HOUSTON (CN) - Haste and a failure to insist on precise contract language doomed a rock exporter's suit against a Texan accused of selling it a mineral concession he did not own, a federal judge ruled.
Genesis Agregados Honduras, a Honduran company with offices in Louisiana, sued Tom Cross, of La Porte, Texas in January 2012.
Genesis mines and imports volcanic rock from Honduras to the Gulf Coast of the United States for levee-building and other projects by the United States Army Corps of Engineers, according to its original complaint.
Genesis says Cross claimed he owned an antimony concession in Santa Rita de Santa Barbara, Honduras and offered to lease it to the company with an option to purchase.
Antimony is a shiny silver metalloid used in microelectronics, cosmetics, as alloy material for lead and tin and as an additive to fire retardants.
Genesis says after it hired a geologist and mining engineer who determined the site had sufficient antimony to be profitable it paid the Honduras government $26,000 for back taxes on the concession, and $24,000 to Cross, through his attorney.
The company wasted no time hiring geologists, engineers and labor to mine the concession at a cost of $500,000, it says.
Genesis says it also negotiated a tentative joint venture with Mina Emusa, a Bolivian mining consort where Mina Emusa would provide the equipment and manpower to mine the concession and take it to port for 50 percent of the profits, which would have netted Genesis a minimum of $5 million a year.
The company says Cross signed a lease in November 2011, granting it an option to purchase the concession.
But in preparing to sign the lease Genesis contacted the office of the Minister of Mines in Honduras and found out Cross was not the registered owner of the concession, and "incapable of transferring the same," Genesis says in its original complaint.
Genesis sued Cross for $10 million in punitive damages, $551,000 in compensatory damages and an injunction to stop him from marketing the concession on the Internet.
U.S. District Judge Melinda Harmon granted Cross' initial motion to dismiss the lawsuit, but granted Genesis leave to file an amended complaint to fix deficiencies in the first.
Genesis filed an amended complaint that reasserted all allegations in the original but added an affidavit from Julio Zavala, Genesis' alleged CEO and president.
Included with Zavala's affidavit was a "Lease with Option to Buy Contract" between Cross and Zavala that names Zavala as "lessee" with no indication that Zavala is acting for Genesis, in fact it does not mention Genesis at all.
Zavala claims he pointed out to Cross that the lease incorrectly named him as the lessee/purchaser before the agreement was executed.
Cross said it would be fixed, but Zavala signed the agreement anyway "due to urgency," according to Zavala's affidavit.
Based on Zavala's assertions Genesis brought a new claim for reformation of contract in its amended complaint.
Cross moved to dismiss arguing that Genesis had failed to plead a breach of contract claim or shown that it was ever a signatory party to any contract for the concession.
Harmon agreed with Cross and tossed the case.
"Genesis has failed to identify and support with facts what law applies here; has failed to allege facts establishing that Genesis has standing to bring these vague allegations; has failed to plead fraud with the required particularity... has failed to state a claim for breach of contract or reformation of the lease/purchase agreement; and has failed to state facts supporting claims for negligent misrepresentation or unjust enrichment," Harmon wrote.
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