AZZ, Inc. v. Southeast Texas Industries, Inc.

In The

                                Court of Appeals

                    Ninth District of Texas at Beaumont

                               ________________

                               NO. 09-24-00181-CV
                               ________________

                              AZZ, INC., Appellant

                                         V.

             SOUTHEAST TEXAS INDUSTRIES, INC., Appellee

________________________________________________________________________

                     On Appeal from the 1st District Court
                           Jasper County, Texas
                           Trial Cause No. 36779
________________________________________________________________________

                          MEMORANDUM OPINION

      Southeast Texas Industries, Inc. (“STI” or “Appellee”) sued AZZ, Inc.

(individually, “AZZ, Inc.” or “Appellant”) and also filed claims against International

Galvanizers LLC d/b/a AZZ Galvanizers and d/b/a AZZ Galvanizing – Beaumont

and f/k/a International Galvanizers Partnership, Ltd. (AZZ-Beaumont), (collectively,

“Defendants”), along with three other AZZ entities, for breach of contract and breach




                                          1
of warranty, among other things. 1 STI also pleaded alter ego and sought to pierce

the corporate veil, but the trial court granted Defendants’ motion for directed verdict

on alter ego before the case was submitted to the jury.

      In this dispute, AZZ, Inc. allegedly failed to properly galvanize pipe for STI,

which STI was to supply to Bechtel on two major projects. A central question before

us is which AZZ legal entity entered into the agreement with STI for the galvanizing

of pipe. Following a ten-day trial, a jury answered “yes” to question 1, “Did STI and

AZZ agree that AZZ would galvanize pipe spools provided by STI?” The jury then

answered “yes” to question 2, “[d]id AZZ fail to comply with the Contract found in

Question 1?” The jury also answered “yes” to question 7, “Was the failure, if any,

of AZZ to comply with an express warranty the proximate cause of damages to STI.”

It should be noted that all the jury questions were prefaced on a definition in the

charge that was requested by STI and given by the trial court, over Defendants’

objections, that stated “AZZ” refers to “Defendant AZZ Inc. a/k/a AZZ

Incorporated.”

      The jury awarded identical actual damage amounts for each cause of action,

$4,539,468.25. In its Motion for Entry of Judgment, STI elected to recover only on

the breach of contract claim. The trial court entered a Final Judgment against AZZ,


      1
       Before trial, STI non-suited the following entities: AZZ GP, LLC; AZZ LP,
LLC; and AZZ Group, LP. When the case was submitted to the jury, STI only
submitted questions to the jury on their claims against one Defendant, AZZ, Inc.
                                          2
Inc. only and awarded STI actual damages of $4,539,468.25, attorney’s fees through

trial of $950,558.50, attorney’s fees for post-trial matters of $56,850.00, contingent

appellate attorney’s fees, pre-judgment interest of $2,414,499.63, and post-judgment

interest.

       In three issues, AZZ, Inc. argues: (1) there is legally and factually insufficient

evidence to support STI’s claim for breach of contract 2 because AZZ, Inc. is not the

legal entity that had the agreement with STI to perform the Stage 3 galvanization

work; (2) the trial court reversibly erred by mischarging the jury when it refused to

instruct the jury on any measure of damages for a breach of warranty and improperly

defined breach-of-contract damages as “costs . . . related to” the alleged breach; and

(3) there is legally insufficient evidence to support the damages awarded by the jury.

We hold the evidence was legally insufficient to support the jury’s finding that STI

and AZZ, Inc. entered into a contract whereby AZZ, Inc. agreed it would galvanize

pipe spools provided by STI. Accordingly, we reverse the trial court’s judgment and

render judgment that STI take nothing by way of its claims against AZZ, Inc. as

discussed below.


       2
        On appeal, the AZZ Defendants also make similar arguments as to the legal
and factual sufficiency of the jury’s findings relating to the alleged breach of
warranty claim, but because STI elected to recover a judgment solely on the breach
of contract claim, we will discuss the breach of warranty claim only when necessary
to our ruling. See Tex. R. App. P. 47.1 (appellate court must hand down a written
opinion as brief as practicable that addresses ever issue necessary to the appeal’s
final disposition).
                                           3
                                I. BACKGROUND

Parties’ Relationship 3

      STI had an agreement with Bechtel Corporation (“Bechtel”) on two “mega”

projects to supply fabricated pipe spools for: (1) the Sabine Pass Liquefaction

Project; and (2) the Corpus Christi Liquefaction Project. The pipe had to be

galvanized, and Bechtel’s purchase orders and specifications issued to STI for each

project specified that standard specification ASTM A123 applied to the pipe

galvanization. STI’s project manager, Henry Glaser testified that he “reached out to

AZZ to get them to quote galvanizing.” Glaser said he did so “because [of] their

proximity there in Beaumont” and “the fact that they have multiple locations spread

all over the United States, they’re essentially the biggest game in town.” Glaser

testified that STI had already used AZZ for Stages 1 and 2 of the Sabine Pass Project,

and there were no issues from that work.

      In 2015, in response to STI’s inquiry, Henry Netherland, the AZZ Galvanizing

– Beaumont plant manager, submitted a cover letter on “International Galvanizers




      3
        Often, in the pleadings and in the record of the trial, there is a reference to
“AZZ” generally without specifying whether it is a reference to “AZZ, Inc.” or “AZZ
Galvanizing – Beaumont.” In our summary of the background and evidence at trial,
when the parties, testimony, or other evidence failed to specify a particular AZZ
entity, we will also use “AZZ.” When a particular AZZ entity was referenced, we
will also do so.
                                           4
Partnership Limited” letterhead as shown below with a manual attached entitled

“AZZ Galvanizing Services Quality Program Manual.”




STI, in turn, submitted the materials to Bechtel, who stamped it “Code 1,” which

meant it approved the procedure for use in the galvanizing. The AZZ Galvanizing

Services Quality Program Manual submitted by Netherland outlined the various

inspection processes and specified that galvanization would be performed in

accordance with ASTM A123. Similarly, the record shows that the AZZ

Galvanizing Services of Houston Sales Manager Mike Bond responded to STI’s

galvanizing inquiry with two documents. The first document Bond sent had the

following logo:




Bond signed the document as “AZZ Houston Sales Manager.” The correspondence

stated that “AZZ provides hot dip galvanizing services throughout the United States

and Canada, operating 36 facilities.” The second document Bond submitted was on

the same letterhead Netherland used:


                                        5
The second document noted it was a “[r]esponse to procedural inquiry[.]” It stated

that the galvanizing procedures would comply with ASTM A123, among others, and

that repairs would be made per ASTM A780. Bond signed the second letter as the

“Sales Manager” for “AZZ Galvanizing – Beaumont.”

      Once Bechtel approved the use of the AZZ galvanizing procedure, STI

submitted various purchase orders to “International Galvanizers,” which is the

Beaumont facility, for galvanized approximately 1900 pipe spools to be delivered to

AZZ in Beaumont by STI, then “International Galvanizers” in Beaumont invoiced

STI, and STI paid for the galvanizing. Each of the invoices sent to STI is from AZZ-

Beaumont (International Galvanizers/AZZ Galvanizing – Beaumont) and directs

that payment be remitted to “International Galvanizers.” The first purchase order for

“original galvanizing” or “original galvanization” 4 for the projects was issued by




      4
         Throughout this opinion, we use “original galvanizing” or “original
galvanization” to refer to the first galvanization of the pipe spools that occurred at
the AZZ Galvanizing – Beaumont facility between late 2015 and early 2017. When
we use “regalvanizing” or “regalvanization,” we refer to subsequent galvanization
of the same pipes to remedy the alleged defects in the original galvanization, which
occurred at various AZZ facilities, including AZZ Galvanizing – Beaumont.
                                          6
STI to International Galvanizers in Beaumont in early 2016. The original

galvanization continued until early 2017.

      Appellant contends the entity that agreed to galvanize the pipes was

International Galvanizers LLC, which operated under the d/b/a names “AZZ

Galvanizers” and “AZZ Galvanizing – Beaumont,” and Appellant argues there is no

evidence in the record that supports a finding that AZZ, Inc. is the legal entity who

agreed to galvanize the pipes. In contrast, Appellee contends that direct and

circumstantial evidence supports the finding that AZZ, Inc. is the legal entity who

agreed to galvanize the pipes through its agents, Beaumont Plant Manager Henry

Netherland and Regional Sales Manager Mike Bond. STI points to the fact that after

the problems arose with the stage three galvanization, Bernardo Duran, a metal

coatings engineer employed by AZZ, Inc., became involved to provide

recommendations for resolving the dispute and that Duran sent his report to “AZZ

Vice President Mike Delesandri, AZZ Southeast Regional Manager Bobby

McKinney, and AZZ Regional Sales Manager Kevin Houston.” STI contends these

“AZZ representatives, along with Beaumont personnel, were ‘directly involved with

the project.’”

      According to the record, Bechtel rejected about 1500 pipe spools for defective

galvanization, and STI alleged it had to correct the problem by having AZZ

regalvanize the pipes.

                                            7
Pleadings and Parties’ Claims

      STI sued several AZZ entities, including AZZ, Inc. and AZZ-Beaumont and

other AZZ entities in its last live pleading, the third amended petition, for its

remediation costs, amounts Bechtel back charged it, and attorney’s fees, among

other things. In the live petition, STI alleges that it “contracted and retained the

services of AZZ Inc. a/k/a AZZ INCORPORATED, AZZ GP, LLC, AZZ LP, LLC,

AZZ GROUP, LP and/or INTERNATIONAL GALVANIZERS PARTNERSHIP,

LTD. d/b/a International Galvanizers d/b/a Aztec Galvanizing d/b/a AZZ

Galvanizers Partnership, Ltd. d/b/a AZZ Galvanizing – Beaumont,” which STI

collectively referred to as “AZZ.” STI pleaded that AZZ represented it could

galvanize the pipes and that its work would meet or exceed the specifications. STI

asserts that based on AZZ’s representations, Bechtel approved it to provide the

galvanizing services and materials for the projects’ pipe spools.

      STI alleges that AZZ made representations about its “rigorous” inspection

protocol. STI claims that despite these representations about AZZ’s inspections and

its written policies, “AZZ never notified” it or Bechtel of any problems with the pipe

spools before, during or after galvanization. STI claims that it relied on “AZZ’s . . .

various representations” and that “AZZ failed to comply with its own Quality

Program,” so STI accepted and, in some cases, installed the pipe.




                                          8
      According to STI, after installing the pipe, STI or Bechtel discovered

“numerous material defects in the galvanizing performed by AZZ.” Bechtel required

STI to cure the defects by removing the pipe and sending it back for regalvanization,

then shipping it back for reinstallation, with those costs “either being borne directly

by [STI] or being back charged and/or assessed to [STI] by its customer, Bechtel.”

STI asserts that although “AZZ” agreed to regalvanize some materials at its cost,

STI bore the “vast majority” of these costs.

      STI alleges that upon pressing, “AZZ finally” agreed to regalvanize some pipe

at “a different facility.” STI claims that based on its contractual obligations with

Bechtel, it incurred “substantial damages in curing AZZ’s defaults and defective

galvanizing[.]” According to STI, these damages included continued “charges from

AZZ,” hiring its own quality-control experts to inspect materials, the costs of

reinstallation, freight, back charges and assessments from Bechtel.

      STI alleged causes of action collectively against all AZZ Defendants for:

breach of contract; breach of express warranty for services; negligence; negligent

misrepresentation; and alter ego/piercing the corporate veil/joint and several liability.

In conjunction with its breach of contract claim, STI alleges that it “and AZZ had a

valid and enforceable contract for AZZ’s galvanizing services and materials.” STI

asserts that it fully performed under the contract, but “AZZ defaulted” by “failing to

provide the agreed-upon and requisite galvanizing services and materials suitable

                                           9
and acceptable under the agreed-to specifications and standards.” It claims that these

acts constitute the “producing cause” of STI’s damages. STI alleges that “[b]ecause

of AZZ’s breach of contract,” it is entitled to damages, including direct,

consequential, benefit of the contract and benefit of the bargain, attorney’s fees, and

costs.

         In the petition, STI alleged alter ego, veil-piercing, and joint and several

liability theories, arguing, among other things, that “AZZ Inc. a/k/a AZZ

Incorporated (“AZZ Inc.”) is liable for the conduct of its subsidiaries which are mere

tools or business conduits of AZZ Inc. and agents of their principal AZZ Inc.” It

sought to disregard the corporate form of AZZ Inc.’s subsidiary entities.

         The Defendants answered with a general denial, a verified denial, and various

affirmative defenses. The Defendants pleaded that “International Galvanizers

Partnership, Ltd. converted to International Galvanizers LLC, a Texas limited

liability company on August 31, 2018.” They also specially excepted, complaining

that STI references all the entities “collectively,” fails to separate or differentiate any

alleged conduct to a particular defendant, and STI’s pleading fails to give fair notice

of which entity engaged in which conduct.

         AZZ-Beaumont (International Galvanizers LLC d/b/a AZZ Galvanizers d/b/a

AZZ Galvanizing – Beaumont) filed its own counterclaim against STI. In the

counterclaim, AZZ-Beaumont alleges it offered to compromise and regalvanize the

                                            10
rejected pipe for the Bechtel project, and in essence, formed a new contract, which

it referred to as the “Moving Forward Agreement.” It asserts that it offered to

regalvanize rejected straight run pipe at no cost to STI, but it would require STI to

pay to regalvanize pipe with 90-degrees or bends. According to International

Galvanizers, STI agreed to this proposal but failed to pay International Galvanizers

after being invoiced $134,836.57 and applying credits, and STI still owes it

$72,524.17. International Galvanizers pleaded the following causes of action: suit

on sworn account; breach of contract; promissory estoppel; quantum meruit; and

setoff and recoupment.

      In its Amended Answer to Defendant’s Counterclaim, STI asserts a general

denial, specific denials, and affirmative defenses. Among other things, it asserts a

“failure of consideration for the alleged contract forming the basis of IGP’s claims

[] because IGP had a pre-existing obligation to correct its defective work and

therefore the services it performed pursuant to IGP’s Alleged Contract were not

proper consideration.” It also responds that there was only one contract between the

parties, and it is the one in STI’s live petition known as the “Galvanization Contract.”




                                          11
                 II. TRIAL PROCEEDINGS AND EVIDENCE

Testimony of Jimmy Glaser

      Jimmy Glaser testified that he has worked for STI for twenty years and is a

project manager. He said the two projects at issue were for Bechtel. STI bid for the

first stage of the project in 2012 and was involved in all three stages of the projects.

They began negotiations with Bechtel in 2012, the purchase order was issued in

December 2012, Bechtel began shipping raw materials to STI early in 2013, and

fabrication began “in earnest” around June or July 2013. Glaser said that on the

Sabine Pass project, STI performed some of the piping in Stages 1 and 2, and that

“AZZ was our galvanizer throughout the entire program.” In the first two stages,

there “were no major issues that were cause for concern” with the galvanization.

According to Glaser, STI began fabricating pipe for Stage 3 of the Sabine Pass

project at the end of 2015 and started shipping pipe to the site in early 2016. Glaser

testified that STI entered an agreement with Bechtel to do Stages 1 and 2 of the

Corpus Christi Project, and STI hired AZZ to perform the galvanization for Stages

1 and 2 of that project.

      Glaser indicated these were exceptionally large projects involving billions of

dollars, so time was of the essence. Glaser testified that Bechtel issued purchase

orders to STI for the Corpus Christi Project and Sabine Pass Project containing the

agreement between Bechtel and STI, which were both admitted into evidence.

                                          12
Glaser negotiated both agreements with Bechtel for STI. Glaser noted the award date

for the Corpus Christi Project was June 1, 2015, and the award for the Stage 3 Sabine

Pass Project was September 30, 2015. Glaser testified the terms of the agreement for

the Sabine Pass Stage 3 Project were the same as for the Corpus Christi Project.

      Per the agreements, Bechtel was the Buyer, and STI’s work was subject to

Bechtel’s inspection. Before any STI subcontractor could work on the projects, the

subcontractor had to submit its procedures for how it would do the work, which STI

then sent to Bechtel for approval. Bechtel then assigned a procedure code, and the

Bechtel “Code 1” stamp meant the subcontractor could proceed with the work

exactly as outlined in the submitted procedure.

      According to Glaser, STI had two agreements with Bechtel for these projects,

then STI entered into an agreement with AZZ regarding both of those projects.

Glaser testified,

      I reached out to AZZ to quote the galvanizing for us; and, actually, they
      were the only ones that I reached out to because their proximity there
      in Beaumont and also the fact that they have multiple locations spread
      all over the United States, they’re essentially the biggest game in town.

Glaser testified that AZZ submitted its galvanizing procedure to STI, which STI then

sent to Bechtel. The document shows it was submitted in July 2015 with a cover

letter from Henry Netherland as Plant Manager of “AZZ Galvanizing – Beaumont”

in response to a procedural inquiry. The letter explained it would serve as an



                                         13
addendum to “AZZ Galvanizing Services Quality Manual.” Netherland submitted

the letter on the following letterhead:




The next page contained the same “AZZ Galvanizing Services” logo at the top with

the “Quality Program Manual” immediately underneath. Glaser explained that

Bechtel stamped AZZ’s procedure as “Code 1,” which meant Bechtel agreed with

the procedures and allowed AZZ to proceed with the work. It was the same

procedure followed in Stages 1 and 2 on the Sabine Pass Project.

      Glaser testified that the procedure manual lists all AZZ locations, and STI

expected AZZ to follow the process outlined no matter which AZZ location did the

work. STI expected AZZ to inspect the material upon delivery at AZZ’s facility and

report any damage, but AZZ never reported any damage to STI.

      Glaser testified that STI had “no significant issues” with AZZ’s work on

Stages 1 and 2 of the Sabine Pass project. In contrast, there were significant problems

with Stage 3, although the scope of work was the same as Stage 1 and 2. STI realized

too late that the inside of the pipe was not galvanized properly; there were bare spots,

ash, and dross inclusions.

                                          14
      Glaser testified that in early 2016, the original galvanization work occurred

for the Sabine Pass Stage 3 Project and the Corpus Christi Project with the work

happening “concurrently[,]” and it continued until early 2017. Glaser said around

August 2016, they received the first Deficiency Report from Bechtel noting a

problem with the pipe galvanization. In April 2017, STI first discussed

regalvanization with AZZ, and through the end of 2017, the regalvanization

occurred. According to Glaser, Bechtel’s specifications incorporated the ASTM

standards for hot-dipped galvanization, which AZZ was supposed to follow.

      On Stage 3 of the Sabine Pass and Corpus Christi Projects, they had issues

with flux and ash inclusion in the galvanization, which was a reason Bechtel rejected

AZZ’s galvanization. According to Glaser, AZZ’s process indicated that major

uncoated areas or bare spots were cause for rejection and would be repaired

according to ASTM A780, which is what happened here once Bechtel caught it.

According to AZZ’s procedure, ASTM A123 was the standard AZZ was supposed

to follow. Glaser testified that AZZ’s manual required AZZ to perform multiple

inspections during the process, and STI expected AZZ to do so.

      Glaser said that although the original galvanization of pipe spools on the first

two stages at Sabine Pass met STI’s quality expectations, it did not on Stage 3 for

Sabine Pass nor for the Corpus Christi Project. Although the same specifications

applied to the work, Glaser noted that when the work began, STI worked with Henry

                                         15
Netherland at AZZ, then Steve Shepard at AZZ, then Darrian Wright took over at

AZZ as plant manager. According to Glaser, it seemed many of these problems

happened during Wright’s tenure as manager.

      Glaser said that in April 2017, he let AZZ know that Bechtel reported

problems; Bechtel believed all non-straight run pipe spools had potential problems.

Bechtel wanted STI to send a representative to the site to inspect all the galvanized

pipe in the laydown yard. Glaser testified that STI sent Cody Garrett and a few others

to inspect the pipe in the laydown yard. According to Glaser, the issue with the

galvanized pipe began really becoming known in March and April of 2017. STI

received several Deficiency Reports from Bechtel during this time, rejecting the

pipe. Once Bechtel returned the pipe to STI’s yard, Glaser personally inspected

“hundreds of spools.” He personally observed the problems with the pipe, which

were visible to the naked eye.

      Glaser said that on April 17, 2017, STI’s pipe fabrication manager, Jerrold

Gill, sent a letter to Kevin Houston at AZZ. The letter notes the vendor as “AZZ

Galvanizing.” In the letter, Gill told Houston there were galvanizing issues with 300

pipe spools, STI was returning the spools for repairs, and STI requested a meeting.

The requested meeting between STI and “several representatives from AZZ”

occurred, including Houston, Wright, and McKinney. Glaser testified that everyone

agreed they needed to do whatever was necessary to make Bechtel happy, and STI

                                         16
would be “sending spools back to AZZ.” Glaser said that AZZ was “on board with”

the plan and wanted to help. Glaser testified that AZZ agreed to regalvanize those

300 spools and confirmed this occurred after the original galvanization. Glaser

discussed STI’s communications with AZZ and Bechtel regarding the problems with

the pipes and the plan for fixing them. This included communications with Houston

from AZZ, who was a “regional sales” person and “heavily involved.”

      Glaser also discussed an email from AZZ’s Bernardo Duran dated April 26,

2017, to other AZZ employees, including McKinney, identifying and explaining

issues seen in the pipe photographs. Duran recommended remediation steps,

including regalvanizing certain pipes with bare spots. Duran’s email signature block

contained “AZZ Metal Coatings” and noted he was a “Coatings Performance

Engineer.” Glaser testified that “Duran was an employee from AZZ that was brought

in” and “was more of an expert and was able to offer some direction.”

      Glaser said that on May 10, 2017, he emailed AZZ’s McKinney, among

others, requesting formal documentation for “AZZ’s stance” on the noted issues with

the galvanized spools for the two Bechtel projects. STI’s senior management and

Bechtel’s senior management wanted “AZZ on board with the overall process of

fixing the issue and get their buy-in.” According to Glaser, STI tried to work with

AZZ to fix the problem. The email shows that McKinney responded the same day

regarding repairs to the pipe indicating they would “continue to rerun the material”

                                        17
with “bare spots on the [internal diameter].” Neither the May 10 email nor Glaser’s

testimony indicated that McKinney worked or acted as a representative for AZZ,

Inc. Glaser’s email to McKinney shows that it was sent to an “azzgalv.com” email

address. A report dated May 1, 2017, attached to the email referenced the two

projects and stated that a Bechtel coating specialist travelled to “STI and AZZ

Galvanizers in Beaumont” to inspect the pipe.

      Glaser said that on May 11, 2017, McKinney responded to Glaser’s email with

a letter. McKinney’s letter was on “AZZ Beaumont” letterhead and said it was from

“Bobby McKinney Jr. c/o AZZ Galvanizing.” Glaser told the jury that in the letter,

McKinney outlined AZZ’s position, which was that most bare spots on the pipe’s

interior were due to the design. McKinney also attributed the bare spots to

insufficient blasting, which AZZ raised on very limited quantities previously and

that STI already addressed. Glaser felt that AZZ was making excuses.

      Glaser testified that by June 2017, STI had received “a lot of pipe spools back

from Bechtel” to remediate. On June 6, 2017, AZZ’s Beaumont Plant Manager,

Wright, reached out to STI’s Garrett via email. Wright said that going forward, AZZ

would regalvanize pipes with bare spots on the 90-degree sections or at connections,

but STI would bear the cost. Yet, “AZZ Beaumont” would be responsible for

reprocessing straight pipes with large or inaccessible bare spots and specified that




                                        18
“AZZ Beaumont” would use zinc solder to repair certain spots. Wright’s email had

the following signature block over a logo:

      Darrian Wright
      Plant Manager
      AZZ Galvanizing – Beaumont
      [Phone Numbers]
      5898 Industrial Rd, Beaumont, Texas 77705
      Darrianwright@azzgalv.com




      Glaser testified that Garrett responded to Wright via email on June 9, 2017,

but Glaser denied that response was an agreement by STI to pay for the

regalvanization. According to Glaser, Garrett’s June 9, 2017, response only showed

that STI assigned two separate purchase orders to track items that AZZ refused to

reprocess. When asked if this was a new agreement, Glaser responded, “It’s just the

tracking of the information on these two jobs.” Glaser testified that STI had already

paid AZZ one hundred percent for the original galvanization.

      According to Glaser, STI paid for the regalvanization of pipes with bends until

AZZ completed most of the regalvanization work, because AZZ refused to

regalvanize without STI paying. Glaser noted a liquidated damages clause in STI’s

contract with Bechtel and claimed that AZZ refused to reprocess unless STI paid

again. Glaser testified that “AZZ is the biggest galvanizer around. They’re the only

                                         19
one that’s local to us, and so we’re kind of stuck[.]” Glaser explained that by July

2017, AZZ had a process in place to regalvanize all the spools, which occurred over

four plants in three cities. During Glaser’s testimony, he discussed an email from

McKinney to Garrett in July 2017, where McKinney outlined the procedure for the

rework and indicated four plants in Beaumont, Houston, and San Antonio would be

handling the rework. McKinney signed the email as the South Texas Regional

Manager of “AZZ Metal Coatings.”

      Glaser said that there were approximately 1900 galvanized pipe spools, and

1500 had to be regalvanized. He estimated 800 to 900 spools for each project had

galvanization issues, and Bechtel rejected the vast majority. According to Glaser,

ASTM A123 was the applicable standard, as provided in AZZ’s approved procedure.

      During his testimony, Glaser discussed invoices issued on the projects from

“AZZ Galvanizing Services” requesting that STI remit payment to “International

Galvanizers,” and the product shipped to STI. When asked whether AZZ

Beaumont’s name was International Galvanizers, Glaser said he never dealt with

International Galvanizers, and he believed that was the facility’s name before his

time. Glaser testified, “I’ve always dealt with AZZ. That’s who I hired.”

      Glaser specified that STI paid AZZ about $472,000 for the original

galvanizing. Glaser testified that STI hired AZZ to galvanize the pipe and to perform




                                         20
inspections, which was in AZZ’s manual. According to Glaser, STI thought AZZ

would inspect the pipe according to the procedure.

      Glaser explained why STI sued AZZ. Glaser testified that STI’s owner spent

“millions of dollars” out of his pocket to make the client whole, and with the lawsuit,

“we’re simply trying to recoup that[.]” Glaser also discussed the purchase order

tracking amounts assigned under the June 9, 2017 email, and he discussed an exhibit

reflecting rework amounts billed to STI and billed to “AZZ—Beaumont.” During

Glaser’s testimony, regalvanization invoices were admitted into evidence which had

an “AZZ Metal Coatings” trademark logo at the top noting that payment should be

remitted to “International Galvanizers,” “North American Galvanizing Company,”

or “AZZ-Galvanizing – San Antonio.”

Testimony of Jerrold Gill

      STI’s Piping Director, Jerrold Gill, testified that he has worked for STI for

twenty-nine years. During these projects, about 500 employees reported to him. Gill

is responsible for “everything that goes through the pipe shop, including safety,

quality, and personnel.” Gill assigns the project managers, who become the main

point of contact for the customers, but if there are problems on the job, Gill gets

involved. Gill reported directly to STI’s owner.

      Gill explained that the “AZZ Galvanizing Procedure” for the Corpus Christi

Liquefaction Project stamped as Code 1 by Bechtel became a part of STI’s

                                          21
agreement with AZZ. He testified that AZZ performed galvanizing services for STI

on this project, and he expected AZZ to follow that procedure. These projects

involved Stage 3 work, but STI used AZZ on the first two stages, which involved

the same procedures. Gill believed these pipes were galvanized under ASTM A123.

      Gill testified that

      AZZ . . . used to be International Galvanizers that was in Beaumont;
      and that’s who everybody in the area used. Well, now they’ve bought
      everybody else just about so they’re [] the biggest player on the block.
      So if you’ve got a major mega project, that’s typically who you’re going
      to go to [] get any kind of galvanizing done. There’s just not a lot of
      other people that can produce as much as they can.

The first purchase order for Stage 3 between STI and AZZ for the delivery of pipe

was issued in January 2016.

      Gill testified that STI Project Manager Cory Garrett discussed AZZ Plant

Manager Darrian Wright’s June 6, 2017, email with him regarding the proposed

payments for regalvanizing the pipes. He testified that Garrett’s June 9, 2017,

response was only an agreement to track costs. Garrett’s email did not state that he

accepted nor did it discuss labor costs or money. Gill said he decided not to pay

AZZ’s last regalvanizing invoice.

      During his testimony, Gill described photographs of some pipe spools at issue

and said he observed the problems depicted in the photos, including bare spots.

When Gill first learned of problems, he sent Garrett and Glaser to the Sabine Pass

site. When they arrived, they told Gill they had a bigger problem, because some of
                                        22
the pipe was already being installed. The installers began observing bare spots and

wanted to remove the pipe, but Gill tried to mitigate that, so he obtained a tractor

camera to view the inside of the pipe. Gill testified that once he saw bare spots, he

could not defend it, because there was not galvanized coverage.

      Gill agreed that STI should have inspected the pipe, and if STI saw any

problems, it should not have delivered the pipe to the customer. That said, STI

inspected all the pipe on the first stages of the job and had “hundred percent

coverage[,]” so they only performed spot inspections at this stage. AZZ also told

Gill that it was inspecting the pipe. He agreed that Bechtel was obligated to inspect

the pipe, too. Gill testified that STI had to timely notify AZZ of any issues STI

wanted corrected, and he notified AZZ as soon as he knew. He said that AZZ acted

in “bad faith” when it did not finish the job.

      According to Gill, on the earlier stages of the Sabine Pass and Corpus Projects,

STI did not have problems with AZZ’s work. The specifications were the same, but

management changed at the Beaumont AZZ facility, and “they didn’t take care of

it.” STI used the same galvanizing facility previously without problems, and the only

difference Gill observed was AZZ’s management team. For the regalvanization, STI

used multiple AZZ facilities, including Beaumont, Houston, and San Antonio, but

he only observed problems with the work at the Beaumont facility. According to




                                          23
Gill, as the world’s largest galvanizer, AZZ was the subject matter expert, which is

what he assumed when STI gave the purchase order.

      Gill said that STI had to get all the material regalvanized, and STI paid for

most of the regalvanization, which he disagreed with, because STI had already paid

for it once. He explained they paid it because AZZ refused to regalvanize unless STI

paid. According to Gill, AZZ is the largest galvanizer in the country, which is why

he went there, and he could not have completed the rework without them. According

to Gill, the liquidated damages clause was 1.5 percent of the total contract value,

which STI had to pay if AZZ did not regalvanize the pipe, so STI paid to regalvanize

it. Gill testified, “I trusted my subcontractor[,]” and insisted that AZZ did not do its

job. Gill explained that because of the regalvanization delays, Bechtel back charged

STI, but STI negotiated to reduce the back charges.

Testimony of Shannon Cloud

      Shannon Cloud testified that she is STI Group’s Controller, which includes

STI and its sister field service company, STIS. She is responsible for all financial

transactions, including accounts payable, billing and payroll.

      Cloud spent much of her testimony discussing STI’s “Job Detail Reports” and

supporting documentation. STI’s “Job Detail Reports” covered in Cloud’s testimony

tracked the rework for both projects and showed galvanizing vendors listed as

“Aztec Galvanizers” and “International Galvan.” Cloud testified that Plaintiff’s

                                          24
Exhibits 95 and 101 are the job cost reports for each project, which are summaries

containing all the relevant information in them, and the additional exhibits admitted

are the supporting documentation for those job cost reports.5

      Additional exhibits showed invoices from other trucking vendors that STI

paid, including items retrieved or shipped to various “AZZ Galvanizing” or “AZZ

Galvanizers” locations for rework. She testified that STI Exhibit 100 were the “AZZ

invoices.” Those “AZZ invoices” did not list “AZZ, Inc.” or “AZZ Incorporated.”

Rather, they showed the vendor as “Aztec Galvanizers,” “AZZ Galvanizing – San

Antonio” or “International Galvanizers,” among others.

      Cloud discussed STI’s “AP Open Invoice Report,” which she prepared. The

report lists invoices STI received but were unpaid. This report created by STI

identifies the vendor as “International Galvanizers” and attaches a series of invoices,

none of which are from AZZ, Inc. or AZZ Incorporated. Cloud testified that she was

instructed not to pay these invoices. She explained that the project manager requests

that purchase orders be issued, and she “verif[ies] that the invoices match what we

asked for.”

Testimony of Robert Iezzi

      Robert Iezzi testified that he received a degree in engineering with a chemical

specialty in 1965. He has a master’s degree in physics, and a Ph.D. in metallurgy


      5
          The exhibits reflect that the title of the documents is “Job Detail Report.”
                                            25
and material science. Iezzi described his work experience, including involvement

with galvanizing, for the jury.

      He described the materials he reviewed in this case, including the relevant

Bechtel specifications, three AZZ quality manual procedures, and various other

documents and videos. Iezzi testified STI asked him, based on his review of that

information, to analyze whether the product produced by AZZ met those

specifications. He reviewed Bechtel’s Deficiency Reports and Nonconformance

Reports with attached photographs. He estimated he reviewed 5,000 photographs

and thirty videos.

      Iezzi testified that AZZ’s Quality Program Manual had a Bechtel “Code 1”

stamp on it, which meant Bechtel accepted the document. He explained that

Netherland, the AZZ Galvanizing Plant Manager from Beaumont, sent a cover letter

noting it was in response to a procedural inquiry and that AZZ agreed to galvanize

under ASTM A123. He said that AZZ’s own quality control documents indicated

the plant manager was responsible for ensuring all materials were properly

galvanized. Per the manual, the Senior Vice President would be responsible for the

overall operation of the services segment, whereas the Galvanizing Divisional Vice

President is responsible for the administration, customer relations, safety, and

quality of the plant under their division. Reading from the manual, Iezzi noted that

the Galvanizing Regional Manager is responsible for the administration, customer

                                        26
relations, safety, and quality of the plant. Finally, he stated that the manual outlined,

“Plant Manager’s responsible for administration, customer relations, and so on,

safety, and quality of service and coating. He is responsible for seeing that all

materials are galvanized in accordance with the applicable specifications. He is

responsible for inspections on all galvanized material.”

Testimony of Darrian Wright

      Darrian Wright testified his “first job was at AZZ” in environmental, health,

and safety. From August 2015 until October 2016, he had no role or responsibilities

with galvanizing. Between October 2016 and March 2017, he was the operations

manager in Beaumont. In March 2017, Wright became the Beaumont Plant Manager

and was in that role until August 2018.

      Wright did not recall how STI first contacted AZZ for the projects. He thought

he was involved toward the end of the projects. He testified that AZZ and STI

entered into an agreement for galvanizing on the projects. Wright did not recall the

galvanization specifications STI wanted on the projects or whether he was part of

that process. He testified that he could not recall specifics about these projects but

knew that AZZ galvanized for these projects. Although Wright could not recall

specifics, he did not think AZZ did anything wrong on these projects.




                                           27
Testimony of Paul Spence

       STI’s owner and CEO, Paul Spence, testified that once Bechtel asked STI to

pick up the pipe, he and other STI employees examined it in their shop and observed

“bare spots on the inside of the pipe.” Spence said that he saw bare spots on the

inside of the pipes with the naked eye.

       Spence testified that STI has worked on various projects for Bechtel since

2010, primarily fabricating pipe. STI also worked with AZZ before these projects,

which went back to International Galvanizers. He testified that he did not recall when

AZZ bought International Galvanizers, but STI continued to do “a lot of work” with

AZZ.

       According to Spence, STI hired AZZ to inspect, clean, and galvanize the

inside and outside of the pipe spools. STI paid AZZ for all the original galvanizing.

He said the pipe spools for Stage 1 and 2 were “mirror imaged” of Stage 3, but there

were no problems with those. Spence explained that AZZ performed the original

galvanization on Sabine Pass Stage 3 and Corpus Christi in 2015, and it continued

into early 2017.

       Spence testified that on April 6, 2017, Glaser notified Houston and Wright

with AZZ that they were receiving complaints from the site about the pipe, and STI

was sending a representative to review all the spools in the laydown yard. After a

site visit, STI employees reported to Spence that Bechtel had valid concerns about

                                          28
the pipe spools and confirmed “problems with the galvanizing.” Spence discussed

an April 26, 2017, email from AZZ’s Duran to Houston, McKinney, Delesandri, and

Wright and testified, “I assume they’re all with AZZ.” According to Spence, AZZ

acknowledged there were bare spots that did not meet the specifications. Spence

claimed that AZZ has not admitted that it failed to meet the specifications, and he

spent $4.5 or $4.8 million to “fix this mess.”

      AZZ wanted Spence to pay for regalvanizing the pipes, and he paid for some

of it. Spence explained that he paid AZZ, because around June 2017, Gill told him

AZZ was “refusing to continue the redipping process unless we pay them.” So, Gill

was afraid if STI did not pay, AZZ would shut them down with Bechtel, and STI

would be unable to return the pipes in the required time. Spence felt he was “over a

barrel.”

      Spence discussed documents which he said show AZZ knew there were issues

with the pipe but was unwilling to reprocess them. Under the Bechtel contract, if

STI failed to fulfill its obligation, Bechtel would enact liquidated damages plus back

charge STI. Spence testified that liquidated damages would have been $2.5 million,

but if Bechtel did all the remediation work or subcontracted it out, it would have

been “as high as $8 million.”

      Regarding Garrett’s June 9, 2017, email, Spence disputed that STI agreed to

pay AZZ for reprocessing the pipe spools and simply said STI would “track costs.”

                                         29
He testified that after the email, STI paid to reprocess some pipe spools, but “[o]nly

to the extent that we had to keep it going.” STI stopped paying AZZ to reprocess the

pipes in July or August, because of mounting costs, and they already paid AZZ once.

He explained that before then, the original galvanization was done, and AZZ was on

notice of the problems.

      Spence asked the jury to award $4,789,482.21, which he claimed was the

amount STI spent to have AZZ’s pipes removed, regalvanized, and replaced. He

testified that Bechtel’s complaints about AZZ’s galvanizing work were correct, and

the galvanized pipe spools he personally observed were “100 percent defective” and

“needed to be redipped.”

      Spence said that the original galvanization work was done at AZZ Beaumont.

He testified that STI hired AZZ to galvanize these pipe spools according to ASTM

A123; in some instances, AZZ complied with ASTM A123, and in some instances

they did not. Spence agreed that not all bare spots are rejectable. According to

Spence, the only change that occurred in Stage 3 was the leadership in the Beaumont

AZZ plant. He noted that Wright became operations manager there in October 2016,

then became plant manager as the work was regalvanized. AZZ sent the

regalvanization work to four plants.




                                         30
Testimony of Bobby McKinney

      Bobby McKinney testified that he is AZZ’s corporate representative.

McKinney felt that AZZ complied with ASTM A123 for every spool in this case,

but that did not mean they were all galvanized perfectly. He explained that AZZ “did

strive to comply with ASTM 123[.]” McKinney said he was the AZZ Beaumont

plant manager from September 2003 until March 2013, then he was the regional

manager until 2017. As a regional manager, McKinney had several AZZ plants

under him, including the Houston plants, the Beaumont plant, and San Antonio

plants. McKinney is currently the Beaumont plant manager and explained how he

transitioned back to that role.

      For these projects, AZZ galvanized over 1900 spools for STI, and between

June and October 2017, AZZ regalvanized 1501 of those. AZZ did not charge to

regalvanize 430 spools but did charge for 1,071. McKinney provided a breakdown

of which AZZ plants regalvanized these spools. He testified that the other plants

billed them to “AZZ Beaumont.” According to McKinney, STI eventually stopped

paying for the regalvanizing and still owes AZZ $72,525.00.

      McKinney testified that there was not a written contract between AZZ and

STI, but AZZ followed the Bechtel specifications, which incorporated ASTM A123.

McKinney testified that Netherland, as the Plant Manager, sent a letter in July 2015

responding to a procedural inquiry and forwarding the “AZZ Galvanizing Services

                                        31
Quality Program Manual.” The letter specified it was an addendum to the manual

and specified that the galvanizing would be done per ASTM A123 plus addressed

the need for abrasive blasting before galvanizing. In conjunction with this

correspondence, McKinney described Netherland “as a[n] agent of the company.”

      McKinney was asked about an internal email from Bernardo Duran, AZZ’s

internal coatings engineer, which references the “contracts [Netherland] and Mike

Bond agreed to during the start of the STI/Bechtel project[,]” and states that STI’s

Garrett “previously sent me an email with the contracts.” Duran’s email then

attaches Garrett’s email containing the following documents: the Corpus Christi

specifications; Bond’s letter on AZZ Galvanizing Services Houston letterhead with

a “Code 1” Bechtel stamp discussing Special High Grade zinc used by the Houston

facility; Netherland’s letter regarding the galvanizing procedure referencing ASTM

A123, the Bechtel specifications, and stating the letter serves as an addendum to the

“AZZ Galvanizing Services Quality Manual;” and the “AZZ Galvanizing Services

Quality Program Manual.” He confirmed the contents of Duran’s email but

explained that while they have thirty-six facilities, the “Houston facility uses only

special high-grade zinc.” He explained that regarding the “special high-grade zinc,”

Bond’s letter “calls out the Houston facility” but “doesn’t call out any of the other

facilities.” McKinney characterized Bond’s letter as “mirroring” the quality manual

by discussing how AZZ verified incoming orders against packing lists, and noted

                                         32
that Bond’s letter explains the Houston’s facility’s use of “hydrochloric acid rather

than sulfuric acid[.]”

      McKinney explained that Netherland was the AZZ Beaumont plant manager

during Stages 1 and 2 of Sabine Pass, but Shepard and Wright were the plant

managers during Stage 3. He explained that Wright became the AZZ Beaumont plant

manager in March 2017, and most of the work was done before then. Wright was

the plant manager during the regalvanization.

      McKinney described the galvanizing process and the various inspections

along the way. He testified that there is a “QA/QC sheet” that they fill out on the

completed order. McKinney explained that they completed a QA/QC sheet for every

load; they visually inspect the product with the naked eye, which complies with

ASTM A123.

      McKinney testified that AZZ followed ASTM A123 for the whole project,

and AZZ followed all its Quality Manual standards, including performing its

Galvanizing Inspection Checklist and its other inspections. According to McKinney,

they completed a “Visual Inspection Check List” for every pipe spool load, but if

the bare spots cannot be seen with a visual inspection, then the material is not

rejectable under ASTM A123. McKinney explained that if AZZ inspected the pipe

but could not see issues during the inspection, it still complied with ASTM A123,

Bechtel’s specifications, and AZZ’s quality manual. He said that Bechtel was given

                                         33
“carte blanche to decide what they wanted and what they didn’t want” and returned

material that was not rejectable per the specification. McKinney testified that, after

the fact, Bechtel found bare spots, which do not comply with ASTM A123. He noted

that once the bare spots were found, AZZ remediated them pursuant to ASTM A123

and 780.

      He said that STI had no basis to claim that AZZ failed to meet its agreed-to

obligations, but AZZ could claim that STI failed to pay AZZ $72,000 for

remediation work. McKinney testified that AZZ complied with the agreement, but

STI did not comply by failing to (1) sufficiently blast the interior of the pipe, and (2)

pay for the rework it agreed to pay. According to McKinney, AZZ made STI “pay

for what was not our issue.”

      During his testimony, McKinney went through many pictures, described what

he saw, and explained why the material was not rejectable under the applicable

standards or how AZZ could have remediated in the field if given a chance.

McKinney testified that AZZ was not perfect and “may have missed one or two[,]”

but once found, they remediated it. On May 10, 2017, STI’s Glaser asked for AZZ’s

response about the pipe defects, and on May 11, 2017, McKinney responded on

“AZZ Galvanizing Beaumont” letterhead explaining his position. The letter notes

that most problems are on the pipe’s interior diameter, and none are on the outside

diameter. He attributes the problems to the pipe’s design with multiple connections

                                           34
and to insufficient blasting before galvanizing. McKinney said his position has not

changed since sending the letter.

      McKinney said that to the best of his knowledge, AZZ did not threaten to stop

work unless STI agreed to the June 6, 2017, email, which AZZ referred to as the

“moving forward agreement.” He claimed that AZZ was already remediating spools

at that time. He also discussed Duran’s July 2017 report, which identified four

categories of deficiencies and recommended corrective action.

      McKinney testified that STI “hired AZZ” to do the job, and to speed up the

remediation process, they sent work to Houston, San Antonio, and West Houston.

McKinney also agreed that AZZ is the largest galvanizer in North America and is

publicly traded.

Testimony of Bernardo Duran

      The video deposition of Bernardo Duran was played for the jury. Duran

discussed his work experience and LinkedIn profile which was shown to the jury

with his video deposition. He testified that he worked as a technical sales manager

for AZZ Galvanizing in 2013, then he became a coating performance engineer with

AZZ Incorporated in March 2015. He worked at AZZ’s corporate office in Fort

Worth and served as technical support for AZZ’s plants nationwide. Duran left AZZ

in 2018 for another job.




                                        35
      Duran became involved in the STI project in 2017, after AZZ completed the

original galvanization work. Duran gave AZZ a “6 or 7” rating out of a possible 10

for this project, and a 9 or 10 for earlier stages. According to Duran, once STI raised

complaints, AZZ made “intense efforts” to address them, and the regional manager

and vice presidents were involved.

      Duran testified that ASTM A123 applied to this job, including the inside and

outside of the pipe spools, but he did not know what other specifications Bechtel’s

contract required. As one of the largest galvanizers in the country, Duran expected

AZZ to be a subject-matter expert in galvanizing.

      Duran discussed his April 26, 2017, email, in which he told other AZZ

personnel that the small bare spots must be touched up per ASTM A123 to meet the

specification requirements, and if the areas are inaccessible for that, they must be

regalvanized. Duran testified that ASTM A123 outlined an inspection process by lot,

and while it did not contain a rate that was “acceptable” for rejection, it provided a

number per lot that should be tested. Per ASTM A123, AZZ would not check every

piece. He explained that Bechtel and STI did not want any debris at all inside the

pipe, but ASTM A123 does not require that. Duran felt there was a problem with the

customer’s understanding of what is reasonable and expected in the galvanizing

process, but it was not a galvanizing problem. He did not feel AZZ was responsible




                                          36
for bare spots on the interior diameter of the pipe only visible with a borescope,

because that was not a naked-eye inspection, thus it was beyond ASTM A123.

      Duran testified that the Beaumont plant felt that some pipes had been

insufficiently abrasively blasted, which caused the bare spots, but he did not recall

seeing that specifically. Duran said his job was to try to make the customer happy;

if there was something rejectable, he wanted to get it remedied, and if it was not

rejectable, he wanted to help the customer understand why it was not rejectable. He

believed that STI and Bechtel wanted a higher standard than ASTM A123 required.

      The proposal that AZZ be responsible for the straight runs and STI would be

responsible for regalvanizing the bends was an effort to keep the customer happy.

AZZ was willing to help, but some of this was not their responsibility, and he felt

some of STI’s requests were unreasonable. Duran testified there were

misunderstandings by the project inspectors, as some rejected pipe that others

accepted.

      On July 5, 2017, Duran prepared a report summarizing his site visit for STI

and Bechtel. He testified that his report noted variances, including active corrosion

and inclusions, which do not conform to ASTM A123. Duran agreed that areas

visible to the naked eye can be a proper basis for rejection of AZZ’s galvanizing

work. He also stated in his report that most problems were on the pipe’s interior

diameter but not the outer diameter, which indicated the quality issue was not caused

                                         37
by the processing chemicals; if that were the case, you would expect problems on

the outer diameter of the pipe. He testified that his report listed several corrective

actions and testified those were to “appease Bechtel and STI.”

Other Testimony

      STI’s retained experts included licensed professional engineer Wesley

Oliphant, metallurgist Robert Iezzi (as noted and discussed briefly above), and CPA

Dan Clark. Oliphant and Iezzi discussed the applicable galvanizing standards and

deficiencies in the original galvanizing, while Clark addressed STI’s alleged

damages. AZZ’s retained experts included financial expert David Fuller, who

disputed STI’s damages, and galvanizing expert Michael O’Brien, who discussed

the applicable ASTM standards. Bechtel’s Lead Piping Engineer for Stage 3 of the

Sabine Pass Project, Ole Madsen, also testified. Madsen discussed the standard he

felt applied to this galvanizing work, which contradicted other witnesses’ testimony.

He discussed the Deficiency Reports and Non-Conformance Reports he prepared for

the pipe at issue, along with the defects he observed in the pipe spools.

Documentary Evidence

      Thousands of pages of documents were admitted at trial, some of which we

have already addressed in our discussion of the witnesses’ testimony, so we will not

describe again here. The admitted documents included Stage 3 purchase orders

issued by STI for the original galvanizing. Some purchase orders listed

                                         38
“International Galvanizers” as the vendor and others listed “Aztec Galvanizing” as

the vendor. Additionally, invoices from the original galvanizing work were admitted

into evidence issued by AZZ Galvanizing Services to STI and said that payment

should be remitted to “International Galvanizers.” Various bills of lading and

multiple “AZZ Galvanizing Services Visal Inspection Check List” documents were

also admitted into evidence.

      An email sent by Wright, the AZZ Beaumont Plant Manager, on May 9, 2017,

to Glaser discussed rerunning pipe spools and had the same signature block

previously noted. In the email, Wright asks Glaser or Garrett to look at the

regalvanized pipes, because “I don’t want AZZ Beaumont to be responsible for these

pipes as Bechtel receives them.” Wright’s June 6, 2017, email contained the same

signature block and logo as his previous email and noted that AZZ would reprocess

the pipes. Wright added that STI would be responsible for the cost of reprocessing

the pipes with 90-degrees or bends, while “AZZ Beaumont would be responsible”

for reprocessing the straight pipes with bare spots.

      The “AZZ Galvanizing Services Quality Program Manual” sent by

Netherland along with a cover letter attached as an addendum listed all galvanizing

facilities. As discussed by Iezzi, it lists “Key Personnel” as including: Senior Vice

President, Galvanizing Services; the Galvanizing Divisional Vice President; the

Galvanizing Regional Manager; the Galvanizing Plant Manager; and the Plant

                                         39
Superintendent. It does not suggest that any of these individuals is employed by AZZ,

Inc. rather than “AZZ Galvanizing Services.”

Motion for Directed Verdict

      After STI rested, the Defendants moved for directed verdict on STI’s claims.

The trial court granted a directed verdict on STI’s “alter ego” claims but denied

Defendants’ motion for directed verdict on STI’s other claims. With respect to the

contract, the Defendants argued there was no evidence of who had the contract and

whether that was AZZ, Inc. or International Galvanizers, which was STI’s burden to

prove but it failed to do so. In response to Defendants’ motion for directed verdict,

STI represented that Glaser, Gill, and Spence testified that “an agreement existed

from (sic) galvanization with AZZ, Inc.” STI also pointed to its Exhibits 4, 6, and 7,

which were the specifications for each project and the documents from Netherland

sending the AZZ Galvanizing Quality Manual.

Jury Charge and Verdict

      With respect to STI’s breach of contract and breach of warranty claims, STI

asked the trial court to define “AZZ” in the jury charge solely as “AZZ, Inc.”

Defendants objected repeatedly to this definition, explaining that the trial court

“heard nothing about the entity AZZ, Inc., in this entire trial[,]” and arguing again

that AZZ, Inc. is a separate corporate entity from the AZZ-Beaumont entity.

Additionally, Defendants reminded the trial court that it had already granted the

                                         40
directed verdict on STI’s alter ego claim, and that STI “was trying to make an end

run around their failure to prove agency, joint venture, alter ego, or piercing the

corporate veil claims.” Despite the Defendants’ repeated objections to defining

“AZZ” to mean “AZZ, Inc.” and the trial court acknowledging that “no one’s ever

broke[n] down the corporate structure,” the trial court accepted STI’s definition and

included the following definitions in its jury charge:

      “AZZ” refers to Defendant AZZ Inc. a/k/a AZZ Incorporated.

      “AZZ Galvanizing – Beaumont” refers to International Galvanizers
      LLC d/b/a AZZ Galvanizers and d/b/a AZZ Galvanizing – Beaumont
      and f/k/a International Galvanizers Partnership, Ltd.

The trial court then submitted as Question 1, “Did STI and AZZ agree that AZZ

would galvanize pipe spools provided by STI?” The jury answered “Yes” to that

question. The jury found that AZZ breached the contract and an express warranty.6

It then awarded the same amounts of damages for each cause of action,

$4,539,468.25.

Trial Court’s Judgment

      STI filed a Motion for Entry of Judgment and elected to recover on its breach

of contract claim. Among other things, STI requested its attorney’s fees through trial,




      6
       The jury rejected International Galvanizers LLC’s counterclaim for breach
of contract related to the regalvanization, and answered “No” to Question 4, but
AZZ-Beaumont did not appeal that finding.
                                          41
post-trial, and on appeal. The trial court entered its Final Judgment solely against

AZZ, Inc. and awarded STI the following:

      1. Actual damages in the principal amount of $4,539,468.25;
      2. Attorney’s fees incurred through October 2023 in the amount of
      $950,558.50;
      3. Attorney’s fees of $56,850.00 for post-trial matters expected to be
      performed on behalf of STI at the trial court level before the Court’s
      plenary power expires;
      4. Pre-judgment interest of $2,414,499.63, representing interest on
      STI’s principal damages of $4,539,468.25 at a rate of eight- and one-
      half percent (8.5%) per annum calculated as simple interest from
      October 24, 2017 until the day before this judgment is signed;
      5. Post-judgment interest of on all of the above at the rate of eight and
      one half percent (8.5%), compounded annually, from the date this
      judgment is signed until all amounts are paid in full.
      6. Contingent attorney’s fees in the amount of $149,250.00 recoverable
      if there is an appeal to the intermediate court of appeals and STI
      ultimately prevails on appeal;
      7. Contingent attorney’s fees of $69,000.00 if a petition for review is
      filed with the Texas Supreme Court and STI ultimately prevails; and
      8. Contingent attorney’s fees of $82,500.00 if the Texas Supreme Court
      grants a petition for review and requests briefing on the merits and STI
      ultimately prevails on appeal.
      9. Post-judgment interest of eight and one half percent (8.5%) on
      contingent attorney’s fees from the date this judgment is made final by
      the appropriate appellate court’s judgment until this judgment is fully
      paid.

Defendants’ Post-Trial Motions

      AZZ, Inc. and the other Defendants filed a Motion for New Trial challenging

the factual sufficiency of the evidence and a Motion for Judgment Notwithstanding

the Verdict challenging the legal sufficiency of the evidence to support any liability

finding against AZZ, Inc., including the jury’s answer to Question 1, among others.

                                         42
They complained, among other things, that the trial court defined “AZZ” to mean

“AZZ, Inc.” in its charge. They argued no evidence supported the jury’s adverse

liability findings against “AZZ, Inc.,” and stated that instead “AZZ Galvanizing –

Beaumont” was the correct legal entity who had agreed to galvanize (and

regalvanize) pipe spools for STI. These motions were overruled by operation of law.

         III. ISSUE ONE: SUFFICIENCY OF THE EVIDENCE AND
                     EXISTENCE OF AN AGREEMENT

      In its first issue, AZZ, Inc. contends the evidence is legally and factually

insufficient to support the jury’s answer to Question 1. In Question 1, the jury found

that STI and AZZ, Inc. agreed that AZZ, Inc. would galvanize pipe spools provided

by STI. AZZ, Inc. is the only defendant against whom STI obtained a judgment, and

it is the only defendant from whom STI sought a verdict under the charge. On appeal,

AZZ, Inc. argues there is no evidence that anyone at either AZZ Beaumont or AZZ

Houston had authority to contract for AZZ, Inc., nor is there any evidence that shows

a contract between STI and AZZ, Inc.

      We address the legal sufficiency argument raised in this issue first since, if

sustained, it would result in rendition in favor of AZZ, Inc. See Tex. R. App. P. 43.3

(discussing rendition), 47.1 (requiring appellate court to hand down and opinion as

brief as practicable); Glover v. Tex. Gen. Indem. Co., 619 S.W.2d 400, 401 (Tex.

1981) (instructing that “no evidence” points should be reviewed first). The existence

of a valid contract is an essential element of a breach of contract claim, and without
                                         43
it, a party’s claim for breach fails. See USAA Tex. Lloyds Co. v. Menchaca, 545

S.W.3d 479, 501 n.21 (Tex. 2018) (citations omitted) (noting first requisite element

of breach of contract claim is the existence of a valid contract).

Waiver

         To begin, we address STI’s argument that AZZ, Inc. waived its sufficiency-

of-the-evidence challenge to liability by framing its issue on appeal as attacking the

evidence supporting a “Stage 3” contract neither found by the jury nor incorporated

into the judgment and by not attacking the jury’s “no” answer to the existence of a

Stage 3 contract. STI focuses on AZZ, Inc.’s use of “Stage 3” in the framing of its

issue.

         “[B]riefing waiver is generally disfavored[,]” and we should reach the merits

of an appeal whenever possible. Gill v. Hill, 688 S.W.3d 863, 869 (Tex. 2024)

(citations omitted). A “statement of an issue or point” in an appellate brief “will be

treated as covering every subsidiary question that is fairly included.” Tex. R. App.

P. 38.1(f). We construe briefs liberally but reasonably so the right to appeal is not

lost by waiver. See Lion Copolymer Holdings, LLC v. Lion Polymers, LLC, 614

S.W.3d 729, 732 (Tex. 2020) (quoting Horton v. Stovall, 591 S.W.3d 567, 569 (Tex.

2019) (per curiam)) (other citation omitted). In addition to the wording of the parties’

issues, we look to their “arguments, evidence and citations” to determine what “the

parties intended to and actually briefed.” Id. at 733 (citations omitted).

                                           44
      In its first issue presented, AZZ, Inc. contends that a breach-of-contract claim

requires proof of a contract, “which in the context of entities, requires proof of an

agreement for the entity by an agent with authority.” Appellant also asserts that “STI

offered no evidence that anyone had authority to bind AZZ, Inc. to do the ‘Stage 3’

galvanization work, or that any contract existed between AZZ, Inc. and STI for the

Stage 3 work.” AZZ, Inc.’s briefing outlines factual allegations and authorities

challenging the legal sufficiency of the evidence to support the existence of an

agreement, and asserts that no evidence established AZZ, Inc. was the party who had

an agreement with STI to galvanize the pipe and that AZZ, Inc. is in fact a separate

and distinct legal entity from AZZ-Beaumont who had an agreement with STI. The

evidence in the record shows, and the briefing explains, that the “agreement” the

jury was asked about dealt with galvanization of Stage 3 work for the two projects

at issue. Indeed, as AZZ, Inc. explains in its brief, the Bechtel projects proceeded in

stages, and the record shows that the witnesses consistently testified that there were

no issues with the galvanizing done for Stages 1 and 2. AZZ, Inc. cites to Bechtel’s

purchase orders and specifications in the record to likewise support that the work

moved in “stages,” and the issues regarding the galvanization work only pertained

to the Stage 3 work. Additionally, AZZ, Inc. cites multiple authorities addressing:

legal sufficiency challenges; the existence of a valid agreement as a necessary

element of a breach-of-contract claim; the necessity of evidence showing someone

                                          45
had authority to bind a corporation; and how the equal inference rule applies in this

situation involving entities that share overlapping names and means no evidence

supports that the entity AZZ, Inc. agreed to galvanize the pipe at issue, which was

the Stage 3 pipe.

      Looking to the wording of the issues, “arguments, evidence and citations” in

AZZ, Inc.’s brief, we conclude AZZ, Inc. did not waive its legal sufficiency

challenge to the evidence supporting the jury’s finding that STI and AZZ, Inc. agreed

that AZZ, Inc. would galvanize pipe spools provided by STI. See id. at 732–33. We

now address the merits of AZZ, Inc.’s legal sufficiency challenge to the evidence

supporting the jury’s affirmative finding that AZZ, Inc. and STI agreed that AZZ,

Inc. would galvanize pipe provided by STI. See Gill, 688 S.W.3d at 869.

Standard of Review and Applicable Law

      A party challenging the legal sufficiency of the evidence to support an adverse

finding on which it did not have the burden of proof at trial must demonstrate no

evidence supports the adverse finding. See Exxon Corp. v. Emerald Oil & Gas Co.,

348 S.W.3d 194, 215 (Tex. 2011); see also Graham Cent. Station, Inc. v. Pena, 442

S.W.3d 261, 263 (Tex. 2014). When reviewing legal sufficiency, we credit favorable

evidence if reasonable jurors could and disregard contrary evidence unless

reasonable jurors could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.

2005). Evidence is legally sufficient if it enables fair-minded people to reach the

                                         46
verdict under review. Id. We consider all the evidence “‘in the light most favorable

to the party in whose favor the verdict has been rendered,’” and “‘every reasonable

inference deducible from the evidence is to be indulged in that party’s

favor[.]’” Bustamante v. Ponte, 529 S.W.3d 447, 456 (Tex. 2017) (quoting Merrell

Dow Pharms. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). As the sole judges of

the witnesses’ credibility and the weight to give their testimony, the jury may choose

to believe one witness and disbelieve another. City of Keller, 168 S.W.3d at 819.

      We will sustain a legal sufficiency challenge when the record confirms either:

      (a) complete absence of a vital fact; (b) the court is barred by rules of
      law or of evidence from giving weight to the only evidence offered to
      prove a vital fact; (c) the evidence offered to prove a vital fact is no
      more than a mere scintilla; or (d) the evidence conclusively establishes
      the opposite of the vital fact.

Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014) (citing City of Keller,

168 S.W.3d at 819); see also Crosstex N. Tex. Pipeline, LP v. Gardiner, 505 S.W.3d

580, 613 (Tex. 2016) (citations omitted). “Evidence is more than a scintilla if it ‘rises

to a level that would enable reasonable and fair-minded people to differ in their

conclusions.’” Serv. Corp. Int’l v. Guerra, 348 S.W.3d 221, 228 (Tex. 2011)

(quoting Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004)). Evidence

that “does no more than create a mere surmise or suspicion and is so slight as to

necessarily make any inference a guess, then it is no evidence.” Id. We presume




                                           47
jurors made all inferences in favor of the verdict, but only if reasonable minds could.

Id.

       “Jurors may not simply speculate that a particular inference arises from the

evidence.” Id. (citing City of Keller, 168 S.W.3d at 821). Under the equal inference

rule, “a factfinder ‘may not reasonably infer an ultimate fact from meager

circumstantial evidence which could give rise to any number of inferences, none

more probable than the other.’” Graham Cent. Station, 442 S.W.3d at 265 (quoting

Hancock v. Variyam, 400 S.W.3d 59, 70–71 (Tex. 2013)) (concluding evidence was

legally insufficient). In such cases, we view each piece of circumstantial evidence

considering all the known circumstances and not in isolation. City of Keller, 168

S.W.3d at 813–14 (citation omitted).

      When an element of a claim is omitted from the jury charge without objection

and the trial court makes no written findings on that element, then the omitted

element is deemed to have been found by the factfinder in support of the

judgment. See Tex. R. Civ. P. 279; Guerra, 348 S.W.3d at 228–29. As with any other

finding, there must be evidence to support a deemed finding. See Guerra, 348

S.W.3d at 229.

      A party alleging a breach of contract claim must establish the existence of a

valid contract. See TRO-X, L.P. v. Anadarko Petroleum Corp., 548 S.W.3d 458,

464–65 (Tex. 2018); Menchaca, 545 S.W.3d at 501 n.21; Akhtar v. East Tex. Truss,

                                          48
LLC, No. 09-23-00287-CV, 2025 WL 2798554, at *6 (Tex. App.—Beaumont Oct.

2, 2025, pet. denied) (mem. op.) (noting as party with the burden of proof, plaintiff

must prove each element of breach-of-contract action by a preponderance of the

evidence). In Texas, a corporation may act only through its agents. In re Vesta Ins.

Grp., Inc., 192 S.W.3d 759, 762 (per curiam). “Texas law does not presume agency,

and the party who alleges it has the burden of proving it.” IRA Res., Inc. v. Griego,

221 S.W.3d 592, 597 (Tex. 2007) (citing Buchoz v. Klein, 184 S.W.2d 271 (Tex.

1944)). An agent cannot bind a principal without either actual or apparent authority.

DB Sterling Invs., L.P. v. Pro M & E, Inc., No. 09-08-00381-CV, 2009 WL 2045307,

at *3 (Tex. App.—Beaumont July 1, 2009, pet. denied) (mem. op.); Sanders v. Total

Heat & Air, Inc., 248 S.W.3d 907, 913 (Tex. App.—Dallas 2008, no pet.). An

agent’s authority to act on a principal’s behalf “depends on some communication by

the principal either to the agent (actual or express authority) or to the third party

(apparent or implied authority).” Gaines v. Kelly, 235 S.W.3d 179, 182 (Tex. 2007)

(citation omitted). Apparent authority is based on estoppel, arising “‘either from a

principal knowingly permitting an agent to hold [himself] out as having authority or

by a principal’s actions” that lack “such ordinary care as to clothe an agent with the

indicia of authority, thus leading a reasonably prudent person to believe that the

agent has the authority [he] purports to exercise.’” Id. (quoting Baptist Mem’l Hosp.

Sys. v. Sampson, 969 S.W.2d 945, 948 (Tex. 1998)). Only the principal’s conduct is

                                         49
relevant to determining whether apparent authority exists. Id. Thus, courts examine

the principal’s conduct and the reasonableness of the third party’s assumptions about

authority. Id. at 183.

      “Texas law presumes that two separate corporations are indeed distinct

entities[.]” BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 798 (Tex. 2002)

(discussing in the context of jurisdictional analysis); TPC Grp. Litigation, No. 09-

22-00159-CV, 2024 WL 3197475, at *15 (Tex. App.—Beaumont June 27, 2024, no

pet.) (mem. op.). Thus, a party seeking to disregard the distinct corporate entities to

ascribe one’s acts to the other must prove that the two entities are not separate. See

BMC Software Belg., 83 S.W.3d at 798; TPC Grp. Litigation, 2024 WL 3197475, at

*15. Courts are generally more reluctant to disregard the corporate entity in breach

of contract cases than in tort cases. See Lucas v. Tex. Indus., Inc., 696 S.W.2d 372,

375 (Tex. 1984) (citation omitted).

Analysis

      The trial court instructed the jury that when the charge uses the name “AZZ”

it “refers to Defendant AZZ, Inc. a/k/a AZZ Incorporated.” STI had the burden to

prove by a preponderance of the evidence that AZZ, Inc. and STI agreed that AZZ,

Inc. would galvanize pipe for these projects. See TRO-X, L.P., 548 S.W.3d at 464–

65; Menchaca, 545 S.W.3d at 501 n.21; Akhtar, 2025 WL 2798554, at *6. The law

requires us to presume that AZZ, Inc. and International Galvanizers LLC d/b/a AZZ

                                          50
Galvanizers and d/b/a AZZ Galvanizing – Beaumont and f/k/a International

Galvanizers Partnership, Ltd. are separate and distinct legal entities. See BMC

Software Belg., 83 S.W.3d at 798; TPC Grp. Litigation, 2024 WL 3197475, at *15.

Here, before the case was submitted to the jury, the trial court granted Defendants’

motion for directed verdict on the alter ego theory, which meant that the trial court

found no evidence existed showing these entities could be fused for liability

purposes. See BMC Software Belg., 83 S.W.3d at 798; TPC Grp. Litigation, 2024

WL 3197475, at *15. STI did not challenge the directed verdict by cross-appeal.

      As a corporation, AZZ, Inc. could act only through an agent. See In re Vesta

Ins. Grp., Inc., 192 S.W.3d at 762. Agency is not something we presume, and STI

had the burden of proving it. See Gaines, 235 S.W.3d at 182. There was no objection

to the court’s charge on the basis that it omitted a question that an agent of AZZ, Inc.

agreed to bind the company, so the issue is “deemed found by the court in such

manner as to support the judgment.” See Tex. R. Civ. P. 279; Guerra, 348 S.W.3d

at 228–29. That said, there still must be evidence in the record to support the deemed

finding of agency. See Guerra, 348 S.W.3d at 229. There must be evidence that an

agent of AZZ, Inc. with the authority—actual or apparent—to bind the company

agreed to galvanize the pipe at issue. See id.; see also Gaines, 235 S.W.3d at 182;

DB Sterling Invs., 2009 WL 2045307, at *3. As the principal, we look only at AZZ,

Inc.’s conduct leading a third party to believe Bond or Netherland had an agency

                                          51
relationship. See Gaines, 235 S.W.3d at 182; DB Sterling Invs., 2009 WL 2045307,

at *3.

         Evidence that an agent of International Galvanizers LLC d/b/a AZZ

Galvanizers and d/b/a AZZ Galvanizing – Beaumont and f/k/a International

Galvanizers Partnership, Ltd. agreed to galvanize pipe is not evidence that AZZ, Inc.

agreed to galvanize pipe. Yet that is what this jury concluded. To do so, evidence

must exist in the record to justify a reasonable inference, and not simply speculation,

that testimony regarding “AZZ” meant “AZZ, Inc.” since evidence that “does no

more than create a mere surmise or suspicion and is so slight as to necessarily make

any inference a guess,” is no evidence. See Guerra, 348 S.W.3d at 228. The jury

determined that “AZZ, Inc.” agreed to galvanize pipe provided by STI in this case.

To do so, the jury was required to infer that testimony regarding “AZZ” or as STI

characterizes it, “big AZZ” meant “AZZ, Inc.” The jury cannot simply speculate that

a particular inference arises from the evidence. See id.; see also City of Keller, 168

S.W.3d at 821.

         Glaser testified that he reached out to “AZZ” to quote galvanizing given their

proximity in Beaumont, that they had multiple locations nationwide, and “they’re

essentially the biggest game in town.” Contrary to STI’s representations in the

charge conference, Glaser did not testify it was “AZZ, Inc.” that he asked to quote

the job. Rather, a careful review of Glaser’s testimony reveals that he did not specify

                                           52
a particular “AZZ” entity. There is some evidence that Netherland and Bond sent

specifications to STI for the original pipe galvanization, both on separate “AZZ

Galvanizing Services” letterhead that acted as an addendum to the “AZZ

Galvanizing Services Quality Program Manual.” In 2015, Netherland sent a copy of

the manual to STI regarding an inquiry for pipe galvanization on these projects,

which Bechtel stamped “Code 1.” The manual lists all the galvanizing plants, which

STI asserts supports the notion “big AZZ” meant “AZZ, Inc.” that owned all these

facilities.

       This is problematic on multiple fronts. STI introduced no evidence at trial that

suggested either Netherland or Bond worked for AZZ, Inc. when they responded to

STI’s galvanizing inquiry with the manual and galvanizing procedure. Indeed, the

letterhead, while not dispositive, said that the specifications were being forwarded

on behalf of “AZZ Galvanizing Services” and in Netherland’s case, “AZZ

Galvanizing – Beaumont” both purportedly d/b/as of “International Galvanizers,

LLC,” although there was no clear evidence of the d/b/a status admitted at trial either.

The title of the Quality Program Manual likewise does not show that it was a product

of AZZ, Inc., rather it was titled “AZZ Galvanizing Services Quality Program

Manual.” Nor did Glaser testify that he understood Bond or Netherland to be acting

as agents of AZZ, Inc.




                                          53
      STI also urges us to consider the fact that the manual lists organization charts

showing Senior Vice President and not the Plant Manager has the responsibility to

“plan, implement and maintain the Quality Program.” Iezzi’s testimony briefly

addressed various roles as listed in the “AZZ Galvanizing Services Quality Program

Manual.” We agree that the Quality Program Manual says as much, but the manual

does not reflect that the Senior Vice President mentioned is a Senior Vice President

for AZZ, Inc. rather than a Senior Vice President for “AZZ Galvanizing Services.”

STI also points to the fact that Bernardo Duran, a metal coatings engineer employed

by AZZ, Inc. became involved in April 2017, after the original galvanizing work

was done for these stages of the projects, to provide recommendations for

remediation and that Duran sent his report to “AZZ Vice President Mike Delesandri,

AZZ Southeast Regional Manager Bobby McKinney, and AZZ Regional Sales

Manager Kevin Houston.” STI contends these “AZZ representatives, along with

Beaumont personnel, were ‘directly involved with the project.’”

      Except for Duran, nothing in the record shows that any of these individuals

were employed by AZZ, Inc. rather than another AZZ entity. In fact, the only

evidence in the record showing any link to AZZ, Inc. was that it employed Duran, a

technical expert who offered support services to all plants, and who had nothing to

do with the formation of any agreement. Another important note of context shows




                                         54
that before becoming a coatings engineer for “AZZ Incorporated,” Duran was a

technical sales manager for “AZZ Galvanizing.”

         At trial, Glaser testified about STI’s communications with AZZ and Bechtel

regarding the problems with the pipes and the plan for fixing them. This included

communications with Houston from AZZ, who was a “regional sales” person and

“heavily involved.” That said, Glaser did not specify which entity Houston was a

regional salesperson for—whether AZZ, Inc. or some other AZZ entity. The record

shows that Wright was the Beaumont plant manager during the regalvanization

process. On his June 6, 2017, email proposing who would bear the financial cost for

regalvanizing the pipe, an AZZ, Inc. logo appears under his signature block. Even

so, he signed the email as the plant manager of “AZZ Galvanizing – Beaumont,”

which is a d/b/a of “International Galvanizers.” When Glaser was asked whether

Garrett’s response to Wright’s email constituted a new agreement, Glaser responded,

“It’s just the tracking of the information on these two jobs.” Gill and Spence

provided similar testimony denying any agreement based on Wright’s June 6, 2017,

email.

         STI directs us to documents in the record, including a “valued vendor letter”

sent by Gill to the attention of Houston, but it notes “AZZ Galvanizing” is the vendor

not AZZ, Inc. Likewise, none of the purchase orders, invoices, or STI’s own Job

Detail Reports list AZZ, Inc. Rather, the original galvanization purchase orders and

                                           55
invoices list “International Galvanizers” as the vendor who performed the work.

While McKinney agreed under cross-examination that AZZ was the largest

galvanizer in North America and publicly traded, he did not specify that “AZZ” was

“AZZ, Inc.” That McKinney may have used “AZZ” to mean “AZZ, Inc.” in this

context is not evidence and does not give rise to a reasonable inference that his other

references to “AZZ” in other contexts meant “AZZ, Inc.” Testimony that AZZ, Inc.

is a large, publicly traded company is not testimony that AZZ, Inc., agreed with STI

to galvanize pipe spools for STI on these projects. STI introduced no evidence of the

corporate structure, how AZZ, Inc. was involved, or how that entity was related to

“International Galvanizers” or any d/b/a. Nor did the record show that AZZ, Inc.

communicated to the individuals involved or to STI that Bond or Netherland were

its agents who had authority to agree that AZZ, Inc. would galvanize pipe. See

Gaines, 235 S.W.3d at 182. There was no evidence that AZZ, Inc. employed

Netherland, Bond, McKinney, Houston, or Delesandri, individuals who STI point to

as being “directly involved” in the Bechtel projects, or that anyone acting on behalf

of AZZ, Inc. rather than some other related entity, had authority to act.

      Jurors in this case inferred that testimony regarding “AZZ” meant “AZZ, Inc.,”

and that the individuals who agreed to the galvanizing specifications had authority

to act as agents of AZZ, Inc. These were ultimate facts drawn from meager

circumstantial evidence which could give rise to any number of inferences such that

                                          56
no inference was more probable than another. See Graham Cent. Station, 442

S.W.3d at 265 (quoting Hancock v. Variyam, 400 S.W.3d at 70–71) (concluding

evidence was legally insufficient). Here, given the meager circumstantial evidence

viewed in context, testimony referring to “AZZ” could just as easily have meant

“International Galvanizers LLC d/b/a AZZ Galvanizers and d/b/a AZZ Galvanizing

– Beaumont and f/k/a International Galvanizers Partnership, Ltd.” as “AZZ, Inc.”

See id. Viewing each piece of circumstantial evidence considering all the known

circumstances and not in isolation, we conclude that the jury violated the equal

inference rule when it determined that STI and AZZ, Inc. agreed that AZZ, Inc.

would galvanize pipe spools provided by STI. See City of Keller, 168 S.W.3d at

813–14; see also Graham Cent. Station, 442 S.W.3d at 265 (concluding that

inference witness was employed by specific entity where he testified he was paid by

“Graham Central Station without specifying “Graham Central Station, Inc.” or

“Pharr Entertainment Complex, L.L.C. d/b/a Graham Central Station,” violated

equal inference rule given lack of specificity); Guerra, 348 S.W.3d at 229–31

(determining inferences were equal and the presence of a company logo on the

documents was legally insufficient to support a finding that individual was employed

by a particular entity); BMC Software Belg., 83 S.W.3d at 800 (concluding use of

letterhead containing “BMC Software” by two corporations was no evidence that

the corporations failed to observe corporate formalities in context of jurisdiction);

                                         57
All Star Enters., Inc. v. Buchanan, 298 S.W.3d 404, 423–24 (Tex. App.—Houston

[14th Dist.] 2009, no pet.) (explaining that under the equal inference rule, where the

names of several affiliated companies began with “Antero Resources,” invoices

addressed to “Antero Resources” were no evidence that the vendors were referring

to a particular company).

      The evidence in this case does no more than create a mere surmise or suspicion

and is so slight as to necessarily make any inference a guess that an agent authorized

to bind AZZ, Inc., a distinct legal entity, agreed on behalf of AZZ, Inc., with STI to

galvanize pipe, so it is no evidence. See Guerra, 348 S.W.3d at 228; City of Keller,

168 S.W.3d at 813–14. Thus, we hold the evidence was legally insufficient to

support the jury’s finding that STI and AZZ, Inc. agreed that AZZ, Inc. would

galvanize pipe spools provided by STI. See City of Keller, 168 S.W.3d at 813–14;

see also Graham Cent. Station, 442 S.W.3d at 265; Guerra, 348 S.W.3d at 229–31;

BMC Software Belg., 83 S.W.3d at 800; All Star Enters., 298 S.W.3d at 423–24. We

sustain issue one.

                                IV. CONCLUSION

      We have sustained issue one because we conclude the evidence was legally

insufficient to support the jury’s finding that STI and AZZ, Inc. agreed that AZZ,

Inc. would galvanize the pipe at issue. Accordingly, we find it unnecessary to

address AZZ, Inc.’s remaining issues. See Tex. R. App. P. 47.1. We reverse the trial

                                         58
court’s judgment and render judgment that STI take nothing by way of its claims

against AZZ, Inc. See id. 43.3; Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922,

929 (Tex. 2009) (explaining that reversal and rendition is appropriate when appellate

court holds there is legally insufficient evidence to support a judgment after a trial

on the merits).

      REVERSED AND RENDERED.


                                                    W. SCOTT GOLEMON
                                                         Chief Justice

Submitted on March 5, 2026
Opinion Delivered April 9, 2026

Before Golemon, C.J., Johnson and Wright, JJ.




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