A three-judge panel in the U.S. Court of Appeals for the Fifth Circuit unanimously ruled in favor of our client, TIN, Inc., on August 8, 2011, ruling that the breach of contract case brought against our client must be dismissed as a matter of law.
The dispute arose out of two pump and installation projects that TIN, Inc., (d/b/a Temple-Inland) contracted UO Group to complete. At the outset of the work, Temple-Inland explicitly instructed UO Group that any change in the scope of the work had to be approved in writing by Temple-Inland prior to commencement of the work. The projects progressed and exceeded the originally expected time and cost, but no written approvals were secured for any of the changes. Upon completion, UO Group billed Temple-Inland for the entire amount of work performed. Temple-Inland resisted paying the amount, citing the lack of contractually required written approvals. UO Group countered that the Project Manager, Temple-Inland's representative on the project, had verbally approved the changes. Temple-Inland said he had no authority to do that.
UO Group sued Temple-Inland and the case went before a jury. Before the jury was given the case, Temple-Inland filed a motion for judgment as a matter of law. (In the Fifth Circuit opinion, the court explained "matter of law" by citing precedent: "A motion for judgment as a matter of law should be granted if "there is no legally sufficient evidentiary basis for a reasonable jury to find for a party.'") The jury found for the plaintiffs. Temple-Inland filed a post-judgment motion for judgment as a matter of law. The court denied this and ordered Temple-Inland to pay more than a quarter million dollars in damages plus attorneys fees of more than $450,000. Temple-Inland appealed.
In reversing the lower court and finding for Temple-Inland, Circuit Judges Thomas M. Reavley, Emilio M. Garza and Leslie H. Southwick found that UO Group presented no evidence that they had good reason to believe Temple-Inland's Project Manager had the actual or apparent authority to approve changes in work without going through the written approval process that was specified in their contract. "Key to the tests for both actual and apparent authority," the judges wrote, "is the need for some action or omission by the principal, not merely the agent." [The Project Manager]'s own actions toward UO Group cannot establish actual authority - express or implied - because they are not the actions of the principal." Since Temple-Inland had said nothing about it being acceptable to forgo written approvals, UO Group had no business proceeding with changed work without them.
John LaBoon, Jason Kennedy and Lindsey Rodgers represented Temple-Inland on appeal. At oral argument, John LaBoon argued on behalf of Temple-Inland. You can read the court's ruling here.