HOUSTON – Troutman Pepper Locke secured a reversal of a $9 million verdict on behalf of Asset Risk Management LLC (ARM) before the Houston First Court of Appeals. The court held that Comal Energy Services LP’s (Comal) negligent misrepresentation claim was barred as a matter of law because Comal failed to establish that its alleged damages were separate and distinct from damages it could have sought under a contract.
Comal alleged that ARM employees made negligent representations regarding the payment of invoices, causing Comal to suffer economic losses. The claims arose from a broader lawsuit filed by Salt Creek Midstream LLC related to the expansion of a natural gas pipeline. Specifically, Comal claimed that ARM misrepresented that Comal would be paid under its contract with Salt Creek Midstream. However, the damages Comal sought from ARM were not only contractual damages but also damages that were prohibited under Comal’s contract with Salt Creek.
The First Court of Appeals rejected Comal’s claim, applying the economic loss rule under Texas law, which bars a party from recovering purely economic losses under a tort claim where the alleged damages arise under a contract. Because Comal’s damages were limited to the value of the contract it expected to receive, the court found that a negligent misrepresentation claim against ARM was barred.
The Troutman Pepper Locke team that secured this victory for ARM was led by Mia Lorick, David Harrell, Chris Verducci, and Sagar Patel.
Troutman Pepper Locke’s Business Litigation Practice has a successful track record defending and prosecuting high-stakes commercial matters in federal, state, trial, and appellate courts throughout the U.S. The team handles complex multidistrict cases, class actions, and single-case litigations, representing both mid-market companies and Fortune 500 industry leaders. Additionally, Troutman Pepper Locke represents clients before administrative boards, government agencies, and domestic and international alternative dispute tribunals.
Troutman Pepper Locke
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