Fourteenth Court Affirms Judgment on Oral Modification Defense in Oil Field Equipment Procurement Dispute
The Fourteenth Court of Appeals affirmed a trial court judgment in favor of Equip Up Store, LLC in a breach of contract action arising from an oil field equipment procurement agreement with BP Angola, rejecting AOSS Inc's defense that the parties orally modified the written Independent Contract Agreement's three percent markup compensation formula. AOSS argued the parties verbally modified the contract to provide monthly employee payments totaling $49,500 instead of the contractual markup on $4.6 million in BP payments, but the ICA expressly required modifications to be in writing.
Background and Business Context
Wayne Ledingham and AOSS Inc (collectively, AOSS) entered into an Independent Contract Agreement (ICA) in April 2017 with Collinet Itoe and Equip Up Store, LLC (collectively, Equip Up) for sourcing, procuring, and delivering oil field equipment and supplies to BP Angola's offshore exploration and production projects. Under the ICA's terms, Equip Up received requisitions and purchase orders for oil field equipment from AOSS on behalf of BP, processed vendor quotes, and submitted formal quotes to BP that included a markup percentage to cover work performed, overhead costs, and overall margins. The ICA specified that AOSS would compensate Equip Up at a rate of three percent markup on the cost of each purchase order received from BP, with payment due within seven days after AOSS received payment from BP.
The Contractual Dispute
Equip Up alleged that AOSS received payments from BP totaling $4,615,523.23, and based on the three percent markup formula, AOSS owed $138,465.75 but failed to pay. AOSS countered that Equip Up expressed concerns about the amount of time it would take to receive payment under the ICA's compensation process, and the parties verbally agreed to modify the contract. According to AOSS, Equip Up received thirteen monthly payments totaling $49,500 from February 2017 to February 2018 as AOSS's employee rather than as a contractor under the computation formula, and never objected to this modified payment structure until AOSS terminated the ICA in February 2018.
The ICA contained express provisions regarding modifications. AOSS insisted the parties agreed to this oral modification notwithstanding the contract's terms that explicitly required modifications to be in writing. AOSS also filed a counterclaim for breach of contract, alleging Equip Up violated the Non-Disclosure Agreement (NDA).
Procedural History
Equip Up filed suit in February 2020, asserting claims for breach of contract, quantum meruit, and promissory estoppel, later amending to add a defamation claim. After a bench trial, the trial court signed a final judgment in favor of Equip Up and denied AOSS's requested relief. On appeal, AOSS raised three issues: (1) the evidence was legally insufficient to support the trial court's judgment, (2) the parties verbally modified the written contract, and (3) the trial court erred in ordering AOSS take nothing on its counterclaim. The Fourteenth Court of Appeals affirmed the trial court's judgment.