AVCO Corporation, Textron Lycoming Reciprocating Engine Division of AVCO Corporation v. Interstate Southwest, LTD

• Court: Court of Appeals of Texas
• Decided: April 3, 2008
• Docket: 14-05-00860-CV
• Status: Published

Opinion

Appellant=s and Appellee=s Motions for Rehearing Overruled; Supplemental Opinion on Rehearing filed April 3, 2008

Appellant=s and Appellee=s Motions for Rehearing Overruled; Supplemental Opinion on Rehearing filed April 3, 2008. 

In The

Fourteenth Court of Appeals

_______________

NO. 14-05-00860-CV

AVCO CORPORATION, TEXTRON LYCOMING RECIPROCATING ENGINE DIVISION OF AVCO CORPORATION, Appellant

V.

INTERSTATE SOUTHWEST, LTD., Appellee

On Appeal from the 278th District Court

Grimes County, Texas

Trial Court Cause No. 29,385

S U P P L E M E N T A L    O P I N I O N    O N   R E H E A R I N G

In its motion for rehearing, Lycoming argues this court erroneously concluded that it did not challenge the portion of the declaratory judgment in which the trial court stated that a design defect was the sole cause of the crankshaft failures.  Lycoming then argues that this portion of the judgment should be reversed because it (a) is a restatement of a factual finding unconnected to any form of relief that survives our November 1, 2007 decision, (b) is tainted by evidentiary error, and (c) conflicts with our ruling that Aspecifically preserves Lycoming=s right to pursue indemnity and other recovery against IFI and ISW under a variety of possible theories of law.@^[1]  We deny Lycoming=s motion for rehearing^[2] and issue this supplemental opinion to clarify the reasons for this ruling.^[3] 

I.  Issues Presented by Lycoming on Motion for Rehearing

A.        Alleged Challenge to Declaratory Judgment 2^[4]  

ADeclaratory Judgment 2@ consists of the trial court=s statement, AA defect in [Lycoming]=s design of the crankshafts was the sole cause of the crankshaft failures and the resulting service bulletins, airworthiness directives, crankshaft recall and grounding of aircraft with Lycoming engines . . . .@ Lycoming argues that it challenged Declaratory Judgment 2 in the issue that we identified as Issue Fifteen, in which Lycoming argued that the findings of the jury and the trial court Afail to provide a basis for the declaratory judgment and other equitable relief, as well as attorneys= fees, awarded by the trial court[.]@^[5] Specifically, Lycoming refers us to pages 29B30 of its opening brief, in which it argues as follows:

The declaratory relief claim also fails because the trial court did not make the necessary findings to support such relief.  The court signed ISW=s proposed judgment exactly as ISW submitted it and thus merely adopted the jury=s finding in response to Question 8 that A[a] defect in Defendant AVCO Corporation=s design of the crankshafts was the sole cause of the crankshaft failures and the resulting service bulletins, airworthiness directives, crankshaft recall and grounding of aircraft with Lycoming engines.@  This finding, however, is insufficient to support the declaratory relief the court entered because Question 8 does not address the MSA=s indemnity provision, as ISW=s counsel conceded.

(emphasis added, record citations omitted).  We agree that the finding (i.e., the jury=s sole-cause finding) does not support the Adeclaratory relief@ entered (i.e., the declaration of the parties= rights and duties in Declaratory Judgments 3B5 of the Final Judgment).  But we disagree that the statement in Declaratory Judgment 2  that a design defect is the sole cause of the failures is included in Athe declaratory relief@ that Lycoming=s brief describes.

Lycoming argued that the jury=s finding does not support the declaratory relief entered because the finding Adoes not address the MSA=s indemnity provision . . . .@  On its face, this argument applies to Declaratory Judgments 3, 4, and 5, which purport to address the MSA=s indemnity provision.  But Declaratory Judgment 2 does not address the indemnity provision.  Moreover, Declaratory Judgments 3, 4, and 5 offer Adeclaratory relief@ because in these portions of the judgment, the trial court declares the rights of the parties, albeit erroneously.

See Tex. Civ. Prac. & Rem. Code Ann. ' 37.003(a) (Vernon 1997) (AA court of record within its jurisdiction has power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.@) (emphasis added).  But in Declaratory Judgment 2, the trial court merely repeats the jury=s factual finding; it offers no Adeclaratory relief@ because it makes no declaration of the rights, status, or other legal relations between the parties.  See Indian Beach Prop. Owners= Ass=n v. Linden, 222 S.W.3d 682, 699 (Tex. App.CHouston [1st Dist.] 2007, no pet.) (AThe power to determine an issue of fact, however, >does not concomitantly carry with it the power to render such a finding of fact as a declaratory judgment.=@ (quoting Hill v. Heritage Res., Inc., 964 S.W.2d 89, 140 (Tex. App.CEl Paso 1997, pet. denied))). 

We must also emphasize that Lycoming did not challenge Declaratory Judgment 2 on the basis that it is a bare statement of fact, and did not previously contend that a declaratory judgment Ais not the proper remedy if a factual dispute is the only issue to be resolved.@  See Querencia Props., S. de R.L. de C.V. v. New Querencia Capital Partners, L.L.C., 224 S.W.3d 348, 352 (Tex. App.CDallas 2006, no pet.); Emmco Ins. Co. v. Burrows, 419 S.W.2d 665, 671 (Tex. Civ. App.CTyler 1967, no writ).  To the contrary, in the quoted language in its brief, Lycoming only argued that the sole-cause finding is insufficient to support Athe declaratory relief the court entered@ because the finding does not also address indemnity.   On its face, then, this argument appears to challenge the declarations concerning the right to indemnity (i.e., Declaratory Judgments 3, 4, and 5), and does not appear to challenge Declaratory Judgment 2.  

In contrast, Lycoming=s argument on rehearing is based on the premise that the trial court=s repetition of the jury=s Asole cause@ finding is Adeclaratory relief@ to which the argument in Lycoming=s Appellate Brief applies.  But if this is so, then the argument in Lycoming=s Appellate Brief is circular.  Specifically, if Declaratory Judgment 2 is part of the Adeclaratory relief@ included in the challenge as briefed, then Lycoming=s argument with respect to this portion of the judgment can be restated as follows: AThe jury=s finding that design defect was the sole cause of the crankshaft failures is insufficient to support the trial court=s declaration that design defect was the sole cause of the crankshaft failures because the jury=s finding does not address the MSA=s indemnity provision.@  Reduced to its simplest form, Lycoming=s argument is that AA@ does not equal AA,@ because AA@ does not equal AA + B.@^[6] 

If this argument presents a challenge to Declaratory Judgment 2, then further explanatory argument was required.  If we had considered the trial court=s statement to be Adeclaratory relief@ encompassed within the argument presented in Lycoming=s original brief, then contrary to Lycoming=s assertion on appeal, and in the absence of an explanatory argument, it would seem logically unassailable that a jury=s finding of fact is sufficient support for a trial court=s recitation of the same fact.^[7]  Thus, if we had read Lycoming=s brief as presenting this argument, we would have considered the argument waived for inadequate briefing.  See Tex. R. App. P. 38.1(h); Jordan v. Jefferson County, 153 S.W.3d 670, 676 (Tex. App.CAmarillo 2004, pet. denied).  Instead, we read Lycoming=s brief to present the logical argument that the declaration of the parties= rights in Declaratory Judgments 3, 4, and 5, which do address the MSA=s indemnity provision, is not supported by the jury=s sole-cause finding that does not address the MSA=s indemnity provision.  This argument, which follows the form AA … A + B,@ does not suffer from the logical inconsistency of the argument previously discussed.    

B.        FAA Report

Lycoming also contends it Aargued at length that the trial court=s exclusion of the FAA report was a highly prejudicial error that directly impacted all of ISW=s claims.@^[8]  But in response to ISW=s hearsay objection at trial, Lycoming stated that the FAA report was not offered for the truth of the matters asserted, but was instead offered to show Lycoming=s state of mind in connection with the fraud claims.  Not only is evidence of Lycoming=s state of mind irrelevant to the determination of the actual cause of the crankshaft failures, but the argument now advanced conflicts with Lycoming=s position at trial.

C.        No Specific Preservation of Right to Pursue Indemnity

Lycoming further argues as follows:

This Court=s opinion directly conflicts with Declaratory Judgment 2 in another, even more explicit way.  The opinion specifically preserves Lycoming=s right to pursue indemnity and other recovery against IFI and ISW under a variety of possible theories of law.  Yet ISW has already begun to publicly assert that Declaratory Judgment 2 somehow precludes such recovery, in disregard of this Court=s express language to the contrary.^[[9]]  In short, this Court should reverse Declaratory Judgment 2 in order to ensure that its November 1 judgment is fully vindicatedBand not undermined by ISW, as ISW has already made clear that it and IFI hope to do.^[[10]]

But our opinion does not Aspecifically preserve[] Lycoming=s right to pursue indemnity and other recovery against IFI and ISW@ as Lycoming asserts.  To the contrary, we emphasized that one reason that the trial court=s declaratory judgments were overbroad is that Lycoming=s right to pursue other claims under unidentified theories of recovery was not at issue.^[11]  Thus, we have not and do not express an opinion on the availability of any other unidentified theories of indemnity. 

II.  Conclusion

Lycoming did not previously argue that the recitation of the jury=s finding in Declaratory Judgment 2, unconnected to any surviving claim, was an improper application of the Declaratory Judgment Act.  Generally, we do not base our rulings on arguments raised for the first time on rehearing.  Sherrod v. Moore, 819 S.W.2d 201, 205 (Tex. App.CAmarillo 1991, no writ) (AIt is well established that [issues] raised for the first time in a motion for rehearing are too late and will not be considered.@ (citing Morrison v. Chan, 699 S.W.2d 205, 206B07 (Tex. 1985))); see also Brown v. Hearthwood II Owners Ass=n, Inc., 201 S.W.3d 153, 161 (Tex. App.CHouston [14th Dist.] 2006, pet. denied) (holding that failure to Aadvance substantive analysis waives the issue on appeal@); Cont=l Dredging, Inc. v. De-Kaizered, Inc., 120 S.W.3d 380, 400 (Tex. App.CTexarkana  2003, pet. denied) (op. on reh=g) (refusing to consider arguments raised in a motion for rehearing but not raised on original submission); Wheeler v. Methodist Hosp., 95 S.W.3d 628, 646 (Tex. App.CHouston [1st Dist.] 2002, no pet.) (stating that an issue adequately briefed in a motion for rehearing is waived if the original brief  Ais not sufficient to acquaint the Court with the issue and does not present an argument that would allow the court to decide the issue@); ICM Mortgage Corp. v. Jacob, 902 S.W.2d 527, 535 (Tex. App.CEl Paso 1994, writ denied) (op. on reh=g) (AThe appropriate time to seek relief on this ground, however, was on original submission in this Court, not on rehearing.@).

In sum, Lycoming chose to present twenty-seven issues to this court on appeal.  This strategy was successful.  Nevertheless, Lycoming now asks the court to consider a twenty-eighth issue, and, based on grounds that were not previously argued, to eliminate an unchallenged finding resulting from a six-week jury trial.  It has not addressed its failure to brief these arguments previously, and has not shown harmful error.^[12]  See Tex. R. App. P.

44.1 (establishing the standard for reversible error).  We therefore deny Lycoming=s motion for rehearing.

/s/        Eva M. Guzman

Justice

Supplemental Opinion on Rehearing filed April 3, 2008.

Panel consists of Justices Anderson and Guzman and Senior Justice Hudson.^*

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^[1]  Lycoming argues, AThe Court, however, mistakenly assumed that Lycoming did >not challenge[] on appeal= >paragraph 2, page 4 of the Final Judgment.=@  Appellant=s Motion for Rehearing, at 2.

^[2]  We contemporaneously deny appellee=s motion for rehearing.

^[3]  The appellate court retains plenary jurisdiction over its judgment for thirty days after overruling all timely-filed motions for rehearing.  Tex. R. App. P. 19.1(b).

^[4]  Appellant=s Motion for Rehearing, at 1 (AIssue Presented@).  This issue is rephrased on page 4 of the motion as AAppellant Clearly Sought Reversal of Declaratory Judgment 2 on Appeal.@ 

^[5]  Lycoming further argues in its Motion for Rehearing:

This issue C which this Court not only quoted verbatim in footnote 40 of its opinion but also sustained, does not distinguish between Declaratory Judgment 2 and the other portions of the declaratory judgment, but instead challenges that judgment in its entirety.

(internal citations omitted, emphasis added).  In fact, we stated three times that we sustained Issue Fifteen only in part, and only as it pertained to the jury=s findings of fraud and fraudulent inducement and Declaratory Judgments 1, 3, 4, and 5.  AVCO Corp. v. Interstate Sw., Ltd., BS.W.3dB, B, 2007 WL 4845443, at *23 (Tex. App.CHouston [14th Dist.] Nov. 1, 2007, no pet. h.) (ABecause the jury=s findings of fraud and fraudulent inducement fail to provide a basis for those portions of the judgment that relied on these findings, we also sustain Lycoming=s fifteenth and seventeenth issues in part.@) (emphasis added); id., 2007 WL 4845443, at *26 (ABecause Declaratory Judgment 1 is not supported by the jury=s findings or by conclusive evidence, we sustain Lycoming=s fifteenth issue in part and reverse the trial court=s first declaration.@) (emphasis added); 2007 WL 4845443, at *27  (ABecause these rulings address unadjudicated claims and causes of action, we sustain Lycoming=s fifteenth issue as it pertains to Declaratory Judgments 3, 4, and 5, and we reverse these portions of the judgment.@) (emphasis added).

^[6]  Although AA@ (the sole-cause finding) does not address AB@ (the MSA=s indemnity provision), neither does Declaratory Judgment 2, which merely repeats AA.@ 

^[7]  Lycoming did not preserve and present an appellate challenge to the legal and factual sufficiency of the evidence supporting the jury=s sole-cause finding.

^[8]  Appellant=s Motion for Rehearing, at 1 (AIssue Presented@).

^[9]  This contention is based on material that is not part of the record.

^[10]  This exhortation is phrased on page 7 of the motion for rehearing as ADeclaratory Judgment 2 Directly Conflicts with This Court=s November 1 Ruling in Multiple Ways and Therefore Must Be Reversed.@

^[11]  A claim for declaratory judgment is not required to be tied to a valid cause of action for damages.  See, e.g., Tex. Civ. Prac. & Rem. Code Ann. ' 37.004(b) (a contract may be construed before a breach).

^[12]  See Republic Ins. Co. v. Davis, 856 S.W.2d 158, 164 (Tex. 1993) (the Declaratory Judgment Act Acannot be invoked as an affirmative ground of recovery to revise or alter@ existing rights or legal relations). 

^*  Senior Justice J. Harvey Hudson sitting by assignment.