Nunn, Yoest, Prin v. Union Pacific Corp, et al

United States Court of Appeals
Fifth Circuit
F I L E D
May 23, 2003
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 02-20818
Summary Calendar
_______________
NUNN, YOEST, PRINCIPALS & ASSOCIATES, INC.,
DOING BUSINESS AS CROSSROAD CARRIERS,
Plaintiff-Appellant,
VERSUS
UNION PACIFIC CORPORATION AND UNION PACIFIC RAILROAD COMPANY
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Southern District of Texas
m H-98-CV-3396
_________________________
Before JOLLY, HIGGINBOTHAM, and SMITH,
Circuit Judges.
PER CURIAM:*
Nunn, Yoest, Principals & Associates, Inc.
(“Nunn, Yoest”), appeals a summary judgment
on claims of breach of contract, negligent
misrepresentation, and fraud. We affirm.
* Pursuant to 5TH CIR. R. 47.5, the court has
determined that this opinion should not be pub-
lished and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.

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I.
Nunn, Yoest is a shipping broker that ar-
ranges rail transportation under the business
name CrossRoad Carriers (“CrossRoad”). It
acts as an intermediary, arranging for the
shipment of its clients’ cargo on third-party rail
carriers. In August 1997, CrossRoad entered
into an agreement with Union Pacific Railroad
(“Union Pacific”) that set shipping rates and
provided for the payment of rebates to Cross-
Road based on the volume of shipping it
arranged through UPRR.
CrossRoad alleges that as a result of Union
Pacific’s merger with Southern Pacific Rail-
road, there was a deterioration in Union Pa-
cific’s service and performance. CrossRoad
asserts that its shipments were delayed, mis-
handled, and misplaced, and that Union Pacific
failed to deliver freight according to the times
provided on its schedules. CrossRoad became
so dissatisfied that it elected to ship its cargo
on other carriers.
In October 1998, CrossRoad sued Union
Pacific and its parent company, Union Pacific
Corporation (“UPC”), for breach of contract
against Union Pacific and for fraud and negli-
gent misrepresentation against Union Pacific
and UPC. Almost three years later, the district
court entered summary judgment against
CrossRoad on all claims. We review a sum-
mary judgment de novo. Bridgmon v. Array
Sys. Corp., 325 F.3d 572, 576 (5th Cir. 2003).
II.
To succeed on a claim for breach of con-
tract, a plaintiff must prove the defendant vio-
lated some obligation under the agreement.2
Although the existence of a binding contract
is unquestioned, CrossRoad has failed to dem-
onstrate that Union Pacific failed to live up to
any of its provisions.
CrossRoad alleges that Union Pacific
breached the agreement by failing timely to
perform its obligations. The principal feature
of the agreement was the Union Pacific
Revenue Incentive Plan Provision (“incentive
plan”), which obligated UPRR to pay a rebate
to CrossRoad based on the aggregate amount
of business CrossRoad brought to UPRR in
excess of $2.2 million per year. The contract
does not, however, reference any specific re-
quirements or obligations with respect to the
delivery of CrossRoad’s shipments, but, in-
stead, provides that such shipments are
governed by the terms of the applicable
shipping order and certain external documents,
particularly UP System Exempt Circular 20B.
Circular 20B provides that “[c]arriers will
transport the shipment in accordance with the
plan of service specified on the shipping order,
with reasonable dispatch but not on any
particular train or schedule.” It may be true
that this provision imposes on UPRR an obli-
gation to make reasonably timely delivery of
any particular shipment which it has agreed to
deliver. CrossRoad, however, does not claim
damage or delay to particular freight. Instead,
it contends that its brokerage business was un-
dermined by Union Pacific’s generally bad per-
formance.
According to CrossRoad, Union Pacific’s
inefficiency and untimeliness constitutes a
breach of their agreement, because it prevent-
ed CrossRoad from relying on UPRR for its
shipping, and thus precluded it from realizing
2 See Prime Prods., Inc. v. S.S.I. Plastics, Inc.,
97 S.W.3d 631, 636-37 (Tex. App.SSHouston [1st Dist.] 2002, pet. denied).

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the amounts it had anticipated based on the in-
centive plan. As the district court noted, the
parties’ agreement did not render Union
Pacific a surety of CrossRoad’s business
success.
III.
CrossRoad argues that defendants are liable
for fraud and negligent misrepresentation in
connection with various statements, including
projections that Union Pacific’s merger with
Southern Pacific Railroad would benefit rail
customers by improving transit times and re-
liability of service generally, and additional
representations that the bottlenecking problem
Union Pacific was experiencing would not
have a negative impact on CrossRoad’s
shipments. Claims of negligent
misrepresentation, however, must be based on
past or present facts.3 Consequently, a
plaintiff may not base such claims on
statements regarding future events.4 Likewise,
with some exceptions, an action for fraud
cannot arise from expressions of opinion or
predictions about the future. Bryant v.
Transcon. Gas Pipe Line Co., 821 S.W.2d
187, 190 (Tex. App.SSHouston [14th Dist.]
1991, pet. denied).
CrossRoad contends that the disputed
statements concerning Union Pacific’s
expected performance were expressions of
present facts, because Union Pacific should
have known, at the time, that it would be
unable to perform in the manner represented.
Even if we accepted this argument, to support
a cause for fraud or misrepresentation a
plaintiff must prove that its reliance was
justifiable. See Clardy Mfg. Co. v. Marine
Midland Bus. Loans, Inc., 88 F.3d 347, 358,
360 (5th Cir. 1996). “The justifiableness of
the reliance is judged in light of the plaintiff’s
intelligence and experience.” Scottish
Heritable Trust, PLC v. Peat Marwick Main &
Co., 81 F.3d 606, 615 (5th Cir. 1996).
CrossRoad is a sophisticated, long-time
participant in the freight shipping industry and
cannot demonstrate that its reliance on Union
Pacific’s optimistic projections was justifiable.5
As here hereinabove explained, and as fur-
ther explicated by the district court in its co-
gent opinion entered June 18, 2002, the
summary judgment is AFFIRMED.
3 Allied Vista, Inc. v. Holt, 987 S.W.2d 138,
141 (Tex. App.SSHouston [14th Dist.] 1999, pet.
denied); Key v. Pierce, 8 S.W.3d 704, 709 (Tex.
App.SSFort Worth 1999, pet. denied).
4 Allied Vista, 987 S.W.2d at 141 (“[T]he sort
of ‘false information’ contemplated in a negligent
misrepresentation case is a misstatement of existing
fact, not a promise of future conduct.”).
5 See Clardy, 88 F.3d at 358, 360 (stating that
sophisticated plaintiffs with industry experience are
unable, as a matter of law, to prove justifiable
reliance); cf. Presidio Enters., Inc. v. Warner
Bros. Distrib. Corp., 784 F.2d 674, 682 (noting
that plaintiffs were experienced executives who
could not have reasonably relied on
misrepresentations at issue).

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