Suzlon Wind Energy Corp. v. Shippers Stevedoring Co. (662 F. Supp. 2d 623, 2009)

United States District Court for the Southern District of Texas 2009-01-27

Citations

Full opinion text

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

This suit arises from a fire that damaged a nacelle, which is part of a wind turbine generator. The nacelle was manufactured in India and shipped to the Port of Houston for inland transport to Minnesota. The fire occurred after the nacelle had been unloaded from the ship at the Port of Houston, during preparations for transport on a truck-trailer. Those preparations included “hot work” to secure the nacelle to the trailer.

Suzlon Energy Ltd. (“Suzlon Energy”), based in India, designed and manufactured the wind turbine. Suzlon Wind Energy Corporation (“Suzlon Wind”) was the American distributor. The plaintiffs, Suzlon Wind and its insurer, Codan Forsikring A/S (“Codan”), sued Shippers Stevedoring Company (“Shippers”), the stevedoring company that performed the hot work; ATS Wind Energy Services, a Division of Anderson Trucking Services (“ATS”), which contracted with Suzlon Wind to handle the nacelle’s inland transport to Minnesota; and Fitzley, Inc. (“Fitzley”), which was hired by ATS to provide the drivers, trucks, and trailers to transport the nacelle. Suzlon Wind and Codan alleged negligence in preparing the nacelle for its inland transport. The day after Suzlon Wind filed this suit, Shippers filed a declaratory judgment action against Suzlon Wind and Suzlon Energy seeking to eliminate or limit liability for the fire damage to the nacelle. The two suits were consolidated. (Docket Entry No. 4).

ATS and Fitzley filed a third-party complaint seeking indemnification or contribution from Andrews Boom Repair, Inc. (“ABR”), the welding company that Shippers hired, and from ABR employee Pablo Pineiro, who did the welding work. (Docket Entry No. 50). Suzlon Wind and Codan cross-claimed against ABR and Pineiro. (Docket Entry No. 52).

On June 29, 2007, Suzlon Wind and Codan moved for partial summary judgment that Shippers, ATS, and Fitzley could not rely on the terms, conditions, limitations, or defenses contained in the bill of lading for the nacelle’s ocean shipment. (Docket Entry No. 33). On March 7, 2008, 2008 WL 686206, this court granted the plaintiffs’ motion, concluding that defenses and limitations under the bill of lading and COGSA were not applicable. (Docket Entry No. 78). Following mediation, Suzlon Wind and Codan settled their claims against ATS and Fitzley. Those claims, as well as all cross-claims involving ATS and Fitzley were dismissed on May 30, 2008. (Docket Entry No. 134).

The following motions are pending:

• Suzlon Wind and Codan have moved for partial summary judgment granting their breach of contract claim against Shippers. (Docket Entry No. 143). Shippers filed a response, (Docket Entry No. 153); Suzlon Wind and Codan replied, (Docket Entry No. 156); Shippers filed a surreply, (Docket Entry No. 167); and Suzlon Wind and Codan replied to the surreply, (Docket Entry No. 171).

• Shippers has moved for leave to amend its answer and counterclaim, (Docket Entry No. 146). Suzlon Wind and Codan responded, (Docket Entry No. 154); Shippers replied, (Docket Entry No. 164); and Suzlon Wind and Codan filed a surreply, (Docket Entry No. 166). ABR filed a joinder to Shippers’s motion for leave to amend, (Docket Entry No. 162); Suzlon Wind and Codan responded, (Docket Entry No. 169); and ABR replied, (Docket Entry No. 177).

• Shippers has moved for partial summary judgment dismissing the plaintiffs’ breach of contract and negligence per se claims, (Docket Entry No. 158), to which Suzlon Wind and Codan responded, (Docket Entry No. 174). Shippers filed a motion to consider additional evidence, (Docket Entry No. 182), which Suzlon Wind and Codan opposed, (Docket Entry No. 183). Shippers filed a second motion to consider additional evidence, (Docket Entry No. 184), and Suzlon Wind and Codan responded, (Docket Entry No. 188).

• ABR moved for partial summary judgment dismissing the plaintiffs’ claims against it, (Docket Entry No. 160). Suzlon Wind and Codan responded, (Docket Entry No. 170), and ABR replied, (Docket Entry No. 180).

• Suzlon Wind and Codan moved to exclude the testimony of Ruben Arredondo, a witness ABR designated, (Docket Entry No. 157). ABR responded, (Docket Entry No. 168), and Suzlon Wind and Codan replied, (Docket Entry No. 176).

• ABR moved to exclude the testimony of Dr. Lawrence M. Matta, an expert the plaintiffs designated, (Docket Entry No. 163). Suzlon Wind and Codan responded, (Docket Entry No. 173), as did Suzlon Energy, (Docket Entry No. 175), and ABR replied, (Docket Entry No. 178).

• ABR moved to exclude the testimony of Haskell Simpkins, an expert the plaintiffs designated, (Docket Entry No. 186). Suzlon Wind and Codan responded, (Docket Entry No. 189), and ABR replied, (Docket Entry No. 193).

• ABR moved to compel production of documents by Suzlon Wind and Codan, (Docket Entry No. 159). Suzlon Wind and Codan responded, (Docket Entry No. 172); ABR replied, (Docket Entry No. 179); and Suzlon Wind and Codan filed a surreply, (Docket Entry No. 181).

• ABR moved to compel the deposition of Suzlon Wind’s CEO Andy Cukurs, (Docket Entry No. 187). Suzlon Wind and Codan responded, (Docket Entry No. 190), and ABR replied, (Docket Entry No. 192).

Based on a careful review of the motions, responses, and replies; the record; the parties’ submissions; and the applicable law, this court:

• grants Shippers’s motion to consider additional evidence in connection with the summary judgment motions, (Docket Entry No. 184);

• grants the motions for leave to amend filed by Shippers and ABR;

• denies the plaintiffs’ motion for summary judgment on their breach of contract claim;

• grants in part and denies in part Shippers’s motion for partial summary judgment on the plaintiffs’ breach of contract and negligence per se claims;

• grants ABR’s motion for partial summary judgment on the plaintiffs’ claims;

• grants in part and denies in part the plaintiffs’ motion to exclude Arredondo’s expert testimony;

• denies ABR’s motion to exclude Mat-ta’s expert testimony;

• grants in part and denies in part ABR’s motion to exclude Simpkins’s expert testimony;

• grants in part and denies in part ABR’s motion to compel documents from Suzlon Wind and Codan; and

• denies ABR’s motion to compel the deposition of Cukurs.

The reasons for these rulings are explained below.

I. Background

Suzlon Energy regularly ships wind energy equipment that it designs and manufactures from India to its United States distributor, Suzlon Wind. Shortly before the shipment at issue, two fires occurred in nacelles manufactured by Suzlon Energy. The first of the fires occurred on October 25, 2005 in a nacelle on board the BBC Canada in the Houston ship channel. The fire started while welders were performing hot work to remove a clip securing the nacelle to the ship’s deck. The nacelle’s polyurethane foam insulation and fiberglass shell ignited and provided fuel for the fire. The crew, which had maintained a fire watch and had multiple fire extinguishers, was able to put the fire out. The second of the fires occurred on November II, 2005 in Minnesota. A nacelle caught fire while hot work was being performed during installation. The fire started when sparks or “slag” from a worker’s oxyacetylene torch ignited the foam insulation inside the nacelle. One worker was killed. Kenneth Glazier, in-house counsel and a vice-president of Suzlon Wind, received a report on the BBC Canada fire and damage to the nacelle. Glazier also promptly learned of the Minnesota fire and wrote a report on it.

On the day of the Minnesota fire, Suzlon Wind’s Chief Operating Officer, John Hewitt, issued a “MANDATORY INSTRUCTION” that “NO HOT WORK” be performed near any Suzlon Wind turbine until further notice. (Docket Entry No. 153, Ex. B). Glazier testified that the instruction applied to all Suzlon employees and to anyone working on a Suzlon nacelle. (Docket Entry No. 153, Ex. A, Glazier Deposition, at 111:24-112:5). Glazier also testified that he would want to tell anyone doing hot work on a Suzlon nacelle about the no-hot-work mandatory instruction. (Id., at 112:6-9). Suzlon Wind’s position in this lawsuit is that the no-hot-work instruction applied only to nacelles undergoing assembly or being installed on the job site, not to nacelles that were being prepared for transport. (Id., at 117:14-25).

On November 17, 2005, Steve Mikel, head of Suzlon Wind’s Minnesota operation, issued a memorandum on “Foam Removal Procedure.” (Docket Entry No. 153, Ex. D). Glazier testified that Suzlon Wind instituted this procedure because “[t]he polyurethane foam (accoustical egg crate foam) has a potential to catch fire if an ignition source is present within the nacelle.” Suzlon Wind required “[a]s a necessary precaution, [that] the polyurethane foam ... be removed from the nacelle” before hot work was performed. (Id.). After the November 2005 fire, at the request of Suzlon Wind, Suzlon Energy stopped putting insulation in the nacelles that it manufactured and shipped to the United States. (Docket Entry No. 153, Ex. A, Glazier Deposition, at 122:14-21).

The nacelle at issue was shipped by Suzlon Energy to Suzlon Wind as part of a cargo of wind-energy equipment in November 2005. The cargo, including four nacelles, was shipped from Mumbai, India to the Port of Houston on board the M/V Saudi Hofuf under bill of lading HF126BMHO-058. The nacelle at issue was discharged on November 18, 2005 at the Barbours Cut Terminal in the Port of Houston at a site operated by Shippers. Suzlon Wind retained ATS to handle the inland transport of the cargo, including the nacelle, from the Port of Houston to its ultimate destination in Minnesota. ATS hired drivers, trucks, and trailers from Fitzley for the transport.

ATS learned that under applicable United States Department of Transportation regulations, transport on the Fitzley trailers required additional support points for tie-downs in the nacelle shipping stands. ATS consulted with Suzlon Wind about these additional support points and where they would be placed on the shipping stands. Suzlon Wind asked its agent, Project Logistics International, Inc. (“PLI”), to arrange for the hot work needed to cut holes on the shipping stands for the tie-downs. PLI’s Ove Christensen contacted Shippers’s Operations Manager, William Templet, to ask Shippers to have the hot work done. When Christensen asked Templet if Shippers required an indemnity letter to do the hot work, Templet said “yes.” (Docket Entry No. 153, Ex. E, Deposition of William Templet at 11:20-12:1).

In the early morning of January 17, 2006, Glazier received a report he had requested from a Suzlon Energy engineer, Rakesh Dhakar, about the October 2005 nacelle fire. (Docket Entry No. 184, Ex. O). The report contained photographs of the nacelle’s parts as well as Dhakar’s observations and conclusions about the damage. (Id.). Glazier asked for this report because Suzlon Wind had shipped the fire-damaged nacelle to Minnesota and planned to use the undamaged parts to repair another nacelle. (IoL). Dhakar concluded that the October 2005 fire had started in the front section of the nacelle. While the fire affected mostly the front half, the foam inside was “totally burnt.” (Id.). Dhakar recommended that in the future, Suzlon “must use the fire resistant accoustic foam” in the nacelles. (Id.).

Later that day, January 17, Glazier spoke with Templet, the Shippers Operation Manager, about the hot work. Glazier told Templet that Suzlon Wind would provide Shippers an indemnity letter. Glazier advised Templet that fire blankets and fire extinguishers had to be available during the hot work but did not mention any specific fire precautions. (Docket Entry No. 153, Ex. E, Templet Deposition, at 107:9-108:23). Glazier did not inform Templet about the two recent nacelle fires, the no-hot-work instruction that had issued on November 11, 2005, or the foam-removal procedure for Suzlon nacelles that had issued on November 17, 2005. Templet testified that neither Glazier nor Christensen placed any stress on the need for fire precautions other than fire blankets and extinguishers. (Id.). Templet testified that Shippers would not have agreed to do the hot work if he had known about Suzlon’s ban on hot work on all nacelles and the two recent Suzlon nacelle fires. (Id., Ex. E., Templet Deposition, at 100:13-17).

Glazier sent Templet the indemnity letter the afternoon of January 17, 2006. (Docket Entry No. 184, Ex. P). The letter stated in relevant part:

Suzlon Wind ... has requested Shipper’s ... to cut holes today about two inches thick in diameter in the corners of the shipping stands of four Suzlon nacelles (16 total cuts). This work will be pursuant to instructions from ATS Wind Energy Services and to enable them to chain the nacelles and shipping stands to their trucks. [Suzlon Wind] will pay you for this work based on your time and materials pursuant to prior arrangements.

Careful fire precautions are necessary because this will be hot work near the nacelles. Shipper’s Stevedoring must use fire blankets to cover the nacelles, have fire extinguishers available, and adhere to other customary good practices and fire prevention procedures, while performing this work. If you do so, and absent any other negligence on your part [Suzlon Wind] will indemnify Shipper’s Stevedoring and hold it harmless from any damage or liability resulting from this work.

(Docket Entry No. 143, Ex. 1). Glazier testified that he did not specifically mention that the insulation was flammable. Nor did he inform Shippers about the previous fires and the no-hot-work mandatory instruction. He assumed that Shippers was aware of the Minnesota fire because of the fact they were requesting an indemnity letter from Suzlon Wind to do the hot work. (Docket Entry No. 153, Ex. A, Glazier Deposition, at 257:9-259:13).

Shippers alleges that Suzlon Wind intentionally did not disclose information about the previous nacelle fires, the no-hot-work mandatory instruction, or foam-removal procedure. Shippers alleges that Suzlon Wind misrepresented that such general precautions as using fire blankets and having fire extinguishers available would be enough because Suzlon Wind needed to get the nacelle to Minnesota quickly. On January 10, 2006, ATS had informed Hewitt that Suzlon Wind needed to ship the four nacelles from the Port of Houston to Minnesota as soon as possible because Minnesota law prohibited moving heavy equipment “once frost comes out of the ground,” which ATS said could occur as early as February. (Docket Entry No. 153, Ex. A, Glazier Deposition, 145:19-146:8). Suzlon Wind had to install and commission the nacelles by February 22, 2006 or it would be contractually obligated to reimburse the nacelle owners for lost incentive payments the owners would have received from the State of Minnesota. (Id., Glazier Deposition at 172:21-173:11). Glazier testified that on January 17, 2006, Suzlon Wind was under “severe time constraints” and needed the holes cut in the shipping stands the next day because trucks and cranes were waiting and Suzlon Wind would have to pay for them even if the nacelles were not ready to ship. In addition, Glazier was not sure if the trucks and cranes would be available later. (Id., Glazier Deposition at 254:21-255:21).

After receiving the indemnity letter from Glazier, Templet called Pablo Pineiro of ABR and hired him to do the hot work on the shipping stands. Pineiro was an experienced open-flame welder who had done welding work for Shippers for nineteen years. Templet asked Pineiro to come to Shippers’s site at Barbours Cut on January 18, 2006. Templet told Pineiro to bring a torch, fire blankets, and fire extinguishers. (Docket Entry No. 143, Ex. 3, Templet Deposition, 19:1-6).

On January 18, 2006, the nacelle at issue was loaded onto a Fitzley trailer. An ATS representative, Don Finnvik, was on site. Pineiro arrived early that morning with an oxyacetylene torch, a six-by-seven foot fire blanket, and a fire extinguisher. Two other fire extinguishers were present at the site. There were no written instructions on how Pineiro was to cut the holes in the shipping stands.

The shipping stand was at the base of the nacelle. Approximately two feet above the stand was a small gap, which extended all the way around the nacelle and led to the nacelle’s interior. The interior was lined with polyurethane foam insulation. Pineiro testified in his deposition that when he looked inside the gap, it was dark and he could not see anything. (Docket Entry No. 143, Ex. 5, Pineiro Deposition at 73:9-15). Finnvik showed Pineiro where to cut the holes and how to use his fire blanket to cover the gap between the nacelle’s outer shell and the shipping stand. Pineiro placed the blanket so that it was covering the gap for two feet on one side and four feet on the other side. Because the outer shell was made of fiberglass, the fire blanket would not stay up on its own. Finnvik told Pineiro to use a piece of plywood to hold the fire blanket in place against the nacelle base.

The Fitzley truck driver on the site, Christopher Fuqua, testified that while Pineiro was cutting holes in the first nacelle’s shipping stand, a plastic tarp covering the nacelle caught fire and burned. (Docket Entry No. 167, Ex. 2, Fuqua Deposition at 17-19). Pineiro denied that a tarp caught fire. (Docket Entry No. 143, Ex. 5, Pineiro Deposition at 20:21-21:5).

After cutting the holes in the shipping stand of the first nacelle, Pineiro moved on to the second nacelle. He set up his fire blanket the way Finnvik had shown him with the first nacelle. Pineiro began using his torch to cut the holes in the shipping stand. He was nearly finished with the first hole on the second nacelle when he heard a “whoosh” sound behind him, from within the nacelle. He saw smoke and flames coming out of the nacelle approximately five to ten feet behind where he had been cutting. Fuqua testified that he was on the trailer making adjustments when he felt heat on his back and turned around. He saw a cloud and a shadow and jumped off the trailer. (Docket Entry No. 167, Ex. 2, Fuqua Deposition at 20:13-19). Fuqua testified that the nacelle was totally engulfed in flames shortly after he jumped off. (Id., Ex. 2, Fuqua Deposition at 66:5-7). Pineiro unsuccessfully tried to put the fire out with the extinguishers. He then called the Fire Department.

Suzlon Wind and Codan assert that the damage to the nacelle resulting from the fire was $848,502.27. Suzlon Wind and Codan allege that the defendants negligently failed to use adequate fire blankets, to have an adequate number of fire blankets, or to have an adequate number of fire extinguishers. Suzlon Wind and Codan also allege that the defendants failed to post a fire watch; properly supervise the welding operations; engage a competent welder; safely perform welding operations; obtain a hot-work permit; and follow required hot-work safety procedures. (Docket Entry No. 139, at 3).

These motions followed extensive discovery.

II. The Motions for Leave to Amend

Shippers seeks leave to amend its answer to assert several affirmative defenses to contract formation, including fraudulent inducement, and to counterclaim against Suzlon Wind for fraud by nondisclosure. ABR has joined in Shippers’s motion, asserting that “the arguments and authorities cited by Shippers Stevedoring Company are equally applicable to ABR.” (Docket Entry No. 162). Suzlon Wind and Codan oppose these motions, arguing that Shippers and ABR unduly delayed seeking leave to amend their answers and that allowing these defenses and counterclaims would be unduly prejudicial.

A. The Legal Standard

Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend its pleading once without seeking leave of court or the consent of the adverse party at any time before a responsive pleading is served. After a responsive pleading is served, a party may amend only “with the opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a). Rule 15(a) instructs that “[t]he court should freely give leave when justice so requires.” Id. The rule “evinces a bias in favor of granting leave to amend.” Jones v. Robinson Prop. Group, L.P., 427 F.3d 987, 994 (5th Cir.2005) (quoting Lyn-Lea Travel Corp. v. Am. Airlines, Inc., 283 F.3d 282, 286 (5th Cir.2002)). But leave to amend “is not automatic.” Matagorda Ventures, Inc. v. Travelers Lloyds Ins. Co., 203 F.Supp.2d 704, 718 (S.D.Tex.2000) (citing Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 598 (5th Cir.1981)). Whether to allow amendment “lies within the sound discretion of the district court.” Little v. Liquid Air Corp., 952 F.2d 841, 845-46 (5th Cir.1992). A district court reviewing a motion to amend pleadings under Rule 15(a) may consider “whether there has been ‘undue delay, bad faith or dilatory motive, ... undue prejudice to the opposing party, and futility of amendment.’ ” Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir.1998) (quoting In re Southmark Corp., 88 F.3d 311, 314-15 (5th Cir.1996)).

B. Analysis

This lawsuit was filed on January 15, 2007. Shippers filed its original answer on February 7, 2007. (Docket Entry No. 10). Suzlon Wind and Codan have filed three amended complaints. (Docket Entry Nos. 86, 101, 137). Shippers asserts that it seeks leave to amend to “plead responsively to Suzlon Wind Energy Corporation’s Second and Third Amended Complaint.” (Docket Entry No. 146, at 2).

Shippers argues that it first learned the factual basis for its fraud-by-non-disclosure claim on February 28, 2008. That was when Glazier testified that he knew about the previous fires, the no-hot-work instruction, and the foam-removal procedure but did not relay the information to anyone at Shippers or ABR. Glazier was Shippers’s primary contact person at Suzlon Wind about the hot work at issue. On March 27, 2008, Shippers sought leave to amend its declaratory judgment complaint to assert a fraud-by-non-disclosure claim against Suzlon Wind. (Docket Entry No. 93). This court denied Shippers’s motion on May 7, 2008 because the proposed amended complaint did not plead fraud with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. (Docket Entry No. 128). Shippers filed the present motion for leave to amend its answer and counterclaim on September 11, 2008. Shippers asserts that it sought leave to amend when Hewitt’s August 19, 2008 deposition testimony about Suzlon Wind’s policy forbidding hot work near nacelles and Suzlon’s failure to disclose this policy to Shippers provided the detailed facts that had been missing earlier. (Docket Entry No. 146, at 2). Shippers asserts that the proposed amended pleading cured the pleading deficiencies this court had identified in denying Shippers’s earlier motion for leave to amend its declaratory-judgment complaint. (Docket Entry No. 146).

Suzlon Wind and Codan dispute that Hewitt’s August 2008 deposition testimony first provided Shippers the factual basis needed to plead fraud with particularity. Suzlon Wind and Codan argue that these facts were “elicited from documents and depositions obtained and completed long ago, and far in advance of [Shippers] seeking leave to amend.” (Docket Entry No. 154, at 4). Suzlon Wind and Codan argue that Shippers has had the “No Hot Work” instruction since September 2007. Suzlon Wind and Codan argue that by delaying in seeking leave to amend to assert defenses to contract formation and a counterclaim for fraud, Shippers is seeking to “change the landscape of this litigation” on “the eve of trial.” Suzlon Wind and Codan assert that from the outset, Shippers has taken the position that the January 17, 2006 indemnity letter is a binding agreement and is seeking to change course late in the litigation in a “desperate attempt ... to avoid summary judgment on Plaintiffs’ breach of contract claim.” (Docket Entry No. 166, at 3). Suzlon Wind and Codan assert that they will be prejudiced by facing a new affirmative defense and a new counterclaim late in the litigation.

Shippers first sought leave to amend in March 2008. That was one month after Glazier’s deposition provided details about his knowledge of the recent nacelle fires and the fire-prevention directions and procedures Suzlon Wind put into place as a result. That one month is not “undue” delay. That motion was denied for lack of particularity in May 2008. Shippers filed the present motion in September 2008. This motion was filed a month after Hewitt’s deposition testimony.

The “[m]ere passage of time need not result in refusal of leave to amend; on the contrary it is only undue delay that forecloses amendment.” Dussouy, 660 F.2d at 598; see also Mayeaux v. La. Health Serv. & Indem. Co., 376 F.3d 420, 427 (5th Cir.2004) (delay alone is insufficient to deny leave to amend). “Amendment can be appropriate as late as trial or even after trial.” Dussouy, 660 F.2d at 598. Undue delay is present when an amendment is untimely and would prejudice the nonmoving party and impose unwarranted burdens on the court. Mayeaux, 376 F.3d at 427.

The delay in filing the motions was not extensive. Nor will Suzlon Wind and Codan be unfairly prejudiced if leave to amend is granted. A party is prejudiced “if an added claim would require [it] ‘to reopen discovery and prepare a defense for a claim different from the [one] ... that was before the court.’ ” Smith v. EMC Corp., 393 F.3d 590, 596 (5th Cir.2004) (quoting Duggins v. Steak ‘N Shake, Inc., 195 F.3d 828, 834 (6th Cir.1999)). The proposed amendment would not unfairly prejudice Suzlon Wind and Codan because they have had notice of the nature of the added claims against them. See Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 245 (5th Cir.1997) (the “touchstone of the [prejudice] inquiry under Rule 15(a) is whether the proposed amendment” would “deny[] defendants notice of the nature of the complaint”). Suzlon Wind and Codan have been aware of Shippers’s intent to assert affirmative defenses and claims based on fraud and nondisclosure by Suzlon Wind since at least March 27, 2008. Significant discovery has been exchanged on the previous nacelle fires, the no-hot-work instruction, and the foam-removal procedure. Because no delay or additional discovery is necessary, no unwarranted burden is placed on either the parties or on this court by allowing the amendment.

Suzlon Wind and Codan cite cases in which leave to amend was denied because the motion seeking leave was not filed until after the opposing party moved for summary judgment. See Matagorda Ventures, 203 F.Supp.2d at 720; Butschek v. Southwestern Bell Telephone Co., 952 F.Supp. 470, 479 (S.D.Tex.1996). These cases present far different circumstances than are disclosed by this record. In Matagorda Ventures, the plaintiff sued for a declaratory judgment that its insurer, Travelers, was obligated to defend it in a trademark and copyright infringement lawsuit. 203 F.Supp.2d at 706. After two years of proceedings, the expiration of the discovery deadline, and the filing of summary judgment motions, responses, and replies based on the pleadings, the insured sought leave to amend to assert a new claim based on Travelers’s alleged to duty to defend an entirely separate lawsuit. Id. at 720. The court denied leave to amend because the plaintiffs claim for coverage in the second lawsuit raised a “distinct set of factual issues in a two-year old case which has, to this point, only involved the question of whether Travelers owes a duty to defend the [trademark and copyright] lawsuit.” Id. The court in Butschek denied leave to amend because the plaintiff was attempting to “change his theory of the case after summary judgment motions [were] filed.” 952 F.Supp. at 479. In the present case, by contrast, Shippers’s proposed amended answer and counterclaim do not raise a distinct set of factual issues. Instead, the pleading relates to issue that have been part of this case at least since Glazier’s deposition on February 28, 2008. Shippers first moved to include these issues in the pleadings on March 27, 2008 when it sought leave to assert a fraud claim against Suzlon Wind. The plaintiffs’ contention that Shippers is seeking leave to amend only as an attempt to avoid summary judgment is belied by the fact that Shippers sought to assert the fraud by nondisclosure claim months before Suzlon Wind and Codan moved for summary judgment on their breach of contract claim.

Suzlon Wind and Codan argue that this court should deny Shippers leave to amend its answer and counterclaim because this court previously denied Shippers’s motion for leave to amend its declaratory judgment complaint. Suzlon Wind and Codan argue that Shippers’s motion is a second attempt to obtain relief that this court already denied, and that the denial is the law of the case. This argument is unpersuasive. “Law of the case directs a court’s discretion, it does not limit the tribunal’s power.” Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983) (citations omitted). “[I]n civil cases a district court is not precluded by the ... doctrine from reconsidering previous rulings on interlocutory orders such as summary judgment motions, as those rulings are not immutable and lack res judicata effect.” United States v. Palmer, 122 F.3d 215, 220 (5th Cir.1997). A ruling on a motion for leave to amend is an interlocutory order. Moreover, this court’s previous order did not deny the relief sought by the current motion for leave to amend Shippers’s answer to assert the affirmative defenses contained in the proposed pleading, or for leave to amend to cure the lacking particularity in the earlier proposed pleading. The law of the case doctrine is inapplicable.

Shippers’s and ABR’s motions for leave to amend are granted.

III. The Motions for Summary Judgment

A. The Legal Standard

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). “The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th Cir.2005) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

If the burden of proof at trial lies with the nonmoving party, the movant may satisfy its initial burden by “‘showing’ — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party’s case.” See Celotex, 477 U.S. at 325, 106 S.Ct. 2548. While the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant’s case. Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005) (citation omitted). “ ‘An issue is material if its resolution could affect the outcome of the action.’ ” DIRECTV, Inc. v. Robson, 420 F.3d 532, 536 (5th Cir.2005) (quoting Weeks Marine, Inc. v. Fireman’s Fund Ins. Co., 340 F.3d 233, 235 (5th Cir.2003)). “If the moving party fails to meet its initial burden, the motion for summary judgment must be denied, regardless of the nonmovant’s response.” Quorum Health Res., L.L.C. v. Maverick County Hosp. Dist., 308 F.3d 451, 471 (5th Cir.2002) (citing Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc)).

When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings. “[T]he nonmovant must identify specific evidence in the record and articulate the manner in which that evidence supports that party’s claim.” Johnson v. Deep E. Tex. Reg’l Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir.2004) (citation omitted). “This burden is not satisfied with ‘some metaphysical doubt as to the material facts,’ by ‘conclusory allegations,’ by ‘unsubstantiated assertions,’ or by ‘only a ‘scintilla’ of evidence.’ ” Little, 37 F.3d at 1075 (internal citations omitted). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citation omitted).

B. The Summary Judgment Record

The undisputed relevant summary judgment evidence includes the January 17, 2006 agreement between Suzlon Wind and Shippers; excerpts of Port of Houston Authority Tariff No. 8; the Port of Houston Authority Welding and Hot Work Permit; National Fire Protection Association Standard 51B, “Fire Prevention During Welding, Cutting, and Other Hot Work”; the deposition of William Templet; the deposition of Pablo Pineiro; photographs of the damaged nacelle; the deposition of Kenneth Glazier; the deposition of John Hewitt; the deposition of Lawrence Matta; the deposition of Christopher Fuqua; Suzlon Wind’s “No-Hot-Work” Mandatory Instruction memorandum dated November 11, 2005; Suzlon Wind’s nacelle foam-removal procedure dated November 17, 2005; a January 12, 2006 email from Christensen to Templet; a January 14, 2006 e-mail from Hewitt to Glazier; a January 17, 2006 e-mail from Christensen to Glazier; Suzlon’s postaccident memorandum dated January 23, 2006; and a report by marine surveyor Rock O’Keefe.

Shippers has moved to supplement the record with: (1) an e-mail exchange between Glazier and Dhakar about the report on the nacelle damaged in the October 25, 2005 fire; (2) an e-mail showing that Glazier sent Templet the indemnity letter approximately 12 hours after he received the report from Dhakar; and (3) correspondence between Suzlon Wind’s counsel and Shippers’s counsel confirming that Glazier received the Dhakar report on January 17, 2006. Suzlon Wind opposes the motion, arguing that evidence of Glazier’s knowledge of the nacelle’s flammability on January 17, 2006 is irrelevant to this court’s determination of the breach of contract claim. (Docket Entry No. 188). Because Shippers’s and ABR’s motion for leave to amend is granted, Suzlon Wind’s objection is moot. The evidence is relevant to the affirmative defense of fraudulent inducement and counterclaim of fraud by nondisclosure. Shippers’s motion to supplement the summary judgment record, (Docket Entry No. 184), is granted.

C. The Cross-Motions for Summary Judgment on the Plaintiffs’ Breach of Contract Claim

Suzlon Wind and Codan argue that Shippers breached its January 17, 2006 letter agreement to provide hot work by failing to use “careful fire precautions” and by failing to adhere to “other customary good practices and/or fire-prevention procedures.” Specifically, Suzlon Wind and Codan contend that Shippers’s failure to follow the requirements of Port of Houston Tariff No. 8 Subrule No. 54, Section 10 (“Subrule No. 54”) and National Fire Protection Association Standard 51B (“NFPA 51B”) breached the letter agreement provision requiring use of “careful fire precautions” and “other customary good practices and/or fire-prevention procedures.” Shippers responds that the contract terms “careful fire precautions” and “other customary good practices and/or fire prevention procedures” are ambiguous. Shippers argues that there was no meeting of the minds and no enforceable contract because “Shippers did not agree to the referenced tariff and standard as a clause, term, or definition of the alleged contract.” (Docket Entry No. 158, at 21). Shippers also argues that it was wrongfully induced to enter into the contract because Suzlon Wind failed to disclose the previous nacelle fires, the no-hot-work instruction, and the foam-removal procedure. Shippers has cross-moved for summary judgment on the plaintiffs’ breach of contract claim on these grounds.

The elements of a breach of contract cause of action are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. Smith Intern., Inc. v. Egle Group, LLC, 490 F.3d 380, 387 (5th Cir.2007). The elements of a valid contract are: (1) an offer; (2) an acceptance; (3) a meeting of the minds; (4) each party’s consent to the terms; and (5) execution and delivery of the contract with the intent that it be mutual and binding. Roman v. Roman, 193 S.W.3d 40, 50 (Tex.App.-Houston [1st Dist.] 2006, pet. denied).

1. Ambiguity and a Meeting of Minds

Shippers argues that “careful fire precautions” and “other customary good practices and fire prevention procedures” are undefined and subject to more than one reasonable interpretation. Rock O’Keefe, a surveyor hired by Suzlon Wind, wrote a report after the fire. He noted that “a fire blanket was used in between the shipping stand and the nacelle cover and three (3) fire extinguishers were on hand” and concluded that “[fjrom our review, we are satisfied that reasonable precautions were taken.” (Docket Entry No. 158, Ex. L). Pablo Pineiro testified that he felt he was following good practices and procedures by using a fire blanket and fire extinguishers. (Docket Entry No. 153, Ex. F, Pineiro Deposition at 74:15-18). Shippers points to the deposition testimony of Suzlon’s expert witness, Lawrence Matta, that the term “customary good practices” is not a defined term in the welding regulations and that he “hasn’t heard that as a term specifying anything in particular.” (Docket Entry No. 167, Ex. 1, Matta Deposition at 307:1-15). Shippers contends that there was no meeting of the minds because there was no agreement as to the scope of these terms. Shippers points to Templet’s deposition testimony that “my understanding of our conversation was that, if we had the fire blankets and fire extinguishers, this is what Suzlon requested that we have.” (Docket Entry No. 153, Ex. E, Templet Deposition at 17:18-21). Shippers asserts that the letter agreement does not “incorporate any specific tariffs or standards,” and “Shippers did not agree to incorporate any tariffs or standards.” (Docket Entry No. 158, at 21).

Suzlon Wind and Codan contend that the contract terms at issue are not ambiguous. They argue that adhering to required applicable regulations and industry standards, including Subrule No. 54 and NFPA 51B, necessarily falls within “careful fire precautions” and “other customary good practices and fire prevention procedures.” Suzlon Wind and Codan point to Matta’s deposition testimony that a “welder should have been aware” of these standards. Suzlon Wind and Codan argue that the contract terms are unambiguous and a meeting of the minds occurred.

What a contract means, and whether a contract is ambiguous, are questions of law for the court. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.1996). If the contract can be given a certain or definite legal meaning or interpretation, then it is not ambiguous, and a court should construe the contract as a matter of law. SAS Inst., Inc. v. Breitenfeld, 167 S.W.3d 840, 841 (Tex.2005). A court should construe an unambiguous contract according to the plain meaning of its express words. Lyons v. Montgomery, 701 S.W.2d 641, 643 (Tex.1985). Unambiguous contracts are enforced as written. Heritage, 939 S.W.2d at 121.

A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation. Heritage, 939 S.W.2d at 121. An ambiguity does not arise simply because the parties offer opposing interpretations. Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex.2000). A court determines whether a contract is ambiguous by looking at the contract as a whole in light of the circumstances present when the parties entered the contract. Universal Health Servs., Inc. v. Renaissance Women’s Group, P.A., 121 S.W.3d 742, 746 (Tex.2003). Parol evidence is not admissible for the purpose of creating an ambiguity. See Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 517, 243 S.W.2d 154, 157 (Tex.1951); Lewis v. E. Tex. Fin. Co., 136 Tex. 149, 146 S.W.2d 977, 980 (1941). If a contract is determined to be ambiguous, then a court may consider extraneous evidence to ascertain the true meaning of the instrument. Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995). The meaning of an ambiguous contract is a question of fact. Harris v. Rowe, 593 S.W.2d 303, 306 (Tex.1980).

“The law existing at the time a contract is made becomes a part of the contract and governs the transaction.” (Wessely Energy Corp. v. Jennings, 736 S.W.2d 624, 626 (Tex.1987); see also Central Educ. Agency v. George West Indep. School Dist., 783 S.W.2d 200, 202 (Tex.1989) (“Laws which subsist at the time and place of the making of a contract ... enter into and form a part of it, as if they were expressly referred to or incorporated in its terms.”) (internal citations omitted)). “Courts presume that the parties to a contract knew and took into consideration the laws affecting matters about which they contracted, unless the contrary clearly appears in the terms of the contract.” Jamestown Partners, L.P. v. City of Fort Worth, 83 S.W.3d 376, 381 (Tex. App.-Fort Worth 2002, pet. denied).

Port of Houston Tariff No. 8, Subrule No. 54, Section 10, titled “Preventing, Detecting, Controlling, and Fighting of Fires,” applied to the hot work at issue. (Docket Entry No. 143, Ex. 6). Subrule No. 54 applies to “all Users and all facilities within the jurisdiction of the Port Authority, including but not limited to piers, wharves, landings, buildings, or other structures adjacent to such waterways or utilized by the Port Authority in providing services.” {Id., Ex. 6 at 9). Tariff No. 8 defines “Users” to include stevedores and their “agents, servants, representatives, and/or employees.” In the section titled “Scope,” Subrule No. 54 states that “[a]ll ordinances, rules and regulations issued by the Port Authority relative to Fire Protection shall, in the event of conflict, take precedence over local or state law ... but if there is no conflict, all such provisions, ordinances, rules, and regulations shall apply and shall be in addition to the ordinances, rules, and regulations of the Port Authority.” {Id.). With respect to welding or hot work, Subrule No. 54, Section 10 provides:

Oxyacetylene, electric, or any other welding or burning or other “hot work” within the territorial jurisdiction of the Port Authority as set out in these regulations is permitted subject to the conditions set out herein and provided that a current permit issued by the USCG Captain of the Port is in the possession of the person on the job in charge of the operation and a permit has been issued by the Port Authority.... When welding, burning or other hot work is being performed, positive means shall be taken to confine heat, sparks, or slag so as to protect immovable fire hazards. Suitable operable fire extinguishing equipment shall be in the immediate vicinity and ready for instant use.

(Docket Entry No. 143, Ex. 6 at 9).

The welding and hot-work permit that the Port of Houston Authority required for such work stated that the following steps must be taken: (1) an inspection of the area and adjoining areas performed by the welding foreman or operator in charge before beginning the hot work; (2) maintaining a competent fire watch; and that (3) “[a]ll safe practices, local laws and ordinances shall be observed (See National-Fire Code 51 B).” (Docket Entry No. 143, Ex. 7). Welding and hot-work permits issued by the Port of Houston require that “all safe practices” be observed and incorporate NFPA 51B as the standard for those practices. An individual or entity performing hot work in the Port of Houston is required by Tariff No. 8, Subrule 54, Section 10 to observe NFPA 51B. NFPA 51B requires, among other things, that: (1) the hot work be performed in either a designated or permissible area; (2) the entity entrusted with management of the hot-work operations designate a permit authorizing individual (“PAI”); (3) the PAI obtains a hot-work permit; (4) the PAI determines any potential fire hazards associated with the hot work; (5) the PAI ensures any combustibles are properly shielded against ignition; (6) the PAI determines that fire protection and extinguishing equipment is properly located at the situs for hot work; (7) the PAI ensures the presence of at least one fire watch; (8) the fire watch ensures that safe conditions are maintained at the hot-work site; (9) the fire watch is authorized to stop hot-work operations; and (10) the fire watch has extinguishers readily available and is trained in their use. (Docket Entry No. 143, Ex. 8).

The contract between Suzlon Wind and Shippers is not ambiguous. The contract states that “careful fire precautions are necessary” and that Shippers “must use fire blankets to cover the nacelles, have fire extinguishers available, and adhere to other customary good practices and fire prevention procedures.” (Docket Entry No. 143, Ex. 1). The parties intended Shippers to follow the applicable law and fire-protection standards for doing the hot work at issue. The applicable law and fire-protection standards, Sub-rule No. 54 and NFPA 51B, are part of the laws existing when the agreement was formed.

For a contract to be enforceable, “the minds of the parties must meet with respect to the subject matter of the agreement and all its essential terms.” Weynand v. Weynand, 990 S.W.2d 843, 846 (Tex.App.-Dallas, 1999, pet. denied). Whether there was a meeting of the minds, and thus an offer and acceptance, is determined based on what the parties said and did, not on a subjective standard. Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex.App.-San Antonio 1999, pet. denied). There must be a clear offer and, in turn, a definite acceptance of the terms contained in the offer. Harris v. Balderas, 27 S.W.3d 71, 77 (Tex.App.-San Antonio 2000, pet. denied). The record shows a clear offer and acceptance of the terms of the January 17, 2006 agreement, which is not ambiguous. The agreement’s terms include that Shippers would follow the applicable regulations and standards for performing the hot work. Templet’s subjective understanding of what Suzlon Wind meant by “careful precautions” and “other customary good practices and fire prevention procedures” does not create a fact issue as to whether there was a meeting of the minds.

It is undisputed that Shippers did not follow Subrule No. 54 and NFPA 51B. Shippers did not obtain a hot-work permit. (Docket Entry No. 143, Ex. 3, Templet Deposition at 44:9-13). Shippers did not formally designate anyone as a PAL (Id., at 44:6-19). Templet testified that he was the person at Shippers in charge of authorizing hot-work permits. (Id., at 18:17-19, 43:10-44:4). Templet did not know whether the hot work at issue was performed in a designated or permissible area; did not inspect the work site; did not ensure that the hot-work site was free of combustible or flammable contents; and did not ensure the presence of a fire watch.

Shippers’s failure to follow the requirements of Subrule No. 54 and NFPA 51B is a breach of the agreement to “adhere to other customary good practices and fire prevention procedures.” However, summary judgment on the breach of contract claim is unwarranted because Shippers has raised a disputed fact issue material to determining whether the contract is unenforceable based on fraudulent inducement.

2. Fraudulent Inducement

Shippers argues fraudulent inducement based on Suzlon Wind’s failure to disclose the flammability of the insulation, the previous nacelle fires, and the no-hot-work instruction and foam-removal procedure. Suzlon Wind responds that the January 17, 2006 letter agreement states that careful fire precautions would be needed because the hot work would be close to the nacelles. Suzlon Wind argues that it had no duty to made additional disclosures about the flammable nature of the nacelles’s foam interior because that danger was “open and obvious.”

A party fraudulently induced to consent to a contract is not bound by the contract’s terms and may rescind the entire contract. See, e.g., Formosa Plastics Corp. v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex.1998) (a party is not bound by a contract procured by fraud); Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 162 (Tex.1995) (a buyer is not bound by an agreement to purchase that it was fraudulently induced to execute); Lyn-Lea Travel Corp. v. American Airlines, Inc., 283 F.3d 282, 289 (5th Cir.2002) (“A fraudulently induced party has not assented to an agreement because the fraudulent conduct precludes the requisite mutual assent.”). The elements of fraudulent inducement are the same for common-law fraud. DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex.1990). “The elements of fraud are a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of the truth, which was intended to be acted upon, which was relied upon, and which caused injury.” Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex.1998). To establish fraudulent inducement, a party must show more than ordinary detrimental reliance. See Haase v. Glazner, 62 S.W.3d 795, 798 (Tex.2001).

Fraud can be by either misrepresentation or passive silence. Santanna Natural Gas Corp. v. Hamon Operating Co., 954 S.W.2d 885, 890 (TexApp.Austin 1997, pet. denied). As a general rule, a failure to disclose information is not fraudulent unless there is a duty to disclose the information. Bradford v. Vento, 48 S.W.3d 749, 755 (Tex.2001). Silence is a false representation only when the circumstances impose a duty on the party to speak and he deliberately remains silent. Id. Texas courts have held that a duty to disclose information may arise in an arm’s-length business transaction when a party makes a partial disclosure that, although true, conveys a false impression. See, e.g., Citizens Nat’l Bank v. Allen Rae Invs., 142 S.W.3d 459, 476-77 (Tex.App.-Fort Worth 2004, no pet.); Hoggett v. Brown, 971 S.W.2d 472, 487 (Tex.App.-Houston [14th Dist.] 1997, no writ); Ralston Purina Co. v. McKendrick, 850 S.W.2d 629, 633 (Tex.App.-San Antonio 1993, writ denied). Courts have also held that voluntarily disclosing some information creates a duty to disclose the whole truth. Anderson, Greenwood & Co. v. Martin, 44 S.W.3d 200, 212-13 (TexApp.-Houston [14th Dist.] 2001, pet. denied). Whether such a legal duty exists is a question of law. Bradford, 48 S.W.3d at 755. In deciding whether a legal duty exists, courts consider “whether one party generally had superior knowledge of the risk in question.” Humble Sand & Gravel, Inc. v. Gomez, 146 S.W.3d 170, 182 (Tex.2004).

The facts of Bradford and Citizens Nat’l Bank are instructive. Bradford involved a fraud claim asserted by an individual, Vento, about purchasing a shop from Taylor. 48 S.W.3d at 752-54. Taylor had signed successive short-term leases in the mall where the store was located. Bradford was the mail’s property manager. Id. at 752. After purchasing the shop from Taylor — or so he thought — Vento went to Bradford’s office, paid the shop’s rent for October, informed Bradford that he had purchased the store, and asked about a long-term lease. Id. Bradford congratulated Vento on the purchase, indicated that he had heard about it, informed Vento that the monthly rent was a “decent deal,” suggested that a long-term lease was a bad idea, and said that he would “take care of’ Vento in January. Id. Bradford did not mention that the store’s lease was nonassignable, that additional rent would be due in December, and that Vento would be required to apply for a new lease. Id. Taylor subsequently told Bradford that he still owned the store and that there could be “trouble.” Id. at 752-53. Bradford alerted mall security and Vento was asked to leave the mall because he could not prove that he owned the store. Id. at 753. Vento sued Bradford, among others, for fraud. Id.

The jury found for Vento on the fraud claim and the appellate court upheld that verdict. The court concluded that Bradford’s “failure to disclose pertinent information regarding the procedures for obtaining a new lease constituted a partial disclosure which conveyed a false impression.” Id. at 755. The false impression included that no rent increase would occur until January and that executing a new lease was a mere formality. Id. The Texas Supreme Court reversed, holding that there was no evidence that Bradford knew Vento was ignorant of a material fact or that Vento did not have an equal opportunity to discover the truth. Even though Vento claimed to have purchased the store, he never asked Bradford about the terms of the lease, for a copy of the lease, or about the rent for the rest of the year. Id. at 756. There was “no evidence that Bradford knew that Vento had not obtained or could not obtain the information from other sources, such as Taylor, from whom Vento was buying the store.” Id. at 755-56.

In Citizens Nat’l Bank, a borrower sued a bank’s business development officer for fraud based on his failure to disclose material information. 142 S.W.3d at 468. The officer, Lawson, attended a business presentation for Bed & Bath Inns, Inc., a company in which some of the bank’s clients were investing as franchisees. Id. One week later, Ruth Ann of Allen Rae Investments, Inc. (“ARI”), sought a loan from the bank to finance construction of a motel project. Id. Ruth Ann met with Lawson, who informed her that the bank could not finance ARI’s motel project with only a ten percent down payment. Id. Without disclosing his doubts about the Bed & Bath sales pitch or the bank’s prior relationship with Bed & Bath, Lawson told Ruth Ann about the Bed & Bath investment opportunity, gave her the brochure he had received the week before, and told her that the investment was a “good deal” and that the bank would give ARI a U.S. Small Business Administration loan for the Bed & Bath project but not for any other project. Id. at 468-69.

ARI agreed to proceed with the Bed & Bath project. The bank then tried to obtain required financial information from Bed & Bath. Id. at 469. Bed & Bath did not comply. Lawson wrote Bed & Bath a letter stating that the bank “could be on the verge of losing a deal we switched from [the motel project] to you because of the delay.” Id. After Bed & Bath still did not provide the information, the bank sent them another letter stating that it would not go forward on any other Bed & Bath project and that it would not recommend any other Bed & Bath projects to its customers. Id. All this occurred before ARI closed on its Bed & Bath project. Ruth Ann testified that ARI would not have gone forward with the project had she known that the bank was not going to recommend that any other customers proceed. Id. at 478.

Before ARI agreed to proceed, Lawson did not disclose the bank’s “prior relationship with Bed & Bath, his ambivalence about Bed & Bath’s ability to deliver on the profits it promised to [the bank] from their business relationship, or the fact that neither [the bank] nor he himself had investigate Bed & Bath’s financial condition.” Id. at 477. The court held that Lawson had a duty to disclose this information because he had voluntarily provided some information and was therefore obligated to disclose the complete picture. Id. The court held that after ARI went forward with the project, Lawson had a duty to disclose that the bank was losing enthusiasm, was not getting financial information from Bed & Bath, and was specifically not recommending the investment to other bank customers. The failure to disclose this information created a false impression that induced ARI to continue with the loan and project. Id.

In the present case, Suzlon Wind argues that it did not have a duty to disclose the flammability of the foam insulation inside the nacelle because that danger was “open and obvious.” There is generally no duty to disclose a fact that the other party knew or should have known. See Terry v. Mercedes-Benz, No. 05-06-00118-cv, 2007 WL 2045231, at *3 (Tex.App.-Dallas 2007, no pet.). Suzlon Wind asserts that the danger was obvious because the area where Pineiro was cutting holes in the shipping stands was within 16 inches of the foam insulation inside the nacelle. Suzlon Wind contends that Pineiro should have known about the foam insulation because he should have conducted an inspection to determine whether combustible materials were close to the hot work he was going to do. Suzlon Wind points to the deposition testimony of Haskell Simpkins, an engineer it designated as an expert witness, that an individual performing hot work near a nacelle would have been able to “see a considerable amount of the interior” from the front of the nacelle and would have had “access to the interior where [he] could climb in and do a very complete inspection of what’s inside the nacelle.” (Docket Entry No. 171, at 5). Suzlon Wind asserts that “[p]olyurethane foam, if not known, must be assumed to be flammable.” (Id.).

Shippers responds that Glazier’s January 17, 2006 letter created “a false impression that hot work could be safely undertaken on the nacelle” if Shippers used standard “careful fire precautions” and “other customary good practices and fire prevention procedures” (Docket Entry No. 153, at 16). Pineiro testified that he could not see into the nacelle’s interior before he began the welding. (Docket Entry No. 143 Ex. 5, Pineiro Deposition at 73:9-15). Shippers asserts that Suzlon Wind had superior knowledge of the danger posed by the foam insulation because it knew that the insulation had been ignited in the two recent nacelle fires as a result of hot work conducted nearby. According to Shippers, these previous fires “demonstrate that the flammability of the insulation was not ‘open and obvious.’ ” (Docket Entry No. 167, at 6). Shippers points to the deposition testimony of Lawrence Matta, a fire investigator designated as an expert witness by Suzlon Wind. Matta testified that although polyurethane foam insulation is often treated with flame retardant, the insulation in the nacelle at issue was not. (Docket Entry No. 167, Ex. 1, Matta Deposition at 155:21-25, 157:10-12). There is no apparent visual difference between treated and nontreated insulation. (Id., at 271:13-17). Matta testified that had he known of the two prior nacelle fires, the no-hot-work instruction, and the foam-removal procedure, he would have informed Shippers of these facts before they began the hot work. (Id., at 286:21-287:12). There are fact issues material to determining whether the presence of flammable foam insulation was an “open and obvious” fire danger.

Suzlon Wind cites Terry v. Mercedes-Benz, 2007 WL 2045231, at *3, to support its argument. In that case, several individuals who bought or leased a Mercedes-Benz car with a low-profile design sued the manufacturer for fraudulent failure to disclose. 2007 WL 2045231, at *1. They alleged that Mercedes-Benz did not tell them that “the front bumper was designed to be so low to the ground that it would hit common curbs and wheel stops.” Id. The court concluded that Mercedes-Benz did not have a duty to disclose because “the height of the bumper was not concealed.” Id. at *3. The plaintiffs had “no right to be informed” that the bumper could hit curbs or wheel stops because the plaintiffs “knew, or certainly should have known, that the bumper had a minimum clearance of some amount.” Id. “That [the bumper] could be damaged if it came into contact with an object higher than its minimum clearance is they type of information that any person driving an automobile is expected to know.” Id. The court c