Taita Chemical Co. Ltd. v. Westlake Styrene LP

The identities of the two companies and their actors were probably confusing because of the overlapping actors between the two companies. But with the arguments from the lawyers and the context of trial, the instruction was clear enough. It is at least not so unclear as to create substantial and ineradicable doubt whether the jury has been properly guided in its deliberations.

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Click here for the full text of this decision FACTS: Taita Chemical Co. sued Westlake Styrene for breach of contract, arguing that Westlake failed to sell Taita styrene monomer at a lower price to which Taita was entitled under the contract. Westlake asserted affirmative defenses, including the aiding and abetting of a breach of fiduciary duty and fraud. Westlake also pled aiding and abetting breach of fiduciary duty and fraud as counterclaims. The jury found that Taita aided and abetted a breach of fiduciary duty and that it defrauded Westlake. The jury awarded Taita nothing on its contract claim, but awarded Westlake $16.297 million on its aiding and abetting breach of fiduciary duty counterclaim. Westlake also recovered attorneys fees based on the fraud finding. Taita argues that the jury’s findings must be reversed because the jury instructions were erroneous. HOLDING: The court affirms the judgment denying Taita recovery under the contract and awarding Westlake attorneys’ fees, but reverses the judgment’s award to Westlake on the counterclaim for aiding and abetting a breach of fiduciary duty. The court is persuaded that no adequate objection was leveled at the charge and the court reviews by the measure of plain error. Taita contends that the charge lacked detail needed by the jury in judging the duty to disclose. Perhaps so, but the result is not a clear and obvious error that seriously affects substantial rights and the fairness, integrity, or public reputation of judicial proceedings. Taita argues that by failing to give specific instructions about actual and apparent authority, “the district court made it far too easy for the jury to hold Taita accountable [for aiding and abetting the breach of loyalty].” Taita argues that the alleged bad acts should be attributed to BTR, a different corporation (that owned a 51% interest in Taita). If the jury knew the law of actual and apparent authority, Taita argues, it could have attributed the bad acts to BTR because the actors had no authority to bind Taita. Taita relies on Thompson and Wallace of Memphis v. Falconwood Corp., 100 F.3d 429 (5th Cir. 1996). In Falconwood this circuit held that the district court erred in failing to give a detailed instruction on agency law. At issue was whether a corporation’s employee bound the corporation when he secured a loan with false invoices. Instead of giving a detailed instruction on agency law, the court only instructed that “in general, any agent or employee of a corporation may bind the corporation by his acts and declarations made while acting within the scope of his authority, delegated to him by the corporation or within the scope of his duties as an employee of the corporation.” The court held that, considering the difficulty of agency law, the court abused its discretion in failing to give a more detailed instruction. Viewing the charge as a whole, Taita’s argument must fail. Taita’s concern is being held liable for the acts of BTR. Even assuming the primary portion of the charge dealing with agency is insufficient, a later portion of the charge ensures that the jury was adequately guided in its deliberations. The court instructed the jury that if it found that the Taita-appointed officers breached their fiduciary duties by not divulging information during board meetings, “you must further consider whether Taita, through the actions of its own officers and/or directors , knowingly joined with or participated in that breach of loyalty.” It was instructed further that if it found such a breach, it “must also find Taita liable (or responsible) for that breach of loyalty.” This language focused the jury on the fact that it must find Taita liable for the acts, not BTR. The identities of the two companies and their actors were probably confusing because of the overlapping actors between the two companies. But with the arguments from the lawyers and the context of trial, the instruction was clear enough. It is at least not so unclear as to create substantial and ineradicable doubt whether the jury has been properly guided in its deliberations. Taita’s third argument is that the trial court erred in instructing the jury that it could hold Taita liable for aiding and abetting breach of fiduciary duty without finding Westlake damaged in any way. The court agrees. Even assuming that the error in misstating the elements of aiding and abetting breach of fiduciary duty tainted both Westlake’s claim and its affirmative defense, the verdict must be upheld if the error could not have affected the outcome of the case. The fraud claim was based, like the breach of fiduciary duty, in part on the allegation that Taita fraudulently induced Westlake into entering into the lower-priced contracts. Taita’s fraudulent inducement resulted in the price-discounts Taita claimed in its breach of contract action. The jury found that Taita defrauded Westlake through this conduct, and this finding supports the invalidity of Taita’s breach of contract claim. OPINION: Higginbotham, J.

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