Supreme Court
Am. Midstream, LLC v. Rainbow Energy Mktg. Corp
- Case number: 23-0384
- Legal category: Contracts
- Subtype: Interpretation
- Set for oral argument: January 13, 2024
Case Summary
This case involves contract interpretation and repudiation, lost-profits damages, and the election-of-remedies doctrine.
American Midstream owns the Magnolia natural gas pipeline. Rainbow, a natural gas trading company, contracted with American Midstream to transport natural gas on the Magnolia. The parties’ contract required American Midstream to provide “firm” transportation and balancing services absent certain contractual exemptions. American Midstream limited its balancing services on various occasions and claims that it was excused from performing under the contract. The parties’ representatives spoke on a conference call in which Rainbow claims American Midstream repudiated the contract. A month later, after continuing to ship gas under the contract, Rainbow terminated the contract, citing American Midstream’s breach and repudiation.
Rainbow sued American Midstream for breach of contract and related claims. After a bench trial, the trial court found for Rainbow on all its claims, and Rainbow elected to recover on its breach-of-contract claim. The trial court awarded Rainbow more than $6 million in lost-profit damages. In a divided opinion, the court of appeals affirmed. It held that the trial court properly interpreted the contract and sufficient evidence supports the trial court’s findings of breach and its award of lost profits.
American Midstream petitioned the Supreme Court for review. It argues that (1) the trial court’s erroneous interpretation of the contract led it to find that American Midstream breached when the contract excused its performance; (2) the trial court erred in awarding Rainbow speculative lost profits; and (3) the court of appeals erred in creating an exception to the election-of-remedies doctrine for contracts “performed as discrete transactions conducted on an on-going basis.” The Court granted the petition.
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