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Click here for the full text of this decision FACTS:Odeco Drilling Inc., Odeco Enterprises Inc., and Diamond-M Odeco Ltd. (collectively Odeco) own and operate semi-submersible drilling rigs. This case involves a component of those rigs called a chain-riser-tensioner-system (CRTS), which was originally marketed by the NL Shaffer division of NL Industries Inc. (hereinafter Baroid). The tensioner system used a chain, rather than the traditional wire rope. Odeco viewed chains as an alternative to wire rope for its tensioners because of the increased depth rating required for ocean-going rigs and because wire rope was more difficult to store on the rigs. Baroid quoted Odeco a price for a CRTS to be placed on the Ocean Odyssey, a vessel chartered to an oil company for drilling in the Gulf of Alaska. Because the CRTS was a new invention, there was no service history for chain-riser-tensioners before the Ocean Odyssey went into service. The chains on the Ocean Odyssey”s tensioners were manufactured by Whitney, a division of Dresser Industries. The Whitney chains failed shortly after the Ocean Odyssey went into operation. While the Ocean Odyssey was under construction, Odeco became involved in the building of a second semi-submersible rig, the Ocean Alliance, with British National Oil Co. (Britoil) and Ben Line Steamers Ltd. (Ben Line). The parties contemplated that Britoil and a contractor would each own a one-half interest in the rig. Britoil and Ben Line agreed that Odeco would serve as the contractor through Ben Odeco Limited, a company jointly owned by Ben Line and Odeco. The construction and financing of the Ocean Alliance involved creating a new company, St. Vincent Drilling Limited (St. Vincent), the shares of which were owned 50 percent by Britoil and 50 percent by Ben Odeco. The rig was actually ordered and owned by Lloyds Leasing Limited (Lloyds Leasing) and leased by St. Vincent. The joint venture eventually selected Scott Lithgow Limited (Scott Lithgow) as the shipyard to construct the rig. Scott Lithgow and Odeco signed a letter agreement, which appointed Odeco as the agent for Scott Lithgow to purchase owner’s specified equipment (OSE) for the rig. The chain- riser-tensioners for the Ocean Alliance were OSE. The Ocean Alliance went into service in December 1988. Its chain failed on three separate occasions in 1990. Odeco filed suit against Baroid and Rexnord. Odeco asserted claims for violation of the DTPA, breach of warranty, fraud, negligence, products liability and breach of contract, alleging that it had incurred chain replacement costs, damage to other rig property, increased servicing and lubricating costs, and lost drilling time for which the defendants were responsible as the designers, engineers, manufacturers, distributors or lubricators of the “160K Chain Riser Tensioner.” At trial, following proceedings before a special judge and a partial settlement agreement, Odeco’s only remaining claims were those against Baroid for breach of contract and breach of express warranty. Also remaining were Baroid’s DTPA counterclaims against Odeco, Baroid’s cross-claims against Rexnord, and Rexnord’s cross-claims against Baroid. The trial court awarded contract damages and attorney’s fees to Odeco against Baroid Equipment, Inc., f/n/a Schaffer Inc., and Varco Shaffer Company (collectively Baroid). The trial court also awarded Baroid damages and attorney’s fees on its indemnity cross-claim against a co-defendant, Rexnord Corp. (Rexnord). HOLDING:Affirmed in part, reversed and rendered in part. The primary issue presented by the appeal is whether Odeco, the operator of a semi-submersible drilling rig and purchasing agent for the rig builder, entered into an oral contract with Baroid, an equipment supplier to the rig, that created warranties running to Odeco, which were greater than, and in addition to, the warranties Baroid made to the rig builder, who was the actual purchaser of the equipment. The court notes that Odeco represented Scott Lithgow in its purchase negotiations with Baroid. As part of its negotiations, Odeco admitted that Baroid’s standard terms and conditions applied to the purchase of the CRTS. Baroid’s standard terms and conditions provided, among other things, a one-year warranty from the date of shipment on equipment manufactured by Baroid. The terms and conditions included the merger language referenced earlier and “disclaim[ed] all liability, whether in contract, tort, warranty, or otherwise, to any party other than [Scott Lithgow].” The court finds that Odeco’s claim rests on the existence of the written contract at issue in the case but for the sale of the CRTS from Baroid to Scott Lithgow, there would be no basis for Odeco to claim an oral contract to warranty the CRTS to Odeco. Therefore, the court holds that Odeco is not a stranger to the written contract between Baroid and Scott Lithgow and cannot offer parol evidence of an oral agreement that conflicts with or adds to the terms of the written contract that it negotiated on behalf of Scott Lithgow. Because Odeco is bound by the terms of the written contract and the alleged oral contract actually conflicts with the written contract, the court concludes that there is legally and factually insufficient evidence to show that Baroid and Odeco entered into an oral contract. Baroid also contends that there is legally and factually insufficient evidence to support an award of damages on Odeco’s breach of contract claim. The court agrees and reasons that the damage to the value of the Ocean Alliance occurred in this case when the CRTS failed long before Odeco’s purchase. At the time of the CRTS failure, Odeco was not the owner of the Ocean Alliance; it was merely the rig operator and the purchasing agent for the actual owner. As such, Odeco should have taken the decreased value of the rig into account when it decided to purchase the rig. Because the court holds that Odeco’s recovery of damages from Baroid is barred by the parol evidence rule and is supported by legally insufficient evidence of the existence of an oral agreement between Baroid and Odeco, wherein Baroid warrantied to Odeco that it would stand behind the CRTSs Baroid sold to Scott Lithgow, and damages to Odeco caused by the sale of the CRTSs to Scott Lithgow, the court reverses the judgment against Baroid and render judgment that Odeco take nothing from Baroid on its claims. Because the court holds that the trial court did not abuse its discretion in failing to award damages on Baroid’s DTPA counterclaim against Odeco, it affirms that portion of the judgment. Because the court holds that all of Baroid’s claims against Rexnord were contingent on a finding that Baroid was liable to Odeco, and because Baroid is not liable to Odeco, the court reverses the judgment as it relates to Baroid’s cross-claims against Rexnord and renders judgment that Baroid take nothing from Rexnord. OPINION:Sherry Radack, C.J.; Radack, C.J., Nuchia and Bland, JJ.

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