by Eric Pearson

Heygood, Orr & Pearson is representing the City of Brownsville (and the City’s Public Utilities Board) in a lawsuit against AEP Texas Central Company (“TCC”) arising from the purchase of an electric power plant.  Among other claims, the City contends that TCC breached a purchase and sale agreement by failing to close the sale in a commercially reasonable and timely manner.  Brownsville is suing to recover more than $30 million in damages resulting from TCC’s breaches.

In 2009, the trial court dismissed all of the claims brought by the City on the basis that they had been released under the terms of a Termination Agreement and Releases signed when the sale of the plant to Brownsville finally closed in February 2007.  The City had argued that the release was limited to claims arising from the 1985 Participation Agreement between the City and TCC as co-owners of the plant and did not release claims arising under the 2004 Purchase and Sale Agreement pursuant to which TCC was to sell its ownership interest in the plant to Brownsville.

Following the trial court’s ruling, Heygood, Orr and Pearson filed an appeal on behalf of the City.  Last summer, the Dallas Court of Appeals issued its decision in City of Brownsville ex rel. Public Utilities Bd. v. AEP Texas Cent. Co., 348 S.W.3d 348 (Tex. App.–Dallas  2011, pet. denied).  The court of appeals reversed the trial court’s judgment, held that the release at issue did not apply to claims arising from TCC’s breaches of the 2004 Purchase and Sale Agreement and remanded the case back to the trial court.

Earlier this year, TCC petitioned the Texas Supreme Court to review the decision by the court of appeals.  After requesting and receiving full briefing by the parties, the Texas Supreme Court denied TCC’s petition on May 11, 2012.  As a result, the decision of the court of appeals stands and the lawsuit returns to the trial court, where the City can resume preparing its claims for trial.

Lead trial lawyer Eric D. Pearson stated, “while it has been a long wait, the City of Brownsville is thankful that the appellate courts have agreed with its position that the parties never intended to release claims for breach of their Purchase and Sale Agreement.  The City looks forward to presenting its case to a Dallas County jury as soon as possible.”

The legal briefs filed by Heygood, Orr & Pearson for the City and the briefs filed by TCC are available online.