Appellate Court Reinstates Tractebel`s Award In Contract Dispute With Dupont

(HOUSTON) – The 14th Court of Appeals has overruled a motion for rehearing in Tractebel Energy Marketing, Inc. and Tractebel Power, Inc. v. E.I. DuPont Denemours and Company. The ruling lets stand an August decision by the court reinstating a Harris County jury verdict that awarded Tractebel $1.2 million for DuPont’s breach of contract.

The decision brings to a close a business dispute over a 1998 agreement between Tractebel and DuPont for the purchase of emission reduction credits. Companies earn these credits through pollution control and can be sold or traded to companies that are building new facilities.

While in the preliminary stages of building a power plant, Tractebel agreed to purchase ERC’s from DuPont. DuPont refused to perform the agreement, claiming that the deal had never been formalized and that governmental regulations made securing the credits commercially “impracticable.”

A Harris County jury awarded Tractebel $1.2 million in November 2001. “The jury found that a deal was a deal,” says John Thomas, Tractebel’s lead trial attorney and a name partner in Houston’s Hicks Thomas & Lilienstern LLP. “But the trial judge sided with DuPont based on the fact local regulators reduced DuPont’s credit inventory. Essentially, they sold us credits they didn’t have and then claimed that the cost of finding replacements was too expensive.”

The Aug. 14, 2003, appellate decision setting aside the defense of impracticability reinstated the $1.2 million in damages, plus interest and attorneys fees.

“Claiming that performance ‘won’t be easy’ is not a valid argument for backing out of a contract,” says Tractebel’s lead appellate attorney Laura Rowe of Hicks Thomas & Lilienstern. “The Court of Appeals defined the parameters of the impracticability defense and upheld the standards for enforcing contracts. Businesses are expected to follow through on deals even if turns out to be a bad deal.”

DuPont had sought a rehearing on the issue, arguing that the original appellate decision had set too high a standard on foreseeability in submitting the question of impracticability to the trial jury. The appeals court rejected the argument, citing court records showing both parties had requested limited instructions on impracticability.

For more information on this case, please contact attorneys John Thomas or Laura Rowe at 713.547.9100, or call Mike Androvett at 214.559.4630 or pager 800.943.1502.