneys' fees and costs in this case.

14. Diamondback incurred reasonable and necessary attorneys' fees totaling
$319,761.50 for representation through trial and completion of proceedings in the
trial court.

15. Diamondback will incur $150,000.00 for representation through appeal to
the Court of Appeals, if necessary.

16. Diamondback will incur $50,000.00 for representation through the Petition
for Review stage at the Supreme Court of Texas, if necessary,


2090183 1
 17. Diamondback will incur $25,000.00 for representation through oral
 argument at the Supreme Court of Texas, if necessary.
 18.    Diamondback incurred reasonable court costs totaling $3,512.90.
 19. All fees for legal services rendered in this case are recoverable and
 permitted; thus, there is no requirement that fees be segregated among claims for
 which fees are recoverable and not recoverable.
 20. Permian Power Tong's objections to evidence in support of attorneys' fees
 are overruled, and its motion to strike (dated December 2, 2015) is denied.

        SIGNED this      day of February, 2016.




                                      Rodney W. Satterwhite
                                      Judge Presiding




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