Attorney Harrison Oldham

This week, we will quickly look into a ubiquitous part of most people’s professional lives – email.  Specifically, we will review a recent case out of the Fifth Circuit, Texxon Petrochemicals LLC v. Getty Leasing, Inc., which was decided on May 3, 2023.  In Texxon, the Fifth Circuit affirmed the lower courts’ conclusions that a 2-email exchange did not establish a contract to sell a gas station.

Although this matter originated after Texxon filed for bankruptcy, we will ignore most of that and focus on the Fifth Circuit’s discussion regarding the email exchange.  As a bit of background, before declaring bankruptcy, Texxon had operated a gas station, convenience store, and car wash on a property in Austin, Texas.  Texxon leased the property (the “Leased Property”) from Getty Realty Corporation.

In 2018, Saravana Raghavan, who was Texxon’s owner, testified that he had a 2-email exchange with Gary Bendzin, an asset manager from Getty Realty (not Getty Leasing, the appellee). Both below and on appeal, Texxon argued that the exchange constituted a contract between Texxon and Getty Leasing to purchase the Leased Property.

The exchange went as follows.  On March 28, 2018, Bendzin emailed Raghavan with the subject line “Lamar Blvd., Austin, Texas.” In the email, Bendzin wrote,

“Saravana,

We are interested in selling the property for $350,000. You would need to pay the open A/R balance as well.”

Attached to the email was a lease ledger from “Getty Reality Corp.” for Texxon Petrochemicals, LLC.  The next day, March 29, 2018, Raghavan replied, writing:

“Gary

Sure. Thanks for your help man. Michael always help on the real estate closer. We both will work with you and get this done asap.

Michael – Lets meet today and discuss this property.”

Neither party took any further action to finalize and effectuate a sale of the Leased Property.

Three years later, in 2021, Texxon first sought to execute the alleged contract, when it filed a motion to assume the alleged contract and consummate the sale. Getty Leasing opposed this motion, arguing that it never entered into a contract to sell the Leased Property.  Both the bankruptcy court and the district court rejected Texxon’s argument, finding that the “contract” failed to sufficiently identify the property or comprise an unequivocal offer or acceptance.

On appeal, the Fifth Circuit agreed with both lower courts and held that the brief email exchange did not demonstrate an offer or acceptance, as required for a contract to be binding under Texas law.  Under Texas law, “To prove that an offer was made, a party must show (1) the offeror intended to make an offer, (2) the terms of the offer were clear and definite, and (3) the offeror communicated the essential terms of the offer to the offeree.”

In this case, the court held, Texxon failed to show that the email exchange satisfied any of the three required elements of an offer, primarily because a “statement that a party is ‘interested’ in selling a property is not an offer to sell that property—it is an offer to begin discussions about a sale.”  Finally, the court reasoned, the alleged offer failed to identify the property to be conveyed.  For a property description to be sufficient, “the writing must furnish within itself, or by reference to some other existing writing, the means or data by which the land to be conveyed may be identified with reasonable certainty.”

Key Takeaways:

Although it’s unlikely that you are trying to sell any property by email today, hopefully, this article will cause you to think twice next time you discuss some contract or agreement via email.  While reading this, you probably thought, “Texxon is making a ridiculous argument.  No way is that a contract.”  But keep in mind, Getty Leasing probably thought the same thing.  Despite that, Getty Leasing still had to battle Texxon’s arguments through three different courts.  I doubt they enjoyed incurring that time or expense.

Maybe it’s worth taking a few extra minutes to clarify when an email is intended to be binding, or not.

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About Harrison Oldham

Harrison grew up in Mansfield, Texas. He attended Texas A&M University for his bachelor’s degree, where he met his wonderful wife, Kelsey. After graduating magna cum laude from Texas A&M, he attended SMU Dedman School of Law, graduating with honors in 2012. Today, Harrison and his wife live in Dallas, Texas with their son, Teddy.

Since graduating from SMU Law, Harrison has worked exclusively in the field of business law. He has spent time in private practice and in-house, working with clients of every size; from single person startups to Fortune 250 companies. Today his practice focuses on serving the diverse needs of businesses and individuals throughout Texas. You can learn more about Harrison by visiting his website, at: http://lonestarbusinesslaw.com/.

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