Bonanza Restaurants v. Uncle Pete's, Inc.

757 S.W.2d 445, 1988 Tex. App. LEXIS 2472, 1988 WL 104900
CourtCourt of Appeals of Texas
DecidedAugust 3, 1988
Docket05-87-00610-CV
StatusPublished
Cited by9 cases

This text of 757 S.W.2d 445 (Bonanza Restaurants v. Uncle Pete's, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bonanza Restaurants v. Uncle Pete's, Inc., 757 S.W.2d 445, 1988 Tex. App. LEXIS 2472, 1988 WL 104900 (Tex. Ct. App. 1988).

Opinion

HECHT, Justice.

Appellant Bonanza Restaurants sued ap-pellees Uncle Pete’s, Inc. and David R. Carruthers 1 for royalties due under a restaurant franchise agreement. 2 Appellees counterclaimed for rescission of the agreement and for damages, asserting fraud and violations of the Texas Deceptive Trade Practices Act. 3 After trial before a jury, the trial court rendered judgment rescinding the franchise agreement and Carruth-ers’ guaranty of the performance of that agreement, awarding appellees attorney fees, and decreeing that Bonanza take nothing against Uncle Pete’s and Carruth-ers.

Bonanza challenges the sufficiency of the evidence to support the jury’s finding that its conduct was unconscionable in violation of the DTPA. Bonanza also complains that the trial court erred in granting rescission without a jury finding that Uncle Pete’s suffered actual monetary damages, and without restoring the parties to their respective positions prior to the franchise agreement. We overrule Bonanza’s seven points of error and affirm the judgment of the trial court.

I

Bonanza’s business is franchising restaurants. Uncle Pete’s purchased one such restaurant from franchisee Nancy Robb for $160,000 and, with Bonanza’s consent, assumed Robb’s obligations to Bonanza under the franchise agreement, including payment of royalties on sales. Carruthers, a principal of Uncle Pete’s, guaranteed Uncle Pete’s performance of its obligations under the franchise agreement.

: Uncle Pete’s quickly found that the res- . taurant could not be operated profitably and, only a few months after taking it over, changed its name and ceased to operate it as a Bonanza restaurant. When Bonanza sued to recover the royalties due under the franchise agreement which Uncle Pete’s had never paid, Uncle Pete’s countered with claims of fraud and DTPA violations. Basically, Uncle Pete’s complained that it did not know and was not told when it undertook the obligations of the franchise agreement that the restaurant had a reputation for unsanitary operation and had been closed by city health authorities, that the restaurant had long operated at a loss, and that Bonanza’s franchise operations were inefficient and impaired by Bonanza’s legal and financial woes.

After a five-day trial, the jury found that:

—Bonanza’s conduct in selling the franchise to Uncle Pete’s was knowing, unconscionable, and a producing cause of damage to Uncle Pete’s, within the meaning of the DTPA;
*447 —The damages caused Uncle Pete’s by Bonanza’s unconscionable conduct, defined as the difference in the value of the restaurant as represented by Bonanza and as actually received by Uncle Pete’s, was zero;
—Bonanza’s statements defrauded Uncle Pete’s;
—The damages Bonanza proximately caused Uncle Pete’s by its fraud were zero;
—Uncle Pete’s should be awarded $15,-000 exemplary damages against Bonanza; and
—Reasonable fees for legal services rendered by appellees’ attorney would be $16,740 in the trial court, $5,000 in the court of appeals, $2,500 for application for writ of error, and $2,500 if writ of error were granted.

The jury failed to find that:

—Bonanza misrepresented the characteristics, uses or benefits of the franchise agreement;
—Bonanza failed to disclose information which it knew concerning the sale of the franchise to induce Uncle Pete’s to enter into the agreement when it otherwise would not have done so; and
—Bonanza failed to give Carruthers consideration for his personal guaranty.

Appellees objected that these findings were fatally inconsistent and moved for mistrial or a new trial. Alternatively, appellees moved for judgment granting them rescission and attorney fees and denying Bonanza any relief. Bonanza also moved for judgment, arguing that its right to royalties was undisputed. The trial court granted appellees’ motion for judgment and denied the other motions.

II

In points of error five and six Bonanza complains that the evidence is legally and factually insufficient to support the jury’s finding that its conduct was unconscionable as defined by section 17.45(5) of the DTPA, which states:

An “unconscionable action or course of action” means an act or practice which, to a person’s detriment:
(A) takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree; or
(B) results in a gross disparity between the value received and consideration paid, in a transaction involving transfer of consideration.

The bulk of Bonanza’s argument is that the insufficiency of the evidence to support a finding of unconscionability is established by the jury’s answers to three other questions. Specifically, Bonanza argues that the jury’s negative answers to questions as to whether Bonanza misrepresented the nature of the franchise agreement and whether Bonanza failed to disclose information establish the insufficiency of the evidence to prove unconscionability under section 17.45(5)(A), that is, taking grossly unfair advantage. Further, Bonanza argues that the jury’s “0” answer to the question as to what difference in value there was between the restaurant as represented and as delivered establishes the insufficiency of the evidence to prove uncon-scionability under section 17.45(5)(B), that is, a gross disparity between the value received and consideration paid. Thus, Bonanza concludes, the verdict itself shows that the evidence was insufficient for the jury to find unconscionable conduct.

Bonanza’s argument is a non sequitur. The court, not the jury, determines sufficiency of the evidence. A jury finding indicates nothing as to whether there is sufficient evidence to support it, let alone whether there is sufficient evidence to support some other finding. Bonanza’s reliance on three jury answers to show insufficiency of the evidence for a fourth is completely misplaced.

To this argument Bonanza adds only the summary assertion that the evidence is otherwise insufficient to support a finding of unconscionable conduct. Inasmuch as Bonanza has not undertaken to review the record in its brief, we need not set out in detail the evidence which supports the jury’s verdict. Briefly summarized, the evidence shows that the restau *448 rant Uncle Pete’s purchased had developed a reputation for unsanitary operations and had been involuntarily closed by the city health department. The restaurant had operated at a loss for some time, eventually resulting in Robb’s bankruptcy. The advertising cooperative used by Bonanza franchisees in the area was underfunded and of little benefit to the restaurant Uncle Pete’s purchased. Despite Uncle Pete’s best efforts, it could not make the restaurant a profitable operation in the months it operated under the name “Bonanza”.

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757 S.W.2d 445, 1988 Tex. App. LEXIS 2472, 1988 WL 104900, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bonanza-restaurants-v-uncle-petes-inc-texapp-1988.