Justice Lehrmann delivered the opinion of the Court.
After agreeing with an oil-and-gas lessee to postpone plugging several abandoned offshore wells, the Railroad Commission of Texas mistakenly plugged one of those wells. The lessee sued the Commission with legislative permission and obtained a favorable jury verdict on the lessee's negligence and breach-of-contract claims. The court of appeals affirmed the judgment on the verdict. The Commission complains that the trial court erred in failing to submit a jury question on a statutory good-faith defense, which the Commission contends forecloses its liability on both claims, and in failing to submit a question about whether the Commission and lessee entered into a binding contract before the well was plugged. We hold that the trial court erred in refusing to submit a jury question on the good-faith defense. We also hold that a fact question exists on the contract-formation issue. Accordingly, we reverse the court of appeals' judgment and remand the case for a new trial.
This case arises out of the Commission's duties with respect to abandoned oil-and-gas wells, which are governed by Texas Natural Resources Code chapter 89. One of the statute's express purposes is to protect Texas's water and land from pollution by providing "additional means" for the plugging of abandoned wells. TEX. NAT. RES. CODE § 89.001. The statute and accompanying Commission rules place primary responsibility on an inactive well's
Chapter 89 also provides a liability defense to those engaged in plugging operations
In January 2008, the Commission issued orders requiring American Coastal Enterprises (ACE) to plug a number of inactive offshore wells the company operated in the Gulf of Mexico. Those plugging orders became final in March 2008. Because ACE did not have sufficient assets to carry out the orders — the company declared bankruptcy in May 2008 — the Commission took over that responsibility. On April 24, 2008, the Commission awarded Superior Energy Services a contract to plug eight of the ACE wells, including the two at issue in this case identified as 707S-5 and 708S-5.
When the plugging order was issued, Gulf Energy Exploration Corporation was the lessee of the offshore area that included the 708S-5, having acquired the lease from the General Land Office in 2007. Gulf Energy was considering applying to the Commission to take over as operator of some of the abandoned ACE wells. On May 19, 2008, representatives of Gulf Energy, ACE, and the Commission, including lawyers from the Attorney General's Office, met to discuss Gulf Energy's proposal. As of that date, Superior had commenced plugging operations and had already plugged one of the eight wells. The representatives reached an oral agreement at the meeting that the Commission would delay plugging four of the remaining wells covered by the plugging order, including the 708S-5. Meanwhile, Gulf Energy would post a bond and would apply to the Commission to supersede the plugging order and take over as operator of those four wells no later than June 12, 2008. The other three wells, including the 707S-5, would be plugged as planned.
In the days following the meeting, the participants confirmed the terms of the agreement in a series of e-mails and reduced it to writing in a formal Settlement and Forbearance Agreement.
In September 2008, the Commission issued several orders superseding the plugging orders on the wells covered by the agreement and approving Gulf Energy's application to transfer their operation. A few months later, Gulf Energy discovered that the 708S-5 was plugged. As it turned out, the Commission had plugged the well on May 25, 2008 under the mistaken belief that it was plugging the 707S-5. The circumstances surrounding that error were the subject of the resulting lawsuit.
The mistake originated with an admitted clerical error by Commission employee
Gulf Energy's theory at trial was that Superior received information from Fugro Chance, Inc., the subcontractor Superior hired to perform sonar surveys of the ocean floor around the well sites in advance of the plugging operation, alerting it that the coordinates on the procedure sheets were incorrect. Gulf Energy presented evidence that Fugro Chance provided this information to Superior employees several days before the 708S-5 was plugged, and that they failed to pass it along to the boat crew conducting the operation. Gulf Energy also explored the theory that the crew members, including the Commission representative on board, ignored obvious indicators that they were at the wrong well when they mistakenly plugged the 708S-5.
After discovering that the 708S-5 had been plugged, Gulf Energy sought and obtained legislative consent to sue the Commission. Specifically, the Legislature adopted Senate Concurrent Resolution No. 72, which authorized Gulf Energy to sue the Commission for no more than $2.5 million in damages, subject to Texas Civil Practice and Remedies Code chapter 107. Pursuant to chapter 107, the resolution did not waive the Commission's immunity from liability, nor did it waive any defense of law or fact "except the defense of immunity from suit without legislative permission." TEX. CIV. PRAC. & REM. CODE § 107.002(a)(7)-(8), (b).
Gulf Energy then sued the Commission and Superior for wrongfully plugging well 708S-5.
During the charge conference, the Commission objected to the jury charge's failure to include a question on contract formation, arguing that a fact issue existed on whether the parties had a meeting of the minds when the contract was allegedly breached. The trial court overruled the objection and orally ruled that a contract between the Commission and Gulf Energy was formed as a matter of law before the well was plugged.
The jury found that the Commission "fail[ed] to comply with its agreement to postpone plugging and abandoning the 708S-5" and that the Commission's negligence proximately caused Gulf Energy's damages.
The court of appeals affirmed. 480 S.W.3d 570 (Tex.App.-Corpus Christi-Edinburg 2014). The court rejected the Commission's assertion of charge error on the contract question, holding that (1) the Commission waived its complaint that the question "erroneously assumes that the Railroad Commission entered into a legally-enforceable agreement" to postpone plugging the well, (2) even if preserved, any error was harmless, and (3) the Commission did not meet its burden to rebut the presumption that the contract was supported by consideration. Id. at *3, *8. The court of appeals also rejected the Commission's complaint of charge error on the negligence question, holding that the Commission waived its arguments that the proper standard was good faith rather than negligence and that the evidence conclusively established the Commission's good faith.
In this Court, the Commission presents two principal issues. First, it argues that the evidence conclusively establishes its entitlement to the good-faith defense under section 89.045 and, alternatively, that the trial court erred in failing to submit a jury question on the defense. Second, as an alternative argument in the event the Court concludes that section 89.045 bars Gulf Energy's tort damages but not its contract damages, the Commission contends that the trial court erred in ruling as a matter of law that a binding contract was in effect when the well was plugged and in refusing to submit that issue to the jury. We address these issues in turn.
To reiterate, under section 89.045 "[t]he commission and its employees and agents, the operator, and the nonoperator are not liable for any damages that may occur as a result of acts done or omitted to be done by them or each of them in a good-faith effort to carry out this chapter." TEX. NAT. RES. CODE § 89.045. No findings were made about this defense because the trial court refused to submit it to the jury.
As an initial matter, Gulf Energy argues that the legislative resolution granting it permission to sue precludes the Commission from invoking section 89.045. We disagree. As required by statute, the resolution did not waive any defense of law or fact "except the defense of immunity from suit without legislative permission." TEX. CIV. PRAC. & REM. CODE § 107.002(a)(7)-(8). The Commission's immunity from suit is a jurisdictional component of its sovereign immunity and exists under common law unless expressly waived by statute. Brown & Gay Eng'g, Inc. v. Olivares, 461 S.W.3d 117, 121 (Tex. 2015). By contrast, section 89.045 applies to both the Commission and private entities that qualify as operators or nonoperators and provides a statutory affirmative defense to liability for those entities' "good-faith effort[s] to carry out this chapter."
Gulf Energy next argues section 89.045's good-faith defense "applies only to acts that involve discretion," like policy decisions, and does not extend to the ministerial act of plugging the wrong well. In making this argument, Gulf Energy ignores the statute's language and cites case law regarding an inapplicable doctrine. Section 89.045's language is broad, foreclosing liability for "any damages" resulting from acts or omissions "in a good-faith effort to carry out" chapter 89. The only limitation on the acts or omissions that qualify is the "good-faith effort" requirement. Construing the statute to apply only to discretionary acts would require us to impermissibly limit the defense's application in a manner that contravenes the statute's plain language and thus flouts
To support its argument, Gulf Energy cites case law regarding the affirmative defense of official immunity, which shields government officials from personal liability for discretionary acts in good faith and within the scope of their authority. E.g., Ballantyne v. Champion Builders, Inc., 144 S.W.3d 417, 424 (Tex.2004). Official immunity is a common-law doctrine, a specific element of which is that the act for which immunity is sought be in the performance of a discretionary duty. Id. It has no bearing on our interpretation of an independent, unrelated statute that places no such limitation on the acts and omissions to which it applies. Accordingly, we reject Gulf Energy's argument that section 89.045 cannot apply to the Commission's erroneous plugging of well 708S-5.
On section 89.045's application to the facts at hand, the Commission argues that the trial evidence conclusively established that the Commission acted in good faith or, at the very least, the trial court erred in failing to submit a good-faith jury question. To properly apply the good-faith defense, we must first examine the parties' dispute as to what "good faith" means. Again, section 89.045 provides a defense to liability "for any damages that may occur as a result of acts done or omitted to be done by [the Commission] in a good-faith effort to carry out this chapter." TEX. NAT. RES. CODE § 89.045. The statute does not define "good faith" or "good-faith effort."
These definitions focus overwhelmingly on subjective state of mind and are consistent with our interpretation of the term in an unrelated context. In Associated Indemnity Corp. v. CAT Contracting, Inc., we examined a surety agreement that required indemnity for claims settled by the surety in good faith. 964 S.W.2d 276, 282-83 (Tex.1998). We held that "good faith" in the surety agreement
Id. at 285. We believe the term "good faith" in section 89.045 refers to similar conduct. Had the Legislature intended to place an objective limitation on the term in contravention of its ordinary meaning, it could have done so. See, e.g., TEX. CIV. PRAC. & REM. CODE § 74.351(l) (requiring trial court to grant a motion challenging the adequacy of an expert report under the Texas Medical Liability Act if the report "does not represent an objective good faith effort to comply" with the statute).
As the Commission argues, the absence of an "objective reasonableness" component makes sense for two reasons. First, if the Commission's actions must simply be objectively reasonable to qualify as a good-faith effort to comply with chapter 89, then the good-faith defense merely duplicates the negligence standard and serves no purpose. See Methodist Healthcare Sys. of San Antonio, Ltd. v. Rankin, 307 S.W.3d 283, 290 (Tex.2010) (holding that statutes of repose that could be tolled or deferred would serve no purpose and that allowing tolling would equate statutes of repose with statutes of limitations); City of Lancaster v. Chambers, 883 S.W.2d 650, 655 (Tex.1994) (noting in the official-immunity context that good faith serves no purpose if it is equivalent to a negligence standard).
Accordingly, we hold that a good-faith effort to carry out chapter 89 requires conduct that is honest in fact and is free of both improper motive and willful ignorance of the facts at hand. Applying that standard, we cannot say that the evidence conclusively establishes the Commission's good faith. While nothing indicates that Zambrano's original transcription error was anything more than a negligent oversight, Gulf Energy presented trial evidence that Superior's plugging crew and the Commission representative aboard the boat ignored obvious indicators that they were at the wrong well when the 708S-5 was plugged.
As noted, when the May 19 meeting took place, Superior was already in the process of plugging eight of the offshore wells that were the subject of the Commission's plugging order. Zambrano was the Commission representative aboard Superior's boat and had prepared a binder with the plugging procedure sheets arranged in the sequence in which the wells were to be plugged. Sometime after the meeting, Zambrano was told not to plug four wells, including the 708S-5, and removed the procedure sheets for those wells from the binder.
On May 24, the boat reached the coordinates listed on the procedure sheet for the 707S-5, and, although several wells were visible from that location, the coordinates had led the crew to open water. Reed called Zambrano, who told him to look at the photographs Zambrano had taken in order to confirm which well to approach.
By itself, we cannot say that this is willful ignorance of the facts at hand. However, two more red flags emerged before the well was plugged calling into question whether the boat was at the correct well. First, the procedure sheets described the 707S-5 as having only a single string of tubing, but the well that the boat approached had a dual tree, raising the possibility of a second string.
Zambrano and Reed gave conflicting testimony about the Commission's reaction to these discrepancies. Zambrano testified that Reed called him to discuss both matters and that neither of them affected his conclusion that the boat was at the correct well. When asked whether he had ever seen a single-string well with a dual tree, he responded, "Maybe not often, but it does happen." He also testified that he had been involved in plugging operations in which the well ran deeper than expected. He testified that, in light of this experience, he instructed Reed to proceed to plug the well.
By contrast, Reed testified that he did not speak to Zambrano about either issue. With respect to the well's having a dual tree, Reed testified:
Reed also testified about the well's unexpected depth:
Based on this evidence, we cannot say as a matter of law that the Commission acted in good faith. On the one hand, the jury
Because a fact issue exists on the Commission's good faith, we may not render judgment in its favor. However, the Commission requested and was entitled to a jury question on this defense, and the trial court erred in failing to submit it. TEX. R. CIV. P. 278 ("The court shall submit the questions, instructions and definitions... which are raised by the written pleadings and the evidence.").
Gulf Energy argues the Commission waived any error relating to the trial court's refusal of its proposed good-faith question by failing to request a definition of good faith in conjunction with the question. We disagree. The procedural rules governing jury charges state in pertinent part that "[f]ailure to submit a question may not be deemed a ground for reversal of the judgment, unless its submission, in substantially correct wording, has been requested in writing and tendered by the party complaining of the judgment." TEX. R. CIV. P. 278.
Gulf Energy does not dispute that the Commission's proposed good-faith question generally tracked the pertinent statutory language. The Commission complied with Rule 278 and did not waive the trial court's error in refusing to submit that question by failing to request an accompanying extra-statutory definition. We are particularly loath to find waiver for failing to propose a definition of a statutory term when no case law provided explicit guidance on what the proper definition of that term should be.
Because the trial court's error was not waived, we must consider whether it is reversible. TEX. R. APP. P. 61.1 (trial court's error is not reversible unless it "probably caused the rendition of an improper judgment" or "probably prevented the petitioner from properly presenting the case to the appellate courts"). Charge error "is generally considered harmful" and thus reversible "if it relates to a contested, critical issue." Columbia Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851,
The Commission's remaining issues concern the jury's finding that the Commission breached its contract with Gulf Energy in light of the Commission's assertion that a binding contract did not exist when the breach occurred. The parties' specific dispute is whether Gulf Energy and the Commission entered into a binding contract on May 19, 2008 — the date of the meeting between representatives of Gulf Energy, the Commission, and ACE — even though a formal written agreement was not signed by all parties until June 9. The Commission argues they did not, and that it could not have breached the contract by plugging the well on May 25 because no contract existed at that time. The Commission contends that a fact issue exists as to when the contract was formed and that the trial court erred in failing to submit that issue to the jury.
The court of appeals held that the Commission waived this complaint, concluding that the Commission "did not object at trial to question one [the breach-of-contract question] on the basis it complains of on appeal." 480 S.W.3d at 576. We disagree. Question one asked the jury: "Did the Railroad Commission fail to comply with its agreement to postpone plugging and abandoning the 708S-5?" At the charge conference, the Commission objected "to the failure to have a formation question with regard to the contract," arguing:
In the court of appeals, the Commission argued that the trial court "erred by instructing the jury that there was a legally binding contract between the Railroad Commission and Gulf Energy on May 19, 2008," and that the submitted question "erroneously assumes that the Railroad Commission entered into a legally-enforceable agreement to postpone plugging the well on May 19, 2008." The Commission further argued that, assuming the parties entered into a valid contract, "it was not formed until June 9, so nobody breached the June 9 contract by plugging the well on May 26."
We agree with the Commission that its objection to the contract question and its argument in the court of appeals are similar in substance. The Commission contended both at the charge conference and on appeal that the May 19 agreement was not binding and that the issue of contract formation should have been submitted to the jury. The court of appeals erred in holding that the Commission waived its charge-error complaint on the contract question.
Turning to the merits, our analysis is governed by Foreca, S.A. v. GRD Development Co., in which we addressed the "increasingly common [situation] in business negotiations" in which an "[a]greement was reached as to certain material terms, yet another formal document was contemplated by the parties." 758 S.W.2d 744, 745 (Tex.1988). We considered whether "the contemplated formal document [was] a condition precedent to
By contrast, in Hardman v. Dault, the court of appeals held as a matter of law that a memorandum outlining the essential terms of a mediated settlement was a binding contract as opposed to a tentative agreement to agree, even though one of the provisions stated that "[f]inal documents [were] to be signed by" a particular date. 2 S.W.3d 378, 380-81 (Tex.App.-San Antonio 1999, no pet.). The court explained that the provision did not contain any "subject to" language or otherwise indicate that signing the subsequent documents was a condition precedent to the formation of an enforceable contract. Id. at 381.
In this case, the evidence is conflicting as to whether the Commission and Gulf Energy intended to be bound by the oral agreement reached at the May 19 meeting, or whether the formal Forbearance and Settlement Agreement subsequently signed by the parties was necessary for the formation of a binding contract. The following evidence is relevant to this issue:
In light of this evidence, we agree with the Commission that whether the parties intended to be legally bound on May 19 is a disputed fact issue that should have been presented to the jury. Some portions of the e-mails and testimony described above support Gulf Energy's position that the formal Settlement and Forbearance Agreement was "merely a memorial of an already enforceable contract." Foreca, 758 S.W.2d at 745. Others support the Commission's position that the parties did not intend to be legally bound absent a negotiated formal document. Id. The question of the parties' intent to be bound is usually one of fact, and we cannot say that this case presents the unusual situation in which that question may be decided as a matter of law.
Accordingly, we hold that the trial court erred in resolving the contract-formation issue as a matter of law. Whether the Commission's conduct in plugging the well on May 25 constituted a breach of contract depends on whether the parties had entered into a binding contract at that time. See David J. Sacks, PC v. Haden, 266 S.W.3d 447, 450 (Tex.2008) ("A meeting of the minds is necessary to form a binding contract."). On remand, the Commission is entitled to have this disputed issue of material fact resolved by the jury.
Because we are remanding for a new trial, we address an additional dispute between the parties on the good-faith defense's application to Gulf Energy's contract claim. The Commission argues that, because section 89.045 protects the Commission from liability for any damages resulting from the Commission's good-faith efforts to carry out chapter 89, the defense is not limited to tort liability and limits Gulf Energy's ability to recover on the contract claim as well. Gulf Energy counters that good faith is irrelevant in a breach-of-contract context.
The Commission does not dispute that bad faith is not an element of a breach-of-contract claim and that a party generally may be liable for breach of contract regardless of whether the breach was intentional or inadvertent. However, section 89.045 does not tie the good-faith defense to a specific cause of action or category of claims. Rather, it applies broadly to "any damages" resulting from "acts done or omitted to be done by [the Commission] in a good-faith effort to carry out this chapter." TEX. NAT. RES. CODE § 89.045. Had the Legislature intended to apply the defense to a particular claim or class of claims, it could have done so. Instead, the Legislature determined that the policies underlying chapter 89 — protection of Texas's water and land through the plugging
We hold that the trial court erred in (1) failing to submit a jury question on section 89.045's good-faith defense and (2) failing to submit a jury question on contract formation. We reverse the court of appeals' judgment and remand the case for a new trial.