In 2020, the Texas Supreme Court decided two cases related to an important question:  Can a series of emails constitute a legally binding, written contract as required by the Statute of Frauds?  Today, we will look at one of these cases, Copano Energy, LLC v. Bujnoch. Given the prevalence of email in today’s society, this case offers important lessons to keep in mind.

Image by StartupStockPhotos from Pixabay

Background

Plaintiffs own land in Lavaca and Dewitt Counties.  In 2011, they granted 30′ easements to Copano for the construction, operation, and maintenance of a 24-inch pipeline on their properties.  In 2012, Copano approached the landowners again, seeking a second easement for another 24-inch pipeline.  It is a series of emails related to this second easement that form the basis of the lawsuit.   The landowners were represented by an attorney, Mr. Schwartz, and Copano was represented by a landman, Mr. Sanford.

On December 6, 2012, Schwartzs’ assistant emailed Sanford to inform him that Schwartz was available for a meeting the following week.  Sanford responded offering a date for the meeting.

On December 7, 2012, Schwartzs’ assistant and Sanford exchanged numerous emails. The assistant asked the size of the line so Schwartz could discuss with his clients in preparation for the meeting. Sanford responded it would be a 24-inch gas line and they would be asking for 20′ additional right of way plus a 20′ temporary work easement, generally laying along the North side of the existing line. The two of them emailed about the type of product that would flow through the line.  All emails were under the subject line “Meeting with Schwartz.”  The evidence does not show whether the planned meeting actually occurred.

On January 30, 2013, Sanford emailed Schwartz stating in part, “Pursuant to our conversation earlier, Copano agrees to pay your clients $70.00 per foot for the second 24 inch line it proposes to build.”  Schwartz responded the same day with the following, “James: In reliance on this representation we accept your offer and will tell our client you are authorized to proceed with the survey on their property. We would appreciate you letting them know a reasonable time before going on their property.”

On February 1, 5, 6, 11, and 22, 2013, six letters were sent to the Landowners by another landman acting on behalf of Copano. These letters proposed expanding the existing easement by 30-50 feet, showed locations both north and south of the existing line, and offered $15-$25/foot.  None of these were accepted by the landowners.

On February 13, 2013, Schwartz sent an amendment of right of way agreement to Sanford for review, and Sanford said he was fine with the changes.

On March 14, 2013, yet another landman acting on behalf of Copano emailed Schwartz attaching a compensation proposal offering $20-$40/foot under 5 different scenarios, some of which whereby the new easement would not fully track the existing easement.  The same day, Schwartz responded to Sanford, telling him “this is not our deal” and asking what was going on.

On March 18, 2013, Sanford responded, “I know that this is not our deal. I believe that we have most of the plats. I think that we can start closing easements no later than the end of March (I want to be done by the end of April). Our deal still stands.”

The second pipeline was never built.

The landowners sued Kinder Morgan (who purchased Copano during the time of the emails at issue) alleging a breach of contract to sell an easement to Copano for $70/foot.  The trial court ruled in favor of Kinder Morgan and dismissed the case, finding the emails did not constitute a valid contract.  The appellate court reversed summary judgment on the breach of contract claims.  Copano appealed to the Texas Supreme Court.

Applicable Law

The Statute of Frauds applies to the alleged agreements.  Although certain verbal agreements may be legally valid, the Statute of Frauds provides there are other agreements, including a contract for the sale of real estate, that are “not enforceable unless the promise or agreement, or a memorandum of it” is in writing and signed by the person charged with the promise or agreement or by someone legally authorized to act for  that person.  The required writing must be “complete within itself in every material detail” and contain “all of the essential elements of the agreement, so that the contract can be ascertained from the writings without resorting to oral testimony.”  The writing need not be a single document.  Rather, multiple writings may be taken together to form a single contract.   Finally, writings that contemplate a contract to be made in the future does not satisfy the Statute of Frauds.

Opinion

The Court found the emails offered by the landowners, when considered together, do not satisfy the Statute of Frauds.  While the January 30 emails do contain an offer to pay $70/foot for a second 24-inch line and the acceptance thereof,  they contain none of the essential elements of the agreement.  The landowners argued the December 7 emails setting forth more details about the easement provided the missing elements.  The Court, however, disagreed.

The Court held there is simply no evidence of intent to be bound by the terms of the December 7 email.  “When it is alleged that an e-mail amounts to a contract binding on the sender, the e-mail’s context must be carefully examined to determine whether it truly evidences the grave intent to be legally bound. Here, neither the context of the December 7 emails nor their verbiage reflects an intent to bind Copano to the easement terms stated in those emails.”

First, the email was between Copano’s landman and the landowners’ attorney’s assistant to facilitate setting up a meeting to discuss the easement deal.  The email described what Copano intended to offer at the future meeting and included language like “will be buying” and “will be asking for.”  The Court viewed these emails as “a request to negotiate at a later meeting” and a description of the terms that would be offered at the meeting.  This type of offer to be made in the future does not satisfy the Statute of Frauds.

Further, it is not enough for a writing to state potential contract terms, as the December 7 email did here.  Instead, the writings must evidence an agreement so that the contract may be ascertained.  There is simply no such evidence in this case.  Not only did the December 7 emails not indicate this intent, but neither do the January 30 emails.  Nothing in the January 30 emails referenced the terms included in the December 7 email.  The vague reference to “our conversations earlier” was insufficient to show, without resorting to other evidence, intent to be bound by the December 7 terms. Additionally, the March 18 email where the landman stated “our deal stands” was likewise unhelpful, as it simply does not inform what that deal included. Without express intent to be bound by the terms of the December 7 contract, the Statute of Frauds is not satisfied.

Thus, the Court concluded, “there is no way for a court, on this record, to piece together with certainty and clarity a collection of writings showing the essential terms of an easement contract and the parties’ agreement to be bound by those terms.”  Therefore, the landowners’ purported contract is not enforceable and Copano cannot be liable for any breach.  The trial court’s summary judgment in favor of Copano on the breach of contract claim was correct.

Key Takeaways 

Given the frequent use of email in today’s world, issues like this are bound to arise more frequently.  This case offers a number of important considerations to keep in mind.

First, it is likely always the safest bet to reduce agreements to a single written, signed document rather than to rely on a chain of emails.  This will avoid many of the issues present in this case.

Second, if a party intends to rely on emails to prove a contract, it is critical the emails set forth not only an offer and acceptance, but also specific reference to the key terms of the agreement and the intent to be bound by such terms.  Explicitly referencing back to prior emails may be necessary to ensure this is successfully achieved.  For example, had the January 30 emails where the offer and acceptance were made expressly referenced their inclusion of the terms in the December 7 email, the outcome of the case may have been different.

Third, remember the Statute of Frauds requires certain agreements to be in writing to be legally enforceable.  The Statute of Frauds applies to a number of different types of contracts in Texas.  [View statute here.]  Particularly important for those involved in agriculture are contracts for the sale of real estate, lease agreements lasting a year or more, and an agreement not to be performed within one year of the date of making the agreement.  While I would recommend having all agreements in writing, it is particularly critical for these types of agreements be put in writing because of the Statute of Frauds.

The post Texas Supreme Court Addresses Whether Emails Constitute a Contract appeared first on Texas Agriculture Law.