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FILED
7/2/2021 1:56 PM
FELICIA PITRE
DISTRICT CLERK
DALLAS CO., TEXAS
Treva Parker-Ayodele DEPUTY
CAUSE NO. DC-19-18070
Trinity Industries Leasing Company,
IN THE DISTRICT COURT OF
Plaintiff
v. DALLAS COUNTY, TEXAS
Clover Oil & Gas, Inc.
K-192ND JUDICIAL DISTRICT
Defendant.
CLOVER’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Defendant, Clover Oil & Gas Inc. (“Clover” or “Defendant”) files this Motion for Partial
Summary Judgment on the claims of Trinity Industries Leasing Company (“TILC” or “Plaintiff’) and
respectfully shows as follows:
I SUMMARY
TILC’s breach of contract claim fails as a matter of law because it has no enforceable
agreement with Clover pursuant to the terms of the alleged agreement. The mutual agreement and
execution of an Operating Agreement and Arbitrage Share Agreement is expressly specified as
Conditions Precedent to the Lease Agreement and Rider on which TILC’s claims depend. TILC
simply jumped the gun in an effort to strong arm Clover into agreeing to more favorable terms by
delivering railcars before the parties had reached agreement on all material terms. Clover refused,
correctly noting that there were key agreements and terms that the parties had expressly agreed would
be Conditions Precedent to any binding contract between the parties and had not even been agreed,
much less fully-executed. As a result, no enforceable agreement was ever entered. There is no dispute
that no Operating Agreement and Arbitrage Share Agreement were ever agreed upon or executed by
the Parties. TILC seeks to avoid the consequence of failing to wait until it had an enforceable
agreement before shipping the railcars by claiming that this clear provision was somehow only
enforceable by TILC or was somehow waived by Clover. Neither theory is supportable as a matter of
law or of fact. TILC’s motion for partial summary judgment must be denied and Clover’s Motion for
CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 10F 8
Summaty Judgment granted for the same reason—there is no binding and enforceable agreement to
support TILC’s breach of contract and declaratory judgment claims in this action.
Il. FACTUAL BACKGROUND
In 2018 and 2019, Clover was in the business of transporting Western Canadian Select crude
from Canadian oil fields for refining in the United States. In 2018, Clover and TILC began negotiating
regarding the lease of railcars to transport the oil.
On October 29, 2019, the parties entered a term sheet in anticipation of the negotiation and
execution ofa Lease Agreement and Rider to the Lease Agreement for the lease of railcars.'
On July 2, 2019 the parties entered a Lease Agreement” which set forth general terms and
conditions for the lease of railcars between the parties and a Rider to the Lease Agreement’ which set
forth the terms of the lease of 110 railcars and also anticipated as “Conditions Precedent to the Lease”
the future agreement of an Operating Agreement and Arbitrage Share Agreement:
Conditions Precedent to the Lease — As a condition precedent to the
Agreement and this Rider, Lessor and Lessee hereby mutually agree
that the Operating Agreement and Arbitrage Share Agreement
(collectively the “Ancillary Agreements”) described in that certain
Omnibus Term Sheet agreed to by Lessor and Lessee shall be fully-
executed. Lessor shall not be bound by the terms of the Lease until
such time as Lessor receives a copy of such fully-executed Ancillary
Agreements.
It is undisputed that the parties never came to an agreement on an Operating Agreement and
Arbitrage Share Agreement.”
1 Clover hereby incorporates by reference Tab A-1 to TILC’s Motion for Summary Judgment; Exhibit A,
Declaration of Brent A. Osmond § 3.
2 Clover hereby incorporates by reference Tab A-4 to TILC’s Motion for Summaty Judgment; Exhibit A.
Declaration of Brent A. Osmond § 3.
3 Clover hereby incorporates by reference Tab A-5 to TILC’s Motion for Summaty Judgment; Exhibit A.
Declaration of Brent A. Osmond § 3.
4 Tab A-5 to TILC’s Motion for Summary Judgment at 1-2; ; Exhibit A, Declaration of Brent A. Osmond
41 3-4.
5 Exhibit A, Declaration of Brent A. Osmond § 3.
CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 2 OF 8
The Operating Agreement and Arbitrage Share Agreement were material to the overall
agreement between Clover and TILC because the parties contemplated further negotiation of not only
credit options but profit sharing in which TILC would accept a greater degree of risk in return for a
share of Clover’s profits.’ For Clover, this was a crucial provision because Clover needed to know
what the final terms between the patties would actually look like before proceeding.
Ill. SUMMARY JUDGMENT STANDARD
To prevail on a traditional motion for summary judgment, a movant must prove entitlement
to judgment as a matter of law on the issues set out in the motion. Tex. R. Civ. P. 166a(c); Cantey
Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015). When the movant is a defendant, a trial court
should grant summary judgment only if the defendant (1) conclusively negates at least one element of
each of the plaintiff's causes of action, or (2) conclusively establishes each element of an affirmative
defense. Clark v. ConocoPhillips Co., 465 S.W.3d 720, 724 (Tex. App—Houston [14th Dist.] 2015, no
pet.).
Iv. ARGUMENT & AUTHORITIES
A. TILC’s claim for breach of contract must be dismissed because the purported
contracts on which it rests are not valid or enforceable.
TILC’s claim for breach of contract is predicated on the existence of a valid, enforceable
contract.’ No such contract exists here. The agreement contemplated by Clover and TILC was subject
to extensive negotiation which included not only the lease of railcars but the mutual agreement and
execution of an Operating Agreement and Arbitrage Share Agreement.
6 Exhibit A, Declaration of Brent A. Osmond §[ 5.
7 To establish a claim for breach of contract, plaintiff must show: (1) there is a valid, enforceable contract,
(2) the plaintiff is a proper party to sue for breach of the contract, (3) the plaintiff performed, tendered
performance of, or was excused from performing its contractual obligations, (4) the defendant breached
the contract, (5) the defendant’s breach caused the plaintiff injury. Marquis Acquisitions, Ine. v. Steadfast Ins.,
409 S.W.3d 808, 813 (Tex. App.—Dallas 2013, no pet.).
CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 3 OF 8
For that reason, the parties expressly agreed that the Operating Agreement and Arbitrage
Share Agreement would not just be negotiated and agreed, but that the full execution of such
agreements would be a “Conditions Precedent.” At the heart of TILC’s claim for the alleged
nonpayment for 110 railcars is Rider One (1) to Railroad Car Lease Agreement (“Rider” or the “110
Car Rider”). The Rider expressly states:
Conditions Precedent to the Lease — As a condition precedent to the
Agreement and this Rider, Lessor and Lessee hereby mutually
agree that the Operating Agreement and Arbitrage Share
Agreement (collectively the “Ancillary Agreements”) described
in that certain Omnibus Term Sheet agreed to by Lessor and
Lessee shall be fully-executed, Lessor shall not be bound by the
terms of the Lease until such time as Lessor receives a copy of such
fully-executed Ancillary Agreements.
Rider at 1-2 (emphasis added).*
Clover actually and reasonably interpreted and relied upon the plain language of this Condition
Precedent.’ Unless “the Operating Agreement and Arbitrage Share Agreement” were “fully-executed”
that condition is an event that must happen before the related agreements become binding and
enforceable. TILC now claims that it drafted this provision solely for its own benefit and was therefore
unilaterally entitled to enforce it or choose to waive it depending on its whim. This defies common
sense and Texas contract law. The provision clearly provides that the parties must “mutually agree”
on the Operating Agreement and Arbitrage Share Agreement. It is expressly described as a “condition
precedent to the Lease.” It expressly provides that the Operating Agreement and Arbitrage Share
Agreement must not just be agreed to in principle or substantially agreed to but “fully-executed.” If
8 Pursuant to the July 2, 2019 Master Lease Agreement, Lessor [Trinity Industries Leasing Company or
TILC] agrees to lease to Lessee [Clover Oil and Gas, LLC] and [Clover] agrees to lease from [Trinity] ..
the railroad cars ... set out and identified in the Rider or Riders hereto...” Lease Agreement, Art. 1
(Lease Agreement) at 1. The parties agree that “Each Rider shall set forth a brief description of the car or
cars covered thereby ... and Lessor and Lessee agree that each Rider hereto shall constitute a separate
lease which incorporates the terms of this Agreement.” Lease Agreement, Art. 1 (Lease Agreement) at 1.
° Exhibit A, Declaration of Brent A. Osmond ff] 3-5.
CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 4 0F 8
TILC had merely wanted an option to enter the Operating Agreement and Arbitrage Share Agreement
or not, it would not have expressly made “fully-executing” those agreements a “Condition Precedent
to the Lease.”
Conditions precedent are stipulations that call for the performance of some act or the
occurrence of some event before an agreement becomes binding and enforceable. Centex Corp. v.
Dalton, 840 SW.2d 952, 956 (Tex. 1992) (holding that approval of acquisition by third party was
condition precedent to enforcement of agreement for finder’s fees, thus failure of condition precedent
invalidated agreement to pay); Hohenberg Bros. Co. v. George E. Gibbons & Co, 537 S.W.2d 1, 3 (Tex.
1976); Evans v. Prufrock, Restaurants, Inc, 757 SW.2d 804, 805 (Tex. App.—Dallas 1988, writ denied);
Gordin v. Shuler, 704 SW.2d 403, 406 (Tex. App—Dallas 1985, writ refid n.r.e.). see also Exsy v. Beal
Bank S.S.B., 298 S.W.3d 280, 300 (Tex. App—Dallas 2009, no pet.).
A condition precedent can be either a condition to the initial formation of a contract or a
condition to an obligation to perform an existing agreement. Dillon v. Linty, 582 S.W.2d 394, 395 (Tex.
1979); Hohenberg Bros. Co. v. George E. Gibbons ¢ Co., 537 SW.2d 1, 3 (Tex. 1976); America's Favorite
Chicken Co. v. Samaras, 929 S.W.2d 617, 627 (Lex. App—San Antonio 1996, writ denied); Graco
Robotics, Inc. v. Oaklawn Bank, 914 S.W.2d 633, 640 n.2 (Tex. App.—Texarkana 1995, writ dism'd).
Ordinarily, if the acceptance of a contract is conditioned upon the happening of a future event,
the condition must be performed or fulfilled exactly as set forth in the contract before the promise
can be enforced. See Centex, 840 S.W.2d at 956.
A patty seeking to recover under a contract must prove it has met all conditions precedent.
Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 283 (Tex. 1998); Trevino v. Allstate Ins.
Co., 651 S.W.2d 8, 11 (Lex. App.—Dallas 1983, writ ref'd n.t.e.). If a contract contains conditions
precedent, there must be some allegation by the plaintiff that the conditions have been met. Texas Int’
Airlines v. Wits Air Freight, 608 S.W.2d 828, 831 (Tex.Civ.App—Dallas 1980, no writ). Performance
CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 5 OF 8
of any condition precedent is an essential element of the plaintiff's case. Trevino, 651 S.W.2d at 11
(“[t]he law is clear that performance ofa condition precedent is an essential element of the plaintiff's
case on which the plaintiff has the burden of proof unless he alleges performance of all conditions
precedent and the defendant fails to deny specifically performance of the conditions”).
For example, in Centex Corp. v. Dalton, 840 S.W.2d 952 (Tex. 1992) Centex, a residential and
commercial construction company, entered an agreement with Dalton, a thrift institution consultant,
to assist Centex in acquiring certain thrift institutions, agreeing to pay him $750,000 over a three-year
period if Centex were successful in acquiring certain thrift institutions that Dalton discovered were
available for purchase. The bids were subject to approval by the Federal Home Loan Bank Board.
After initially being told that the Bank Board would approve the payment to Dalton, Centex’s
President was informed the day before closing that the Bank Board would not approve the payment.
The Texas Supreme Court refused to enforce the agreement, holding:
Here, by the terms of the letter agreement, Dalton's right to enforce it
could not accrue until the Bank Board approved the acquisition.
Because the Bank Board, in approving the acquisition, prohibited the
payment of the finder's fees, thereby invalidating the letter agreement,
Dalton's right to enforce the letter agreement never accrued.
Id. at 956.
Similarly, in Conn CreditI, L.P. v. TF LoanCo II, L.L.C., 903 F.3d 493, 500 (5th Cir. 2018), the
Fifth Circuit held that the stated obligation of a debt collector to transfer accounts only if
representations and watranties were true and correct was unambiguous condition precedent:
Under Section 10.2 of the Sale Agreement—titled “Conditions
Precedent to Purchase or Sale of Accounts”—TF Loan was “obligated
to transfer Accounts on a Closing Date only if ... the representations
and warranties of the Buyer or the Seller, respectively, in this
Agreement ate true and correct as of such Closing Date”. This is an
unambiguous condition precedent. Accordingly, if Conn’s
representations and warranties in the Sale Agreement were not true
and correct as of August 28, 2014, Conn cannot enforce TF Loan’s
obligation to close on Deliveries Three, Four, Five and Six.
CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 6 OF 8
Id. at 500.
Clover was entitled to rely on the express Condition Precedent as a condition that would
ptecede the entry of a final and binding agreement between Clover and TILC” and it did in fact rely
on it as a condition precedent.'! Clover and TILC contemplated the further negotiation of not only
credit options but profit sharing in which TILC would accept a greater degree of risk in return for a
share of Clover’s profits.” For Clover, the Condition Precedent was crucial because Clover needed to
know what the credit terms and the final terms between the parties would actually look like before
ptoceeding.'’ Before the parties could reach agreement on those key terms, ‘Trinity shipped the railcars
to a tailyard with which it knew Clover eventually planned to store the railcars, provided the patties
could finally agree on terms.'* TILC did so without even notifying Clover that it planned to do so or
that it had actually shipped the cars. Clover first learned that TILC had jumped the gun in this manner
when it received a call from the storage yard notifying Clover that the railcars were already at the yard.
TILC’s primary contact with Clover, Stephanie Moxley, then sent the signed documents. Clover’s
CEO, Brent Osmond, expressly told Ms. Moxley that they needed to get things finalized before
ptoceeding.'° TILC ignored that and its own contract terms, presenting the rail cars as a fait accompli
in an effort to force Clover to agree to its terms. Clover refused. No enforceable agreement was
reached.
10 Gallup v. St. Paul Ins. Co., 515 S.W.2d 249 (Tex. 1974) (strongest indication of what a contract requires is
determined by what its words plainly state).
11 Exhibit A, Declaration of Brent Osmond, {| 3-4.
12 Exhibit A, Osmond Declaration, § 5.
13 Exhibit A, Osmond Declaration, {[ 5.
14 Exhibit A, Osmond Declaration, { 6.
15 Exhibit A, Osmond Declaration { 6.
CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 7 OF 8
Vi; CONCLUSION & PRAYER FOR RELIEF
Defendant Clover Oil & Gas, Inc. requests the Court GRANT Clover Oil & Gas, Inc.’s
Motion for Partial Summary Judgment, and provide all other relief in law or in equity to which Clover
Oil & Gas may be entitled, including attorneys’ fees and costs.
Respectfully submitted,
JACKSON WALKER L.L.P.
BY:
I eJ
Tex as State Bar No. 24074279
1401 McKinney, Suite 1900
Houston, TX 77010
(713) 752-4350 (Telephone)
[man om
Eric Wong
Texas State Bar No. 24102659
2323 Ross Street, Suite 600
Dallas, TX 75204
(214) 953-6116 (Telephone)
Attorneys for Defendant Clover Oil & Gas Inc.
CERTIFICATE OF SERVICE
Thereby certify that this 2nd day of July, 2021, a true and correct copy of this document was
served on the following in accordance with the Texas Rules of Civil Procedure:
Via E-File and Email
James B. Greer
RANDALL GREER PLLC
5910 N. Central Expressway, Ste. 925
Dallas, Texas 75206
jgreer@rglaw.com
Attorney for Plaintiff Trinity Industries Leasing Company
/s/ Luke J. Gilman
Luke J. Gilman
29441007
CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 8 OF 8
Exhibit A
DECLARATION OF BRENT OSMOND
J, Brent A. Osmond, declare and state as follows:
1 My name is Brent A. Osmond. I am over 21 years of age and I am fully competent
to make this Declaration. I declare that all of the facts contained herein are within my personal
knowledge, unless otherwise stated, and are true and correct.
2. I am the former President and Chief Executive Officer of Clover Oil and Gas, Inc.
(“Clover”). I was the sole negotiator with Trinity Industries Leasing Company (“TILC”).
3 The parties negotiated an Oct. 29, 2018 Term Sheet, a July 2, 2019 Railroad Car
Lease Agreement and a July 2, 2019 Rider One to the Lease Agreement, but not the Operating
Agreement and Arbitrage Share Agreement. The agreements were interrelated and dependent upon
each other as part of the overall transaction contemplated by the parties. It was very important to
me that the parties come to a complete agreement on all of the key terms of the overall transaction
before Clover or TILC became legally bound by the agreements.
4 This included reaching final agreement on the Operating Agreement and Arbitrage
Share Agreement. The Rider One included specific provision that stated that “[a]s a condition
precedent to the Agreement and this Rider, Lessor and Lessee hereby mutually agree that the
Operating Agreement and Arbitrage Share Agreement (collectively the “Ancillary Agreements”)
described in that certain Omnibus Term Sheet agreed to by Lessor and Lessee shall be fully-
executed.” I understood and relied on this provision to mean that there would not be a final and
binding agreement between Clover and TILC unless both parties came to a mutual agreement and
actually executed the Operating Agreement and Arbitrage Share Agreement. The parties never did
come to a mutual agreement on the terms of an Operating Agreement and Arbitrage Share
Agreement and never executed any such agreements. I do not believe that Clover and TILC
reached final and binding agreements.
5 The Operating Agreement and Arbitrage Share Agreement were key parts of the
overall transaction between Clover and TILC because the parties contemplated further negotiation
of not only credit options but profit sharing in which TILC would accept a greater degree of risk
in return for a share of Clover’s profits. For Clover, this was a crucial provision because Clover
needed to know what the final terms between the parties would actually look like before
proceeding.
6 Before the parties could reach agreement on those key terms, TILC shipped the
railcars to a railyard with which it knew Clover eventually planned to store the railcars, provided
the parties could finally agree on terms. TILC did so without even notifying me that it planned to
do so or when it had actually shipped the cars. Clover first learned that TILC had jumped the gun
in this manner when it received a call from the storage yard notifying Clover that the railcars were
already at the yard. TILC’s primary contact with Clover, Stephanie Moxley, then sent the signed
documents. Clover’s CEO, Brent Osmond, expressly told Ms. Moxley that the parties needed to
get things finalized before proceeding.
Page 1 of 2
7 Ido not agree with Mr. Jardine that the condition precedent provision was “intended
to protect TILC’s interest in the transactions contemplated...” I understood it to protect the
interests of both parties by ensuring that each party understood that no binding agreement would
be entered unless and until the parties came to a complete set of terms, including the Operating
Agreement and Arbitrage Share Agreement.
8 I do not agree with Mr. Jardine that I “acknowledged and accepted TILC’s July 23,
2010 delivery of the first subset of the 110 Tank Cars to Clover”; although railcars were delivered
to the Viper Storage Yard, I reiterated the need for a fully finalized Operating Agreement and
Arbitrage Share Agreement. TILC jumped the gun and sent the first subset of the 110 Tank Cars
to Clover prematurely without having binding agreements in place. The deal was still being
negotiated. I made it clear that I thought it was premature and that we still had key terms to
negotiate, including the terms of the Operating Agreement and Arbitrage Share Agreement. We
ultimately failed to come to agreement or execute the Operating Agreement and Arbitrage Share
Agreement. None of those cars should have been shipped until those agreements were executed.
9 I do not agree with Mr. Jardine or Ms. Moxley that “Clover never rejected any of
the 110 Tank Cars.” I made it clear that the Tank Cars that TILC did send to the railyard did not
have quick connect valves that were required. Clover did not waive the requirements that the
parties come to terms and execute the Operating Agreement and Arbitrage Share Agreement. TILC
unilaterally sent the Railcars to a storage yard without enforceable contracts and without proper
notice to Clover. The Railcars were never put into service by Clover. Clover did not accept the
cars for service because there was no contract in place.
I declare under penalty of perjury that the foregoing is true and correct’
Executed in Calgary, Alberta, on the 24th day of June, 2021.
Brent A. Osmond
Page 2 of 2
Automated Certificate of eService
This automated certificate of service was created by the efiling system.
The filer served this document via email generated by the efiling system
on the date and to the persons listed below. The rules governing
certificates of service have not changed. Filers must still provide a
certificate of service that complies with all applicable rules.
Melanie McClenathen on behalf of Luke Gilman
Bar No. 24074279
mmcclenathen@jw.com
Envelope ID: 55024159
Status as of 7/7/2021 2:25 PM CST
Case Contacts
Name BarNumber | Email TimestampSubmitted | Status
Luke Gilman 24074279 Igilman@jw.com 7/2/2021 1:56:20 PM SENT
James Bachman Greer | 24014739 jgreer@rglaw.com | 7/2/2021 1:56:20 PM SENT
Associated Case Party: CLOVER OIL & GAS, INC
Name BarNumber | Email TimestampSubmitted | Status
Eric Wong ewong@jw.com | 7/2/2021 1:56:20 PM SENT
Preview
FILED 7/2/2021 1:56 PM FELICIA PITRE DISTRICT CLERK DALLAS CO., TEXAS Treva Parker-Ayodele DEPUTY CAUSE NO. DC-19-18070 Trinity Industries Leasing Company, IN THE DISTRICT COURT OF Plaintiff v. DALLAS COUNTY, TEXAS Clover Oil & Gas, Inc. K-192ND JUDICIAL DISTRICT Defendant. CLOVER’S MOTION FOR PARTIAL SUMMARY JUDGMENT Defendant, Clover Oil & Gas Inc. (“Clover” or “Defendant”) files this Motion for Partial Summary Judgment on the claims of Trinity Industries Leasing Company (“TILC” or “Plaintiff’) and respectfully shows as follows: I SUMMARY TILC’s breach of contract claim fails as a matter of law because it has no enforceable agreement with Clover pursuant to the terms of the alleged agreement. The mutual agreement and execution of an Operating Agreement and Arbitrage Share Agreement is expressly specified as Conditions Precedent to the Lease Agreement and Rider on which TILC’s claims depend. TILC simply jumped the gun in an effort to strong arm Clover into agreeing to more favorable terms by delivering railcars before the parties had reached agreement on all material terms. Clover refused, correctly noting that there were key agreements and terms that the parties had expressly agreed would be Conditions Precedent to any binding contract between the parties and had not even been agreed, much less fully-executed. As a result, no enforceable agreement was ever entered. There is no dispute that no Operating Agreement and Arbitrage Share Agreement were ever agreed upon or executed by the Parties. TILC seeks to avoid the consequence of failing to wait until it had an enforceable agreement before shipping the railcars by claiming that this clear provision was somehow only enforceable by TILC or was somehow waived by Clover. Neither theory is supportable as a matter of law or of fact. TILC’s motion for partial summary judgment must be denied and Clover’s Motion for CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 10F 8 Summaty Judgment granted for the same reason—there is no binding and enforceable agreement to support TILC’s breach of contract and declaratory judgment claims in this action. Il. FACTUAL BACKGROUND In 2018 and 2019, Clover was in the business of transporting Western Canadian Select crude from Canadian oil fields for refining in the United States. In 2018, Clover and TILC began negotiating regarding the lease of railcars to transport the oil. On October 29, 2019, the parties entered a term sheet in anticipation of the negotiation and execution ofa Lease Agreement and Rider to the Lease Agreement for the lease of railcars.' On July 2, 2019 the parties entered a Lease Agreement” which set forth general terms and conditions for the lease of railcars between the parties and a Rider to the Lease Agreement’ which set forth the terms of the lease of 110 railcars and also anticipated as “Conditions Precedent to the Lease” the future agreement of an Operating Agreement and Arbitrage Share Agreement: Conditions Precedent to the Lease — As a condition precedent to the Agreement and this Rider, Lessor and Lessee hereby mutually agree that the Operating Agreement and Arbitrage Share Agreement (collectively the “Ancillary Agreements”) described in that certain Omnibus Term Sheet agreed to by Lessor and Lessee shall be fully- executed. Lessor shall not be bound by the terms of the Lease until such time as Lessor receives a copy of such fully-executed Ancillary Agreements. It is undisputed that the parties never came to an agreement on an Operating Agreement and Arbitrage Share Agreement.” 1 Clover hereby incorporates by reference Tab A-1 to TILC’s Motion for Summary Judgment; Exhibit A, Declaration of Brent A. Osmond § 3. 2 Clover hereby incorporates by reference Tab A-4 to TILC’s Motion for Summaty Judgment; Exhibit A. Declaration of Brent A. Osmond § 3. 3 Clover hereby incorporates by reference Tab A-5 to TILC’s Motion for Summaty Judgment; Exhibit A. Declaration of Brent A. Osmond § 3. 4 Tab A-5 to TILC’s Motion for Summary Judgment at 1-2; ; Exhibit A, Declaration of Brent A. Osmond 41 3-4. 5 Exhibit A, Declaration of Brent A. Osmond § 3. CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 2 OF 8 The Operating Agreement and Arbitrage Share Agreement were material to the overall agreement between Clover and TILC because the parties contemplated further negotiation of not only credit options but profit sharing in which TILC would accept a greater degree of risk in return for a share of Clover’s profits.’ For Clover, this was a crucial provision because Clover needed to know what the final terms between the patties would actually look like before proceeding. Ill. SUMMARY JUDGMENT STANDARD To prevail on a traditional motion for summary judgment, a movant must prove entitlement to judgment as a matter of law on the issues set out in the motion. Tex. R. Civ. P. 166a(c); Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015). When the movant is a defendant, a trial court should grant summary judgment only if the defendant (1) conclusively negates at least one element of each of the plaintiff's causes of action, or (2) conclusively establishes each element of an affirmative defense. Clark v. ConocoPhillips Co., 465 S.W.3d 720, 724 (Tex. App—Houston [14th Dist.] 2015, no pet.). Iv. ARGUMENT & AUTHORITIES A. TILC’s claim for breach of contract must be dismissed because the purported contracts on which it rests are not valid or enforceable. TILC’s claim for breach of contract is predicated on the existence of a valid, enforceable contract.’ No such contract exists here. The agreement contemplated by Clover and TILC was subject to extensive negotiation which included not only the lease of railcars but the mutual agreement and execution of an Operating Agreement and Arbitrage Share Agreement. 6 Exhibit A, Declaration of Brent A. Osmond §[ 5. 7 To establish a claim for breach of contract, plaintiff must show: (1) there is a valid, enforceable contract, (2) the plaintiff is a proper party to sue for breach of the contract, (3) the plaintiff performed, tendered performance of, or was excused from performing its contractual obligations, (4) the defendant breached the contract, (5) the defendant’s breach caused the plaintiff injury. Marquis Acquisitions, Ine. v. Steadfast Ins., 409 S.W.3d 808, 813 (Tex. App.—Dallas 2013, no pet.). CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 3 OF 8 For that reason, the parties expressly agreed that the Operating Agreement and Arbitrage Share Agreement would not just be negotiated and agreed, but that the full execution of such agreements would be a “Conditions Precedent.” At the heart of TILC’s claim for the alleged nonpayment for 110 railcars is Rider One (1) to Railroad Car Lease Agreement (“Rider” or the “110 Car Rider”). The Rider expressly states: Conditions Precedent to the Lease — As a condition precedent to the Agreement and this Rider, Lessor and Lessee hereby mutually agree that the Operating Agreement and Arbitrage Share Agreement (collectively the “Ancillary Agreements”) described in that certain Omnibus Term Sheet agreed to by Lessor and Lessee shall be fully-executed, Lessor shall not be bound by the terms of the Lease until such time as Lessor receives a copy of such fully-executed Ancillary Agreements. Rider at 1-2 (emphasis added).* Clover actually and reasonably interpreted and relied upon the plain language of this Condition Precedent.’ Unless “the Operating Agreement and Arbitrage Share Agreement” were “fully-executed” that condition is an event that must happen before the related agreements become binding and enforceable. TILC now claims that it drafted this provision solely for its own benefit and was therefore unilaterally entitled to enforce it or choose to waive it depending on its whim. This defies common sense and Texas contract law. The provision clearly provides that the parties must “mutually agree” on the Operating Agreement and Arbitrage Share Agreement. It is expressly described as a “condition precedent to the Lease.” It expressly provides that the Operating Agreement and Arbitrage Share Agreement must not just be agreed to in principle or substantially agreed to but “fully-executed.” If 8 Pursuant to the July 2, 2019 Master Lease Agreement, Lessor [Trinity Industries Leasing Company or TILC] agrees to lease to Lessee [Clover Oil and Gas, LLC] and [Clover] agrees to lease from [Trinity] .. the railroad cars ... set out and identified in the Rider or Riders hereto...” Lease Agreement, Art. 1 (Lease Agreement) at 1. The parties agree that “Each Rider shall set forth a brief description of the car or cars covered thereby ... and Lessor and Lessee agree that each Rider hereto shall constitute a separate lease which incorporates the terms of this Agreement.” Lease Agreement, Art. 1 (Lease Agreement) at 1. ° Exhibit A, Declaration of Brent A. Osmond ff] 3-5. CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 4 0F 8 TILC had merely wanted an option to enter the Operating Agreement and Arbitrage Share Agreement or not, it would not have expressly made “fully-executing” those agreements a “Condition Precedent to the Lease.” Conditions precedent are stipulations that call for the performance of some act or the occurrence of some event before an agreement becomes binding and enforceable. Centex Corp. v. Dalton, 840 SW.2d 952, 956 (Tex. 1992) (holding that approval of acquisition by third party was condition precedent to enforcement of agreement for finder’s fees, thus failure of condition precedent invalidated agreement to pay); Hohenberg Bros. Co. v. George E. Gibbons & Co, 537 S.W.2d 1, 3 (Tex. 1976); Evans v. Prufrock, Restaurants, Inc, 757 SW.2d 804, 805 (Tex. App.—Dallas 1988, writ denied); Gordin v. Shuler, 704 SW.2d 403, 406 (Tex. App—Dallas 1985, writ refid n.r.e.). see also Exsy v. Beal Bank S.S.B., 298 S.W.3d 280, 300 (Tex. App—Dallas 2009, no pet.). A condition precedent can be either a condition to the initial formation of a contract or a condition to an obligation to perform an existing agreement. Dillon v. Linty, 582 S.W.2d 394, 395 (Tex. 1979); Hohenberg Bros. Co. v. George E. Gibbons ¢ Co., 537 SW.2d 1, 3 (Tex. 1976); America's Favorite Chicken Co. v. Samaras, 929 S.W.2d 617, 627 (Lex. App—San Antonio 1996, writ denied); Graco Robotics, Inc. v. Oaklawn Bank, 914 S.W.2d 633, 640 n.2 (Tex. App.—Texarkana 1995, writ dism'd). Ordinarily, if the acceptance of a contract is conditioned upon the happening of a future event, the condition must be performed or fulfilled exactly as set forth in the contract before the promise can be enforced. See Centex, 840 S.W.2d at 956. A patty seeking to recover under a contract must prove it has met all conditions precedent. Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 283 (Tex. 1998); Trevino v. Allstate Ins. Co., 651 S.W.2d 8, 11 (Lex. App.—Dallas 1983, writ ref'd n.t.e.). If a contract contains conditions precedent, there must be some allegation by the plaintiff that the conditions have been met. Texas Int’ Airlines v. Wits Air Freight, 608 S.W.2d 828, 831 (Tex.Civ.App—Dallas 1980, no writ). Performance CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 5 OF 8 of any condition precedent is an essential element of the plaintiff's case. Trevino, 651 S.W.2d at 11 (“[t]he law is clear that performance ofa condition precedent is an essential element of the plaintiff's case on which the plaintiff has the burden of proof unless he alleges performance of all conditions precedent and the defendant fails to deny specifically performance of the conditions”). For example, in Centex Corp. v. Dalton, 840 S.W.2d 952 (Tex. 1992) Centex, a residential and commercial construction company, entered an agreement with Dalton, a thrift institution consultant, to assist Centex in acquiring certain thrift institutions, agreeing to pay him $750,000 over a three-year period if Centex were successful in acquiring certain thrift institutions that Dalton discovered were available for purchase. The bids were subject to approval by the Federal Home Loan Bank Board. After initially being told that the Bank Board would approve the payment to Dalton, Centex’s President was informed the day before closing that the Bank Board would not approve the payment. The Texas Supreme Court refused to enforce the agreement, holding: Here, by the terms of the letter agreement, Dalton's right to enforce it could not accrue until the Bank Board approved the acquisition. Because the Bank Board, in approving the acquisition, prohibited the payment of the finder's fees, thereby invalidating the letter agreement, Dalton's right to enforce the letter agreement never accrued. Id. at 956. Similarly, in Conn CreditI, L.P. v. TF LoanCo II, L.L.C., 903 F.3d 493, 500 (5th Cir. 2018), the Fifth Circuit held that the stated obligation of a debt collector to transfer accounts only if representations and watranties were true and correct was unambiguous condition precedent: Under Section 10.2 of the Sale Agreement—titled “Conditions Precedent to Purchase or Sale of Accounts”—TF Loan was “obligated to transfer Accounts on a Closing Date only if ... the representations and warranties of the Buyer or the Seller, respectively, in this Agreement ate true and correct as of such Closing Date”. This is an unambiguous condition precedent. Accordingly, if Conn’s representations and warranties in the Sale Agreement were not true and correct as of August 28, 2014, Conn cannot enforce TF Loan’s obligation to close on Deliveries Three, Four, Five and Six. CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 6 OF 8 Id. at 500. Clover was entitled to rely on the express Condition Precedent as a condition that would ptecede the entry of a final and binding agreement between Clover and TILC” and it did in fact rely on it as a condition precedent.'! Clover and TILC contemplated the further negotiation of not only credit options but profit sharing in which TILC would accept a greater degree of risk in return for a share of Clover’s profits.” For Clover, the Condition Precedent was crucial because Clover needed to know what the credit terms and the final terms between the parties would actually look like before ptoceeding.'’ Before the parties could reach agreement on those key terms, ‘Trinity shipped the railcars to a tailyard with which it knew Clover eventually planned to store the railcars, provided the patties could finally agree on terms.'* TILC did so without even notifying Clover that it planned to do so or that it had actually shipped the cars. Clover first learned that TILC had jumped the gun in this manner when it received a call from the storage yard notifying Clover that the railcars were already at the yard. TILC’s primary contact with Clover, Stephanie Moxley, then sent the signed documents. Clover’s CEO, Brent Osmond, expressly told Ms. Moxley that they needed to get things finalized before ptoceeding.'° TILC ignored that and its own contract terms, presenting the rail cars as a fait accompli in an effort to force Clover to agree to its terms. Clover refused. No enforceable agreement was reached. 10 Gallup v. St. Paul Ins. Co., 515 S.W.2d 249 (Tex. 1974) (strongest indication of what a contract requires is determined by what its words plainly state). 11 Exhibit A, Declaration of Brent Osmond, {| 3-4. 12 Exhibit A, Osmond Declaration, § 5. 13 Exhibit A, Osmond Declaration, {[ 5. 14 Exhibit A, Osmond Declaration, { 6. 15 Exhibit A, Osmond Declaration { 6. CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 7 OF 8 Vi; CONCLUSION & PRAYER FOR RELIEF Defendant Clover Oil & Gas, Inc. requests the Court GRANT Clover Oil & Gas, Inc.’s Motion for Partial Summary Judgment, and provide all other relief in law or in equity to which Clover Oil & Gas may be entitled, including attorneys’ fees and costs. Respectfully submitted, JACKSON WALKER L.L.P. BY: I eJ Tex as State Bar No. 24074279 1401 McKinney, Suite 1900 Houston, TX 77010 (713) 752-4350 (Telephone) [man om Eric Wong Texas State Bar No. 24102659 2323 Ross Street, Suite 600 Dallas, TX 75204 (214) 953-6116 (Telephone) Attorneys for Defendant Clover Oil & Gas Inc. CERTIFICATE OF SERVICE Thereby certify that this 2nd day of July, 2021, a true and correct copy of this document was served on the following in accordance with the Texas Rules of Civil Procedure: Via E-File and Email James B. Greer RANDALL GREER PLLC 5910 N. Central Expressway, Ste. 925 Dallas, Texas 75206 jgreer@rglaw.com Attorney for Plaintiff Trinity Industries Leasing Company /s/ Luke J. Gilman Luke J. Gilman 29441007 CLOVER’S MOTION FOR SUMMARY JUDGMENT PAGE 8 OF 8 Exhibit A DECLARATION OF BRENT OSMOND J, Brent A. Osmond, declare and state as follows: 1 My name is Brent A. Osmond. I am over 21 years of age and I am fully competent to make this Declaration. I declare that all of the facts contained herein are within my personal knowledge, unless otherwise stated, and are true and correct. 2. I am the former President and Chief Executive Officer of Clover Oil and Gas, Inc. (“Clover”). I was the sole negotiator with Trinity Industries Leasing Company (“TILC”). 3 The parties negotiated an Oct. 29, 2018 Term Sheet, a July 2, 2019 Railroad Car Lease Agreement and a July 2, 2019 Rider One to the Lease Agreement, but not the Operating Agreement and Arbitrage Share Agreement. The agreements were interrelated and dependent upon each other as part of the overall transaction contemplated by the parties. It was very important to me that the parties come to a complete agreement on all of the key terms of the overall transaction before Clover or TILC became legally bound by the agreements. 4 This included reaching final agreement on the Operating Agreement and Arbitrage Share Agreement. The Rider One included specific provision that stated that “[a]s a condition precedent to the Agreement and this Rider, Lessor and Lessee hereby mutually agree that the Operating Agreement and Arbitrage Share Agreement (collectively the “Ancillary Agreements”) described in that certain Omnibus Term Sheet agreed to by Lessor and Lessee shall be fully- executed.” I understood and relied on this provision to mean that there would not be a final and binding agreement between Clover and TILC unless both parties came to a mutual agreement and actually executed the Operating Agreement and Arbitrage Share Agreement. The parties never did come to a mutual agreement on the terms of an Operating Agreement and Arbitrage Share Agreement and never executed any such agreements. I do not believe that Clover and TILC reached final and binding agreements. 5 The Operating Agreement and Arbitrage Share Agreement were key parts of the overall transaction between Clover and TILC because the parties contemplated further negotiation of not only credit options but profit sharing in which TILC would accept a greater degree of risk in return for a share of Clover’s profits. For Clover, this was a crucial provision because Clover needed to know what the final terms between the parties would actually look like before proceeding. 6 Before the parties could reach agreement on those key terms, TILC shipped the railcars to a railyard with which it knew Clover eventually planned to store the railcars, provided the parties could finally agree on terms. TILC did so without even notifying me that it planned to do so or when it had actually shipped the cars. Clover first learned that TILC had jumped the gun in this manner when it received a call from the storage yard notifying Clover that the railcars were already at the yard. TILC’s primary contact with Clover, Stephanie Moxley, then sent the signed documents. Clover’s CEO, Brent Osmond, expressly told Ms. Moxley that the parties needed to get things finalized before proceeding. Page 1 of 2 7 Ido not agree with Mr. Jardine that the condition precedent provision was “intended to protect TILC’s interest in the transactions contemplated...” I understood it to protect the interests of both parties by ensuring that each party understood that no binding agreement would be entered unless and until the parties came to a complete set of terms, including the Operating Agreement and Arbitrage Share Agreement. 8 I do not agree with Mr. Jardine that I “acknowledged and accepted TILC’s July 23, 2010 delivery of the first subset of the 110 Tank Cars to Clover”; although railcars were delivered to the Viper Storage Yard, I reiterated the need for a fully finalized Operating Agreement and Arbitrage Share Agreement. TILC jumped the gun and sent the first subset of the 110 Tank Cars to Clover prematurely without having binding agreements in place. The deal was still being negotiated. I made it clear that I thought it was premature and that we still had key terms to negotiate, including the terms of the Operating Agreement and Arbitrage Share Agreement. We ultimately failed to come to agreement or execute the Operating Agreement and Arbitrage Share Agreement. None of those cars should have been shipped until those agreements were executed. 9 I do not agree with Mr. Jardine or Ms. Moxley that “Clover never rejected any of the 110 Tank Cars.” I made it clear that the Tank Cars that TILC did send to the railyard did not have quick connect valves that were required. Clover did not waive the requirements that the parties come to terms and execute the Operating Agreement and Arbitrage Share Agreement. TILC unilaterally sent the Railcars to a storage yard without enforceable contracts and without proper notice to Clover. The Railcars were never put into service by Clover. Clover did not accept the cars for service because there was no contract in place. I declare under penalty of perjury that the foregoing is true and correct’ Executed in Calgary, Alberta, on the 24th day of June, 2021. Brent A. Osmond Page 2 of 2 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules. Melanie McClenathen on behalf of Luke Gilman Bar No. 24074279 mmcclenathen@jw.com Envelope ID: 55024159 Status as of 7/7/2021 2:25 PM CST Case Contacts Name BarNumber | Email TimestampSubmitted | Status Luke Gilman 24074279 Igilman@jw.com 7/2/2021 1:56:20 PM SENT James Bachman Greer | 24014739 jgreer@rglaw.com | 7/2/2021 1:56:20 PM SENT Associated Case Party: CLOVER OIL & GAS, INC Name BarNumber | Email TimestampSubmitted | Status Eric Wong ewong@jw.com | 7/2/2021 1:56:20 PM SENT