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colleague Appellees= Motion for Rehearing Overruled; Reversed and Rendered; Opinion of June 6, 2006 Withdrawn and Substitute Opinion filed October 19, 2006.
In The
Fourteenth Court of Appeals
____________
NO. 14-04-00433-CV
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RAMCO OIL & GAS LTD. AND RAMCO ENERGY PLC, Appellants/Cross-Appellees
V.
ANGLO-DUTCH (TENGE) L.L.C. AND ANGLO-DUTCH PETROLEUM INTERNATIONAL, INC., Appellees/Cross-Appellants
On Appeal from the 61st District Court
Harris County, Texas
Trial Court Cause No. 00-22588
S U B S T I T U T E O P I N I O N [1]
This case arises out of a business dispute over interests in a foreign oil and gas field. After a lengthy trial involving complicated facts and extensive expert testimony, the trial court rendered judgment on the jury=s verdict, awarding plaintiffs/appellees/cross-appellants $6.4 million in lost profits, plus attorney=s fees and interest, based on their breach-of-contract claims against defendants/appellants/cross-appellees. The main issue on appeal is whether the evidence proves with reasonable certainty the profits appellees claim to have lost as a result of appellants= breaches of contract. We conclude that it does not. We also conclude that the trial court correctly granted summary judgment as to appellees= claims for breach of fiduciary duty, misappropriation, and misappropriation of trade secrets. Accordingly, we reverse the trial court=s judgment and render judgment that appellees take nothing against appellants.
I. Overview
Scott Van Dyke repeatedly tried without success to realize his Adream and business plan@ by purchasing the equity of a company with development rights in a potentially lucrative oil and gas field in Kazakhstan so that he could try to profitably develop this field. After learning that another company had acquired these development rights, Van Dyke concluded that the purchaser acquired these rights by using confidential information obtained in violation of confidentiality agreements. Van Dyke=s companies filed suit against the companies he believed had breached these agreements and misappropriated confidential information and trade secrets.
II. Factual and Procedural Background
In 1992, Van Dyke and appellee/cross-appellant Anglo-Dutch Petroleum International, Inc. (hereinafter AAD International@), a Texas corporation in which he was a principal, became involved in a group of companies that sought to identify, evaluate, and determine the feasibility of oil and gas opportunities in the former Soviet Union. Sugarland Oil Company, a Delaware corporation, was also a member of this group. The group purchased geological and geophysical data on a field in Kazakhstan known as the Tenge Field. The Soviet Union had produced gas from shallow horizons in the Tenge Field, and this data showed potential oil horizons beneath the gas.
After deciding that the possibilities in the Tenge Field were worth pursuing, appellee/cross-appellant Anglo-Dutch (Tenge) L.L.C. (hereinafter AAD Tenge@), a company in which Van Dyke owned a ninety-percent interest, formed a Delaware limited liability company named Tenge Development L.L.C. (hereinafter ATenge Development@). Sugarland (Kazakhtenge) L.L.C. (hereinafter ASugarland@), a Delaware company, also owned an interest in Tenge Development.[2] Tenge Development, in turn, was a member[3] of Anglo-Dutch (Kazakhtenge) L.L.C. (hereinafter AKazakhtenge@), a Texas limited liability company. Later, N.I.R. Tenge L.P. (hereinafter the AIsraeli Company@), an Israeli limited partnership, and Overseas Petroleum and Investment Corporation (hereinafter the ATaiwanese Company@), a Panamanian corporation affiliated with the government of Taiwan, both provided capital and became members of Kazakhtenge. At all material times, Tenge Development served as the administrative member of Kazakhtenge. Although Van Dyke=s company AD Tenge was the administrative member of Tenge Development and thus effectively the administrative member of Kazakhtenge until May 1996, neither Van Dyke nor any of his companies owned or controlled a majority interest in Tenge Development or Kazakhtenge at any material time. Lacking this ownership and control, Van Dyke and his companies, on various occasions, attempted unsuccessfully to acquire all of the interests in Tenge Development and Kazakhtenge.
In November 1993, Kazakhtenge and Mangistaumunaygaz Production Association (hereinafter the AGas Production Association@), a Kazakhstani association affiliated with the Kazakhstan government, entered into a Foundation Agreement regarding the creation of the Tenge Joint Enterprise (the AJoint Enterprise@), a Kazakhstani joint enterprise. Under this Foundation Agreement, which had a term of twenty-five years, each party owned a fifty-percent interest. The following diagram shows the ownership interests in the Joint Enterprise as well as Kazakhtenge=s relationship to the various entities vis-à-vis the matters in dispute:[4]
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The purpose of the Joint Enterprise was to develop the Tenge Field. The Foundation Agreement and the Charter creating the Joint Enterprise allowed the Joint Enterprise to develop and sell hydrocarbons produced from the Tenge Field.
In May 1997, appellant/cross-appellee Ramco Energy PLC (hereinafter ARamco Energy@), a Scottish company, signed a confidentiality agreement with Anglo-Dutch (Neftenge) L.L.C. (hereinafter AAD Neftenge@) and examined the possibility of becoming involved in the development of the Tenge Field. In June 1997, Ramco Energy decided not to pursue this matter.
Three months later, in August 1997, appellant/cross-appellee Ramco Oil & Gas, Ltd. (hereinafter ARamco Oil@), a Scottish company, learned that Halliburton Energy Services, Inc. (hereinafter AHalliburton@) was reviewing the Tenge Field prospect. Having worked with Halliburton in developing other opportunities in Central Asia, Ramco Oil decided to examine the possibility of becoming involved in the development of the Tenge Field with Halliburton. Ramco Oil and Halliburton signed an agreement delineating the terms of their relationship.
On November 26, 1997, Ramco Oil and Halliburton entered into a Letter of Intent with AD Tenge and Anglo-Dutch (Jersey) Limited (hereinafter AAD Jersey@),[5] a Channel Islands company, detailing, among other things, an approach to purchasing interests in Tenge Development and Kazakhtenge. The Letter of Intent was subject to many conditions, including approvals of executive management and, if necessary, Ramco Oil=s and Halliburton=s boards of directors. The Letter of Intent incorporated the terms of the May 1997 confidentiality agreement signed by Ramco Energy and stated that the terms of this agreement shall apply mutatis mutandis (Aall necessary changes having been made@), as if Ramco Oil had entered into the same agreement with AD Tenge.
Pursuing development of the Tenge Field necessarily would require interface and dealings with the government of Kazakhstan. To obtain expertise and assistance in this regard, Ramco Oil and Halliburton retained as a consultant Golden Eagle Partners (AGolden Eagle@), which had experience in communications and relations with the Kazakhstan government. For business reasons unrelated to the Tenge Field, Halliburton formally withdrew from the Letter of Intent in July 1998. Ramco Oil withdrew as well in November 1998.
AD Tenge and AD International (hereinafter collectively referred to as APlaintiffs@) and Van Dyke continued to seek to purchase the interests of the Tenge Development and Kazakhtenge members not affiliated with Plaintiffs. Golden Eagle and Central Asia Industrial Investments, N.V. (hereinafter ACentral Asia@),[6] a Netherlands Antilles company, also negotiated with the Tenge Development and Kazakhtenge members. On March 8, 2000, Kazakhtenge entered into a purchase agreement with Central Asia, under which it agreed to sell Central Asia all of the shares in a company to which Kazakhtenge would transfer all of its interest in the Joint Enterprise. Central Asia paid $2 million in cash at the closing of this purchase and agreed to future payments conditioned on future production.
Plaintiffs filed this suit against Halliburton, Ramco Energy, Ramco Oil, and others, alleging breach of contract and various torts. Plaintiffs claimed that, in breach of their obligations to keep the information about the Tenge Field confidential, Halliburton, Ramco Energy, and Ramco Oil disclosed confidential information concerning the Tenge Field to Golden Eagle, which Golden Eagle and Central Asia then used for their own benefit. Plaintiffs later nonsuited some of their tort claims, and the trial court granted two motions for summary judgment filed by Ramco Energy and Ramco Oil (hereinafter the ARamco Parties@), dismissing all Plaintiffs= remaining tort claims against the Ramco Parties. Plaintiffs went to trial on their breach-of-contract claims against Halliburton, Ramco Energy, and Ramco Oil. Plaintiffs asserted that these defendants breached their contractual confidentiality obligations, allegedly resulting in Central Asia=s acquisition of Kazakhtenge=s interest in the Joint Enterprise. Plaintiffs claimed that, but for theses breaches, they would have purchased the Kazakhtenge members= interest, developed the Tenge Field, and earned $640 million in profits by 2018, the end of their agreement with the Gas Production Association.
After a trial lasting more than six weeks,[7] the jury rendered its verdict, awarding Plaintiffs $64 million in lost profits for Halliburton=s breach of its confidentiality agreement and $6.4 million in lost profits for the Ramco Parties= breaches of their confidentiality agreements. The jury also determined that Halliburton and Ramco[8] were partners regarding the Tenge Field project. The Ramco Parties filed a motion for judgment notwithstanding the verdict, and the trial court denied their motion except as to the jury=s partnership finding, which it set aside. Otherwise, the trial court rendered judgment on the jury=s verdict, awarding Plaintiffs $6.4 million in lost profits on their contract claims against the Ramco Parties, as well as attorney=s fees, prejudgment and postjudgment interest, and court costs.[9] The Ramco Parties subsequently filed this appeal. Plaintiffs filed a cross-appeal, challenging, among other things, the trial court=s summary judgment in favor of the Ramco Parties as to Plaintiffs= claims for breach of fiduciary duty, misappropriation, and misappropriation of trade secrets.
III. Issues Presented
The Ramco Parties assert the following issues on appeal:
(1) Did the trial court err in admitting the testimony of Plaintiffs= experts George Schaefer and John Brickhill?
(2) Is there evidence proving with reasonable certainty Plaintiffs= lost profits?
(3) As to Ramco Energy=s liability, can Plaintiffs enforce the May 1997 confidentiality agreement between Ramco Energy and AD Neftenge?
(4) Did the trial court reversibly err in charging the jury on the Ramco Parties= liability?
(5) Is the evidence legally and factually sufficient to support the jury=s liability findings against the Ramco Parties?
(6) Are the Ramco Parties liable for attorney=s fees?
In their cross-appeal, Plaintiffs assert the following issues:
(1) Did the trial court err in granting judgment notwithstanding the verdict on the partnership issue?
(2) Did the trial court err in granting summary judgment on the Plaintiffs= claims for breach of fiduciary duty, misappropriation, and misappropriation of trade secrets?
(3) Did the trial court err in denying postjudgment interest on attorney=s fees?
(4) Did the trial court err in denying prejudgment interest on future damages?
(5) Was the trial court=s use of a five percent prejudgment and postjudgment interest rate based on an invalid statute?
IV. Analysis
A. Plaintiffs= Proof of Lost Profits as Damages on Their Contract Claims
The main issue on appeal arises out of Plaintiffs= contract claims. In construing contracts, our primary concern is to ascertain and give effect to the intentions of the parties as expressed in the contract. Kelley‑Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998). To ascertain the parties= true intentions, we examine the entire agreement in an effort to harmonize and give effect to all provisions of the contract so that none will be rendered meaningless. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 652 (Tex. 1999). Whether a contract is ambiguous is a question of law for the court. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation. Id. However, when a written contract is worded so that it can be given a certain or definite legal meaning or interpretation, it is unambiguous, and the court construes it as a matter of law. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003).
In reviewing the denial of the Ramco Parties= motion for judgment notwithstanding the verdict, we must consider the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it. See City of Keller v. Wilson, 168 S.W.3d 802, 821 (Tex. 2005). We must credit favorable evidence if a reasonable factfinder could do so and disregard contrary evidence unless a reasonable factfinder could not. See id. at 827.
Under their third issue, the Ramco Parties assert the trial court erred in denying their motion for judgment notwithstanding the verdict because the evidence does not prove with reasonable certainty the profits Plaintiffs claim to have lost as a result of the Ramco Parties= breaches of contract. A party seeking to recover lost profits on a breach-of-contract claim must prove the loss with reasonable certainty. Tex. Instruments, Inc. v. Teletron Energy Mgm=t, Inc., 877 S.W.2d 276, 279 (Tex. 1994). Evidence of lost profits must not be uncertain or speculative. Id. Whether evidence of lost profits is speculative depends upon the facts and circumstances of each particular case. Id.
Profits are not required to be exactly calculated; it is sufficient that there be data from which they may be ascertained with a reasonable degree of certainty and exactness. Id. Opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits may be ascertained. Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994). Plaintiffs cannot recover profits that are largely speculative, such as activities dependent on uncertain or changing market conditions, chancy business opportunities, promotion of untested products, entry into unknown or unviable markets, or on the success of new and unproven enterprises. Id. Factors like these and others that make a business venture risky preclude a retrospective recovery of lost profits. Id. If the business is shown to have been already established and profitable when the contract was breached, such pre‑existing profit, together with other facts and circumstances, may indicate with reasonable certainty the amount of profits lost. Id.
Is there evidence that proves Plaintiffs= lost profits with reasonable certainty?
The jury found that Plaintiffs suffered $6.4 million in lost profits resulting from the Ramco Parties= breaches of their confidentiality agreement. The only actual damages awarded to Plaintiffs against the Ramco Parties were these lost-profits damages. The jury ultimately found that, as a natural, probable, and foreseeable result of Halliburton=s and the Ramco Parties= breaches, Central Asia was able to purchase Kazakhtenge=s interest in the Joint Enterprise. Plaintiffs assert that, absent these breaches, Plaintiffs would have been able to (1) buy the Taiwanese Company=s and Tenge Development=s interests in Kazakhtenge, (2) develop the Tenge Field in accordance with their expert=s production plan, (3) produce and market more than 100 million barrels of oil and 911 billion cubic feet of gas from the Tenge Field, and (4) generate substantial revenues and profits for Plaintiffs after deducting the expenses and costs of financing. Under Plaintiffs= lost-profits damage model, (1) Plaintiffs would have been able to purchase the Taiwanese Company=s and Tenge Development=s interests in Kazakhtenge in accordance with the regulations governing Kazakhtenge (hereinafter AKazakhtenge Regulations@); (2) Plaintiffs would have obtained financing to purchase these interests; (3) Plaintiffs would have obtained financing allowing them to drill 96 wells in the Tenge Field without losing any of their 100% equity interest in Kazakhtenge; and (4) the Tenge Field would have been highly productive and profitable.
Plaintiffs= Experts
Plaintiffs= evidence of damages came primarily from the testimony of two experts, John Brickhill, the leader of a team that performed an economic analysis of the Tenge Field, and George Schaefer, a petroleum engineer and member of the same team that Plaintiffs hired to do a projection of production from the Tenge Field.
Schaefer=s Testimony
Schaefer worked for ten months projecting the Tenge Field=s production, using data that Anglo Dutch provided him.[10] Schaefer determined that the Tenge Field, which measures approximately 19 square miles, had 717 million barrels of oil and 1.7 trillion cubic feet of gas below the surface. Schaefer and his staff, making allowances for cost-effectiveness and the technology available in the late 1990s, calculated the following projections for total oil and gas production from the third quarter of 2000 through the end of 2018:
! 137.9 million barrels of oil, or 19% of the Tenge Field=s oil
! 911 billion cubic feet of gas, or 55% of the Tenge Field=s gas
Schaefer=s production plan called for the use of gas injection wells to increase oil production by pressurizing the oil. Under this production plan, 96 wells would be used to produce oil and gas as follows:
! 10 reworked vertical wells
! 24 new vertical wells
! 40 new horizontal wells
! 11 new horizontal gas injector wells
! 11 new horizontal water injector wells
Schaefer=s plan designates the location of these wells where he believed recovery would be maximized. Under this plan, oil would be produced for the first ten years, followed by gas production through the end of the term.
Schaefer testified that, in conducting his analysis, he followed Astandard operating procedure in our business@ and calculated what he believed could be produced if the Tenge Field were developed. Schaefer calculated the oil-recovery factor for the life of the Tenge Field to be 26%, with 19% (137.9 million barrels) recovered in the first nineteen years. Schaefer based his gas-production profile on the 725 billion cubic feet of gas the Soviets produced from the shallower horizons.
Brickhill=s Testimony
Brickhill testified that he had worked in the field of economic analysis since 1969. According to Brickhill, there are generally accepted methods used in the oil and gas industry to calculate an oil field=s value, and his team used industry-accepted methods in its economic analysis of the Tenge Field, though he had never been to Kazakhstan, where the Tenge Field is located. Brickhill testified that the steps for calculating the oil field=s value are to project (1) revenues, (2) likely expenses, (3) field income, (4) the client=s share of the field income, (5) the client=s share of lost profits, and (6) the discounted present value of that projected profit stream. Brickhill=s team calculated oil and gas revenues for 2000 through 2018, when the initial term of Kazakhtenge=s agreement with the Gas Production Association was to expire. In his analysis, Brickhill relied on Schaefer=s oil revenue calculations.
Brickhill=s team calculated that, if both oil and gas were produced, then 137.9 million barrels of oil could be generated from the Tenge Field between 2000 and 2018. If only oil were produced, the field would yield 171.0 million barrels of oil during this time frame.[11] Explaining his calculations, data use, and methodology, Brickhill testified as follows:
! In calculating the price of oil, he used the historical price for past periods. For future production, he primarily relied on the United States Department of Energy=s forecasts of the price of oil.
! He calculated revenues by multiplying the number of oil barrels by the price per barrel of oil.
! The Tenge Field would generate oil revenues totaling $3.682 billion through 2018, based on the production of both oil and gas.
! The Tenge Field would generate oil revenues totaling $4.755 billion through 2018, based on the production of only oil.
! In calculating gas revenues, Brickhill developed an independent forecast for the price of gas, using a price of $2.42 per thousand cubic feet (Amcf@) of gas. He multiplied this price by 911,000,000 mcf, which is the amount of gas Schaefer believed would be produced from the Tenge Field.
Brickhill calculated that, if both oil and gas were produced from the Tenge Field, the total gross oil and gas revenues through 2018 would be $5.895 billion. Explaining his analysis, Brickhill testified that the fact that Halliburton=s and Ramco=s calculations were close to those of his team made him even more confident in his team=s numbers.
Brickhill calculated that the total expenses would be $2.315 billion.[12] By subtracting expenses from revenues, Brickhill calculated the Afield income@ as $3.58 billion. He divided this number in half to reflect the Gas Production Association=s 50% share, which leaves $1.79 billion. Brickhill concluded that $2 million would be needed for Anglo Dutch to acquire interests in Kazakhtenge. He noted that in 2000, Anglo Dutch had tried to Abuy out@ the parties owning interests in Kazakhtenge. Brickhill referred to these parties as Aold investors,@ the major one being the Taiwanese Company.[13]
Brickhill explained that to finance Anglo Dutch=s buyout of the Aold investors@ and its development of the Tenge Field, Anglo Dutch would have to obtain financing from new investors. Brickhill set the costs of this financing at 25% of Kazakhtenge=s share of the field income, which he calculated as $447.5 million. Brickhill stated that this cost figure was probably too high but he did not want to overstate the damages. Brickhill estimated that, at a ten percent discount rate, $140 to $200 million in outside financing could be attracted. He anticipated that Shell, Citibank, Lukoil, or Van Dyke=s brother-in-law would provide this Anew investor@ financing. Brickhill testified that, after subtracting this $447.5 million, Anglo Dutch=s share of the lost profits for the nineteen-year term would be $1.3 billion. Brickhill=s team calculated the present value of the stream of lost profits at $640 million.
Brickhill stated that his model reflects that Van Dyke would have had the $22.8 million necessary to acquire the Kazakhtenge members= interests. Although Brickhill said during his deposition that he assumed Van Dyke would be able to buy out all of the Kazakhtenge members,[14] by the time he testified at trial, Brickhill had seen a document suggesting that Van Dyke would have been able to acquire all of these interests. This document is a February 8, 2000 e-mail from Fred Tresca of Golden EagleCa person not affiliated with any of the Kazakhtenge members. Brickhill testified that, in this e-mail, Tresca told Lee Henkel, a lawyer for the Taiwanese Company, that Tresca understood that the Taiwanese Company and others had accepted or were about to accept Van Dyke=s offer. Brickhill believed that, although Van Dyke=s November 29, 1999 offer was rejected initially, the same offer was later accepted in February 2000.[15]
Brickhill did not dispute that Plaintiffs= damage model depends on Van Dyke=s ability to obtain financing and buy out the Kazakhtenge members. If Van Dyke could not acquire the interests of these members, there would be no lost profits. Brickhill=s model also assumes Van Dyke would get the approximately $14 million from outside investors needed to start production, without which, Brickhill acknowledged, Van Dyke would have no lost profits.
Although Brickhill was not aware of any commitments from lenders who would advance the $14 million to start production, he claimed he had seen indications that Citibank, Shell, or Lukoil would lend Van Dyke these funds. Brickhill testified that it would be Aridiculous@ to assume that Van Dyke would be unable to obtain any financing because Van Dyke=s brother-in-law had said he would lend Van Dyke $2 million. Furthermore, Brickhill testified that he believed Van Dyke could have bought out the Kazakhtenge members by paying only $220,000 up front, plus additional payments later. According to Brickhill, Van Dyke=s Adream and business plan@ was to obtain control of Kazakhtenge by buying the Taiwanese Company=s 66.5% interest and then to produce and market the Tenge Field=s oil and gas.
Under Brickhill=s model for oil and gas production in the Tenge Field, there would be no gas production for the first ten years and therefore no gas revenue to help fund development of the field. If the oil wells in the first ten years did not produce enough oil to pay for field development, then there would be no profits because the field would not produce oil in sufficient quantities to pay for the development of the field. Without oil revenues, there would be no funds to continue development of the field. Likewise, if the gas could not be produced economically and sold profitably, then continued development of the gas wells would cease.
Brickhill candidly admitted that he did not know about the state of Van Dyke=s relationship with the other Kazakhtenge members and did not independently investigate whether those Kazakhtenge members would have agreed to sell Van Dyke their interests. Van Dyke did not tell Brickhill that his relationship with the Kazakhtenge members had been Avery rough@ over the years. Brickhill testified that, even if some Kazakhtenge members disliked Van Dyke, Anglo Dutch only needed to have purchased the Taiwanese Company=s interest because that would have provided Anglo Dutch with a majority, controlling interest in Kazakhtenge. Brickhill acknowledged that section 11.01 of the Kazakhtenge Regulations provides that transfers of interests in Kazakhtenge must be approved by all Kazakhtenge members, rather than by a vote of the holders of a majority of the interests in Kazakhtenge. However, he later testified that he believed Plaintiffs could have bought the Taiwanese Company=s interest in Kazakhtenge without the members= consent if the Taiwanese Company had assigned all of its rights to distributions to Plaintiffs under section 11.02 of the Kazakhtenge Regulations and agreed to always cast its vote in Kazakhtenge matters as directed by Plaintiffs.[16]
Brickhill was aware that Orrin Hein (who was administrative member of Sugarland at the time of trial) had made statements that his company would not accept any offer from Van Dyke based on any kind of contingency payment. Nothing that Brickhill saw in his work on this case led him to believe that Tenge Development would sell Van Dyke its interest in Kazakhtenge, and Van Dyke did not tell Brickhill that he believed Tenge Development would sell him its interest in Kazakhtenge. Rather, Van Dyke told Brickhill that he could obtain a majority of the interests in Kazakhtenge, and Brickhill believed him. However, Brickhill knew of no documentation in which Sugarland indicated it would vote for and agree to Plaintiffs= purchase of the Taiwanese Company=s interest in Kazakhtenge.
Tenge Development=s Approval as a Prerequisite to Plaintiffs= Purchase
of the Kazakhtenge Interests
In arguing that the evidence of lost profits is speculative and not reasonably certain, the Ramco Parties assert that, even if Central Asia had not purchased Kazakhtenge=s interest in the Joint Enterprise, Tenge Development would not have approved Plaintiffs= purchase of any member=s interest in Kazakhtenge. Plaintiffs argue that Tenge Development=s approval was not necessary. Therefore, we examine whether Plaintiffs needed Tenge Development=s approval.
First, we note that Brickhill was inconsistent as to whose interest in Kazakhtenge the Plaintiffs would have needed to purchase. On direct examination, Brickhill testified that Plaintiffs= damage model was based on Plaintiffs= owning all of Kazakhtenge=s equity. He projected that, to accomplish this acquisition of interests, Plaintiffs would purchase the interests of the Aold investors@ in Kazakhtenge. Although the only entity Brickhill mentioned by name as an Aold investor@ was the Taiwanese Company, Brickhill=s calculations were based on Plaintiffs= owning all of the equity, meaning Plaintiffs would have had to acquire both the Taiwanese Company=s and Tenge Development=s interests in Kazakhtenge.
Tenge Development=s approval obviously would have been required to purchase its interest; however, on redirect examination, Brickhill testified that part of Van Dyke=s Adream and business plan@ was to obtain control of Kazakhtenge by purchasing only the Taiwanese Company=s interest in Kazakhtenge. Although Brickhill did not change his damage model to allow for payments of profits to Tenge Development as a continuing member of Kazakhtenge, Brickhill asserted on redirect examination that the Taiwanese Company was the only Aold investor@ whose interest Plaintiffs needed to acquire to obtain control over Kazakhtenge. Brickhill indicated that Plaintiffs could have obtained approval of their purchase of the Taiwanese Company=s 66.5% interest by having the Taiwanese Company cast a majority vote in favor of the purchase. To evaluate this part of Brickhill=s testimony regarding the purchase of only the Taiwanese Company=s interest, we first determine whether Plaintiffs needed Tenge Development=s approval to buy only the Taiwanese Company=s interest in Kazakhtenge.
The unambiguous language of the Kazakhtenge Regulations shows that Tenge Development=s approval would have been required because unanimous approval of all Kazakhtenge members is necessary for the assignment of any or all of a member=s interest:
11.01 Requirements Applicable to Assignment
No assignment of all or any portion of a Member=s Interest, other than those provided for in Section 4.05, shall be valid or permitted unless approved by a unanimous vote of the other Members. No assignee of any Interest of a Member shall have any rights in and under the Regulations, the Foundation Agreement and Charter, or the Tenge Field unless or until such assignment is approved and such assignee expressly undertakes in writing, in a form satisfactory to all of the non-assigning Members, to perform the obligations of the assignor, and provides any parent guarantees or other assurances, plus reimbursement of any transactional costs as all of the non-assigning Members may determine to be necessary.
Because section 4.05 would not have applied, under section 11.01 of the Kazakhtenge Regulations, Plaintiffs would have needed Tenge Development=s approval before purchasing the Taiwanese Company=s interest in Kazakhtenge.
When confronted with the Kazakhtenge Regulations, Brickhill admitted that section 11.01 requires members= unanimous approval for assignments of interests in Kazakhtenge. However, Brickhill later testified that he believed Plaintiffs could have acquired the Taiwanese Company=s interest without Tenge Development=s approval by having the Taiwanese Company (1) assign all of its rights to Kazakhtenge distributions to Plaintiffs under section 11.02 of the Kazakhtenge Regulations and (2) agree to always cast its vote in Kazakhtenge matters as directed by Plaintiffs. Section 11.02 of the Kazakhtenge Regulations reads, in pertinent part, as follows:
11.02 Assignment of Rights to Distributions and Mortgage of Interest
A Member may assign all or a portion of its rights to Distributions, and may mortgage, pledge or otherwise encumber all or part of its Interest, without having first to obtain any approvals from the other Members, provided that: (i) such Member shall continue to exercise control of the vote associated with its Interest and shall remain liable for all obligations relating to such Interest. . .
Under the unambiguous language of the Kazakhtenge Regulations, the Taiwanese Company and Plaintiffs, as a matter of law, could not have used section 11.02 to avoid the need for Tenge Development=s approval if, as posited by Brickhill, the Taiwanese Company would be contractually obligating itself to vote as directed by Plaintiffs. This voting agreement would violate the Taiwanese Company=s obligation to Acontinue to exercise control of the vote associated with its Interest,@ as required by section 11.02.[17] Therefore, we conclude that section 11.02 would not have provided a means by which Plaintiffs could have circumvented the requirement of Tenge Development=s approval of Plaintiffs= purchase of the Taiwanese Company=s interest.[18]
In sum, under the unambiguous language of the Kazakhtenge Regulations, as a matter of law, Tenge Development=s approval would have been required for any sale of the Taiwanese Company=s interest in Kazakhtenge to Plaintiffs. Brickhill testified that Sugarland did not mention this need for Tenge Development=s approval in its correspondence; however, Sugarland=s omission does not change or waive the unambiguous language of the Kazakhtenge Regulations requiring such approval. Brickhill also testified that it would make no sense for the Taiwanese Company to have agreed to a unanimous-approval requirement for such transactions and that he did not believe the Taiwanese people who run the Taiwanese Company are Astupid.@ Regardless of Brickhill=s views and the Taiwanese Company=s folly or wisdom in agreeing to the Kazakhtenge Regulations, these regulations have not been challenged or set aside, and we must give force to their unambiguous language as written. See Schaefer, 124 S.W.3d at 161B62. We cannot rewrite the relevant provisions under the guise of interpretation. See id.
Evidence that Tenge Development Would Have Approved Plaintiffs=
Purchase of the Taiwanese Company=s Interest
Brickhill testified that Plaintiffs= damage model depends on Van Dyke=s ability to acquire the Kazakhtenge members= interests. Brickhill agreed that, without such a buyout, there would be no lost profits. As discussed above, Tenge Development needed to approve the purchase by Plaintiffs of any interest in Kazakhtenge, whether the interest in question was the Taiwanese Company=s or Tenge Development=s. Therefore, Plaintiffs= damage model depends on Tenge Development=s approval for Plaintiffs= purchase of at least the Taiwanese Company=s interest in Kazakhtenge, if not the other interests. However, the evidence that Tenge Development would have approved such a purchase is speculative at best.
To put this issue in context, it is helpful to consider the prior dealings among the members of Tenge Development and the resulting friction in their relationship. Sugarland became the administrative member of Tenge Development on June 4, 1996. At all material times, Tenge Development was the administrative member of Kazakhtenge, which was the operator of the Joint Enterprise. Sugarland took over this position after AD Tenge was terminated as the administrative member of Tenge Development. Orrin Hein of Sugarland testified that AD Tenge was terminated as administrative member because (1) the other members had lost confidence in Van Dyke, (2) they no longer trusted Van Dyke