Date: 06-23-2017

Case Style: Lucia Power v. GSE Consulting, LP

Case Number: 02-16-00175-CV

Judge: Bill Meier

Court: Texas Court of Appeals, Second District on appeal from the 348th District Court of Tarrant County

Plaintiff's Attorney: Thomas M. Michel for Lucia Power

Defendant's Attorney: D. Luke McMahan for GSE Consulting, LP

Description: In this appeal from a final judgment rendered on a jury verdict, Appellant
Lucia Power argues in a single issue that the trial court reversibly erred by
refusing to submit a jury question on her claim for quantum meruit. We will
affirm.
1See Tex. R. App. P. 47.4.
2
II. BACKGROUND
Appellee GSE Consulting, LP brokered agreements between energyconsuming
commercial entities and energy-supplying retail energy providers
(REPs). After GSE closed a deal and an REP started supplying energy to a
consumer, the consumer paid the REP, the REP paid GSE pursuant to its
agreement with GSE and based on the volume of energy that had flowed to the
consumer, and only then did GSE pay a commission to the energy consultant
who had brokered the deal between the consumer and the REP.
Power began working for GSE in June 2004 as a business-development
representative (BDR). BDRs contacted commercial entities with the hope of
scheduling a meeting between the entity and a GSE energy consultant. If
successful, the energy consultant would make a sales presentation and handle
the remainder of the transaction, if any.2
In July 2004, GSE and Power entered into a written employment
agreement that outlined the terms of Power’s employment as a BDR. One
provision provided that Power was eligible to earn a sales commission (2‒3% for
deals that she originated), but another provision prohibited Power from receiving
a sales commission if her employment had been terminated.
2Power described an energy consultant as “the customer’s advocate”—the
REPs were competing for the customer, and the energy consultant “gather[ed] a
host of bids on behalf of any given client to find the best match for that client.”
3
Sometime around March 2005, and after closing her first deal, GSE
promoted Power to the position of energy consultant. According to Power,
around the same time, one of GSE’s owners, Jeremiah Collins, presented her
with an employment agreement and instructed her to review it, sign it, and return
it to him, which Power did. In addition to other terms, including provisions for
both a car and a cell-phone allowance, the 2005 employment agreement
provided that Power was eligible to receive a 20% sales commission on deals
that she had closed but that were originated by a BDR and a 25% sales
commission on deals that she had both originated and closed. At some point,
GSE began paying Power a 30% sales commission. Over the next
approximately six years, GSE paid Power as an energy consultant, consistent
with the terms of the 2005 employment agreement, with the exception of the 30%
sales commission rate.
Significantly, the 2005 employment agreement expressly conditioned
GSE’s obligation to pay Power a sales commission on GSE’s first being paid its
fee from the REP. According to Justin Helms, one of GSE’s owners, GSE’s
policy of paying a commission only after GSE had been paid by an REP was not
intended as a punitive contractual measure but was instead necessary from a
financial perspective.3 In light of GSE’s commission-payment policy, its energy
3For several apparent reasons, it makes little business sense to pay a
commission before receiving the corresponding revenue.
4
consultants accumulated “backlog” sales commissions from deals that they had
already closed but for which GSE had not yet been paid.4
On October 31, 2011, GSE sold its assets to World Energy Solutions, Inc.
(WES). Power negotiated with WES for an employment contract that contained
more favorable terms than her 2005 employment contract with GSE but
ultimately rejected WES’s employment offer.5 At the time of the sale, Power had
backlog sales commissions, as did GSE’s other energy consultants, but GSE did
not pay Power any of them. Power later sued GSE for breaching its obligation to
pay her sales commissions. She also alleged a claim for quantum meruit and
sued WES. Power settled with WES but proceeded to trial against GSE.
At trial, Power confirmed that she was “suing on” the 2005 employment
agreement. She testified that GSE had failed to comply with the 2005
employment agreement by failing to pay her approximately $201,000 in backlog
sales commissions that existed as of October 31, 2011—the date that WES
4Helms testified, “A backlog commission, I would define it as if you signed
up a five-year deal and you’re into month one, then months . . . 2 through 60,
those are the backlog. So it’s an amount that we haven’t been paid yet.”
5Power asked for a salary of $50,000; GSE had been paying her a salary
of $35,000 (or $40,000, according to Power). Power asked for a 50% sales
commission on deals closed after October 31, 2011; GSE had been paying her
either a 20%, 25%, or 30% sales commission. Power asked that she be paid
backlog sales commissions regardless of whether her employment is terminated;
GSE’s policy was the opposite. Power asked for a $50,000 signing bonus; GSE,
not WES, offered to pay her $10,000. Power asked that her employment
agreement contain a clause identifying Texas as the venue for any legal
proceedings.
5
purchased GSE’s assets. Power also sought an additional approximately
$141,000 in underpaid sales commissions, which she calculated by crossreferencing
413 “deal sheets” with seven-and-a-half years of sales-commission
statements.
Helms, Collins, and Byron Biggs, another GSE owner, each testified that
although Power had been an energy consultant and had largely been paid in
accordance with the terms of the 2005 employment agreement, her 2004
employment agreement was the operative contract at the time of the sale to WES
because GSE did not have a signed copy of the 2005 employment agreement on
file.6 Notwithstanding the difference of opinion over which employment contract
was operative, Helms, Collins, and Biggs each testified that GSE had no
obligation to pay Power her backlog sales commissions because under the 2005
employment agreement, GSE’s obligation to pay Power’s sales commissions
was conditioned on GSE’s first being paid by an REP, and after GSE sold its
assets to WES, the REPs quit paying GSE and began paying WES.7
GSE instead maintained that WES was responsible for paying Power’s
backlog sales commissions. As part of the transaction between GSE and WES,
GSE assigned its employee agreements to WES, and WES assumed GSE’s
6Collins denied giving Power the 2005 employment contract.
7Power acknowledged that if the 2004 employment agreement somehow
controlled, her employment terminated when WES purchased GSE, thus
prohibiting her from receiving backlog sales commissions.
6
contractual obligations under the agreements. Both Helms and Collins testified
that in purchasing GSE’s assets, including its ongoing business, WES had
discounted the value that it had attributed to GSE’s outstanding future cash
flows, reflecting an expectation that WES was responsible for paying the energy
consultants’ backlog commissions. Power acknowledged that during her
employment negotiations with WES, its CEO clarified that she would forfeit her
right to any backlog sales commissions if she did not accept WES’s employment
offer.
As for Power’s claim for underpaid sales commissions, Helms testified that
to accurately verify whether Power had been underpaid, one would have to
compare the commissions that she had been paid against the relevant supplier
statements, which reflected the actual amounts that the REPs had paid GSE, not
against the deal sheets, which only estimated what an REP would pay GSE on a
particular deal, as Power had done.
The trial court rejected Power’s request for a jury question on her claim for
quantum meruit. Jury question number one asked, “Did GSE Consulting, LP fail
to comply with the agreement, if any, to pay Lucia Power pre-sale commissions?”
The jury answered, “No.” Jury question number two asked, “Did GSE
Consulting, LP fail to comply with the agreement, if any, to pay Lucia Power postsale
commissions?” The jury answered, “No.” The trial court denied Power’s
motion for new trial, and this appeal followed.
7
III. QUANTUM MERUIT JURY QUESTION
In her only issue, Power argues that the trial court erred by failing to submit
a jury question on her claim for quantum meruit because she pleaded the claim
and submitted evidence to support it. GSE responds that the trial court properly
refused to submit the question because Power was precluded from recovering in
quantum meruit as a matter of law. Power disagrees and alternatively argues
that an exception applies to the rule relied upon by GSE.
We review a trial court’s decision to submit or refuse a jury question or
instruction for an abuse of discretion. In re V.L.K., 24 S.W.3d 338, 341 (Tex.
2000). Although a trial court is generally obligated to submit a theory of recovery
when it is raised by the written pleadings and the evidence, see Tex. R. Civ. P.
278, the trial court here could not have abused its discretion by refusing to submit
a jury question on Power’s claim for quantum meruit if her recovery on that claim
was barred as a matter of law. See Powell Elec. Sys., Inc. v. Hewlett Packard
Co., 356 S.W.3d 113, 123 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (“A trial
court errs by submitting to the jury theories of liability that are not legally
viable . . . .”); UMLIC VP LLC v. T & M Sales & Envtl. Sys., Inc., 176 S.W.3d 595,
608 (Tex. App.—Corpus Christi 2005, pet. denied) (“An issue that involves the
determination of a matter of law should not be submitted to the jury.”).
Quantum meruit is an equitable remedy. Houston Med. Testing Servs.,
Inc. v. Mintzer, 417 S.W.3d 691, 695 (Tex. App.—Houston [14th Dist.] 2013, no
pet.). It “implies a contract in circumstances where the parties neglected to form
8
one, but equity nonetheless requires payment for beneficial services rendered
and knowingly accepted.” Id. It has long been the law, however, that “where an
adequate and complete remedy at law is provided, our courts, though clothed
with equitable jurisdiction, will not grant equitable relief.” Rogers v. Daniel Oil &
Royalty Co., 130 Tex. 386, 392, 110 S.W.2d 891, 894 (1937). Thus, “[a] party
generally cannot recover under quantum meruit where there is a valid contract
covering the services or material furnished.” In re Kellogg Brown & Root, Inc.,
166 S.W.3d 732, 740 (Tex. 2005) (orig. proceeding) (italics removed). When a
written contract unambiguously covers the subject matter of the parties’ dispute,
“there [is] no issue for the jury to decide”; the express-contract rule bars recovery
in quantum meruit as a matter of law. Fortune Prod. Co. v. Conoco, Inc., 52
S.W.3d 671, 683–84 (Tex. 2000); see Christus Health v. Quality Infusion Care,
Inc., 359 S.W.3d 719, 725 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (op. on
reh’g) (holding that express-contract rule barred quantum-meruit recovery as a
matter of law).
A. The Express-Contract Bar Applies
Throughout her testimony, in one way or another, Power repeatedly
confirmed that she was relying on the 2005 employment agreement to support
her claim for recovery of unpaid sales commissions, including backlog sales
commissions. The 2005 employment agreement provided that Power was
eligible to receive “performance commissions,” that she was eligible for a 20%
sales commission on deals that she had closed but that were originated by a
9
BDR, that she was eligible for a 25% sales commission on deals that she had
both originated and closed, that a penalty could be assessed against her sales
commissions if she failed to meet her monthly sales quota, that she could receive
withheld sales commissions if her cumulative revenue “generation” exceeded her
cumulative quota, and that she was not entitled to receive a sales commission
until GSE was paid its fee by the REP. The 2005 employment agreement
expressly covered Power’s entitlement to sales commissions—the very subject of
her dispute with GSE.
Power nevertheless argues that she was not barred from recovering in
quantum meruit because “neither party identified any express language in either
the 2004 Contract or the 2005 Contract that addressed the parties’ rights and
obligations in the event GSE sold its assets.” The supreme court previously
rejected a similarly styled argument.
In Fortune, four natural gas producers sued Conoco after a dispute arose
between the parties involving the prices that Conoco had paid the producers over
a five-year period. 52 S.W.3d at 673. One of the disputes concerned the
producers’ claims that they were entitled to recover the value for their share of
field liquids that collected in Conoco’s pipeline system after Conoco had taken
delivery of and title to the producers’ gas but before the gas stream had reached
Conoco’s processing plants. Id. at 673, 683. Conoco had previously
compensated the producers for liquid hydrocarbons based on the proceeds that it
had received for all liquids, including field liquids, which were collected and
10
separately sold, but at some point, Conoco quit accounting for the proceeds that
it had received for field liquids when calculating the amounts owed under its
contracts with the producers. Id. at 675. The supreme court ultimately
concluded that two of the producers, and one producer before its contract with
Conoco had expired, were barred from recovering under a theory of unjust
enrichment because their written, unambiguous contracts with Conoco covered
the subject matter of the producers’ unjust-enrichment claims. Id. at 684‒85.
Specifically,
The written contracts that Conoco had with Fortune, Tucker,
and Hankamer dealt with the sale of the entire stream of gas
produced by those plaintiffs’ wells. The term “gas” was defined by
the contracts as “all elements and compounds and mixtures thereof
comprising the effluent vapor stream as produced from each lease
or well.” The contracts further provided that Conoco took title to “the
gas and all components” at specified delivery points. Those delivery
points were upstream from the point at which field condensate
formed, which meant that the field liquids separated out of the gas
stream after Conoco had taken delivery of the gas. The contracts
specify what Conoco was obligated to pay for “gas delivered,” which
was in turn contractually defined as the entire gas stream that was
delivered at the delivery points. The fact that the pricing formula
does not specifically reference field liquids does not mean that the
contracts did not cover those liquids. . . . [T]he contract governs the
parties’ respective rights and obligations with regard to the entire
stream of gas. The subject matter of the written contracts is the
entire gas stream. The subject matter of the unjust enrichment
claims is field liquids, a part of that gas stream.
Id. at 684 (emphasis added).
Likewise, here, although the 2005 employment agreement did not
specifically reference Power’s eligibility for backlog sales commissions if GSE is
sold, it did condition GSE’s obligation to pay Power a sales commission on GSE
11
first being paid its fee from the REP, and the evidence was undisputed at trial
that after the October 31, 2011 asset sale, the REPs began paying WES instead
of GSE. The 2005 employment agreement effectively covered the precise
subject matter of Power’s dispute with GSE—her eligibility for backlog sales
commissions after GSE’s sale to WES.
In a similar vein, Power argues that the express-contract rule does not
apply because “neither the 2004 contract nor the 2005 contract provided for the
payment of 30% commissions, but that is what Plaintiff had been paid.” The
subject matter of the parties’ dispute was not the rate at which Power was paid
sales commissions but her eligibility for backlog sales commissions after GSE’s
sale to WES. That the parties orally modified Power’s rate at some unknown
point in time did not render obsolete the otherwise relevant provisions contained
in the 2005 employment agreement establishing the very fact that she was
entitled to receive sales commissions for her performance of services for GSE.
B. GSE Had No Obligation to Obtain a Jury Finding
Power additionally argues that it was incumbent upon GSE to obtain a jury
finding that an express contract covered the parties’ dispute because the parties
did not agree which agreement, if any, controlled Power’s entitlement to backlog
sales commissions. According to Power, “The jury’s answers do not tell us what
the parties’ agreement, if any, was. . . . How do we know if the jury answered
‘No’ to Question 1 and Question 2 because they found that there was not, in fact,
any agreement? We don’t.” We disagree for two reasons.
12
First, jury question numbers one and two were worded in such a way that
by answering “No,” the jury could have found that an express contract did exist
but that GSE did not fail to comply with it. This is all that is necessary. Power
asserts no argument challenging jury question numbers one or two.
Second, and more importantly, no finding was necessary under Fortune.
There, the trial court rendered judgment for the natural-gas producers on their
claims for unjust enrichment, and the court of appeals affirmed, holding that
Conoco had waived its defense to the producers’ claims for unjust enrichment by
failing to secure a jury finding that Conoco’s express contracts with the producers
governed the treatment of field liquids. Fortune, 52 S.W.3d at 675, 683. The
supreme court disagreed in part. It held that Conoco had no obligation to obtain
a jury finding regarding the existence of an express contract as to Fortune,
Tucker, and Hankamer before 1992 because each of the contracts that Conoco
had with those producers were written, admitted into evidence, and
unambiguously covered the subject matter of the dispute (as we thoroughly
explained above). Id. at 683. “Under [those] circumstances, there was no issue
for the jury to decide. The effect of the written contracts on claims for unjust
enrichment is one of law.” Id.
Conversely, the evidence did not reflect the specific terms of the
arrangement that Conoco had with Cox after 1990 or with Hankamer after its
1990 contract expired in 1992—both producers delivered their gas to Conoco,
and Conoco paid them without a written agreement. Id. at 685. The supreme
13
court reasoned, “We do not know whether the parties’ agreements covered the
entire stream of gas or only distinct components of the gas stream.” Id. Under
those circumstances—“[w]hen the existence of or the terms of a contract are in
doubt”—it was incumbent upon Conoco to secure a jury finding that an express
contract covered the subject matter of the dispute. Id.; see Coker v. Coker, 650
S.W.2d 391, 393‒94 (Tex. 1983) (reasoning that an unambiguous contract is
construed as a matter of law but that an ambiguous contract creates a fact issue
for the jury’s resolution).
Power’s 2005 employment agreement with GSE is like the contracts that
Conoco had with Fortune, Tucker, and Hankamer. The written terms clearly and
unambiguously covered the subject matter of Power’s claim for equitable relief,
obligating the trial court to construe the agreement as a matter of law and
eliminating GSE’s obligation to secure a jury finding that an express contract
covered Power’s claim for quantum meruit.
C. No Exception Applies
For the first time in her reply brief, Power alternatively argues that her
claim for quantum meruit was not barred because, under an exception to the
express-contract rule, she partially performed an express contract that was
unilateral in nature.8 See Truly v. Austin, 744 S.W.2d 934, 936‒37 (Tex. 1988);
see also City of Houston v. Williams, 353 S.W.3d 128, 135 (Tex. 2011)
8In a footnote in her opening brief, Power stated that no exception to the
express-contract rule applied.
14
(explaining that unlike a bilateral contract, in which both parties make mutual
promises, a unilateral contract is created when a promisor promises a benefit if a
promisee performs). The exception is inapplicable for several reasons.
Power is not entitled to the partial-performance exception because there is
no evidence that she partially performed her obligations as an energy consultant.
Instead, Power took the position at trial that she was entitled to recover her
backlog and underpaid sales commissions because she had fully performed her
contractual responsibilities by brokering deals between commercial entities and
REPs. Power’s course of conduct and corresponding arguments at trial are
clearly incompatible with any application of the partial-performance exception.
See Gulf Liquids New River Project, LLC v. Gulsby Eng’g, 356 S.W.3d 54, 71
(Tex. App.—Houston [1st Dist.] 2011, no pet.) (reasoning that partialperformance
exception did not permit contractor to recover in quantum meruit
because jury found that it had substantially performed under contract); Montclair
Corp. v. Earl N. Lightfoot Paving Co., 417 S.W.2d 820, 830 (Tex Civ. App.—
Houston 1967, writ ref’d n.r.e.) (“It has long and many times been held in this
State that though there be an express contract there may be a recovery in
quantum meruit if there has been partial performance as distinguished from full
performance.” (emphasis added)).
Further, we cannot ignore that, generally, quantum meruit is available
when nonpayment for services rendered would result in an unjust enrichment to
the party benefited by the work. See Gibson v. Bostick Roofing & Sheet Metal
15
Co., 148 S.W.3d 482, 489 (Tex. App.—El Paso 2004, no pet.). As explained, the
2005 employment agreement unambiguously conditioned GSE’s obligation to
pay Power a sales commission on GSE’s first being paid its fee by an REP. The
evidence conclusively demonstrated that no REP paid GSE after the asset sale
on October 31, 2011, the date that Power confirmed marked the beginning of her
claim for backlog sales commissions. Because GSE was not unjustly enriched
by any post-October 31, 2011 REP payments, permitting Power to recover under
an exception to the express-contract rule would have the undesirable effect of
working an inequity upon GSE, as it would be paying a commission on funds that
it did not receive. The partial-performance exception to the express-contract rule
cannot apply.
The trial court did not abuse its discretion by refusing to submit a jury
question on Power’s claim for quantum meruit. See HFE Dev. Corp. v.
Wilbourne, No. 03-03-00322-CV, 2004 WL 1171680, at *4 (Tex. App.—Austin
May 27, 2004, no pet.) (mem. op.) (holding similarly). We overrule Power’s only
issue.

Outcome: Having overruled Power’s sole issue, we affirm the trial court’s judgment.

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