Motion for Summary Judgment in DEVANEY, PATRICK O II vs. QUANTA SERVICES INC| Trellis.Law

On December 31, 2012 a Motion-Secondary was filed involving a dispute between Devaney, Patrick O Ii, Trident Ventures Inc, and Colson, John R, Quanta Government Services Inc, Quanta Government Solutions Inc, Quanta International Limited, Quanta Services Inc, for OTHER CIVIL in the District Court of Harris County.

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No. 2012-75663

K O. D THE
NT VEN

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OUNTY, XAS

QUANTA .; QUANTA
NMENT
QUANTA OVE

TED; ON,

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PLAINTI S’ RESPONSE IN OPPOSITION TO
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

E AW IRM
ob A. De Leon
Sta Bar No. 24036465
Mason W. Herring
Sta Bar No. 24071746
Four Houston Center
Lamar Street
Houston, Texas 77010-3027
(713) 228-7300 Telephone
(713) 228-7302 Telopi

ALL REITBEIL IDMAN P.C.
Kenneth R.
Bar No. 02947690
Four Houston Center
Lamar Street
Houston, Texas 77010-3027
(713) 590-9300 Telep one
(713) 590-9399 Telopi

EYS LAIN ATRIC
EVEY RIDE ENT ES I.
TABLE OF CONTENTS
TABLE OF CONTENTS .................................................................................................................................. ii

TABLE OF AUTHORITIES ............................................................................. Error! Bookmark not defined.

I. FACTUAL BACKGROUND ................................................................................................................... 1

A. QUANTA, A COMPANY STRUGGLING TO SUCCEED, DECIDES TO FORM INTERNATIONAL AND
GOVERNMENTAL DIVISIONS IN AN EFFORT TO OBTAIN MORE LUCRATIVE WORK. ........................................ 1

B. DEVANEY, A DECORATED NAVY SEAL WITH NUMEROUS INTERNATIONAL BUSINESS CONTACTS, IS
ACTIVELY RECRUITED BY QUANTA AND INDUCED BY DEFENDANTS TO ABANDON HIS PROFITABLE
VENTURES AND INSTEAD OPERATE QUANTA GOVERNMENT SOLUTIONS AND QUANTA INTERNATIONAL AS
PRESIDENT OF BOTH ENTITIES. ...................................................................................................................... 2

C. DEFENDANTS CONTINUALLY PROMISE DEVANEY THEY ARE READY, WILLING, AND ABLE TO EXECUTE
ON LARGE GOVERNMENTAL AND INTERNATIONAL CONTRACTS, AND WILL COMPENSATE DEVANEY
ACCORDINGLY. .............................................................................................................................................. 4

D. A CLOSE BUSINESS AND PERSONAL RELATIONSHIP BETWEEN DEVANEY AND COLSON FORMS. .......... 6

E. DEVANEY PROCURES DOZENS OF CONTRACTS AS PROMISED; DEFENDANTS, HOWEVER, CONTINUE TO
ACTIVELY AVOID CARRYING OUT ON THESE HIGH MARGIN PROJECTS. ......................................................... 7

F. DEVANEY PRESENTS QUANTA WITH A PROJECT WITH THE KUWAITI GOVERNMENT THAT WOULD
YIELD MORE THAN $300 MILLION IN NET PROFITS TO QUANTA; DESPITE SIGNING A MEMORANDUM OF
UNDERSTANDING, AND APPROVAL BY THE BOARD OF DIRECTORS, QUANTA INEXPLICABLY PULLS THE
PLUG. ........................................................................................................................................................... 10

G. DEVANEY IS TERMINATED BY QUANTA AND HIS BUSINESS REPUTATION IS LEFT SCARRED............... 13

III. ARGUMENT AND AUTHORITIES ................................................................................................. 13

A. THE COURT SHOULD DENY SUMMARY JUDGMENT AS TO PLAINTIFFS’ FRAUD AND NEGLIGENT
MISREPRESENTATION CLAIMS BECAUSE THERE IS A GENUINE ISSUE OF MATERIAL FACT AS TO
PLAINTIFFS’ RELIANCE. ..................................................................................................................................

1. MR. DEVANEY CAN DEMONSTRATE REASONABLE AND JUSTIFIABLE RELIANCE ON DEFENDANTS’
REPRESENTATIONS. ................................................................................................................................. 13

A. VAGUE AND INDEFINITE PROMISES PRECLUDE REASONABLE RELIANCE ONLY AS TO EXPRESS OR
IMPLIED CONTRACTS THAT MODIFY AT-WILL EMPLOYMENT
……………………………………………………………………………………………………….

B. QUANTA'S REPRESENTATIONS WERE SUFFICIENTLY DEFINITE TO PROVIDE FOR REASONABLE AND
JUSTIFIABLE RELIANCE UNDER THE GILMARTIN STANDARD, IF APPLICABLE……….........................

C. DEFENDANTS' GILMARTIN STANDARD REQUIRES MORE THAN WHAT THE TEXAS SUPREME COURT

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HAS HELD IS NECESSARY TO PROVE RELIANCE IN FRAUD AND NEGLIGENT MISREPRESENTATION
ACTIONS.

2. PLAINTIFFS CAN DEMONSTRATE ACTUAL AND JUSTIFIABLE RELIANCE ON DEFENDANTS’
MISREPRESENTATIONS ACCORDING TO THE GRANT THORNTON LLP STANDARD . ..ERROR! BOOKMARK
NOT DEFINED.

A. MR. DEVANEY LIVES BY A CODE OF UNCOMPROMISING INTEGRITY AND PLACES SPECIAL
MEANING ON PROMISES ……………………………………………………….................................

B. MR. DEVANEY'S RELIANCE ON DEFENDANT JOHN COLSON'S REPRESENTATIONS WAS JUSTIFIED
BECAUSE DEFENDANT WAS CHAIRMAN AND CEO OF QUANTA SERVICES ………………………….

C. DEFENDANTS' REPRESENTATION OF PLAINTIFFS' CARRIED INTEREST IS CONSISTENT WITH
QUANTA SERVICES'S 100% OWNERSHIP IN QGS AND QIL…………………………..........................

B. THERE IS MORE THAN A MERE SCINTILLA OF EVIDENCE OF A FIDUCIARY RELATIONSHIP. ............Error!
Bookmark not defined.

C. THERE IS MORE THAN A MERE SCINTILLA OF EVIDENCE THAT DEFENDANTS TORTIOUSLY INTERFERED
WITH PLAINTIFFS’ BUSINESS RELATIONSHIPS. ............................................... Error! Bookmark not defined.

E. PLAINTIFFS QUANTUM MERUIT IS A VIABLE CAUSE OF ACTION............. Error! Bookmark not defined.

F. PLAINTIFFS’ UNJUST ENRICHMENT CLAIM IS A VIABLE CAUSE OF ACTION. .......... Error! Bookmark not
defined.

G. STATUTE OF LIMITATIONS DOES NOT PRECLUDE PLAINTIFFS’ CLAIMS. . Error! Bookmark not defined.

IV. CONCLUSION ................................................................................................................................... 38

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Cause No. 2012-75663

PATRICK O. DEVANEY, II and § IN THE DISTRICT COURT OF
TRIDENT VENTURES, INC, §
§
Plaintiffs, §
§
VS. § HARRIS COUNTY, T E X A S
§
QUANTA SERVICES, INC.; QUANTA §
GOVERNMENT SOLUTIONS, INC.; §
QUANTA GOVERNMENT SERVICES, §
INC.; QUANTA INTERNATIONAL § 333rd JUDICIAL DISTRICT
LIMITED; and JOHN R. COLSON, §
§
Defendants. §

PLAINTIFFS’ RESPONSE IN OPPOSITION TO
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

TO THE HONORABLE COURT:
Plaintiffs, Patrick O. Devaney, II and Trident Ventures, Inc., file this Response in

Opposition to Defendants’ Motion for Summary Judgment, and in support thereof would show

as follows:

I. FACTUAL BACKGROUND
A. QUANTA, A COMPANY STRUGGLING TO SUCCEED, DECIDES TO FORM INTERNATIONAL AND
GOVERNMENTAL DIVISIONS IN AN EFFORT TO OBTAIN MORE LUCRATIVE WORK.

Defendant Quanta Services, Inc. (“Quanta”) was first created in November of 1997 by

Defendant John Colson. Between 2001 and 2002, a series of events occurred, adversely affecting

Quanta’s stock. Eventually, Quanta’s value dropped from more than $4 billion to approximately

$220 million, resulting in lost ability to obtain cost-effective financing necessary to sustain

operations. Simultaneously, Quanta’s cash position fell to dangerously low levels, along with the

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executive stock plan.

By 2003, desperate to generate profits and increase stock value, Quanta elected to expand

its labor-intensive business -- which focused on infrastructure construction, upgrade and

maintenance services in the electric power and telecommunications industries -- into more

profitable work involving U.S. government contacts and infrastructure building (or re-building)

projects in the Middle East among other places. This decision was made following the initial

thrust of the post-Iraq invasion, when the U.S. also was getting involved in plans to rebuild

infrastructure in Iraq and other countries in the region, as well as Africa, which would involve

significant and lucrative government contract work. Quanta saw this as a potentially new and

profitable opportunity, but also knew that itneeded an outsider who had the credibility to give

Defendants access to these commercial opportunities (which in turn, would appease concerns

among the Board of Directors about Quanta’s dwindling domestic business). By the fourth quarter

of 2003 Defendants formed a new entity, Quanta Government Solutions (“QGS”), which would

later become the government services unit that Plaintiff Patrick Devaney would organize (along

with an international unit) and operate to the benefit of Quanta and many of its subsidiaries.

Nonetheless, before Devaney’s involvement, QGS was unsuccessful in bidding government

projects. Clearly, something needed to change.

Desperate to salvage QGS, Colson, the CEO and Chairman of the Board, sought out Lt.

Colonel Oliver North, asking for a recommendation of an individual capable of procuring and

delivering the contract QGS and Quanta desperately desired. North discussed this request with

other high-ranking U.S. military officials and Plaintiff, Patrick Devaney, a decorated Navy SEAL
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and former special operations commander, was subsequently recommended. Exhibit 1, Aff. of P.

Devaney at ¶ 9. Devaney had not only an expansive military background, but also a strong

financial and management background, an established residence in the Middle East, and numerous

U.S. Government and Middle East contacts whose trust he earned from years of service. Id. at ¶¶

2–7, 16. During this time, Devaney was operating his own business through Plaintiff Trident

Ventures (“Trident”) within the Middle East, with business ventures in Iraq, Afghanistan, Kuwait,

Saudi Arabia, Bahrain, United Aram Emirates, Indonesia, Hong Kong, the United Kingdom, and

the United States. Id. at ¶ 7. Devaney and Trident’s businesses were successful and included

construction, real estate, financial services, and import/export. Id. Plaintiffs’ success and military

background resulted in numerous connections with foreign dignitaries and leaders. Meanwhile,

Devaney continued to nurture his relationships with various U.S. military commanders and CIA

officials.

Colson and Quanta believed Devaney was the man to organize QGS (and later, Quanta

International Limited (“QIL”)) as president. Id. at ¶¶ 7, 16. Quanta initially solicited Devaney

through a Quanta senior executive named Doug Link, who explained that Quanta wanted

opportunities in the international arena where nation-building projects offered opportunities for

lucrative contracts with foreign governments, the United States government, and large general

contractors. Id. at ¶ 8. Link also specifically referenced Quanta’s impending attempts to bid a $1

billion reconstruction project in Iraq, and that Quanta wanted Devaney’s help in guiding Quanta

through the bid process for Iraq and similar projects. Id.

In January of 2004, Quanta flew Devaney to its headquarters in Houston. Id. at ¶ 9. There,

Devaney met with Quanta’s CEO and Chairman of the Board, John Colson, as well as other

executives including Doug Link, James Haddox (CFO), and John Wilson (a Board member). Id.

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During this time, Quanta had very little, if any, international or government-based contract

business outside of North America, but was trying to break through via a reconstruction contract in

Iraq, though thus far, Quanta’s bid attempts had been unsuccessful. Colson indicated he wanted

Devaney to try and rehabilitate the Iraq project and also seek other similar opportunities as they

became available. Id. Colson and Quanta represented they had the financial wherewithal and were

ready, willing, and able to execute on large-scale government and international contracts through

various subsidiaries – they just needed the opportunity. Id. at ¶¶ 9–10, 13.

Defendants installed Devaney as president and represented that he would be responsible for

leading and organizing the government and international businesses of Quanta, which would

operate separately. Id. at ¶¶ 11, 12. In late 2004, QIL was acquired by QGS to operate as the

international unit of Quanta. Id. at ¶ 21. Devaney was also installed as president of QIL.

Defendants represented to Devaney that he would receive the benefits (i.e.,compensation and

incentives) that go with such a venture. Id. at ¶¶ 12, 14. This was not the last time Defendants

would make these representations to Devaney. Rather, they continued regularly throughout

Devaney’s tenure with QGS and QIL. Id. at ¶¶ 21 (citing numerous instances of Defendants’

representations to Devaney).

C. DEFENDANTS CONTINUALLY PROMISE DEVANEY THEY ARE READY, WILLING, AND ABLE
TO EXECUTE ON LARGE GOVERNMENTAL AND INTERNATIONAL CONTRACTS, AND WILL
COMPENSATE DEVANEY ACCORDINGLY, ALL WHILE DEVANEY BEGINS ORGANIZING QGS
AND QIL.

Devaney began overseeing the organization and operations of QGS and QIL, hiring

employees and drafting policies for both companies. Id. at ¶¶ 14–15. Devaney maintained his

existing residence in Kuwait to take advantage of business opportunities for Quanta – an address

later used as the business addresses of the Quanta government solutions and international

services entities. Id. at ¶ 15. Quanta issued business cards to Devaney that identified him as
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President of Quanta Government Solutions and Quanta International, Ltd., and Devaney was

regularly held out as such to U.S. and foreign government officials. Id. at ¶¶ 11, 21. Quanta

also issued numerous corporate organizational charts which represented Devaney as president of

QGS and QIL, and showed him as a direct report to Colson – a privilege few executives of

Quanta subsidiaries shared. Id. at ¶ 11.

Though Devaney was held out as president, Quanta compensated him differently than the

presidents of other subsidiaries. Unlike the salary, bonuses, and stock Quanta provided its other

presidents, Colson and Quanta indicated it did not want to treat Devaney as an employee. Id. at

¶ 14. Instead, during January and February of 2004, Colson represented that he and Quanta

would compensate Devaney through a share of profits generated by projects that Devaney

procured. Id. Colson, on behalf of Quanta, continued to make these representations through at

least 2010, indicating that Defendants were capable of carrying out large-scale government and

international contracts, and that Devaney would receive a share of the profits. Id.

As Devaney began his tenure with QGS and QIL, Trident was shut down in reliance on

Defendants’ material representations about Devaney’s role, compensation, and financial

incentives with QGS and QIL. Id. at ¶ 15. Indeed, Devaney abandoned his successful

international and governmental business ventures through Trident, instead focusing his sole

efforts on QGS and QIL. Id.

Devaney attended and made presentations at Presidents’ meetings with Colson and the

heads of other Quanta companies, and also to the Quanta Board of Directors. Id. at ¶ 14–15, 21.

Colson assured Devaney he would have Colson’s support in these new international and

governmental ventures, and that management and directors were willing to commit manpower

and resources necessary to execute on large international contracts. Id. at ¶ 13. These

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representations were important to Devaney; indeed, he did not want to make promises to foreign

officials to secure business of Quanta, then have Quanta back out, as such a scenario would

cause embarrassment and harm to Devaney’s credibility, which he had diligently cultivated for

nearly a decade. Id.

D. DEFENDANTS PROMISE TO COMPENSATE DEVANEY THROUGH FINANCIAL INCENTIVES
MEMORIALIZED IN A BUSINESS PLAN.

In September of 2004, to memorialize the profit interest Colson had promised in January

and February of 2004, Devaney prepared a business strategy document, which was presented to

Colson, Dana Gordon (General Counsel) and James Haddox (CFO). Id. at ¶¶ 14, 21; Exhibits C

& D to Aff. of P. Devaney. Devaney’s business strategy detailed a proposed operations budget

for QGS and QIL, as well details about the markets Devaney intended to target. Id. Colson

approved the business strategy, and a Business Plan was subsequently drafted by Devaney.

Exhibit 1, Aff. of P. Devaney at ¶¶ 14, 21. The Business Plan identified Devaney’s proposed

method of compensation: a carrying percentage of 15% to that entity from the profits that the

international business would generate, of which Devaney would receive a portion for being the

leader of the company. Id. at ¶¶ 14, 21; Exhibits C & D to Aff. of P. Devaney. Colson agreed to

the Business Plan and promised that Devaney would ultimately be compensated according to

terms of same, but that, at the time, Quanta would not be able to implement the Business Plan

with the equity/sharing percentages in QIL’s profits until after Devaney succeeded in bringing in

business. Exhibit 1, Aff. of P. Devaney at ¶¶ 14, 21. Nonetheless, in June of 2005, the QGS and

QIL budget drafted by Devaney, and included in the Business Plan, was uploaded into Quanta’s

system, signifying endorsement of same by Quanta. Id.; Exhibit D to Aff. of P. Devaney. The

memorandum included attachments containing the business model as it existed, stating:

I feel that before we hire any new employee[]s, we need to have the budget and
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compensation plan approved so that everyone knows what is going on, how we
are going to measure their performance, and what the incentives are going to be
once they reach these goals. I would like to make immediately employment
offers to Joe Heatly and Lynn Williams once you have approved both plans.
Exhibit 1, Aff. of P. Devaney at ¶ 14; Exhibit D to Aff. of P. Devaney.

Later, Colson reiterated his prior representation to Devaney that the Business Plan was

approved by him and Quanta. Id. at ¶¶ 14, 21. Naturally, Devaney accepted and relied on

Colson’s representations as true. Relying on Colson and Quanta’s representations, Devaney set

out to accomplish this task, hiring staff, and organizing QGS and QIL for marketing purposes

and compliance with the rules and regulations applicable to government and international work

with the energy and telecom ministries of foreign countries, the U.S. government, and prime

contractors. Id. at ¶ 14. Moreover, Quanta extended employment offers to Joe Heatly and Lynn

Williams, who accepted signaling that Devaney’s Business Plan had been approved. Id.

Devaney’s June 2005 Memo provided that employment offers to Heatly and Williams were

contingent upon approval of QGS and QIL’s Business Plan. Id. In sum, Quanta’s actions of

uploading Devaney’s budget, of hiring Heatly and Williams, and Colson’s repeated statements

that he approved the Business Plan continued to demonstrate its approval of the Business Plan.

E. AS PRESIDENT OF QGS AND QIL, DEVANEY SETS OUT TO ACHIEVE QUANTA’S MISSION
AND PROCURES DOZENS OF CONTRACTS AS PROMISED, AND BRINGING UNTOLD VALUE TO
QUANTA; DEFENDANTS, HOWEVER, CONTINUE TO ACTIVELY AVOID CARRYING OUT ON
THESE HIGH MARGIN PROJECTS.

In early 2004, Devaney presented to Quanta’s Board of Directors, introducing himself

and his plans for QGS and QIL. Id. at ¶¶ 15, 21. Devaney’s recommendations and procedures

were later adopted by Quanta, with many of them being executed by Colson in his own way and

image. Id. at ¶ 15. Months after the Board meeting, Devaney was a keynote speaker at Quanta’s

“President’s Meeting” – an annual event limited to upper management of Quanta. Id.

Meanwhile, on the international front, Devaney achieved early success. In 2005,
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Devaney procured an energy services contract in Chad, Africa with Kellogg, Brown & Root

(“KBR”) and Exxon Mobil, as well as a 2007 consulting contract for a smart grid and grid

reliability work in Karachi, Pakistan. Id. Devaney was also working hard to develop the

government business unit.

Over the next several years, Devaney continued to cultivate and add to his pre-existing

network of numerous business partners, agents, potential agents, joint venture partners, and

sources of business referrals in the Middle East. Id. at ¶ 16. Colson, as well as other Quanta

executives, met with many of these individuals, and Colson encouraged and valued these

contacts. Id. However, as deals Devaney procured came close to execution, Quanta’s legal

department would often, if not always, bring up something to do with the Foreign Corrupt

Practices Act (“FCPA”) and claim “risks” as a basis for not proceeding. Id.

Still, eager to carry out on his end of the deal and receive profit sharing for his

performance, Devaney continued to generate government and international contracts and

business opportunities for the Quanta companies that totaled dozens of millions of dollars in

actual business, with the potential for more. In addition to the 2005 KBR contract, and 2007

Pakistan contract, examples of some of the successes and opportunities that Devaney by his

efforts through the years was instrumental in bringing about, or assisted in bringing about,

for the Quanta Defendants include:

In 2005, post Hurricane Rita and Katrina, Devaney utilized his U.S. State Department
contacts to get up to several hundred visas issued for Canadian repairmen to travel to the
Gulf Coast and become borrowed employees for Quanta on its hurricane repair efforts,
which generated millions of dollars in profit.

In 2006, Devaney procured and executed a master Air Force Heavy Engineering and Repair
Construction (“HERC”) contract with the federal government, qualifying Quanta to secure
a series of large and profitable contracts through the federal government over a multi-year
period, which had the potential for hundreds of millions of dollars in profit. Unfortunately,
for reasons unknown to Devaney (at that time), Quanta never pursued the opportunities that
the HERC contract provided.
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Using the HERC qualifications as a resume-builder, Quanta secured another large federal
government contract with the Navy in 2008 – at Point Loma, California, which generated
approximately $90 million in revenues, and a total of more than $200 million.

Id. at ¶¶ 17–18.

Devaney also brought value to the Quanta Defendants in other ways. Between 2004 and

2012, as President of QIL and QGS, Devaney undertook numerous tasks, posturing QIL and QGS,

and other Quanta entities, including Quanta Renewables (i.e., government funded solar projects),

for success. Id. at ¶ 20 (detailing examples of Devaney’s contributions and efforts with various

Quanta entities).

F. DEFENDANTS CONTINUE TO MAKE MATERIAL MISREPRESENTATIONS TO DEVANEY.

Between 2004 and 2010, Colson continued to represent to Devaney that despite not

proceeding on the HERC opportunities, Quanta had the willingness and manpower to pursue large

international projects overseas. Id. at ¶ 21. Devaney continued to trust and relied Colson’s

repeated promises and representations, solely dedicating his time and efforts to Quanta rather than

to Trident. Id. Devaney diverted strategies and plans – originally intended for Trident – to Quanta.

Id. Moreover, relying on Colson’s representations, Devaney did not pursue opportunities he had

developed with other companies that also had the wherewithal to perform the types of international

and government contracts Devaney presented to Quanta. Id. Colson’s representations that

Devaney was the president of QGS and QIL and would receive compensation via the Business Plan

continued regularly throughout Devaney’s tenure. Id.

G. A CLOSE BUSINESS AND PERSONAL RELATIONSHIP BETWEEN DEVANEY AND COLSON
FORMS.
Devaney developed a close business and personal relationship with Colson. Id. at ¶¶ 21–

22. They traveled to various parts of the world and made marketing presentations together. Id.

Colson openly acknowledged and introduced Devaney as the president of Quanta Government

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Solutions and Quanta International. Using his titleas president, coupled with his military and

prior regional experience, Devaney opened doors for Colson and Quanta, providing access to

proprietary technology and U.S. government and foreign leaders and dignitaries. Id. at ¶ 22.

During their travels, Devaney told Colson that he had taken many of his plans and strategies for

Trident and redirected them, along with his energies, skills, and talents, to the development of QGS

and QIL. Id. Indeed, Colson was aware of the sacrifices made by Devaney based on Colson and

Quant’s representations of compensation via the Business Plan. Meanwhile, Quanta and Colson

continued to hold Devaney out as president of QGS and QIL, not only internally, and to Quanta’s

Board of Directors, but also externally to foreign dignitaries and other of Devaney’s clients. Id.

An informal confidential fiduciary relationship of trust and loyalty developed and continued

between Devaney and Defendants, including Colson. Colson fostered and encouraged this

relationship as Devaney continued to report directly to him. Colson was also in a unique roles as

he had the position and authority to deliver, on behalf of Quanta, on the representations and

commitments made to Devaney, and, naturally, Devaney trusted him. Id.

H. DEVANEY PRESENTS QUANTA WITH A PROJECT WITH THE KUWAITI GOVERNMENT THAT
WOULD YIELD MORE THAN $300 MILLION IN NET PROFITS TO QUANTA; DESPITE SIGNING A
MEMORANDUM OF UNDERSTANDING, AND APPROVAL BY THE BOARD OF DIRECTORS,
QUANTA INEXPLICABLY PULLS THE PLUG.

In September and October of 2010, Devaney’s years of networking and cultivating

relationships paid off. Id. at ¶ 23. Devaney was able to secure an opportunity for Quanta to be the

sole contractor to resolve Kuwait’s power grid emergency. Id. During this time, Kuwait was

operating on an outdated power grid, which was operating at 98% capacity, and an impending

surge from increased consumption was certain to overload and blackout the system, presenting a

national crisis. Id. Kuwait’s issues were well-known throughout the industry, and Quanta, through

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other senior managers in Kuwait, had attempted to enter the Kuwait market to provide solutions,

but had been unsuccessful thus far. Id. Devaney, however, had an advantage through his long-

standing relationship with certain leaders in Kuwait, as those leaders in Kuwait sought his advice

on how to proceed. Id. Following a consultation with Colson about the situation, Devaney

recommended Quanta as the company that could resolve Kuwait’s power issues. Id.

Devaney and certain Quanta employees sprang into action, conducting studies and analyses

of the situation, gathering confidential information from Kuwait’s Ministry of Electricity and

Water (“MEW”) (the ministry responsible for the power grid project), running various numbers,

and organizing information so that a contract could be signed. Id. at ¶ 24. As a matter of Kuwaiti

law, foreign contractors who enter into government contracts are required to do so via a Kuwaiti

agent or joint venture. Id. The Kuwaiti agent or joint venture partner assumes the responsibility of

guaranteeing the contracting, as well as financial performance for the work being performed on

behalf of Kuwait. Id. For the MEW project, the potential agent or joint venture partner was

Rawasi Consulting Company (“Rawasi”) through Osama Al-Rasheed, its managing director. Id.

Rawasi had previously helped General Electric in its $2.65 billion 2009 contract to build the

Subiya Power Plant and was well-respected by the Kuwaiti government. Id.

Given the urgency of Kuwait’s crisis, the parties had to act quickly. Kuwait offered a

contract of approximately $625 million for the project. Quanta would receive approximately $350

million, while Rawasi would receive approximately $275 million. Id. Devaney continued to take a

lead role in finalizing the contract’s details, and by early November of 2010, the situation remained

on track to be executed. Id. Meanwhile, Rawasi completed Quanta’s FCPA training and filled out

and certified due diligence questionnaires. Id.; Exhibit H to Aff. of P. Devaney. As such, and as a

result of Rawasi’s good reputation in Kuwait, there were no FCPA issues. Exhibit 1, Aff. of P.

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Devaney at ¶ 24.

On November 10, 2010, the Kuwait project took a turn for the worse. James O’Neil, the

new president of Quanta Services (whom had replaced Colson, although Colson remained CEO),

began interfering with the progress Devaney had made in Kuwait. O’Neil erroneously claimed to

be president of QGS and signed a memorandum of understanding (“MOU”) with Rawasi on behalf

of QGS. Id. at ¶ 25; Exhibit I to Aff. of P. Devaney. O’Neil’s misrepresentations that he was

president of QGS created tension with the Kuwaitis as everyone believed Devaney to be president,

not O’Neil. Exhibit 1 at ¶ 25. Further confusion abounded when, on November 24, 2010, O’Neill

sent the minister of MEW a letter stating that “from this date”, he was assuming direct

responsibility for the project for Quanta and its affiliates. Id.; Exhibit J to Aff. of P. Devaney.

Quanta caused even more confusion in mid-to-late November 2010 when it caused its

lawyers to become involved and took steps investigating what Quanta would allege to be violations

of the FCPA regarding the way Devaney brought the opportunity to Quanta through the date when

O’Neil usurped control. Exhibit 1, Aff. of P. Devaney at ¶ 26. This allegation was unfounded as

Rawasi had already completed FCPA training and provided signed documents to Quanta disclosing

all relevant information and certifying FCPA compliance. Id.; Exhibit H to Aff. of P. Devaney.

Despite Devaney’s wishes and assurances, Quanta continued to press the issue of FCPA violations

with the Kuwait MEW and Rawasi, further souring the project. Exhibit 1, Aff. of P. Devaney at ¶

26. The Kuwait MEW and Rawasi continued to assert that the transaction was transparent. Id.

Nonetheless, Quanta suddenly pulled the plug on the project, leaving Devaney, Kuwait, and

Rawasi hanging in the balance. O’Neil and Quanta had successfully destroyed both the project and

Devaney’s path to the compensation he had been promised. Nevertheless, O’Neil has admitted

there was no corruption or FCPA violations by any party relating to the MEW project. Id. at ¶ 27.

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I. DEVANEY IS TERMINATED BY QUANTA AND HIS BUSINESS REPUTATION IS LEFT SCARRED.

The unfounded withdrawal of Quanta from the MEW project caused Devaney incredible

harm, and was the tipping point. Devaney knew by mid-2011 that his relationship with Quanta was

beyond reproach, and Quanta terminated Devaney in August of 2011, with payment through March

of 2012. As a result of Devaney’s work, Quanta had secured more than $200 million in

government business – business Quanta did not have before Devaney’s tenure. Id. at ¶ 29; Exhibit

F to Aff. of P. Devaney.

For nearly 8 years, Devaney had endeavored to achieve Quanta’s goals, and had delivered.

He had set up internal controls and utilized his contacts to generate the type of business for which

Quanta was so desperate. Nonetheless, Devaney never received the share of the profits promised

by Colson, and memorialized in the Business Plan. Devaney lost 8 years that could have been

spent developing Trident, and his business reputation was left scarred as a result of Defendants’

conduct in Kuwait. As a result of Defendants’ unreasonable and unfounded conduct, Devaney can

no longer conduct business in Kuwait or with Rawasi. Exhibit 1 at ¶ 29.

II. ARGUMENT AND AUTHORITIES

Summary judgment is proper only when there is no genuine issue of material fact and

movant is entitled to judgment as a matter of law. Shah v. Moss, 67 S.W.3d 836, 842 (Tex. 2001);

In determining whether a disputed material fact issue exists, the Court should take as true evidence

favorable to the Plaintiffs, and every reasonable inference must be indulged in favor of the

Plaintiffs. Id. at 842.

A. The Court Should Deny Summary Judgment as to Plaintiffs’ Fraud and Negligent
Misrepresentation Claims Because There Is a Genuine Issue of Material Fact as to
Plaintiffs’ Reasonable Reliance
Plaintiffs’ fraud, fraud in the inducement, promissory fraud, fraud by nondisclosure, and

-13-
negligent misrepresentation claims are sufficiently definite to support Plaintiffs’ reasonable and

justifiable reliance. It must be noted that Defendants misstate the law: Texas law requires only

actual and justifiable reliance for the fraud-based claims.

A plaintiff seeking to prevail on a fraud claim must prove that: (1) the defendant made a

material misrepresentation; (2) the defendant knew the representation was false or made the

representation recklessly without any knowledge of its truth; (3) the defendant made the

representation with the intent that the plaintiff would act on that representation or intended to

induce the plaintiff's reliance on the representation; and (4) the plaintiff suffered an injury by

actively and justifiably relying on that representation. Exxon Corp. v. Emerald Oil & Gas Co., L.C.,

348 S.W.3d 194 (Tex. 2011). The elements of fraud do not require that an enforceable promise

serve as the basis for a claim. See id. Defendants only move for summary judgment on the basis of

“reasonable and justifiable” reliance. See Defendants

Case Info

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BRITTANYE MORRIS Track Judge’s New Case

Case No.

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Document Filed Date

February 21, 2014

Case Filing Date

December 31, 2012

County

Parties

BEHNCKE, MATTHEW COLIN Attorney for the Defendant
BREITBEIL, KENNETH R. Attorney for the Plaintiff
COLSON, JOHN R Defendant
DEVANEY, PATRICK O II Plaintiff
DYER, PATRICK J. Mediator
QUANTA GOVERNMENT SERVICES INC Defendant
QUANTA GOVERNMENT SERVICES INC (DELAWARE CORPORATION) MAY BE SERVED BY Registered Agent
QUANTA GOVERNMENT SOLUTIONS INC Defendant
QUANTA GOVERNMENT SOLUTIONS INC (IS CURRENTLY D/B/A QUANTA SERVICES Registered Agent
QUANTA INTERNATIONAL LIMITED Defendant
QUANTA INTERNATIONAL LIMITED (IS CURRENTLY D/B/A QUANTA SERVICES INC) Registered Agent
QUANTA SERVICES INC Defendant
QUANTA SERVICES INC (IS A PUBLICLY TRADED DELAWARE CORPORATION) MAY BE Registered Agent
TRIDENT VENTURES INC Plaintiff
Manuel Hernandez Attorneys for Plaintiffs
Shawn Raymond Attorneys for Defendants
Eric Mayer Attorneys for Defendants
Jacob De Leon Attorney
Mason Herring Attorney
Patrick Devine Attorney

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Motion-Secondary: DEVANEY, PATRICK O II vs. QUANTA SERVICES INC

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