CASE OVERVIEW: Breach of Oral Contract

Heritage Propane Partners, based in Tulsa, OK, sued SCANA, South Carolina’s largest utility company in 2003, in a contract dispute arising over the bidding process and ultimate sale of SCANA’s propane businesses.

Heritage, now known as Energy Transfer Partners, was approached by SCANA through a SCANA subsidiary, Cornerstone Ventures, about purchasing five of SCANA’s propane companies. As part of the solicitation, Heritage and Cornerstone signed a confidentiality agreement that all information connected with the bid process was to be kept confidential. After a lengthy and expensive process – Heritage told Cornerstone it wished to buy the companies and offered an initial bid. After further negotiations, the two sides came to agreement on all outstanding issues and shook hands. The SCANA senior management team told Heritage, “we have a deal.” The two sides continued to work on finalizing the written documents, agreeing that Heritage would meet with propane employees prior to announcing the agreement publicly. However, SCANA kept delaying the final contract. It turned out that Heritage had been used only as a “stalking horse” to garner a higher bid from another buyer. All the time, expense and expertise that Heritage had expended had only been used to facilitate transactions with a second bidder, enriching the bidder and SCANA at Heritage’s expense.

Breach of contract, fraud and punitive damages awarded--$48 MILLION
Heritage filed suit in 2003, in the Court of Common Please of Richland County, SC, against SCANA, Cornerstone, and Suburban for breach of contract, fraud and conspiracy, among other things. In the trial, SCANA had argued that it never entered into a “final definitive agreement” with Heritage because the contract had not been signed. On Oct. 22, 2004, a jury ruled against SCANA, and Heritage was awarded $48 million.